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Item 8. Financial Statements and Supplementary Data

2022-03-10 compared with 2021-02-26 · 1148 added, 1023 removed, 1501 unchanged (59% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the years ended Decem ber 31, 20 20, 2019 and 2018

Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 and 2019

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In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for credit losses in 2020 and the manner in which it accounts for leases in 2019.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to a lack of an effectively designed control (i) over the communication of modifications to pre-existing compensation agreements in an acquisition transaction between the legal function and the accounting function to ensure the accounting impact of the modifications could be evaluated, and (ii) with a sufficient level of precision to allow for an appropriate review of the tax balances associated with the opening balance sheet of acquired entities.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses referred to above are described in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for credit losses in 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded four entities (Decision Resources Group (“DRG”), CPA Global, Beijing IncoPat Technology Co., Ltd.

(“IncoPat”), and Hanlim IPS.

(“Hanlim”)) from its assessment of internal control over financial reporting as of December 31, 2020 because they were acquired by the Company in purchase business combinations during 2020.

We have also excluded these four entities from

our audit of internal control over financial reporting.

DRG, CPA Global, IncoPat, and Hanlim are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 1%, 5%, 0%, and 0% of total assets, respectively and approximately 15%, 13%, 0%, and 0% of total revenues, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2020.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded ProQuest from its assessment of internal control over financial reporting as of December 31, 2021 because it was acquired by the Company in a purchase business combination during 2021.

We have also excluded this entity from our audit of internal control over financial reporting.

ProQuest is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 2% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquired Customer Relationship Intangible Assets – Decision Resources Group and CPA Global

As described in Note 4 to the consolidated financial statements, the Company acquired 100% of the assets, liabilities and equity interests of Decision Resources Group (DRG) and CPA Global in 2020.

The aggregate consideration paid in connection with the closing of the DRG acquisition was $965.0 million, which resulted in $381.0 million of customer relationship intangible assets being recorded .

The aggregate consideration in connection with the closing of the CPA Global acquisition was $8,839.6 million which resulted in $4,643.3 million of customer relationship intangible assets being recorded.

As disclosed by management, the fair value of the customer relationship intangible assets acquired was estimated by management through a discounted cash flow model using the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to revenue growth rates, operating margins, discount rates, and customer attrition rates, among other items.

The principal considerations for our determination that performing procedures relating to the customer relationship intangible assets acquired in the DRG and CPA Global acquisitions is a critical audit matter are (i) the high degree of auditor judgment and subjectivity in performing procedures relating to the estimated fair value of the customer relationships due to the significant judgment by management in determining these estimates;

(ii) the significant audit effort in evaluating the significant assumptions related to revenue growth rates, operating margins, discount rates, and customer attrition rates;

Acquired Database Intangible Asset and Customer Relationships Intangible Assets – ProQuest

As described in Note 4 to the consolidated financial statements, the Company acquired 100% of ProQuest in 2021.

The aggregate consideration paid in connection with the closing of the ProQuest acquisition was $4,994.3 million, net of cash acquired, which resulted in $2,773.0 million and $709.3 million of customer relationships and technology and databases intangible assets, respectively, being recorded.

Technology and databases intangible assets include both acquired technology intangible assets and acquired databases intangible assets.

As disclosed by management, the fair value of the customer relationships intangible assets acquired was estimated by management through a discounted cash flow model using the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to projected revenue growth rates, operating margins, projected cash flows, royalty rates, tax rates, discount rates, tax amortization benefits, and customer attrition rates, among other items.

The fair value of the databases intangible assets acquired was estimated by management through a discounted cash flow model using the relief from royalty method, which involved the use of significant estimates and assumptions related to projected revenue growth rates, royalty rates, tax rates, discount rates, tax amortization benefits, and obsolescence rates.

The principal considerations for our determination that performing procedures relating to an acquired database intangible asset and the acquired customer relationships intangible assets from the ProQuest acquisition is a critical audit matter are (i) a high degree of auditor judgment and subjectivity in performing procedures relating to the estimated fair value of certain database and customer relationships intangible assets due to the significant judgment by management when developing these estimates;

(ii) the significant audit effort in evaluating the significant assumptions related to projected revenue growth rates,

royalty rate, tax rate, discount rate, tax amortization benefit and obsolescence rate related to the database intangible asset, as well as the significant assumptions related to projected revenue growth rates, operating margins, projected cash flows, royalty rates, tax rates, discount rates, tax amortization benefits, and customer attrition rates related to the customer relationship intangible assets;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of the customer relationship intangible assets, including controls over the determination of significant assumptions related to revenue growth rates, operating margins, discount rates, and customer attrition rates.

These procedures included testing the effectiveness of controls relating to business combination accounting, including controls over management’s valuation of the database intangible asset and the customer relationship intangible assets and controls over the development of significant assumptions related to projected revenue growth rates, royalty rate, tax rate, discount rate, tax amortization benefit and obsolescence rate related to the acquired database intangible asset, as well as significant assumptions related to projected revenue growth rates, operating margins, projected cash flows, royalty rates, tax rates, discount rates, tax amortization benefits and customer attritions rates related to the customer relationship intangible assets.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for estimating the fair value of the customer relationship intangible assets for DRG and CPA Global;

(iii) evaluating the appropriateness of the discounted cash flow model;

(iv) testing the completeness and accuracy of the underlying data used in the model;

evaluating the reasonableness of management’s significant assumptions related to revenue growth rates, operating margins, discount rates, and customer attrition rates .

Evaluating management’s significant assumptions involved evaluating whether the assumptions used were reasonable considering the consistency of the assumptions with external market and industry data and whether these assumptions were consistent with evidence obtained in other areas of the audit.

Evaluating management’s assumptions related to revenue growth rates, operating margins, and customer attrition rates also involved evaluating whether the assumptions used were reasonable considering the current and past performance of the acquired entity.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow model and evaluating the reasonableness of the significant assumptions related to the customer attrition rates and discount rates.

Goodwill Impairment Assessment for Certain Reporting Units

As described in Notes 3 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $6,252.6 million as of December 31, 2020.

(ii) testing management’s process for estimating the fair value of the database intangible asset and the customer relationships intangible assets;

(iii) evaluating the appropriateness of the discounted cash flow models;

(iv) testing the completeness and accuracy of the underlying data used in the models;

and (v) evaluating the reasonableness of the aforementioned significant assumptions.

Evaluating projected revenue growth rates (for both the database intangible asset and the customer relationship intangible assets) and operating margins and projected cash flows (for customer relationship intangible assets) also involved evaluating whether the assumptions used were reasonable considering the current and past performance of the acquired entity.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow models and evaluating the reasonableness of management’s significant assumptions related to the projected revenue growth rates, royalty rates, tax rates, discount rates, and tax amortization benefits (for both the database intangible asset and the customer relationships intangible assets), the customer attrition rates (for customer relationship intangible assets), and the obsolescence rate (for the database intangible asset).

Goodwill Impairment Assessment for the IP Management Reporting Unit

As described in Notes 3, 9 and 11 to the consolidated financial statements, the Company’s consolidated goodwill balance was $7,904.9 million as of December 31, 2021, and the goodwill balance assigned to the IP Management Reporting Unit was $3,047.3 million.

Management evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment or one level below an operating segment, annually as of October 1 or more frequently if impairment indicators arise.

In determining the fair value of a reporting unit, management estimates the fair value of a reporting unit using a discounted cash flow model using the income approach.

The discounted cash flow model determines the fair value of a reporting unit based on the projected future discounted cash flows, which include significant assumptions related to revenue growth rates, operating margins, anticipated future economic conditions, and the appropriate discount rates relative to risk and estimates of residual values.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment for certain reporting units is a critical audit matter are (i) the high degree of auditor judgment and subjectivity in performing procedures relating to the estimated fair value of certain reporting units due to the significant judgment by management in determining these estimates;

(ii) the significant audit effort in evaluating the significant assumptions related to revenue growth rates, operating margins, anticipated future economic conditions, discount rates, and estimates of residual values;

As disclosed by management, a quantitative assessment was performed for its IP Management reporting unit.

In determining the fair value of a reporting unit, management estimates the fair value using a discounted cash flow model under the income approach.

The discounted cash flow model determines the fair value of a reporting unit based on the present value of estimated future cash flows, which include significant assumptions related to projected revenue growth rates, operating margins, tax rates, terminal values and discount rates, among others.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment for the IP Management reporting unit is a critical audit matter are (i) a high degree of auditor judgment and subjectivity in performing procedures relating to the estimated fair value of the IP Management reporting unit due to the significant judgment by management when developing this estimate;

(ii) the significant audit effort in evaluating the significant assumptions related to projected revenue growth rates, operating margins, tax rate, and discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the determination of the reporting units, determination of the estimated fair value of certain reporting units, and the development of the significant assumptions used to estimate fair value.

These procedures also included, among others (i) evaluating whether there were any impairment indicators;

(ii) testing management’s process for determining the fair value estimates of certain reporting units;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the determination of the reporting units, valuation of the IP Management reporting unit, and controls over the development of significant assumptions related to projected revenue growth rates, operating margins, tax rate, and discount rate.

These procedures also included, among others (i) testing management’s process for estimating the fair value of the IP Management reporting unit;

(ii) evaluating whether there were any impairment indicators;

(iii) evaluating the appropriateness of the discounted cash flow model;

(iv) testing the completeness and accuracy of underlying data used in the model;

and (v) evaluating the reasonableness of management’s significant assumptions related to revenue growth rates, operating margins, anticipated future economic conditions, discount rates, and estimates of residual values .

Evaluating management’s significant assumptions involved evaluating whether the assumptions used were reasonable considering the consistency of the assumptions with external market and industry data and whether the assumptions were consistent with evidence obtained in other areas of the audit.

Evaluating management’s assumptions related to revenue growth rates and operating margins also involved evaluating whether the assumptions used were reasonable considering the past performance of the Company.

and (v) evaluating the reasonableness of management’s significant assumptions related to projected revenue growth rates, operating margins, tax rate and discount rate.

management’s significant assumptions involved evaluating whether the assumptions used were reasonable considering the consistency of the assumptions with external market and industry data and whether the assumptions were consistent with evidence obtained in other areas of the audit.

Evaluating the projected revenue growth rates and operating margins also involved evaluating whether the assumptions used were reasonable considering the past performance of the Company.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow model and evaluating the reasonableness of management’s significant assumption related to the discount rate.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

February 26, 2021

March 10, 2022

We have served as the Company’s auditor since 2016.

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Consolidated Balance Sheets

(In thousands, except share data)

(In thousands, except share and per share data)

As of December 31,

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Other current assets 66,646 79,150

Assets held for sale — 30,619

Total current assets 1,637,238 1,147,564

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Current portion of long-term debt 30,577 28,600

Liabilities held for sale —

Total current liabilities 1,901,974 1,423,093

Long-term debt 5,456,280 3,457,900

Warrant liabilities 227,839 312,751

Non-current portion of deferred revenues 54,250 41,399

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Shareholders’ equity:

Preferred Shares, no par value;

14,375,000 shares authorized;

5.25 % Mandatory Convertible Preferred Shares, Series A, 14,375,000 and 0 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively

Ordinary Shares, no par value;

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11,827,915 9,989,284

Accumulated other comprehensive income (loss) 503,521 ( 4,879 )

Treasury shares, at cost:

547,136 shares as of December 31, 2021 and 6,325,860 Shares as of December 31, 2020

( 16,956 ) ( 196,038 )

Accumulated other comprehensive income 326,755 492,382

Accumulated deficit ( 1,604,461 ) ( 1,250,838 )

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Restructuring and impairment ( 129,459 ) ( 56,138 ) ( 15,670 )

Other operating income, net 52,381 4,826 6,379

Other operating (expense) income, net ( 27,507 ) 52,381 4,826

Total operating expenses ( 1,963,874 ) ( 1,290,394 ) ( 1,056,831 )

Income (loss) from operations 2,805 ( 82,486 ) ( 105,708 )

Loss from operations ( 86,980 ) ( 36,347 ) ( 82,486 )

Mark to market adjustment on financial instruments 81,320 ( 205,062 ) ( 47,656 )

Legal settlement — — 39,399

Income (loss) before interest expense and income tax 2,805 ( 43,087 ) ( 105,708 )

Loss before interest expense and income tax ( 5,660 ) ( 241,409 ) ( 90,743 )

Interest expense and amortization of debt discount, net ( 252,490 ) ( 111,914 ) ( 157,689 )

Loss before income tax ( 258,150 ) ( 353,323 ) ( 248,432 )

Benefit (provision) for income taxes 2,799 ( 10,201 ) ( 5,649 )

Provision for income taxes ( 12,298 ) 2,698 ( 10,201 )

Net loss ( 270,448 ) ( 350,625 ) $ ( 258,633 )

Basic and diluted $ ( 0.25 ) $ ( 0.77 ) $ ( 1.11 )

Dividends on preferred shares ( 41,508 ) — —

Net loss attributable to ordinary shares $ ( 311,956 ) $ ( 350,625 ) $ ( 258,633 )

Basic $ ( 0.49 ) $ ( 0.82 ) $ ( 0.94 )

Diluted $ ( 0.61 ) $ ( 0.82 ) $ ( 0.94 )

Weighted average shares used to compute earnings per share:

Basic and diluted 428,600,690 273,883,342 217,472,870

Basic 630,976,906 427,023,558 273,883,342

Diluted 640,774,100 427,023,558 273,883,342

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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Net loss $ ( 270,448 ) $ ( 350,625 ) $ ( 258,633 )

Other comprehensive income, net of tax:

Interest rate swaps, net of $ 0 tax in all periods

Other comprehensive income (loss), net of tax:

Interest rate swaps, net of tax of $ 1,557 , $ 0 and $ 0

4,837 ( 978 ) ( 6,422 )

Defined benefit pension plans, net of tax (benefit) provision of $( 65 ), $ 683 and $( 91 ), respectively

Defined benefit pension plans, net of tax (benefit) provision of $ 0 , $( 65 ) and $ 683

( 555 ) ( 659 ) ( 1,041 )

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(In thousands, except share data)

Share Capital Accumulated

Ordinary Shares Preferred Shares Treasury Shares Accumulated

Comprehensive

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Shareholders’

Shares Amount

Balance at December 31, 2017 as originally reported 1,644,720 $ 1,662,221 $ 13,984 $ ( 390,099 ) $ 1,286,106

Conversion of units of share capital 215,683,103 — — — —

Balance at December 31, 2017, as recasted 217,327,823 1,662,221 13,984 ( 390,099 ) 1,286,106

Issuance of ordinary shares, net 198,602 1,574 — — 1,574

Share-based award activity — 13,715 — — 13,715

Net loss — — — ( 242,162 ) ( 242,162 )

Comprehensive income (loss) — ( 8,626 ) — ( 8,626 )

Balance at December 31, 2018 217,526,425 $ 1,677,510 $ 5,358 $ ( 632,261 ) $ 1,050,607

Shares Amount Shares Amount Shares Amount

Balance at December 31, 2018, as originally reported 1,646,223 $ 1,677,510 — $ — — $ — $ 5,358 $ ( 632,261 ) $ 1,050,607

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Balance at December 31, 2018, as recasted 217,526,425 1,677,510 — — — — 5,358 ( 632,261 ) 1,050,607

Shares subject to redemption — ( 64,157 ) — — — — — — ( 64,157 )

Tax Receivable Agreement — ( 264,000 ) — — — — — — ( 264,000 )

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Net loss — — — — — — — ( 258,633 ) ( 258,633 )

Comprehensive income (loss) — — ( 10,237 ) — ( 10,237 )

Other comprehensive loss — — — — — — ( 10,237 ) — ( 10,237 )

Balance at December 31, 2019 306,874,115 $ 2,144,372 — $ — — $ — $ ( 4,879 ) $ ( 890,894 ) $ 1,248,599

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Exercise of public warrants 28,880,098 277,526 — — — — — — 277,526

Exercise of private warrants 274,000 — — — —

Exercise of Private Placement Warrants 274,000 4,124 — — — — — — 4,124

Exercise of stock options 12,042,862 2,122 — — — — — — 2,122

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Share-based award activity — 35,422 — — — — — — 35,422

Treasury shares — — — — 6,325,860 ( 196,038 ) ( 196,038 )

Net loss — — — — — — — ( 350,625 ) ( 350,625 )

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Balance at December 31, 2020 606,329,598 $ 9,989,284 — $ — 6,325,860 $ ( 196,038 ) $ 492,382 $ ( 1,250,838 ) $ 9,034,790

CLARIVATE PLC

Consolidated Statements of Changes in Equity

(In thousands, except share data)

Ordinary Shares Preferred Shares Treasury Shares Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Total

Shareholders’

Shares Amount Shares Amount Shares Amount

Balance at December 31, 2020 606,329,598 $ 9,989,284 — $ — 6,325,860 $ ( 196,038 ) $ 492,382 $ ( 1,250,838 ) $ 9,034,790

Exercise of Private Placement Warrants 212,174 3,592 — — — — — — 3,592

Exercise of stock options 3,057,008 18,562 — — — — — — 18,562

Vesting of restricted stock units 991,759 — — — — — — — —

Shares returned to the Company for net share settlements ( 1,693,274 ) ( 24,892 ) — — — — — — ( 24,892 )

Issuance of ordinary shares, net 257,359,494 6,980,615 — — — — — — 6,980,615

Share-based award activity — 56,134 — — — — — — 56,134

Repurchases of ordinary shares — — — — ( 183,782,279 ) ( 5,211,521 ) — — ( 5,211,521 )

Retirement of treasury shares ( 183,782,279 ) ( 5,211,521 ) — — 183,782,279 5,211,521 — — —

Issuance of preferred shares, net — — 14,375,000 1,392,616 — — — — 1,392,616

Issuance of treasury shares, net — — — — ( 5,778,724 ) 179,082 — ( 41,667 ) 137,415

Dividends to preferred stockholders 664,730 16,141 — — — — — ( 41,508 ) ( 25,367 )

Net loss — — — — — — — ( 270,448 ) ( 270,448 )

Other comprehensive income — — — — — — ( 165,627 ) — ( 165,627 )

Balance at December 31, 2021 683,139,210 $ 11,827,915 14,375,000 $ 1,392,616 547,136 $ ( 16,956 ) $ 326,755 $ ( 1,604,461 ) $ 11,925,869

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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Restructuring and impairment 48,152 5,212 —

Gain on foreign currency forward contracts ( 2,903 ) — —

Mark to market adjustment on contingent and phantom shares 24,218 — —

Loss (gain) on foreign currency forward contracts 6,904 ( 2,903 ) —

Mark to market adjustment on contingent shares ( 25,085 ) 25,212 —

Mark to market adjustment on financial instruments ( 81,320 ) 205,062 47,656

Loss on extinguishment of debt — — 50,676

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Deferred finance charges 13,170 5,752 2,496

Tax indemnity write-off — — 33,819

Other operating activities 541 2,611 ( 374 )

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Proceeds from revolving credit facility 175,000 60,000 70,000

Proceeds from issuance of debt 2,000,000 1,960,000 1,600,000

Redemption of Notes not exchanged ( 157,424 ) — —

Principal payments on term loan ( 28,600 ) ( 12,600 ) ( 641,509 )

Repayments of revolving credit facility — ( 125,000 ) ( 50,000 )

Payment of debt issuance costs ( 38,340 ) ( 41,923 ) —

Payment of debt issuance costs and discounts ( 32,624 ) ( 38,340 ) ( 41,923 )

Contingent purchase price payment — ( 7,816 ) ( 2,371 )

Proceeds from reverse recapitalization — — 682,087

Proceeds from issuance of debt 1,960,000 1,600,000 —

Extinguishment of debt — ( 1,342,651 ) —

Tax receivable agreement payout — ( 200,000 ) —

Proceeds from issuance of preferred shares 1,392,616 — —

Proceeds from issuance of ordinary shares 728,040 843,744 —

Proceeds from warrant exercises 277,526 — —

Proceeds from stock options exercised 2,122 1,582 1,574

Payments related to tax withholding for stock-based compensation ( 33,056 ) — —

Net cash provided by (used in) financing activities 2,926,580 75,215 ( 32,605 )

Proceeds from issuance of treasury shares 139,864 — —

Extinguishment of debt — — ( 1,342,651 )

CLARIVATE PLC

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2021 2020 2019

Tax receivable agreement payout — — ( 200,000 )

Repurchases of ordinary shares ( 159,356 ) — —

Cash dividends on preferred shares ( 18,868 ) — —

Proceeds from warrant exercises — 277,526 —

Proceeds from stock options exercised 18,562 2,122 1,582

Payments related to finance lease ( 158 ) — —

Payments related to tax withholding for stock-based compensation ( 24,892 ) ( 33,056 ) —

Net cash provided by financing activities 4,032,160 2,926,580 75,215

Effects of exchange rates 3,738 ( 5,043 ) ( 971 )

Net increase in cash and cash equivalents $ 173,149 $ 181,600 $ 50,555

Net increase in restricted cash 142,056 14,669 —

Net increase in cash held for sale — — 384

Net increase in cash and cash equivalents, and restricted cash 315,205 196,269 50,939

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Cash paid for income tax $ 33,869 $ 27,621 $ 29,204

Capital expenditures included in accounts payable $ 7,783 $ 8,762 $ 5,166

Assets received as reverse recapitalization capital $ — $ — $ 1,877

Liabilities assumed as reduction of reverse recapitalization capital $ — $ — $ 5,910

Capital expenditures included in accounts payable $ 8,692 $ 7,783 $ 8,762

Non-Cash Financing Activities:

Shares issued and returned for funding of CPA Global Equity Plan $ — $ ( 196,038 ) $ —

Shares issued to Capri Acquisition Topco Limited 5,052,165 — —

Retirement of treasury shares ( 5,211,521 ) — —

Shares issued as contingent stock consideration associated with the DRG acquisition

Shares issued as contingent stock consideration associated with the CPA Global acquisition

Shares issued as dividends on our 5.25% Series A Mandatory Convertible Preferred Shares 16,141 — —

Dividends accrued on our 5.25% Series A Mandatory Convertible Preferred Shares 6,499 — —

Total Non-Cash Financing Activities $ ( 31,207 ) $ ( 196,038 ) $ —

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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Pursuant to the definitive agreement entered into to effect a merger between Camelot Holdings (Jersey) Limited ("Jersey") and Churchill Capital Corp, a Delaware corporation, ("Churchill") (the “2019 Transaction”), the Company was formed for the purposes of completing the 2019 Transaction and related transitions and carrying on the business of Jersey and its subsidiaries.

The Company is a provider of proprietary and comprehensive content, analytics, professional services and workflow solutions that enables users across government and academic institutions, life science companies and research and development (“R&D”) intensive corporations to discover, protect and commercialize their innovations.

The Company is a provider of proprietary and comprehensive content, analytics, professional services and workflow solutions that enable users across government and academic institutions, life science companies and research and development (“R&D”) intensive corporations to discover, protect and commercialize their innovations.

Clarivate has two reportable segments:

Science and Intellectual Property ("IP").

Our segment structure is organized to address customer needs by product group.

Our Science segment consists of our Web of Science and Life Science Product Lines.

This segment provides curated, high-value, structured information that is delivered and embedded into the workflows of our customers, which include research intensive corporations, life science organizations and universities world-wide.

Our IP segment consists of our Derwent, CompuMark, MarkMonitor and CPA Global Product Lines.

This segment helps manage customers' end-to-end portfolios of intellectual property from patents to trademarks to corporate website domains.

Our segment structure is organized to address customer needs by product line.

Our Science segment consists of our AGPL and Life Sciences Product Lines.

Both provide curated, high-value, structured information that is delivered and embedded into the workflows of our customers, which include research intensive corporations, life science organizations and universities world-wide.

Our IP segment consists of our Patent, Trademark, Domain, and IP Management Product Lines.

These Product Lines help manage customer's end-to-end portfolios of intellectual property from patents to trademarks to corporate website domains.

See Note 22 - Segment Information, for additional information on the Company's reportable segments.

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In February 2020, the Company consummated a public offering of 27,600,000 ordinary shares at $ 20.25 per share.

After this offering, Onex Corporation and Baring Private Equity Asia Limited ("BPEA") continued to beneficially own approximately 38.3 % of the Company’s ordinary shares, down from approximately 70.8 % of the ordinary shares beneficially owned by Onex Corporation and BPEA immediately after the closing of our merger with Churchill Capital Corp in 2019.

In June 2020, the Company consummated a public offering of 50,400,000 of our ordinary shares at a share price of $ 22.50 per share.

Of the 50,400,000 ordinary shares, 14,000,000 were ordinary shares offered by Clarivate and 36,400,000 were ordinary shares offered by selling shareholders.

In June 2020, we completed an underwritten public offering of 50,400,000 of our ordinary shares (including 2,400,000 ordinary shares pursuant to the underwriters' option to purchase up to an additional 7,200,000 ordinary shares from certain selling shareholders) at a share price of $ 22.50 per share.

Of the 50,400,000 ordinary shares, 14,000,000 were ordinary shares offered by Clarivate and 36,400,000 were ordinary shares offered by selling shareholders, including 20,821,765 ordinary shares from Onex, 8,097,354 ordinary shares from Baring and 7,480,881 ordinary shares from Directors, Executive Officers and other shareholders.

The underwriters' option to purchase the remaining 4,800,000 ordinary shares from certain selling shareholders expired on July 3, 2020.

The Company received approximately $ 304,030 in net proceeds from the sale of its ordinary shares, after deducting underwriting discounts and estimated offering expenses payable.

We used the net proceeds, in conjunction with the new $ 1,600,000 incremental term loan facility available to Clarivate on October 1, 2020, and cash on the balance sheet to fund the repayment of CPA Global's parent company outstanding debt $ 2,055,822 of

We used the net proceeds, in conjunction with the new $ 1,600,000 incremental term loan facility available to Clarivate on October 1, 2020, and cash on the balance sheet to fund

CLARIVATE PLC

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outstanding debt.

the repayment of CPA Global's parent company outstanding debt of $ 2,055,822 .

The Company did not receive any proceeds from the sale of ordinary shares by the selling shareholders.

Immediately after the offering, Onex Corporation and Baring owned approximately 18.4 % and 7.2 %, respectively, of the Company's ordinary shares, down from an aggregate of 38.3 % owned subsequent to the February 2020 offering.

Additionally, in connection with the acquisition of CPA Global, on October 1, 2020, the Company issued 210,357,918 shares to Redtop Holdings Limited, a portfolio company of Leonard Green & Partners, L.P.

representing approximately 35 % ownership of Clarivate.

In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $ 26.00 , of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares).

The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders.

The Company received approximately $ 728,080 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable .

The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.

We used the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which was completed on December 1, 2021.

The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders.

In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25 % Series A Mandatory Convertible Preferred Shares ("MCPS") which included 1,875,000 of our mandatory convertible preferred shares that the underwriters purchased pursuant to their option to purchase additional shares.

The Company received approximately $ 1,392,671 in net proceeds from the mandatory convertible preferred share offering, after deducting underwriting discounts and estimated offering expenses payable.

We used the net proceeds to finance a portion of the purchase price for the ProQuest acquisition, which was completed on December 1, 2021.

In September 2021, certain selling shareholders completed an underwritten public offering of 25,000,000 of our ordinary shares at a share price of $ 25.25 , The ordinary shares sold by selling shareholders included 18,000,000 ordinary shares from Onex and 7,000,000 ordinary shares from Baring.

The Company did not receive any proceeds from the sale of ordinary shares by the selling shareholders.

After giving effect to the offering, Onex and Baring owned approximately 6.7 % and 2.6 %, respectively, of the Company's ordinary shares.

Risks and Uncertainties

In March 2020, the World Health Organization characterized COVID-19 as a pandemic.

The rapid spread of COVID-19 and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy.

In view of the rapidly changing business environment, market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business.

However, we continue to assess the potential effect on our financial position, results of operations, and cash flows.

If the global pandemic continues to evolve into a prolonged crisis, the effects could have an adverse impact on the Company's results of operations, financial condition and cash flows.

The rapid spread of COVID-19 and issues relating to the resurgence of COVID - 19 and/or new strains of COVID - 19 along with continuously evolving responses to combat it have had an increasingly negative impact on the global economy.

This has had, and may continue to have, an adverse impact to our operational and financial performance as well as the businesses of our customers and partners, including their spending priorities.

It is difficult to predict the full extent of the potential effects and impact on our operations, business, and financial performance, however, we continue to conduct business with substantial modifications and precautionary measures to our daily operations.

Modifications include less employee travel as well as a virtual shift related to work location, and sales and marketing events.

Given the uncertainty around the severity and duration of the COVID-19 pandemic and the measures taken, or may be taken, in response to the COVID-19 pandemic, the Company cannot reasonably estimate the full impact of the COVID-19 pandemic on our business, financial condition and results of operations at this time, which may be material.

Basis of Presentation

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Generally, the Company has a shareholding of more than 50% of the voting rights in its subsidiaries.

The effect of potential voting rights that are currently exercisable are considered when assessing whether control exists.

The effect of potential voting rights that are currently exercisable is considered when assessing whether control exists.

Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from the date control ceases.

dollar is the Company's reporting currency.

As such, the financial statements are reported on a U.S.

dollar basis.

Certain reclassifications of prior year's data have been made to conform to the current year's presentation.

During the fourth quarter of 2020, the Company realigned its reporting structure and changed the manner in which performance is assessed.

The two operating segments created include the Science Group and the Intellectual Property Group.

The segment reporting changes were retrospectively applied to all periods presented.

Certain reclassifications of prior year's data have been made to conform to the current year's presentation of reportable segment information as disclosed in Note 22 - Segment Information and financial statement line items within the Consolidated Statements of Operations.

Summary of Significant Accounting Policies

Business Combinations

The Company determines whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

If this threshold is met, the set is not a business.

If it is not met, the Company then evaluates whether the set meets the requirement that a business include, at a minimum, an input and as substantive process that together significantly contribute to the ability to create outputs.

Business combinations are accounted for using the acquisition method at the acquisition date, which is when control is obtained.

The consideration transferred is generally measured at fair value, as are the identifiable assets acquired and liabilities assumed.

During the one-year period following the acquisition date, if an adjustment is identified based on new information about facts and circumstances that existed as of the acquisition date, the Company will record measurement-period adjustments related to the acquisitions in the period in which the adjustment is identified.

Goodwill is measured at the acquisition date as the fair value of the consideration transferred (including, if applicable, the fair value of any previously held equity interest and any non-controlling interests) less the net recognized amount (which is generally the fair value) of the identifiable assets acquired and liabilities assumed.

Intercompany accounts and transactions have been eliminated in consolidation.

The Employee Benefit Trust ("EBT") associated with the CPA Global Equity Plan was consolidated on October 1, 2020.

The EBT held Clarivate shares that were recorded as treasury shares as they were legally issued but not outstanding.

The EBT also holds cash that is classified as restricted cash on the Consolidated Balance Sheet.

Additionally, certain reclassifications and revisions of prior period data have been made to conform to the current year's presentation.

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Transaction costs, other than those associated with the issuance of debt or equity securities incurred in connection with a business combination, are expensed as incurred and included in either Cost of revenues or Selling, general and administrative costs in the Consolidated Statements of Operations.

During the fourth quarter of 2020, the Company realigned its reporting structure and changed the manner in which performance is assessed.

The two operating segments created include the Science Group and the Intellectual Property Group.

Summary of Significant Accounting Policies

Principles of Consolidation

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The Company held $ 156,734 and $ 14,678 of restricted cash as of December 31, 2021 and 2020, respectively.

Restricted cash of $ 6,498 was primarily related to funds from the Company’s IncoPat transaction as of December 31, 2020.

Restricted cash of $ 4,779 was primarily related to deposits held with patent offices and on behalf of certain customers to make payment to their vendors as of December 31, 2020.

As of December 31, 2019, the Company held $ 9 of restricted cash primarily related to funds from the Company’s Publons transaction.

Restricted cash as of December 31, 2021 primarily included the cash received from the sale of treasury shares from the Employee Benefit Trust established for the CPA Equity Plan in December 2021.

The cash received from the Employee Benefit Trust established for the CPA Equity Plan in December 2021 was subsequently paid in the first quarter of 2022.

Accounts Receivable

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Management performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed appropriate.

Credit losses have been immaterial and reasonable within management’s expectations.

No single customer accounted for more than 1 % of revenues and our ten largest customers represented only 6 % of revenues for the year ended December 31, 2020.

Credit losses have been immaterial and

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reasonable within management’s expectations.

Our ten largest customers represented only 9 % of revenues for the year ended December 31, 2021.

The Company maintains its cash and cash equivalent balances with high-quality financial institutions and consequently, the Company believes that such funds are subject to minimal credit risk.

Prepaid Expenses

Prepaid expenses represent amounts that the Company has paid in advance of receiving benefits or services.

Prepaid expenses include amounts for system and service contracts, sales commissions, deposits, prepaid royalties and insurance and are recognized as an expense over the general contractual period that the Company expects to benefit from the underlying asset or service.

Property and Equipment, net

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Leasehold improvements Lesser of lease term or estimated useful life

Computer Software

Development costs related to internally generated software are capitalized once a project has progressed beyond a conceptual, preliminary stage to that of the application development stage.

Costs of significant improvements on existing software for internal use, both internally developed and purchased, are also capitalized.

Internally Developed Software and Content

Internally Developed Software — Development costs related to internally generated software are capitalized once a project has progressed beyond a conceptual, preliminary stage to that of the application development stage.

Costs of significant improvements or enhancements on existing software for internal use, both internally developed and purchased, are also capitalized.

Costs related to the preliminary project stage, data conversion and post-implementation/operation stage of an internal use software development project are expensed as incurred.

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Purchased software is amortized over three years , which is the estimated useful life of the related software.

The capitalized amounts, net of accumulated amortization, are included in Other intangible assets, net in the Consolidated Balance Sheets.

The cost and related accumulated amortization of sold or retired assets are removed from the accounts and any gain or loss is included within Loss from operations in the Consolidated Statements of Operations.

Computer software is evaluated for impairment whenever circumstances indicate the carrying amount may not be recoverable.

Content — Costs related to the acquisition of source materials, content selection, document processing, editing, abstracting, and indexing are capitalized.

The Company also capitalizes internal and external costs associated with the development of product-related software that adds functionality and improves the customer’s ability to search the Company’s content.

The Company does not capitalize any costs associated with research and development or marketing.

These capitalized costs are amortized over a two to five year useful life.

Both internally developed software and content are evaluated for impairment whenever circumstances indicate the carrying amount may not be recoverable.

The test for impairment compares the carrying amounts with the sum of undiscounted cash flows related to the asset.

If the carrying value is greater than the undiscounted cash flows of the asset, the asset is written down to its estimated fair value.

Business Combinations

We include the results of operations of the businesses that we acquire as of the acquisition date.

We allocate the purchase price of the acquisitions to the assets acquired and liabilities assumed based on their estimated fair values.

The excess of the purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill.

Acquisition-related expenses, other than those associated with the issuance of debt or equity securities, are recognized separately from the business combination and are expensed as incurred.

Identifiable Intangible Assets, net

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Customer Relationships — Customer relationships primarily consist of customer contracts and customer relationships arising from such contracts.

Databases and Content — Databases and content primarily consists of repositories of the Company’s specific financial and customer information and intellectual content.

Developed Technology — Developed technology primarily consists of proprietary technology used for healthcare data, analytics, and insights products and services.

CLARIVATE PLC

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Databases and Content — Databases and content primarily consists of repositories of the Company’s specific financial and customer information and intellectual content.

Developed Technology — Developed technology primarily consists of proprietary technology used for healthcare data, analytics, and insights products and services.

Backlog — Backlog primarily consists of orders and contracts received for which performance has not occurred prior to being acquired by the Company.

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Management identified an impairment loss in connection with the divestiture of certain assets and liabilities of its MarkMonitor Product Line within its IP segment in the year ended December 31, 2019.

As a result of restructuring initiatives, the Company recorded non-cash impairment for leases in the year ended December 31, 2020.

See Note 25 - Restructuring for further information.

As a result of restructuring initiatives, the Company recorded non-cash impairment for leases in the years ended December 31, 2020, and December 31, 2021.

See Note 25 - Restructuring and Impairment for further information.

Goodwill and Indefinite-Lived Intangible Assets

The Company evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment or one level below an operating segment, annually as of October 1 or more frequently if impairment indicators arise in accordance with Accounting Standards Codification ("ASC") Topic 350.

The Company identified six reporting units due to a change in the Company’s reporting structure for the year ended December 31, 2020 and five reporting unit for the years ended December 31, 2019 and 2018.

The Company evaluates the recoverability of goodwill at the reporting unit level.

The Company assesses various qualitative factors to determine whether the fair value of a reporting unit may be less than its carrying amount.

If a determination is made that, based on the qualitative factors, an impairment does not exist, the Company is not required to perform further testing.

If the aforementioned qualitative assessment results in the Company concluding that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount, the fair value of the reporting unit will be determined and compared to its carrying value including goodwill.

In determining the fair value of a reporting unit, the Company estimates the fair value of a reporting unit using the fair value derived from the income approach.

The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit;

whereas, the income approach uses a discounted cash flow (“DCF”) model.

The DCF model determines the fair value of our reporting units based on projected future discounted cash flows, which include significant assumptions

The carrying amount of goodwill is tested for impairment annually during the fourth quarter each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill is tested for impairment on a reporting unit level, which is defined as the operating segment or one level below the operating segment.

As of October 1, 2021, our most recent annual goodwill impairment testing date, the Company identified five reporting units.

We use both qualitative and quantitative analysis to determine whether we believe it is more likely than not that goodwill has been impaired.

For our most recent annual goodwill impairment test, we applied the qualitative assessment to three of the reporting units identified and the quantitative assessment to two of the reporting units identified.

For our prior year goodwill impairment test, as of October 1, 2020, all reporting units identified were subject to the quantitative assessment.

For the year ended December 31, 2021, the fair values of our reporting units exceeded each individual reporting unit’s carrying value, and goodwill was not impaired.

There was no impairment of goodwill as a result of the Company’s annual impairment testing conducted for the years ended December 31, 2021, 2020, and 2019.

CLARIVATE PLC

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related to revenue growth rates, operating margins, anticipated future economic conditions, and the appropriate discount rates relative to risk and estimates of residual values.

If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired, and the Company is not required to perform further testing.

If the fair value of the reporting unit is less than the carrying value, the Company will recognize the difference as an impairment charge.

Management concluded that no goodwill impairment existed for any of the periods presented.

The Company also has indefinite-lived intangible assets related to trade names.

Indefinite-lived intangible assets are subject to impairment testing annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable.

For purposes of impairment testing, the fair value of trade names is determined using an income approach, specifically the relief from royalties method.

Management concluded that no indefinite-lived intangible impairment existed for any of the periods presented.

Other Current and Non-Current Assets and Liabilities

The Company defines current assets and liabilities as those from which it will benefit from or which it has an obligation for within one year that do not otherwise classify as assets or liabilities separately reported on the Consolidated Balance Sheets.

Other non-current assets and liabilities are expected to benefit the Company or cause its obligation beyond one year.

The Company classifies the current portion of long-term assets and liabilities as current assets or liabilities.

The Company has indefinite-lived intangible assets related to trade names.

As of October 1, 2021, our most recent annual indefinite-live intangible assets impairment testing date, the fair value of our indefinite-lived trade names exceeded the assets carrying value, and the assets were not impaired.

There was no impairment of indefinite-lived intangible assets as a result of the Company’s annual impairment testing conducted for the years ended December 31, 2021, 2020, and 2019.

We determine if an arrangement is a lease at inception.

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Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

Accounts Payable and Accruals

Accounts payable and accruals are obligations to pay for goods or services that have been acquired in the ordinary course of business.

Accounts payable and accruals are recognized initially at their settlement value, and are classified as current liabilities if payment is due within one year or less.

Debt is recognized initially at par value, net of any applicable discounts or financing costs.

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Debt is classified as a current liability when due within 12 months after the end of the reporting period.

Tax Receivable Agreement (“TRA”)

Concurrent with the completion of the 2019 Transaction, in May 2019 we became a party to a TRA with our pre-business combination equity holders.

Under the TRA, we are generally required to pay to certain pre-business combination equity holders approximately 85 % of the amount of calculated tax savings, if any, we are deemed to realize (using the actual

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

applicable U.S.

federal income tax rate and an assumed combined state and local income tax rate) as a result of (1) any existing tax attributes associated with Covered Tax Assets acquired in the pre-business combination organizational transactions, the benefit of which is allocable to us as a result of such transactions, (2) net operating loss (NOL) carryforwards available as a result of such transactions and (3) tax benefits related to imputed interest.

Further, there may be significant changes, to the estimate of the TRA liability due to various reasons including changes in corporate tax law, changes in estimates of the amount or timing of future taxable income, and other items.

Changes in those estimates are recognized as adjustments to the related TRA liability, with offsetting impacts recorded in the Consolidated Statements of Operations as Other operating income (expense), net.

On August 21, 2019 the Company entered into a TRA Buyout Agreement to settle the outstanding liability.

The settlement of the original TRA liability pursuant to the TRA Buyout Agreement was accounted for as an adjustment to Shareholders' equity.

Warrant Liabilities

We used a third-party specialist to fair value the awards using the Monte Carlo simulation approach.

The assumptions included in the model include, but are not limited to, risk-free interest rate, expected volatility of stock prices for the Company’s and its peer group, and dividend yield.

A discount for the lack of marketability ("DLOM") is applied to shares that are subject to remaining post vesting lock up restrictions.

Derivative Financial Instruments

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The Company applies hedge accounting and has designated these instruments as cash flow hedges of the risk associated with floating interest rates on designated future quarterly interest payments.

Management assumes the hedge is highly effective and therefore changes in the value of the hedging instrument are recorded in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets.

Management assumes the hedge is highly effective and therefore changes in the value of the hedging instrument are recorded in

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets.

Any ineffectiveness is recorded in earnings.

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We engage outside experts as deemed necessary or appropriate to assist in the calculation of the liability, however management is responsible for evaluating the estimate.

As information becomes available regarding changes in circumstances for ongoing

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

contingent considerations, our potential liability is reassessed and adjusted as necessary.

As information becomes available regarding changes in circumstances for ongoing contingent considerations, our potential liability is reassessed and adjusted as necessary.

See Note 23 - Commitments and Contingencies for further information on contingencies.

Pension and Other Post-Retirement Benefits

The Company may be required to sponsor pension benefit plans, for certain international markets, which are unfunded and are not material for the Company.

The net periodic pension expense is actuarially determined on an annual basis by independent actuaries using the projected unit credit method.

The determination of benefit expense requires assumptions such as the discount rate, which is used to measure service cost, benefit plan obligations and the interest expense on the plan obligations.

Other significant assumptions include expected mortality, the expected rate of increase with respect to future compensation and pension.

Because the determination of the cost and obligations associated with employee future benefits requires the use of various assumptions, there is measurement uncertainty inherent in the actuarial valuation process.

Actual results will differ from results which are estimated based on assumptions.

The liability recognized in the Consolidated Balance Sheets is the present value of the defined benefit obligation at the end of the reporting period.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.

The defined benefit obligation is included in Other non-current liabilities in the Consolidated Balance Sheets.

All actuarial gains and losses that arise in calculating the present value of the defined benefit obligation are recognized immediately in Accumulated deficit and included in the Consolidated Statements of Comprehensive Income (Loss).

See Note 13 - Pension and Other Post‑Retirement Benefits for balances and further details including an estimate of the impact on the Consolidated Financial Statements from changes in the most critical assumptions.

Employer contributions to defined contribution plans are expensed as incurred, which is as the related employee service is rendered.

Treasury Shares

Shares repurchased by the company from the open market or shares held in the EBT as previously discussed are classified within equity as Treasury shares and are recorded at the fair value on the date of acquisition.

When Clarivate reissues treasury shares at an amount greater (less) than it paid to repurchase the shares, it realizes a gain (loss) on the reissuance of the shares.

This gain or loss is recognized within shareholders’ equity.

Management has elected to utilize the FIFO method for determining the gains and losses from sales of Treasury shares.

The Company recognizes income taxes under the asset and liability method.

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The Company first records unrecognized tax benefits as liabilities in accordance with ASC 740 and then adjusts these liabilities when our judgment changes as a result of the evaluation of new information not previously available at the time of establishing the liability.

Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities.

These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

Interest accrued related to unrecognized tax benefits and income tax related penalties are included in the Benefit (provision) for income taxes.

Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis.

Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially

CLARIVATE PLC

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different from our current estimate of the unrecognized tax benefit liabilities.

These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

Interest accrued related to unrecognized tax benefits and income tax related penalties are included in the Benefit (provision) for income taxes.

Deferred tax is provided on taxable temporary differences arising on investments in foreign subsidiaries, except where we intend, and are able, to reinvest such amounts on a permanent basis.

Revenue Recognition

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The Company disaggregates revenue based on revenue recognition pattern.

Subscription based revenues recognize revenue over time, whereas our transactional and re-occurring revenues recognize revenue at a point in time.

The Company believes subscription, transaction and re-occurring is reflective of how the Company manages the business.

Subscription based revenues recognize revenue over time, whereas our re-occurring revenues recognize revenue at a point in time.

Our transactional revenues recognize revenue at a point in time and other revenues relating to professional services recognize revenue over time.

The Company believes subscription, re-occurring and transactional and other revenues is reflective of how the Company manages the business.

The revenue recognition policies for the Company’s revenue streams are discussed below.

Subscription Revenues

Subscription-based revenues are recurring revenues that are earned under annual, evergreen or multi-year contracts pursuant to which we license the right to use our products to our customers.

Revenues from the sale of subscription data and analytics solutions are typically invoiced annually in advance and recognized ratably over the year as revenues are earned.

Subscription-based revenues are recurring revenues that are earned under annual, evergreen or multi-year contracts pursuant to which we license the right to use our products to our customers or provide maintenance services over a contractual term.

Revenues from the sale of subscription data, maintenance services, and analytics solutions are recognized ratably over the contractual period as revenues are earned.

Subscription revenues are typically generated either on (i) an enterprise basis, meaning that the organization has a license for the particular product or service offering and then anyone within the organization can use it at no additional cost, (ii) a seat basis, meaning each individual that uses the particular product or service offering has to have his or her own license, or (iii) a unit basis, meaning that incremental revenues are generated on an existing subscription each time the product is used (e.g., a trademark or brand is searched or assessed).

Transactional Revenues

Transactional revenues are revenues that are earned under contracts for specific deliverables that are typically quoted on a product, data set or project basis and often derived from repeat customers, including customers that also generate subscription-based revenues.

Revenues from the sale of transactional products and services are invoiced according to the terms of the contract, typically in arrears.

Transactional content sales are usually delivered to the customer instantly or in a short period of time, at which time revenues are recognized.

In the case of professional services, these contracts vary in length from several months to years for multi-year projects and customers and typically invoiced based on the achievement of milestones.

Transactional revenues are typically generated on a unit basis, although for certain product and service offerings transactional revenues are generated on a seat basis.

Transactional revenues may involve sales to the same customer on multiple occasions but with different products or services comprising the order.

Re-occurring Revenues

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The most significant components of our re-occurring revenues is our 'renewal' business within CPA Global.

Transactional and Other Revenues

Transactional content sales are usually delivered to the customer instantly or in a short period of time, at which time revenues are recognized.

Transactional revenues are typically generated on a unit basis, although for certain product and service offerings transactional revenues are generated on a seat basis.

Transactional revenues may involve sales to the same customer on multiple occasions but with different products or services comprising the order.

Other revenues relate to professional services including implementation for software and software as a service ("SaaS") subscriptions.

These contracts vary in length from several months to years for multi-year projects.

Revenue is recognized

CLARIVATE PLC

Notes to the Consolidated Financial Statements

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over time utilizing a reasonable measure of progress depicting the satisfaction of the related performance obligation.

Other revenues also includes one-time perpetual archive license ("PAL") revenues.

Performance Obligations

Content Subscription:

Content subscription performance obligations are most prevalent in the Web of Science, Derwent, and Life Sciences Product Lines.

Content subscription performance obligations are most prevalent in the Web of Science, Derwent, CPA Global, ProQuest and Life Sciences Product Lines.

Content subscriptions are subscriptions that can only be accessed through the Company’s online platform for a specified period of time through downloads or access codes.

On-premise the software is purchased by the customer and installed directly onto the customer’s own operating systems.

In addition to the primary content subscription, these types of performance obligations can often include other performance obligations, such as training subscriptions, access to historical content, software licenses, professional services, maintenance and other optional content.

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subscription revenue).

Within the Life Sciences Product Line and resulting from the DRG acquisition, the Company provides analytics and syndicated research and syndicated databases through subscription and membership contracts and through the sale of

CLARIVATE PLC

Notes to the Consolidated Financial Statements

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single reports from the syndicated series.

In case of software sold as a subscription, the cloud based hosted services and post-sales support and maintenance are considered as one performance obligation distinct from other services in the contract.

Subscription based revenues are recognized ratably over the period that the service is being provided, generally one year .

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Packages of select single reports are recognized pro rata as the individual reports are delivered if all other revenue recognition criteria are met based on estimated selling price.

IP Software Subscription:

This performance obligation relates to the CPA Global Product Line.

The Company provides a suite of software packages and solutions designed for customers to manage their own IP, using a single IP Management Software (“IPMS”) platform.

All software products are delivered to the customers in one of two ways (i) On-premise the software is purchased by the customer and installed directly onto the customer’s own operating systems and (ii) Software-as-a-Service (“SaaS”) software is hosted centrally on a cloud-based system and usage is licensed on an annual subscription fee basis.

IP software contracts with customers often include a number of other services such as implementation support, installation, data migration, training to help customers deploy and use products more efficiently, upgrades released over the contract period and after sales support.

On-premise licenses are considered distinct performance obligations when sold with other services in the contract and revenue is recognized upfront at the point in time when the software is made available to the customer.

Revenue is recognized on a straight-line basis over the period of contract as customers simultaneously consume and receive benefits, given that distinct performance obligations are satisfied over time.

SaaS Subscription:

Software-as-a-Service (“SaaS”) software is hosted centrally on a cloud-based system and usage is licensed on an annual subscription fee basis.

The company earns revenue from selling SaaS subscriptions where customers purchase on demand access to hosted software products.

Revenue from software subscription agreements, a portion of which are for multiple year terms, is recognized ratably over the term of the subscriptions, including any free trial periods before or after the paid subscription term.

Revenue from professional services related to SaaS implementation are recognized by the percentage of completion method, determined by the ratio between the actual hours incurred and the total anticipated hours.

Perpetual Archive Licenses ("PAL"):

This performance obligation relates to the ProQuest Product Line.

Customers purchase perpetual archive licenses to collections, periodicals, eBooks, and other resources contained in the Company’s databases.

The Company will grant access to the platform or service at the time of contract inception and the PAL product is for the customer to own forever.

However, the online access to the PAL product is limited by time and if customer wishes to extend the online access, the customer must pay a continuing service fee and if the customer chooses not to pay, the Company will send a hard copy (CD or DVD) of the PAL material.

The Company records revenue on the date when the customer is granted access to the license/service and revenue is recognized at a point in time.

Domain Registration Services:

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Revenue is recognized over the term of the contract, with fees paid annually at the beginning of each contract term.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

This performance obligation relates to the CPA Global Product Line.

This includes services related to (i) on-premise software installation, (ii) post-sales software support services,(iii) keeping software updated for any changes in laws (i.e., law update service), (iv) docketing, (v) search and examination services provided to various PTOs.

This includes services related to (i) on-premise software installation, (ii) post-sales software support services,(iii) keeping software updated for any changes in laws (i.e., law update service), (iv) docketing, and (v) search and examination services provided to various PTOs.

Revenue from IP services is recognized over the period of the contract as and when the service is provided.

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This performance obligation relates to the CPA Global Product Line.

This involves services related to:(i) registration of a patent granted in Europe, to various individual countries where it will ultimately been enforceable;

(ii) translation of documents to be submitted to a PTO in local language;

This involves services related to:(i) registration of a patent granted in Europe, to various individual countries where it will ultimately be enforceable;

(ii) translation of documents to be submitted to a patent and trademark office ("PTO") in local language;

(iii) registration of address with PTO, for all future notifications to be received on behalf of the IP holder;

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The Company has determined each of the above services performed represent separate performance obligations.

Revenue is recognized once the provision of the service is complete and this point is reached when a purchase invoice is received from the agent for (i) and (ii) above, when registration with the PTO gets completed for (iii) above.

Revenue is recognized once the provision of the service is complete and this point is reached when a purchase invoice is received from the agent for (i) and (ii) above and when registration with the PTO gets completed for (iii) above.

With respect to management of notifications, revenue is recognized over the lifetime of the patent on a straight-line basis.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Revenue from Validation Services is recognized net of official fees collected from customers for remittance to the PTO and any taxes collected from customers, which are subsequently remitted to governmental authorities.

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This performance obligation related to the IPM Product Line that was disposed of in October of 2018 and reacquired as part of the acquisition of the CPA Global business and Product Line in October of 2020.

These services consist of gathering all necessary data and information, preparing the renewal applications, and submitting payment to the patent and trademark office (“PTO”) in the relevant country on behalf of the IP holders and the Company could have potential liability for the successful completion of the renewal application process, for which we carry insurance.

These services consist of gathering all necessary data and information, preparing the renewal applications, and submitting payment to the PTO in the relevant country on behalf of the IP holders and the Company could have potential liability for the successful completion of the renewal application process, for which we carry insurance.

The Company has determined there is one performance obligation relating to the provision of the service, which includes compiling the necessary data and submitting the renewal application, as well as facilitating the payment from the customer to the PTO.

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(b) The Company has latitude in establishing pricing for its services.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Therefore, the Company reports the revenues from these transactions on a gross basis and records the related third-party commission fees as cost of revenues.

As it relates to the Content Subscription, PALs and SaaS Subscription performance obligations have an additional party is involved in a transaction and can be categorized as either agreements with Third Party Distributors or Reseller Agreements.

Third Party Distributor agreements provide the distributor with the right to market and resell ProQuest products to end customers and based on the indicators of control, revenues from these Third Party Distributor transactions are generally recognized gross.

Reseller Agreements involve contracting to resell third party products where the Company is the Reseller and revenues from these transactions are generally recognized net.

Variable Consideration

In some cases, contracts provide for variable consideration that is contingent upon the occurrence of uncertain future events, such as retroactive discounts provided to the customers, indexed or volume-based discounts, and revenue between contract expiration and renewal.

In some cases, contracts provide for variable consideration that is contingent upon the occurrence of uncertain future events, such as retroactive discounts provided to the customers, indexed or volume-based discounts, time and materials based implementation services, and revenue between contract expiration and renewal.

Variable consideration is estimated at the expected value or at the most likely amount depending on the type of consideration.

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The estimate of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of its anticipated performance and all information (historical, current, and forecasted) that is reasonably available to the Company.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Significant Judgments

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Determining a standalone selling price that may not be directly observable amongst all the products and performance obligations requires judgment.

Specifically, many Web of Science, DRG, and CPA Global Product Line contracts include multiple product offerings, which may have both subscription and transactional revenues.

Specifically, many Web of Science, DRG, CPA Global, and ProQuest Product Line contracts include multiple product offerings, which may have both subscription and transactional revenues.

Judgment is also required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the subscription service and recognized over time for other products.

The Company allocates value to primary content subscriptions or licenses and accompanying performance obligations, such as training subscriptions, access to historical content, maintenance and other optional content.

The Company allocates value to primary content subscriptions or licenses including PALs and accompanying performance obligations, such as training subscriptions, continuing service fees, access to historical content, maintenance and other optional content.

When multiple performance obligations exist in a single contract, the transaction price is allocated to each performance obligation based on the standalone selling price of each performance obligation.

The Company utilizes its standard price lists to determine the standalone selling price based on the product and country.

The Company allocates the transaction price to each performance obligation based on the best estimate of the standalone selling price of each distinct good or service in the contract.

The transaction price in the contract is allocated at contract inception to the distinct good or service underlying each performance obligation in proportion to the standalone selling price.

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Discounts applied to the contract will be allocated based on the same proportion of standalone selling prices.

For certain of our businesses, the discount is allocated entirely to one or more, but not all, performance obligations in the contract when certain criteria are met.

Cost to Obtain a Contract

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The costs are amortized to Selling, general and administrative expenses within the Consolidated Statements of Operations.

The amortization period is between one and five years based on the estimated length of the customer relationship.

The amortization period is between one and seven years based on the estimated length of the customer relationship.

Deferred Revenues

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

The timing of revenue recognition may differ from the timing of invoicing to customers.

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These assets are depreciated over their expected useful lives, and in the case of leasehold improvements over the shorter of their useful life or the term of the related lease.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Amortization expense relates to the Company’s finite-lived intangible assets including databases and content, customer relationships, computer software, and trade names.

These assets are being amortized over periods of 2 to 23 years.

Impairment on Assets Held for Sale

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Share-based Compensation

Share-based compensation expense includes cost associated with stock options, restricted share units (“RSUs”), performance share units ("PSUs") and 2019 Transaction related shares granted to certain members of key management.

All share-based awards are recognized in the Consolidated Statements of Operations based on their grant date fair values.

We amortize the value of share-based awards to expense over the vesting period on a graded-scale basis.

The incremental fair value of modifications to stock awards is estimated at the date of modification.

We recognize any additional estimated expense in the period of modification for vested awards and over the remaining vesting period for un-vested awards.

The Company elects to recognize forfeitures as they occur.

Share-based compensation consists of restricted share units ("RSUs"), performance share units ("PSUs") and 2019 Transaction related shares granted to certain key members of management which are recognized in the Consolidated Statements of Operations based on their grant date fair values with forfeitures recognized as they occur.

The share-based compensation cost of time-based RSU and PSU grants is calculated by multiplying the grant date fair value by the number of shares granted.

We recognize compensation expense over the vesting period of the award.

The value of PSUs is weighted between a total shareholder return ("TSR") component and a performance metric component.

PSUs with performance metric components are assessed for probability of achieving the targets at each quarterly period end.

The fair value of stock options is estimated at the date of grant using the Black-Scholes option pricing model, which requires management to make certain assumptions of future expectations based on historical and current data.

The assumptions include the expected term of the stock option, expected volatility, dividend yield, and risk-free interest rate.

The expected term represents the amount of time that options granted are expected to be outstanding, based on forecasted exercise behavior.

The risk-free rate is based on the rate at grant date of zero-coupon U.S.

treasury notes with a term comparable to the expected term of the option.

Expected volatility is estimated based on the historical volatility of comparable public entities' stock price from the same industry.

The Company’s dividend yield is based on forecasted expected payments, which are expected to be zero for current plan.

The Company recognizes compensation expense over the vesting period of the award on a graded-scale basis.

The share-based compensation cost of time-based RSU and PSU grants is calculate by multiplying the grant date fair market value by the number of shares granted.

We recognize compensation expense over the vesting period of the award.

Equity compensation plans of the acquired CPA Global business are accounted for as a liability as they will be paid in cash.

Changes in the fair value of these awards are recorded at the end of each reporting period.

Restructuring

Restructuring expense includes costs associated with involuntary termination benefits provided to employees, certain contract termination costs, and other costs associated with an exit or disposal activity.

Restructuring expense includes costs associated with involuntary termination benefits provided to employees, including the acceleration of equity based awards for severed individuals under the CPA Global Equity Plan, certain contract termination costs, and other costs associated with an exit or disposal activity.

The involuntary termination benefits included within restructuring charges are recognized in accordance with ASC 420, Exit or Disposal Cost Obligations or ASC 712, Compensation – Nonretirement Postemployment Benefits, as applicable.

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The liabilities are recorded within Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The corresponding expenses are recorded within Restructuring and impairment in the Consolidated Statements of Operations.

See Note 25 - Restructuring for further details.

Other Operating Income (Expense), Net

Other operating income (expense) consists of gains or losses related to the disposal of our assets, asset impairments or write-downs and the consolidated impact of re-measurement of the assets and liabilities of our company and our subsidiaries that are denominated in currencies other than each relevant entity’s functional currency.

Other operating income (expense), net includes a tax indemnification write down related to the 2016 Transaction for the year ended December 31, 2018.

See Note 23 - Commitments and Contingencies - Tax Indemnity section for further details.

The gain on sale of the divested IPM Product Line and related assets is also included in the year ended December 31, 2018.

The gain and loss of certain divested non-core assets and liabilities of the IP segment and MarkMonitor Product Line of the IP segment are included in the year ended December 31, 2020.

See Note 5 - Assets Held for Sale and Divested Operations for further details.

The corresponding expenses are recorded

CLARIVATE PLC

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(In thousands, except share and per share data, option prices, ratios or as noted)

within Restructuring and impairment in the Consolidated Statements of Operations.

See Note 25 - Restructuring and Impairment for further details.

Other Operating Income (Expense), Net

The gain and loss of certain divested non-core assets and liabilities of the IP segment are included in the year ended December 31, 2020.

See Note 5 - Assets Held for Sale and Divested Operations for further details.

Interest Expense, Net

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The effects of foreign currency translation adjustments are included as a component of Accumulated other comprehensive income (loss) in the accompanying Consolidated Balance Sheets.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from Net loss, transactions and other events or circumstances from non-owner sources.

Advertising and Promotion Costs

Advertising and promotion costs are expensed as of the first date that the advertisements take place.

Advertising expense was approximately $ 7,090 , $ 9,574 and $ 12,150 for the years ended December 31, 2020, 2019, and 2018, respectively.

Legal costs are expensed and accrued for expected legal costs to be incurred for legal matters.

Debt Issuance Costs

Fees incurred to issue debt are generally deferred and amortized as a component of interest expense over the estimated term of the related debt using the effective interest rate method.

Earnings Per Share

The calculation of earnings per share is based on the weighted average number of common shares or common stock equivalents outstanding during the applicable period.

The dilutive effect of common stock equivalents is excluded from basic earnings per share and is included in the calculation of diluted earnings per share.

Potentially dilutive securities include outstanding stock options.

Employee equity share options and similar equity instruments granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share.

The calculation of earnings per share is based on the weighted average number of ordinary shares or ordinary stock equivalents outstanding during the applicable period.

The dilutive effect of ordinary stock equivalents is excluded from basic earnings per share and is included in the calculation of diluted earnings per share.

Employee equity share options and similar equity instruments granted by the Company are treated as potential ordinary shares outstanding in computing diluted earnings per share.

Diluted shares outstanding are calculated based on the average share price for each fiscal period using the treasury stock method.

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Newly Adopted Accounting Standards

In February 2016, the FASB issued new guidance, Accounting Standard Update (“ASU”) 2016-02, related to leases in which lessees are required to recognize assets and liabilities on the balance sheet for leases having a term of more than 12 months.

Recognition of these lease assets and lease liabilities represents a change from previous U.S.

GAAP, which did not require lease assets and lease liabilities to be recognized for operating leases.

Qualitative disclosures along with specific quantitative disclosures are required to provide enough information to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities.

The Company adopted the standard, using a modified retrospective approach, on January 1, 2019.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

The provisions of ASU 2016-02 are effective for the Company’s fiscal year beginning January 1, 2019, including interim periods within that fiscal year.

The Company elected the package of practical expedients included in this guidance, which allows it to not reassess whether any expired or existing contracts contain leases, the lease classification for any expired or existing leases, and the initial direct costs for existing leases.

The Company does not recognize short-term leases on its Consolidated Balance Sheets, and recognizes those lease payments in Selling, general and administrative costs, excluding depreciation and amortization on the Consolidated Statements of Operations on a straight-line basis over the lease term.

In June 2016, the FASB issued new guidance, ASU 2016-13, related to measurement of credit losses on financial instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

In June 2016, the Financial Accounting Standards Board ("FASB") issued new guidance, ASU 2016-13, related to measurement of credit losses on financial instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

This new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.

The Company has determined that the impact of this new accounting guidance will primarily affect our trade receivables.

The Company has determined that the impact of this new accounting guidance primarily affects our accounts receivable.

The Company prospectively adopted the standard on January 1, 2020.

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The Company's accounting for credit losses did not change as a result of these two updates.

In January 2017, the FASB issued new guidance, ASU 2017-04, which simplifies testing goodwill for impairment by eliminating Step 2 from the goodwill impairment test as described in previously issued guidance.

The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

The Company elected to adopt this standard on January 1, 2019.

This standard did not have a material impact on the Company’s Consolidated Financial Statements.

In July 2018, the FASB issued ASU 2018-11, Leases — Targeted Improvements, as an update to the previously-issued guidance.

This update added a transition option which allows for the recognition of a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption without recasting the financial statements in periods prior to adoption.

The Company elected this transition option.

In March 2019, the FASB issued ASU 2019-01, Leases, as an update to the previously-issued guidance.

This update added a transition option which clarified the interim disclosure requirements as defined in ASC 250-10-50-3.

The Company elected to provide the ASU 2016-02 transition disclosures as of the beginning of the period of adoption rather than the beginning of the earliest period presented.

The guidance is effective for all entities during the same period that ASU 2016-02 is adopted.

The standard had a material impact on our Consolidated Balance Sheets and Consolidated Statements of Cash Flows, but did not have an impact on our Consolidated Statements of Operations.

The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.

In June 2018, the FASB issued guidance, ASU 2018-07, Compensation - Stock Compensation, which simplifies the accounting for nonemployee share-based payment transactions.

The guidance is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

This standard did not have a material impact on the Company’s Consolidated Financial Statements.

In July 2018, the FASB issued guidance, ASU 2018-09, Codification Improvements, which clarifies guidance that may have been incorrectly or inconsistently applied by certain entities.

The guidance is effective for all entities for fiscal years beginning after December 15, 2018.

This standard did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued guidance, ASU 2018-13, Fair Value Measurement, which modifies the disclosure requirements on fair value measurements.

The guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted upon issuance of this update.

The Company adopted this standard on January 1, 2019.

This standard did not have a material impact on the Company’s Consolidated Financial Statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, which provides targeted improvements or clarification and correction to the ASU 2016-01 Financial Instruments Overall, ASU 2016-13 Financial Instruments Credit Losses, and ASU 2017-12 Derivatives and Hedging, accounting standards updates that were previously

CLARIVATE PLC

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(In thousands, except share and per share data, option prices, ratios or as noted)

In August 2018, the FASB issued guidance, ASU 2018-14, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The guidance is effective for all entities for fiscal years beginning after December 15, 2020.

The Company's January 1, 2021 adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued guidance, ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update.

The Company prospectively adopted the standard on January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

All future capitalized implementation costs incurred related to these hosting arrangements will be recorded as a prepaid asset and as a charge to operating expenses over the expected life of the contract.

The guidance is effective upon adoption of the related standards.

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This standard did not have a material impact on the Company’s Consolidated Financial Statements.

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update.

The Company prospectively adopted the standard on January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law.

The guidance is effective for all entities for fiscal years beginning after December 15, 2020.

The Company's January 1, 2021 adoption of this standard did not have a material impact on the Company's Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The guidance is effective for all entities from the period March 12, 2020 through December 31, 2022.

The Company has elected the optional expedients for its interest rate swap agreements and debt agreements with reference to LIBOR.

Beginning with the quarter ended September 30, 2020, the Company adopted this standard and elected the optional expedients for its interest rate swap agreements and debt agreements with reference to LIBOR.

Upon meeting the specified criteria in the guidance, the Company will continue to account for its interest rate swaps in accordance with hedge accounting and will not apply modification accounting to its debt agreements.

In January 2021, the FASB issued ASU 2021-01, which made clarifications relating to the previously issued Reference Rate Reform guidance effective for the same period as ASU 2020-04.

This clarification did have an effect on how the Company accounts for its interest rate swaps and debt agreements.

This clarification did not have an effect on how the Company accounts for its interest rate swaps and debt agreements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments require that the acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The Company has elected to early adopt the ASU and has applied the amendments retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the 2021 fiscal year.

As a result of the adoption, we have accounted for contract assets and liabilities for our 2021 acquisitions in accordance with this updated guidance.

Recently Issued Accounting Standards

In August 2018, the FASB issued guidance, ASU 2018-14, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The guidance is effective for all entities for fiscal years beginning after December 15, 2020.

Early adoption is permitted.

The Company is currently in the process of evaluating the impact of the adoption of this standard on its Consolidated Financial Statements.

The guidance is effective for all entities for fiscal years beginning after December 15, 2020.

Early adoption is permitted.

The Company will adopt ASU 2019-12 in Q1 of 2021, and it is expected that the adoption will not have a material impact to the Consolidated Financial Statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity and amends the scope guidance for contracts in an entity's own equity and certain aspects of the EPS guidance.

The guidance is effective for all entities for fiscal years beginning after December 15, 2021, albeit early adoption is permitted no earlier than fiscal years beginning after December 15, 2020.

The Company evaluated the initial impact of the adoption of this standard and determined that there is no impact on its Consolidated Financial Statements as of December 31, 2020.

There were no other new accounting standards that we expect to have a material impact to our financial position or results of operations upon adoption.

Business Combinations

On May 13, 2019, the Company completed the 2019 Transaction.

Jersey began operations in 2016 as a provider of proprietary and comprehensive content, analytics, professional services and workflow solutions that enables users across

In June 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity as a result of complexity associated with GAAP for certain financial instruments with characteristics of liabilities and

CLARIVATE PLC

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(In thousands, except share and per share data, option prices, ratios or as noted)

government and academic institutions, life science companies and R&D intensive corporations to discover, protect and commercialize their innovations.

This guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods.

The Company will adopt ASU 2020-06 effective January 1, 2022, and it is expected that the adoption will not have a material impact to the Company's Consolidated Financial Statements.

In April 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance regarding the accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange.

This guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The Company will adopt ASU 2021-04 effective January 1, 2022, and it is expected that the adoption will not have a material impact to the Company's Consolidated Financial Statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842) Lessors – Certain Leases with Variable Lease Payments, in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities as well as disclosing key information about leasing transactions.

This guidance is effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years for public business entities.

The Company will adopt ASU 2021-05 effective January 1, 2022, and is still evaluating the impact to the Company’s Consolidated Financial Statements.

There were no other new accounting standards or updates issued or effective as of December 31, 2021, that have, or are expected to have, a material impact on the Company's Consolidated Financial Statements.

Business Combinations

On May 13, 2019, the Company completed the 2019 Transaction.

Jersey began operations in 2016 as a provider of proprietary and comprehensive content, analytics, professional services and workflow solutions that enables users across government and academic institutions, life science companies and R&D intensive corporations to discover, protect and commercialize their innovations.

Churchill was a special purpose acquisition company whose business was to effect a merger, capital stock exchange, asset acquisition, stock purchase reorganization or similar business combination.

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See Note 16 - Shareholders’ Equity for further information.

Upon consummation of the 2019 Transaction, each outstanding share of common stock of Churchill was converted into one ordinary share of the Company.

Upon consummation of the 2019 Transaction, each outstanding share of ordinary stock of Churchill was converted into one ordinary share of the Company.

At the closing of the 2019 Transaction, the Company Owners held approximately 74 % of the issued and outstanding ordinary shares of the Company and stockholders of Churchill held approximately 26 % of the issued and outstanding shares of the Company excluding the impact of (i) 52,800,000 warrants, (ii) approximately 24,806,793 compensatory options issued to the Company's management (based on number of options to purchase Jersey ordinary shares outstanding immediately prior to the 2019 Transaction, after giving effect to the exchange ratio described above) and (iii) 10,600,000 ordinary shares of Clarivate owned of record by the sponsor and available for distribution to certain individuals following the applicable lock-up and vesting restrictions.

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See Note 16 - Shareholders’ Equity for further information on equity instruments.

Acquisition of Decision Resources Group

On February 28, 2020, we acquired 100 % of the assets, liabilities and equity interests of Decision Resources Group ("DRG"), a premier provider of high-value data, analytics and insights products and services to the healthcare industry, from Piramal Enterprises Limited ("PEL"), which is a part of global business conglomerate Piramal Group.

The acquisition helps us expand our core businesses and provides us with the potential to grow in the Life Sciences Product Line.

The aggregate consideration paid in connection with the closing of the DRG acquisition was $ 964,997 , comprised of $ 900,000 of base cash plus $ 6,100 of adjusted closing cash paid on the closing date and up to 2,895,638 of the Company's ordinary shares to be issued to PEL following the one-year anniversary of closing.

The contingent stock consideration was valued at $ 58,897 on the closing date and will be revalued at each period end.

For the year ended December 31, 2020, the fair value of the contingent stock consideration increased by $ 27,132 , which was recorded to selling, general and administrative costs in the Consolidated Statements of Operations.

The corresponding liability increased to $ 86,029 as of December 31, 2020 which was recorded to Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

See Note 23 - Commitments and Contingencies for more information.

The DRG acquisition was accounted for using the acquisition method of accounting.

The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies.

Goodwill is no t deductible for tax purposes.

Total transaction costs incurred in connection with the acquisition of DRG was $ 47,068 for the year ended December 31, 2020.

The amount of Revenues, net and Net loss resulting from the acquisition that are attributable to the Company's stockholders and included in the Consolidated Statements of Operations and Comprehensive Loss were as follows:

Acquisition of ProQuest

CLARIVATE PLC

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(In thousands, except share and per share data, option prices, ratios or as noted)

December 31, 2020

On December 1, 2021, we acquired 100 % of ProQuest, a leading global software, data and analytics provider to academic, research and national institutions, and its subsidiaries from Cambridge Information Group (“CIG”), Atairos and certain other equityholders (collectively, the “Seller Group”).

The aggregate consideration in connection with the closing of the ProQuest acquisition was $ 4,994,334 , net of $ 52,514 cash acquired.

The aggregate consideration was composed of (i) $ 1,094,901 from the issuance of up to 46,910,923 ordinary shares to the Seller Group and (ii) approximately $ 3,951,947 in cash, including approximately $ 917,491 to fund the repayment of ProQuest debt.

The purchase price is subject to the Seller's final approval of the Final Closing Statement.

Issuance of 46,910,923 shares (1)

Cash consideration (2)

Total purchase price 5,046,848

Cash acquired (3)

Total purchase price, net of cash acquired $ 4,994,334

(1) Based on the Company’s closing share price of $ 23.34 on November 30, 2021.

(2) Based on the Closing Statement, total cash consideration of $ 3,951,947 includes a base cash consideration of $ 3,988,000 , less working capital adjustments of $ 31,661 , less closing indebtedness adjustments of $ 36,618 , plus closing cash consideration of $ 32,225 as defined in the Transaction Agreement.

(3) Cash acquired includes $ 52,514 of total cash acquired, less $ 1,957 of restricted cash acquired as defined in the Transaction Agreement.

The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies.

The majority of goodwill is deductible for tax purposes.

During the year-ended December 31, 2021, total transaction costs incurred in connection with the acquisition of ProQuest were $ 62,950 .

The ProQuest acquisition is reported as part of the Science Segment, see Note 22 - Segment Information for further details.

Year Ended December 31, 2021

Revenues, net $ 80,418

Net income attributable to the Company's stockholders $ 4,999

(1) Includes $ 7,157 of a deferred revenue haircut recognized during the year ended December 31, 2020.

The purchase price allocation for the DRG acquisition as of the close date of February 28, 2020 is final.

Net income attributable to the Company's shareholders $ 3,000

The purchase price allocation for the ProQuest acquisition as of the close date of December 1, 2021 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed.

For example, the attrition assumptions used in valuing the customer relationship intangible assets acquired are provisional.

A 0.5 % change in the attrition assumption used would represent a material change in the purchase price allocation.

The following table summarizes the preliminary purchase price allocation for this acquisition:

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Accounts receivable 113,492

4 unchanged sentences

Other non-current assets 17,955

Deferred income taxes 3,512

Operating lease right-of-use assets 28,429

2 unchanged sentences

Accrued expenses and other current liabilities 136,811

Current portion of long-term debt 1,072

Current portion of deferred revenue 335,234

Current portion of operating lease liabilities 7,960

Long-term debt 33,362

Deferred income taxes 58,605

Non-current portion of deferred revenue 6,799

Other non-current liabilities 89,217

Operating lease liabilities 23,085

4 unchanged sentences

Goodwill $ 1,897,184

(1) Includes $ 3,966 of internally developed software in progress acquired.

(2) The Company acquired cash of $ 20,777 .

(1) The Company acquired cash of $ 52,514 , including $ 1,957 of restricted cash to fund bank guarantees (contract performance guarantees, rental guarantees, and bid bonds) assumed in the ProQuest acquisition.

(2) Of the $ 3,534,742 , $ 3,528,000 relates to the valued intangible assets as per the purchase price allocation and $ 6,742 relates to acquired assets under construction.

The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives.

The following table summarizes the estimated fair value of DRG’s identifiable intangible assets acquired and their remaining amortization period (in years):

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Fair Value as of February 28, 2020 Remaining

The following table summarizes the estimated fair value of ProQuest's identifiable intangible assets acquired and their remaining amortization period (in years):

Fair Value as of December 1, 2021 Remaining

Range of Years

Customer relationships $ 2,773,000 17 - 23

Database and content 50,200 2 - 7

Technology & databases (1)

709,300 5 - 17

Trade names 45,700 2 - 10

Purchased software 23,000 3 - 8

Backlog 28,000 4

Total identifiable intangible assets $ 3,528,000

During the year ended December 31, 2020, there were additional purchase accounting adjustments of $ 314 related to fixed assets, deferred revenue and legal accrual with a corresponding increase to goodwill and $1,804 related to the aforementioned items and a reduction in the valuation of assumed lease liabilities and a corresponding reduction in goodwill, respectively.

(1) Technology and databases intangible assets include both acquired technology intangible assets and acquired databases intangible assets.

Unaudited pro forma information for the Company for the periods presented as if the acquisition had occurred January 1, 2020 is as follows:

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Year ended December 31,

Pro forma revenues, net $ 2,702,984 $ 2,116,947

Pro forma net loss attributable to the Company's stockholders ( 97,898 ) ( 257,190 )

Pro forma net loss attributable to the Company's shareholders $ ( 175,418 ) $ ( 545,512 )

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company.

The pro forma financial information presented above has been derived from the historical consolidated financial statements of the Company and from the historical accounting records of DRG.

The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2019, including the following:

(i) additional amortization expense that would have been recognized relating to the acquired intangible assets, (ii) adjustments to interest expense to reflect the removal of DRG debt and the additional Company borrowings in conjunction with the acquisition, (iii) acquisition-related transaction costs and other one-time non-recurring costs which reduced expenses by $ 26,348 for the year ended December 31, 2020 and reduced expenses by $ 439 for the year ended December 31, 2019.

The pro forma financial information presented above has been derived from the historical consolidated financial statements of the Company and from the historical accounting records of ProQuest.

The unaudited pro forma results include certain pro forma adjustments to net loss that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2020, including the following:

(i) additional amortization expense that would have been recognized relating to the acquired intangible assets, (ii) adjustments to interest expense to reflect the removal of ProQuest debt and the additional Company borrowings in conjunction with the acquisition, (iii) acquisition-related transaction costs which reduced expenses by $ 62,950 for the year ended December 31, 2021, and (iv) other one-time non-recurring costs related to undrawn bridge commitment fees which reduced expenses by $ 55,000 for the year ended December 31, 2021.

Acquisition of CPA Global

5 unchanged sentences

Of the 218,306,663 ordinary shares issuable in the acquisition, Clarivate issued 210,357,918 ordinary shares as of October 1, 2020.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

There were 6,325,860 shares that were issued to Leonard Green & Partners, L.P.

that were returned to Clarivate to fund an Employee Benefit Trust established for the CPA Global Phantom Equity Plan.

Accordingly, these shares were excluded from purchase price consideration.

During January 2021, the Company issued the remaining 1,500,000 ordinary shares to Redtop Holdings Limited pursuant to a hold-back clause within the purchase agreement.

Issuance of 210,357,918 shares

4 unchanged sentences

The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies.

Goodwill is no t deductible for tax purposes.

Total transaction costs incurred in connection with the acquisition of CPA was $ 35,377 for the year ended December 31, 2020.

December 31, 2020

Revenues, net (1)

Net loss attributable to the Company's stockholders $ ( 1,229 )

(1) Includes $ 15,297 of a deferred revenue haircut recognized during the year ended December 31, 2020.

The majority of goodwill is deductible for tax purposes.

During the year ended December 31, 2021, total transaction costs incurred in connection with the acquisition of CPA Global were $ 23 .

Total transaction costs during the year ended December 31, 2020 were $ 37,164 .

CLARIVATE PLC

1 unchanged sentence

(In thousands, except share and per share data, option prices, ratios or as noted)

The purchase price allocation for the CPA Global acquisition as of the close date of October 1, 2020 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed.

The following table summarizes the preliminary purchase price allocation for this acquisition:

Year ended December 31,

Revenues, net (1)

$ 631,365 $ 157,504

Net loss attributable to the Company's stockholders $ ( 54,032 ) $ ( 39,985 )

(1) Includes $ 3,863 and $ 15,297 of a deferred revenue adjustment recognized during the year ended December 31, 2021 and 2020, respectively.

The purchase price allocation for the CPA Global acquisition as of the close date of October 1, 2020 is final.

The following table summarizes the final purchase price allocation for this acquisition:

Accounts receivable $ 380,259

19 unchanged sentences

Fair value of acquired identifiable assets and liabilities 4,554,640

Goodwill $ 4,159,539

(1) The Company acquired cash of $ 98,610 .

The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives.

The following table summarizes the estimated fair value of CPA Global’s identifiable intangible assets acquired and their remaining amortization period (in years):

Fair Value as of October 1, 2020 Remaining

Range of Years

Customer relationships $ 4,643,306 17 - 23

Technology 266,224 6 - 14

Trademarks 10,787 2 - 17

Total identifiable intangible assets $ 4,920,317

Unaudited pro forma information for the Company for the periods presented as if the acquisition had occurred January 1, 2019 is as follows:

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Year ended December 31,

Pro forma revenues, net $ 1,709,312 $ 1,498,485

Pro forma net loss attributable to the Company's stockholders ( 144,354 ) ( 355,997 )

The pro forma financial information presented above has been derived from the historical consolidated financial statements of the Company and from the historical accounting records of CPA Global.

(i) additional amortization expense that would have been recognized relating to the acquired intangible assets, (ii) adjustments to interest expense to reflect the removal of CPA Global debt and the additional Company borrowings in conjunction with the acquisition, (iii) acquisition-related transaction costs and other one-time non-recurring costs which increased expenses by $ 70,531 for the year ended December 31, 2020.

Acquisition of Beijing IncoPat

On October 26, 2020, the Company acquired 100 % of the equity voting interest in Beijing IncoPat Technology Co., Ltd.

IncoPat is a leading patent information service provider in China via cash on hand.

IncoPat is complementary to Clarivate’s intellectual property portfolio.

The Company paid $ 52,133 in cash to acquire IncoPat.

As of December 31, 2020, $ 6,313 of the consideration is held in escrow and will be paid in a future period.

Until this balance is paid it will be held in restricted cash with the offsetting liability within accrued expenses and other current liabilities.

The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies.

Goodwill is no t deductible for tax purposes.

Total transaction costs incurred in connection with the acquisition of IncoPat was $ 1,706 for the year ended December 31, 2020.

These costs are included in selling general and administrative expense.

IncoPat contributed revenues of $ 1,408 and a net loss of $ 455 to the Company's 2020 results.

In connection with this acquisition, a legal entity was created in which the Company has a variable interest.

See Note 3 - Summary of Significant Accounting Policies for consideration of accounting treatment for the variable interest entity.

The purchase price allocation for the IncoPat acquisition as of the close date of October 26, 2020 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed.

The following table summarizes the preliminary purchase price allocation for the acquisition:

(1) The Company acquired cash of $ 102,675 including $ 3,400 of restricted cash to fund fixed cash awards and certain taxes related to the phantom equity compensation plan as part of CPA Global acquisition accounting.

(2) Includes $942,201 of buyer-specific synergy goodwill that was allocated to the Clarivate legacy reporting units expected to benefit from the acquisition.

During the year ended December 31, 2021, the Company recorded measurement period adjustments to the purchase price allocation recorded as of the close date of October 1, 2020.

The following table summarizes the measurement period adjustments recorded through the measurement period date ending September 30, 2021:

CLARIVATE PLC

5 unchanged sentences

Property and equipment, net 1,002

Other intangible assets 21,957

Other non-current assets 1,123

3 unchanged sentences

Current portion of deferred revenue 989

Non-current portion of deferred revenue ( 15 )

Deferred income taxes (3)

Other non-current liabilities 283

Total liabilities $ 37,023

3 unchanged sentences

Goodwill $ 26,886

(1) The Company acquired cash of $ 844 .

(1) The $ 7,135 account receivable measurement period adjustment is due to a change in the fair value of CPA Global's accounts receivable, with there being a $ 9,306 increase in the valuation increase offset by a $ 2,171 decrease.

(2) The Company recorded measurement period adjustments of $ 49,164 increasing accrued expenses and other current liabilities, of which, $ 61,000 relates to adjustments to CPA Global's accrual for claims existing prior to the date of acquisition, offset by a $ 11,836 reduction to CPA Global's other accruals.

See Note 23 - Commitments and Contingencies for further information.

(3) The $ 13,405 deferred income tax measurement period adjustment is due to the tax impact of CPA Global's other measurement period adjustments detailed in the chart above.

The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives.

The following table summarizes the estimated fair value of Beijing IncoPat’s identifiable intangible assets acquired and their remaining weighted-average amortization period (in years):

The following table summarizes the estimated fair value of CPA Global’s identifiable intangible assets acquired and their remaining amortization period (in years):

Fair Value as of October 1, 2020 Remaining

Period (in years)

Range of Years

Customer relationships $ 4,643,306 17 - 23

Existing technology $ 1,892 6

Technology 266,224 6 - 14

Trade names 10,787 2 - 17

Total identifiable intangible assets $ 4,920,317

Acquisition of Hanlim IPS Co., LTC

On November 23, 2020, the Company acquired 100 % of the equity voting interest in Hanlim IPS Co., LTC ("Hanlim IPS") Hanlim IPS is a patent research and consulting services provider in South Korea.

The acquisitions purpose is to accelerate innovation in South Korea by offering a more comprehensive range of IP information and insights solutions.

The Company paid $ 9,254 in cash to acquire Hanlim IPS.

The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies.

Goodwill is no t deductible for tax purposes.

Total transaction costs incurred in connection with the acquisition of Hanlim IPS was $ 473 for the year ended December 31, 2020.

Hanlim IPS contributed revenue of $ 145 and net income of $ 90 to the Company's 2020 results.

The purchase price allocation for the Hanlim IPS acquisition as of the close date of November 23, 2020 is preliminary and may change upon completion of the determination of the fair value of assets acquired and liabilities assumed.

The following table summarizes the preliminary purchase price allocation for this acquisition:

Unaudited pro forma information for the Company for the periods presented as if the acquisition had occurred January 1, 2019 is as follows:

Year ended December 31,

Pro forma revenues, net $ 1,708,486 $ 1,498,485

Pro forma net loss attributable to the Company's stockholders $ ( 374,440 ) $ ( 403,653 )

CLARIVATE PLC

1 unchanged sentence

(In thousands, except share and per share data, option prices, ratios or as noted)

future consolidated results of operations of the Company.

The pro forma financial information presented above has been derived from the historical consolidated financial statements of the Company and from the historical accounting records of CPA Global.

(i) additional amortization expense that would have been recognized relating to the acquired intangible assets, (ii) adjustments to interest expense to reflect the removal of CPA Global debt and the additional Company borrowings in conjunction with the acquisition, (iii) acquisition-related transaction costs which reduced expenses by $ 71,103 for the year ended December 31, 2020.

Acquisition of Decision Resources Group

The acquisition helps us expand our core businesses and provides us with the potential to grow in the Life Sciences Product Line.

The aggregate consideration paid in connection with the closing of the DRG acquisition was $ 964,997 , comprised of $ 900,000 of base cash plus $ 6,100 of adjusted closing cash paid on the closing date and 2,895,638 of the Company's ordinary shares issued to PEL on March 5, 2021.

The contingent stock consideration was valued at $ 58,897 on the closing date and was revalued at each period end until the issuance date.

The corresponding liability was $ 86,029 as of December 31, 2020 and recorded to Accrued expenses and other current liabilities in the Consolidated Balance Sheets.

As the liability settled on March 5, 2021 with the Company issuing 2,895,638 ordinary shares valued at $ 61,619 , there was no liability captured within the December 31, 2021 Consolidated Balance Sheet.

See Note 23 - Commitments and Contingencies for more information.

The DRG acquisition was accounted for using the acquisition method of accounting.

The excess of the purchase price over the net tangible and intangible assets was recorded to Goodwill and primarily reflected the assembled workforce and expected synergies.

Goodwill was no t deductible for tax purposes.

Due to the decrease to the fair value of the contingent stock consideration between December 31, 2020 and March 5, 2021, during the year ended December 31, 2021, total transaction costs in connection with the acquisition of DRG resulted in a net gain of $ 24,194 .

Total transaction costs during the year ended December 31, 2020 were $ 47,068 .

Year ended December 31,

Revenues, net (1)

$ 105,265 $ 186,428

Net income attributable to the Company's stockholders $ 28,431 $ 4,999

(1) Includes $ 0 and $ 7,157 of a deferred revenue adjustment recognized during the year ended December 31, 2021 and 2020, respectively.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

The following table summarizes the final purchase price allocation for this acquisition:

Accounts receivable $ 52,193

4 unchanged sentences

Other non-current assets 2,960

Operating lease right-of-use assets 25,099

Total assets $ 648,050

1 unchanged sentence

Accrued expenses and other current liabilities 88,561

Current portion of deferred revenue 35,126

Current portion of operating lease liabilities 5,188

Deferred income taxes 49,403

Non-current portion of deferred revenue 936

Operating lease liabilities 20,341

Total liabilities 203,029

3 unchanged sentences

Goodwill $ 499,199

(1) Includes $ 3,966 of internally developed software in progress acquired.

(2) The Company acquired cash of $ 20,777 .

The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives.

The following table summarizes the estimated fair value of Hanlim’s identifiable intangible assets acquired and their remaining amortization period (in years):

Fair Value as of November 23, 2020 Remaining

The following table summarizes the estimated fair value of DRG’s identifiable intangible assets acquired and their remaining amortization period (in years):

Fair Value as of February 28, 2020 Remaining

Range of Years

Customer relationships $ 381,000 10 - 21

Trade name 15 2

Non-compete agreements 958 5

Database and content 50,200 2 - 7

Trade names 5,200 4 - 7

Purchased software 23,000 3 - 8

Backlog 28,000 4

Total identifiable intangible assets $ 487,400

Acquisition of SequenceBase

In September 2019, the Company purchased the key business assets of SequenceBase, an international patent sequence information provider.

The SequenceBase acquisition was accounted for as an asset acquisition.

As a result of the SequenceBase acquisition, SequenceBase’s identifiable assets were adjusted to their fair market values as of the closing date, which included customer relations intangibles of $ 1,000 and computer software intangibles of $ 2,500 .

The Consolidated Financial Statements include the results of the acquisition subsequent to the closing date.

Acquistion of Darts-ip

On November 27, 2019, the Company closed on the acquisition of Darts-ip, (“Darts”), a provider of global IP case law data and analytics headquartered in Brussels, Belgium.

The Company acquired 100 % of the voting equity interest of Darts for cash consideration.

The Darts acquisition was accounted for using the acquisition method of accounting.

As a result of the Darts acquisition and the application of purchase accounting, Darts' identifiable assets and liabilities were adjusted to their fair market values as of the closing date, which included database intangible assets of $ 22,012 , computer software intangible assets of $ 9,025 , customer relationships intangible assets of $ 2,641 and finite-lived trade names intangible assets of $ 1,541 .

The Consolidated Financial Statements include the results of the acquisition subsequent to the closing date.

The excess of the purchase price over the net tangible and intangible assets is recorded to goodwill and primarily reflects the assembled

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

workforce and expected synergies.

The weighted-average amortization period for total acquired finite-lived intangible assets is 11.5 years and the weighted-average amortization period by major class of intangible asset is 14.0 years for database and content, 6.0 years for computer software, 18.0 years for trade names, and 5.0 years for customer relationships.

Acquisition of TrademarkVision

On October 25, 2018, Clarivate closed on the acquisition of TrademarkVision USA, LLC (“TrademarkVision”), an artificial intelligence technology start-up organization headquartered in Brisbane, Australia.

The total purchase price for the acquisition consisted of $ 20,042 in closing date net cash consideration, subject to subsequent working capital adjustments, plus potential earn-out cash payments dependent upon achievement of certain milestones and financial performance metrics.

The fair market value of the liability associated with the earn-out was $ 4,115 on the date of acquisition.

Additionally, the excess value of the total purchase price over the fair value of our identifiable assets and liabilities upon the closing of the acquisition of $ 19,205 was allocated to goodwill.

The Consolidated Financial Statements include the results of the acquisition subsequent to the closing date.

TrademarkVision and its revolutionary image recognition software search tool for trademarks joined the trademark clearance and protection partner CompuMark.

The fair value of the earn-out liability was $ 8,000 and $ 4,115 at December 31, 2019 and 2018.

Acquistion of Kopernio

On March 15, 2018, the Company acquired all of the outstanding stock of Kopernio (“Kopernio”), an artificial-intelligence technology startup, for $ 3,497 .

The Kopernio acquisition was accounted for using the acquisition method of accounting.

As a result of the Kopernio acquisition and the application of purchase accounting, Kopernio’s identifiable assets and liabilities were adjusted to their fair market values as of the closing date, which included a finite life intangible of $ 1,258 relating to computer software.

Additionally, the excess value of the total purchase price over the fair value of our identifiable assets and liabilities upon the closing of the acquisition of $ 2,322 was allocated to goodwill.

The Consolidated Financial Statements include the results of the acquisition subsequent to the closing date.

In conjunction with the acquisition of Kopernio, the Company agreed to pay former shareholders up to an additional $ 3,500 through 2021.

Amounts payable are contingent upon Kopernio’s achievement of certain milestones and performance metrics and will be recognized over the concurrent service period.

Acquistion of Publons Limited

On June 1, 2017, the Company acquired all assets, liabilities and equity interests of Publons Limited and its wholly-owned subsidiary (“Publons”).

Total net cash consideration for the acquisition was $ 7,401 , plus potential future cash payments of up to $ 9,500 contingent upon Publons achieving certain milestones or financial and non-financial performance targets through 2020, including platform users and reviews.

The fair market value of the liability associated with the earn-out was $ 5,900 on the date of acquisition.

Publons is a researcher-facing peer-review data and recognition platform.

The acquisition of Publons, its platform and data, is believed to increase the value of multiple existing Company products, while supporting researchers in the process.

The Consolidated Financial Statements include the results of the acquisitions subsequent to the closing date.

The fair value of the Publons earn-out liability was $ 0 , $ 3,100 , and $ 2,960 at December 31, 2020, 2019, and 2018, respectively.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

The fair value of identifiable assets acquired and liabilities assumed for all acquisitions at closing during 2020, 2019, and 2018 respectively, net of cash acquired, and contingent consideration liabilities incurred in relation to the acquisitions are summarized below:

2020 2019 (1)

Current assets $ 742,867 $ 2,137 $ 706

Property and equipment, net 16,853 86 —

Finite-lived intangible assets 5,442,445 38,719 7,928

Goodwill 4,700,137 44,779 21,527

Other non-current assets 103,008 2 38

Total assets $ 11,005,310 $ 85,723 $ 30,199

Current liabilities 798,753 4,366 491

Non-current liabilities 459,961 8,920 2,054

Total liabilities 1,258,714 13,286 2,545

Net assets acquired $ 9,746,596 $ 72,437 $ 27,654

(1) Net assets acquired includes $ 3,500 related to the SequenceBase acquisition.

No ne of the goodwill associated with any of the business combinations above will be deductible for income tax purposes.

Pro forma information is not presented for these acquisitions as the aggregate operations of the acquired acquisitions were not significant to the overall operations of the Company.

During the year ended December 31, 2020, there were additional purchase accounting adjustments of $ 314 related to fixed assets, deferred revenue and legal accrual with a corresponding increase to goodwill and $ 1,804 related to the aforementioned items and a reduction in the valuation of assumed lease liabilities and a corresponding reduction in goodwill, respectively.

Unaudited pro forma information for the Company for the periods presented as if the acquisition had occurred January 1, 2019 is as follows:

CLARIVATE PLC

1 unchanged sentence

(In thousands, except share and per share data, option prices, ratios or as noted)

Year ended December 31,

Pro forma revenues, net $ 1,284,419 $ 1,174,295

Pro forma net loss attributable to the Company's stockholders $ ( 335,749 ) $ ( 304,846 )

The pro forma financial information presented above has been derived from the historical Consolidated Financial Statements of the Company and from the historical accounting records of DRG.

Assets Held for Sale and Divested Operations

On November 6, 2020, the Company completed the sale of certain assets and liabilities of the Techstreet business to The International Society of Interdisciplinary Engineers LLC for a total purchase price of $ 42,832 , of which $ 4,300 will be held in escrow and paid to the Company in a future period.

As a result of the sale, the Company recorded a net gain on sale of $ 28,140 , inclusive of incurred transaction costs of $ 115 in connection with the divestiture.

The gain on sale is included in Other operating income, net within the Consolidated Statements of Operations during the year ended December 31, 2020.

On November 6, 2020, the Company completed the sale of certain assets and liabilities of the Techstreet business to The International Society of Interdisciplinary Engineers LLC for a total purchase price of $ 42,832 , of which $ 4,300 was held in escrow and paid to the Company in November 2021.

As a result of the sale, the Company recorded a net gain on sale of $ 28,140 , inclusive of incurred transaction costs of $ 115 in connection with the divestiture during the fourth quarter of 2020.

The gain on sale is included in Other operating (expense) income, net within the Consolidated Statements of Operations during the year ended December 31, 2020.

As a result of the sale, the Company wrote off balances associated with Techstreet including intangible assets of $ 10,179 and Goodwill in the amount of $ 9,129 .

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The Company used the proceeds for general business purposes.

After impairment, Current Assets of $ 2,274 and Long Term Assets of $ 28,345 were reclassified to Current Assets Held for Sale as of December 31, 2019, while Current Liabilities of $ 21,170 and Long Term Liabilities of $ 5,698 were reclassified to Current Liabilities Held For Sale as of December 31, 2019.

The carrying amount of major classes of assets and liabilities that are included in Assets held for sale and Liabilities held for sale at December 31, 2019 related to certain assets and liabilities of its MarkMonitor Product Line consist of the following:

As of December 31,

Current assets:

Cash and cash equivalents $ 384

Prepaid expenses 1,692

Other current assets 198

Total current assets 2,274

Computer hardware and other property, net 2,961

Other intangible assets, net 18,957

Other non-current assets 1,993

Operating lease right-of-use assets 4,434

Total Assets held for sale $ 30,619

Current liabilities:

Accounts payable $ 25

Accrued expenses and other current liabilities 1,764

Current portion of deferred revenues 18,067

Current portion of operating lease liabilities 1,314

Total current liabilities 21,170

Non-current portion of deferred revenues 834

Other non-current liabilities 163

Operating lease liabilities 4,701

Total Liabilities held for sale $ 26,868

On October 1, 2018, all assets, liabilities and equity interest of the IP Management ("IPM") Product Line and related assets were sold to CPA Global for a total purchase price of $ 100,130 .

As a result of the sale, the Company recorded a net gain on

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

sale of $ 36,072 , inclusive of incurred transaction costs of $ 3,032 in connection with the divestiture.

The gain on sale is included in Other operating income, net within the Consolidated Statements of Operations for the year ended December 31, 2018.

As a result of the sale, the Company wrote off Goodwill in the amount of $ 49,349 .

The Company used $ 31,378 of the proceeds to pay down the Term Loan Facility on October 31, 2018.

The divestitures of Techstreet, certain assets and liabilities of MarkMonitor and IPM Product Line do not represent a strategic shift and are not expected to have a major effect on the Company’s operations or financial results, as defined by ASC 205-20, Discontinued Operations ;

as a result, these divestitures do not meet the criteria to be classified as discontinued operations.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

The divestitures of Techstreet and certain assets and liabilities of MarkMonitor did not represent a strategic shift and are not expected to have a major effect on the Company’s operations or financial results, as defined by ASC 205-20, Discontinued Operations ;

as a result, the divestitures do not meet the criteria to be classified as discontinued operations.

Accounts Receivable

O ur accounts receivable balance consists of the following as of December 31, 2021 and 2020:

Year ended December 31,

Accounts receivable $ 913,141 $ 746,478

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The Company estimates credit losses for trade receivables by aggregating similar customer types together, because they tend to share similar credit risk characteristics, taking into consideration the number of days the receivable is past due.

Provision rates for the allowance for doubtful accounts are based upon the historical loss method by evaluating factors such as the length of time receivables that are past due and historical collection experience.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

rates for the allowance for doubtful accounts are based upon the historical loss method by evaluating factors such as the length of time receivables that are past due and historical collection experience.

Additionally, provision rates are based upon current and future economic and competitive environment factors that could impact the collectability of the receivable.

7 unchanged sentences

Write-offs ( 7,951 ) ( 22,205 ) ( 2,321 )

Opening balance sheet adjustment- ASU 2016 -13 adoption 10,097 — —

Opening balance sheet adjustment related to ASU 2016 -13 adoption — 10,097 —

Exchange differences ( 177 ) 3 94

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The Company recorded write-offs against the reserve of $ 7,951 , $ 22,205 and $ 2,321 for the years ended December 31, 2021, 2020 and 2019, respectively .

We are monitoring the impacts from the COVID-19 pandemic on our customers and various counterparties.

During the year ended December 31, 2020, the Company’s allowance for doubtful accounts and credit losses considered additional risk related to the pandemic.

We continue to monitor any impacts from the COVID-19 pandemic on our customers and various counterparties.

During the year ended December 31, 2021 and 2020, the Company’s allowance for doubtful accounts and credit losses considered additional risk related to the pandemic.

However, this risk to-date was not considered material.

As the lessee, we currently lease real estate space, automobiles, and certain equipment under non-cancelable operating lease agreements.

As the lessee, we currently lease real estate space, automobiles, and certain equipment under non-cancelable operating lease agreements, as well as one financing lease assumed in the ProQuest acquisition.

Some of the leases include options to extend the leases for up to an additional 10 years.

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We determine if an arrangement is a lease at inception.

Operating leases are included in Operating lease right-of-use assets, Current portion of operating lease liabilities, and Operating lease liabilities on our Consolidated Balance Sheets.

Operating leases are included in Operating lease ROU assets, Current portion of operating lease liabilities, and Operating lease liabilities on our Consolidated Balance Sheet.

The Company assesses its ROU asset and other lease-related assets for impairment consistent with other long-lived assets.

As of December 31, 2020, we did not record an impairment related to these assets beyond the impairments recorded due to restructuring activity recorded within Note 25 - Restructuring.

Refer to Note 27 - Subsequent Events.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Financing lease assets are included within the Property and Equipment financial statement line item and the related lease liability is treated as an item of indebtedness (see Note 14 - Debt) as a financing lease obligation within the Consolidated Balance Sheet.

As of December 31, 2021, we did not record an impairment related to these assets beyond the impairments recorded due to restructuring activity further described within Note 25 - Restructuring and Impairment.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

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Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The initial valuation of financing lease assets and liabilities is identical to the operating leases, as described above, however they are presented separately from Operating lease ROU assets and Operating lease liabilities in the Consolidated Balance Sheet.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

We have lease agreements with lease and non-lease components, which are accounted as a single lease component.

Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities.

Supplemental balance sheet information related to leases is summarized as follows:

Assets Classification

Operating lease assets, net Operating lease right-of-use assets (1)

$ 86,027 $ 132,356

Finance lease assets, net Property and equipment, net (2)

Total lease assets $ 116,587 $ 132,356

Operating lease liabilities Current portion of operating lease liability $ 32,177 $ 35,455

Finance lease liabilities Current portion of long-term debt 1,977 —

Operating lease liabilities Operating lease liabilities 93,955 104,324

Finance lease liabilities Long-term debt 28,858 —

Total lease liabilities $ 156,967 $ 139,779

(1) Operating lease assets are recorded net of accumulated amortization of $ 26,354 and $ 23,189 as of December 31, 2021 and 2020, respectively.

(2) Finance lease assets are recorded net of accumulated amortization of $ 978 and $ 0 as of December 31, 2021 and 2020, respectively.

The following illustrates the lease costs for the years ended December 31, 2021 and 2020:

Year Ended December 31,

Finance lease cost

Amortization of right-of-use assets $ 1,291 $ —

Interest on lease liabilities 98 —

Operating lease cost 28,817 24,438

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Total lease cost $ 32,355 $ 26,456

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Year Ended December 31,

Other information

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Operating cash flows from operating leases $ 63,777 $ 31,841

Operating cash flows for finance leases 98 —

Financing cash flows for finance leases 158 —

Right-of-use assets obtained in exchange for lease obligations

Operating leases $ 13,387 $ 8,542

Weighted-average remaining lease term - operating leases 6 6

Weighted-average discount rate - operating leases 5.2 % 5.8 %

The future aggregate minimum lease payments as of December 31, 2020 under all non-cancelable operating leases for the years noted are as follows:

Finance leases 29,878 —

Weighted-average remaining lease term

Operating leases 4 6

Finance leases 2 —

Weighted-average discount rate

Operating leases 4.4 % 5.2 %

Finance leases 3.8 % —

The future aggregate minimum lease payments as of December 31, 2021 under all non-cancelable leases for the years noted are as follows:

Operating Leases Finance Leases

Year ending December 31,

2022 $ 35,801 $ 3,114

2023 27,730 29,411

2024 23,876 —

2025 16,913 —

2026 11,969 —

2027 & Thereafter 28,308 —

Total operating lease commitments 159,897

Total lease commitments 144,597 32,525

Less imputed interest ( 18,465 ) ( 1,690 )

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In connection with certain leases, the Company guarantees the restoration of the leased property to a specified condition after completion of the lease period.

As of December 31, 2020 and December 31, 2019, the liability of $ 4,396 and $ 3,455 , respectively, associated with these restorations is recorded within Other non-current liabilities.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

As of December 31, 2021 and 2020, the liability of $ 1,392 and $ 4,396 , respectively, associated with these restorations is recorded within Other non-current liabilities.

There were no material future minimum sublease payments to be received under non-cancelable subleases at December 31, 2021.

There was no material sublease income for the years ended December 31, 2020, 2019 and 2018 respectively.

Disclosures related to periods prior to adoption of Topic 842

As discussed above, the Company adopted Topic 842 effective January 1, 2019 using a modified retrospective approach.

For comparability purposes, and as required, the following disclosure is provided for periods prior to adoption.

The Company’s total future minimum annual rental payments in effect at December 31, 2018 for noncancellable operating leases, which were accounted for under the previous leasing standard, Accounting Standards Codification 840, were as follows:

Year ended December 31,

2019 $ 22,140

Thereafter 40,367

Total operating lease commitments $ 129,555

The Company recognized $ 3,115 and $ 2,023 of sublease income for the years ended December 31, 2021 and 2020, respectively, and there was no material sublease income for the year ended December 31, 2019.

Total rental expense under operating leases amounted to $ 28,817 and $ 24,438 the years ended December 31, 2021 and 2020, respectively.

Property and Equipment, Net

Property and equipment, net consisted of the following:

CLARIVATE PLC

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(In thousands, except share and per share data, option prices, ratios or as noted)

Property and Equipment, Net

Property and equipment, net consisted of the following:

Computer hardware $ 45,510 $ 38,253

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Furniture, fixtures and equipment 34,709 13,201

Capital office leases - finance lease asset (1)

Other 2,334 —

Total property and equipment, gross 124,691 73,068

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Total property and equipment, net $ 83,849 $ 36,267

Depreciation amounted to $ 12,709 , $ 9,181 , and $ 9,422 for the years ended December 31, 2020, 2019, and 2018 respectively.

(1) See Note 7 - Leases for additional information.

Depreciation amounted to $ 13,996 , $ 12,709 and $ 9,181 for the years ended December 31, 2021, 2020 and 2019 , respectively, and there were $ 5,491 of impairment charges related to leasehold improvements during the year ended December 31, 2021.

Other Intangible Assets, net and Goodwill

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As part of this analysis, the Company determined that its trade name, with a carrying value of $ 161,317 and $ 161,245 as of December 31, 2021 and 2020, respectively, was not impaired and will continue to be reported as indefinite-lived intangible assets.

In September and November 2019, the Company purchased the key business assets of SequenceBase and Darts-ip.

As a result of the purchase, customer relations balance increased $ 3,641 , computer software increased $ 11,525 , databases and content increased $ 22,012 and finite-lived trade names increased $ 1,541 .

See Note 4 - Business Combinations for further details.

On January 1, 2020, all assets, liabilities, and equity interest of the Brand Protection, AntiPiracy, and AntiFraud solutions of the MarkMonitor Product Line were sold to OpSec Security for a purchase price of $ 3,751 , which was determined to be the approximation of the fair value.

At December 31, 2019, the assets and liabilities related to the divestment met the criteria for classification as Assets held for sale on the Company’s balance sheet, which included $ 36,924 of intangible assets.

In addition, the Company compared the book value of the assets and liabilities to the purchase price and recorded a total

On November 6, 2020, the Company completed the sale of certain assets and liabilities of the Techstreet business to The International Society of Interdisciplinary Engineers LLC for a total purchase price of $ 42,832 , of which $ 4,300 was held in escrow and paid to the Company in November 2021.

As a result of the sale, the Company recorded a net gain on sale of $ 28,140 , inclusive of incurred transaction costs of $ 115 in connection with the divestiture during the fourth quarter of 2020.

As a result of the sale, the Company wrote off balances associated with Techstreet including intangible assets of $ 10,179 .

See Note 5 - Assets Held for Sale and Divested Operations for further details.

CLARIVATE PLC

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(In thousands, except share and per share data, option prices, ratios or as noted)

impairment charge during the year ended December 31, 2019 of $ 18,431 , which included the write down of the $ 17,967 intangible assets classified as Assets held for sale.

approximation of the fair value.

In addition, the Company compared the book value of the assets and liabilities to the purchase price and recorded a total impairment charge during the year ended December 31, 2019 of $ 18,431 , which included the write down of $ 17,967 intangible assets classified as Assets held for sale at that time.

See Note 5 - Assets Held for Sale and Divested Operations for further details.

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As a result, the Company's identifiable intangible assets increased by $ 6,446 , which consisted of $ 5,446 of databases and content and $ 1,000 of computer software.

The databases and process methodology and the computer software have a remaining weighted average amortization period of 5.0 years and 3.0 years, respectively.

The total remaining weighted average amortization period is 4.7 years.

At the time of acquisition, the databases and process methodology and the computer software had a remaining weighted average amortization period of 5.0 years and 3.0 years, respectively, resulting in a total remaining weighted average amortization period of 4.7 years.

The weighted-average amortization period for each class of finite-lived intangible assets and for total finite-lived intangible assets, which range between 4 and 23 years, is as follows:

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Acquisition 499,199 4,002,695 4,501,894

Transferred to Assets held for sale — ( 468 ) ( 468 )

Divestiture — ( 9,129 ) ( 9,129 )

Impact of foreign currency fluctuations and other 607 221,547 222,154

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Acquisition 1,918,764 27,022 1,945,786

Divestiture — ( 9,129 ) ( 9,129 )

Impact of foreign currency fluctuations and other ( 1,613 ) ( 82,274 ) ( 83,887 )

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The Company performed the goodwill impairment test as of October 1, 2021 and 2020.

Additionally, the Company reviewed goodwill for indicators of impairment at December 31, 2020 and 2019.

As of December 31, 2021, 2020 and 2019, the accumulated goodwill impairment was $ 0 .

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If the carrying value of a reporting unit exceeds the implied fair value of that reporting unit, an impairment charge to goodwill is recognized for the excess.

The Company’s reporting units are one level below the operating segment, as determined in accordance with ASC 350.

For the years ended December 31, 2020 and 2019, the Company had six and five reporting units, respectively.

The Company performs goodwill impairment testing at the reporting unit level which is defined as the operating segment or one level below the operating segment.

As of October 1, 2021, our most recent annual goodwill impairment testing date, the Company identified five reporting units.

See Note 3 - Summary of Significant Accounting Policies for further details.

The Company estimates the fair value of its reporting units using the income approach.

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No indicators of impairment existed as a result of the Company’s assessments, except for the sale of the Brand Protection, AntiPiracy, and AntiFraud solutions of the MarkMonitor Product Line.

On December 22, 2021, the Company acquired Patient Connect, which included $ 8,502 of goodwill.

This goodwill balance is allocated to the Science segment.

On December 1, 2021, the Company acquired ProQuest, which included $ 1,897,184 of goodwill.

This goodwill balance is allocated to the Science segment.

See Note 4 - Business Combinations for further details.

On August 3, 2021, the Company acquired Bioinfogate, which included $ 13,078 of goodwill.

This goodwill balance is allocated to the Science segment.

In addition, the Company compared the book value of the assets and liabilities to the purchase price and recorded a total impairment charge during the year ended December 31, 2019 of $ 18,431 , which included the write down of the $ 468 goodwill classified as Assets held for sale.

In addition, the Company compared the book value of the assets and liabilities to the purchase price and recorded a total impairment charge during the year ended December 31, 2019 of $ 18,431 , which included the write down of the $ 468 goodwill classified as Assets held for sale at that time.

See Note 5 - Assets Held for Sale and Divested Operations for further details.

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(Hanlim), which included $ 2,861 of goodwill.

See Note 4 - Business Combinations for further details.

This goodwill balance is allocated to the Intellectual Property segment.

On November 6, 2020, the Company completed the sale of certain assets and liabilities of the Techstreet business to The International Society of Interdisciplinary Engineers LLC for a total purchase price of $ 42,832 , of which $ 4,300 was held in escrow and paid to the Company in November 2021.

As a result of the sale, the Company recorded a net gain on sale of $ 28,140 , inclusive of incurred transaction costs of $ 115 in connection with the divestiture during the fourth quarter of 2020.

As a result of the sale, the Company wrote off goodwill in the amount of $ 9,129 .

See Note 5 - Assets Held for Sale and Divested Operations for further details.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

On October 26, 2020, the Company acquired Beijing IncoPat Technology Co.

Ltd., which included $ 40,474 of goodwill.

See Note 4 - Business Combinations for further details.

Ltd., which included $ 40,610 of goodwill, inclusive of $ 136 in purchase accounting adjustments recorded in 2021.

This goodwill balance is allocated to the Intellectual Property segment.

On October 1, 2020, the Company acquired CPA Global, which included $ 4,123,165 of goodwill.

On October 1, 2020, the Company acquired CPA Global, which included $ 3,986,246 of goodwill, inclusive of $ 26,886 in purchase accounting adjustments recorded in 2021.

This goodwill balance is allocated to the Intellectual Property segment.

See Note 4 - Business Combinations for further details.

On February 28, 2020, the Company acquired DRG, which included $ 499,199 of goodwill.

See Note 4 - Business Combinations for further details.

On November 27, 2019, the Company acquired Darts-ip, which included $ 44,779 of goodwill.

This goodwill balance is allocated to the Science segment.

See Note 4 - Business Combinations for further details.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Derivative Instruments

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Additionally, effective February 28, 2018, the Company entered into another interest rate swap relating to interest payments on $ 50,000 of its outstanding Term Loan arrangements.

These hedging instruments mature on March 31, 2021.

These hedging instruments matured on March 31, 2021.

The Company applies hedge accounting by designating the interest rate swaps as a hedge on applicable future quarterly interest payments.

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The fair value of the interest rate swaps is recorded in Other current assets or Accrued expenses and other current liabilities and Other non-current assets or liabilities, according to the duration of related cash flows.

The total fair value of the interest rate swaps was a liability of $ 5,159 as of December 31, 2020 and a liability of $ 2,778 as of December 31, 2019.

The fair value of the interest rate swaps was an asset of $ 1,957 as of December 31, 2021 and a liability of $ 5,159 as of December 31, 2020.

In March 2020, the Company amended all of its interest rate derivatives to reduce the 1 % LIBOR floor to a 0 % LIBOR floor.

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The ineffectiveness was due to a drop in LIBOR rates below the LIBOR floor defined per the credit facilities, which were amended on March 31, 2020, resulting in a highly effective hedge.

As a result of the ineffectiveness, the Company recognized a loss of $ 978 for the year ended December 31, 2020, which was recorded to Interest expense, net on the Consolidated Statements of Operations.

As a result of the ineffectiveness, the Company recognized a loss of $ 0 and $ 978 for the year ended December 31, 2021 and 2020, respectively, which was recorded to Interest expense, net on the Consolidated Statements of Operations.

As of December 31, 2021, there was no hedge ineffectiveness associated with the Company’s interest rate swaps.

In March 2021, the Company entered into interest rate swap arrangements with counterparties to reduce its exposure to variability in cash flows relating to interest payments on $ 350,000 of its term loans and replaced the interest rate swaps that matured during March 2021.

These interest rate swap arrangements are effective March 31, 2021 and have a maturity date of March 31, 2024.

The following table summarizes the changes in AOCI (net of tax) related to cash flow hedges for the year ended December 31, 2021, 2020 and 2019:

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

AOCI Balance at December 31, 2018 $ 3,644

Derivative gains recognized in Other comprehensive loss 2,313

Derivative losses recognized in Other comprehensive loss ( 7,107 )

Amount reclassified out of Other comprehensive loss to Net loss 685

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AOCI Balance at December 31, 2020 $ ( 3,756 )

Derivative losses recognized in Other comprehensive loss ( 4,432 )

Derivative gains recognized in Other comprehensive loss 3,360

Amount reclassified out of Other comprehensive loss to Net loss 3,033

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Foreign Currency Forward Contracts

The IPM Product Line and related assets, which were divested on October 1, 2018, had forward contracts with notional values of $ 0 as of December 31, 2020 and December 31, 2019.

Gains on the forward contracts amounted to $ 0 , $ 0 and $ 240

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

for the years ended December 31, 2020, 2019 and 2018, respectively.

These amounts were recorded in Revenues, net in the Consolidated Statements of Operations.

In September 2020, the Company entered into two foreign exchange forward contracts to reduce its exposure to variability in cash flows relating to funding of the repayment of CPA Global's parent company outstanding debt on October 1, 2020.

This contract was settled as of October 1, 2020.

The Company recognized a gain from the mark to market adjustment of $ 2,903 , in Other operating income, net on the Consolidated Statements of Operations for the year ended December 31, 2020.

The nominal amount of outstanding foreign currency contracts was $ 0 and $ 0 as of December 31, 2020 and December 31, 2019.

The Company periodically enters into foreign currency contracts.

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These contracts generally do not exceed 180 days in duration.

The Company recognized a gain from the mark to market adjustment of $ 17,902 , in Other operating income, net on the Consolidated Statements of Operations for the year ended December 31, 2020.

The Company recognized (loss) gains from the mark to market adjustment of $( 6,904 ), $ 20,805 , and $ 0 for the year ended December 31, 2021, 2020, and 2019, respectively, in Other operating income, net on the Consolidated Statements of Operations.

The nominal amount of outstanding foreign currency contracts was $ 216,748 and $ 354,751 as of December 31, 2021, and December 31, 2020, respectively.

The Company accounts for these forward contracts at fair value and recognizes the associated realized and unrealized gains and losses in Other operating income, net in the Consolidated Statements of Operations, as the contracts are not designated as accounting hedges under the applicable sections of ASC Topic 815.

The Company accounts for these forward contracts at fair value and recognizes the associated realized and unrealized gains and losses in Other operating (expense) income, net in the Consolidated Statements of Operations, as the contracts are not designated as accounting hedges under the applicable sections of ASC Topic 815.

The total fair value of the forward contracts represented an asset balance of $ 2,205 and $ 8,574 and a liability balance of $ 641 and $ 106 as of December 31, 2021, and December 31, 2020, respectively, which was classified within Other current assets and Accrued expenses and other current liabilities, respectively, on the Consolidated Balance Sheets.

The Company recognized gains from the mark to market adjustment of $ 20,805 , $ 0 , and $ 0 in Other operating income, net on the Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company recognized (loss) gains from the mark to market adjustment of $( 6,904 ), $ 20,805 and $ 0 for the year ended December 31, 2021, 2020 and 2019, respectively, in Other operating (expense) income, net on the Consolidated Statements of Operations.

See Note 11 - Fair Value Measurements for additional information on derivative instruments.

Fair Value Measurements

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The Company records certain assets and liabilities at fair value.

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Below is a summary of the valuation techniques used in determining fair value:

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Derivatives - Derivatives consist of foreign exchange contracts and interest rate swaps.

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Contingent Consideration - The Company values contingent cash consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows.

Key assumptions used to estimate the fair value of contingent consideration include revenue, net

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

new business and operating forecasts and the probability of achieving the specific targets.

Key assumptions used to estimate the fair value of contingent consideration include revenue, net new business and operating forecasts and the probability of achieving the specific targets.

The Company values contingent stock consideration related to business combinations using observable market data, adjusted for indemnity losses and claims for indemnity losses valued using other indirect market inputs observable in the marketplace.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments.

The carrying value of the Company's variable interest rate debt, excluding unamortized debt issuance costs and original issue discount, approximates fair value due to the short-term nature of the interest rate benchmark rates.

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable, and Other Accruals - The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accruals readily convertible into cash approximate fair value because of the short-term nature of the instruments.

Debt - The carrying value of the Company's variable interest rate debt, excluding unamortized debt issuance costs and original issue discount, approximates fair value due to the short-term nature of the interest rate benchmark rates.

The fair value of the fixed rate debt is estimated based on market observable data for debt with similar prepayment features.

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The fair value is considered Level 2 under the fair value hierarchy.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The Company has determined that its forward contracts, included in other current assets, along with its interest rate swaps, included in Accrued expenses and other current liabilities and Other non-current liabilities according to the duration of related cash flows, reside within Level 2 of the fair value hierarchy.

In accordance with ASC 805, we estimated the fair value of the earn-outs using a Monte Carlo simulation.

The amount of the earn-outs approximate fair value due to the short term nature of their remaining payments as of December 31, 2020 and December 31, 2019.

Private Placement Warrants - The Company has determined that the Private Placement Warrants for shares of the Company's ordinary stock that are not indexed to its own stock are subject to accounting treatment as a liability and should be reported at fair value on the balance sheet.

The Company has determined that the fair value of each Private Placement Warrant issued using a Monte Carlo simulation approach for valuations performed through the August 14, 2019 modification described in Note 17 - Employment and Compensation Arrangements, and a Black-Scholes option valuation model thereafter.

Accordingly, the warrants issued are classified as Level 3 financial instruments and are subject to remeasurement at each balance sheet date.

Any change in fair value is recognized as a component of mark to market adjustment on financial instruments in the Consolidated Statements of Operations.

The assumptions in the models include, but are not limited to, risk-free interest rate, expected volatility of stock prices for the Company and its peer group, dividend yield, and a DLOM was applied to shares that are subject to remaining post vesting lock up restrictions.

The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the ordinary stock warrants.

At that time, the portion of the warrant liabilities related to the ordinary stock warrants will be reclassified to additional paid-in capital.

The amount of income (expense) recorded within the Consolidated Statement of Operations for each period as a result of the changes in fair value was $ 81,320 and $( 205,062 ) for the fiscal year end December 31, 2021 and 2020, respectively.

Forward Contracts and Interest Rate Swaps - The Company has determined that its forward contracts, included in other current assets, along with its interest rate swaps, included in Accrued expenses and other current liabilities and Other non-current liabilities according to the duration of related cash flows, reside within Level 2 of the fair value hierarchy.

The Company enters into foreign currency contracts that are not designated as hedges as defined under ASC 815.

The purpose of these derivative instruments is to help manage the Company's exposure to foreign exchange rate risks.

These contracts are initially recognized at fair value at the date the contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period.

These contracts generally do not exceed 180 days in duration, and these instruments are carried as assets when the fair value is positive (Other current assets on the Consolidated Balance Sheets), and as liabilities when the fair value is negative (Other current liabilities on the Consolidated Balance Sheets) The resulting gain or loss is recognized in profit or loss (other operating income (expense), net) immediately.

The Company assesses the fair value of these instruments, considering current and anticipated movements in future interest rates and the relevant currency spot and future rates available in the market.

The Company receives third party valuation reports to corroborate our determination of fair value.

Accordingly, these instruments are classified as Level 2 inputs.

Earn-Outs - In accordance with ASC 805, we estimated the fair value of the earn-outs using a Monte Carlo simulation.

The amount of the earn-outs approximates fair value due to the short term nature of their remaining payments as of December

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

31, 2021 and December 31, 2020.

This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820.

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These acquisitions occurred in 2017 and 2018, respectively.

The amount payable was contingent upon the achievement of certain company specific milestones and performance metrics including number of cumulative users, cumulative reviews and annual revenue over a 1-year and 3-year period.

The amounts payable were contingent upon the achievement of certain company specific milestones and performance metrics including number of cumulative users, cumulative reviews and annual revenue over a 1-year and 3-year period.

Changes in the earn-out are recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.

As of December 31, 2020, the Company maintains a contingent stock liability based on observable market data relating to the DRG acquisition that occurred on February 28, 2020.

Changes in the contingent stock liability are recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.

The contingent stock liability is recorded in Accrued expenses and other current liabilities and is classified as Level 2 in the fair value hierarchy.

The amount is payable on the one year anniversary of the acquisition date and is contingent upon any indemnity losses or claims for indemnity losses as defined in the purchase agreement.

As part of the DRG acquisition, the Company maintained a contingent stock liability based on observable market data relating to the DRG acquisition that occurred on February 28, 2020.

Changes in the contingent stock liability were recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.

The contingent stock liability was recorded in Accrued expenses and other current liabilities and is classified as Level 2 in the fair value hierarchy.

The liability was settled by the issuance of ordinary shares on March 5, 2021.

This fair value measurement is based on observable market data and other indirect observable market inputs and thus represents a Level 2 measurement as defined in ASC 820.

As of December 31, 2020, the Company maintains a contingent stock liability based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020.

Changes in the contingent stock liability are recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.

The contingent stock liability is recorded in Accrued expenses and other current liabilities and is classified as Level 2 in the fair value hierarchy.

The amount is payable 110 days after the acquisition date and is contingent upon any indemnity losses or claims for indemnity losses as defined in the purchase agreement.

As part of the CPA Global acquisition, the Company maintained a contingent stock liability based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020.

Changes in the contingent stock liability were recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.

The contingent stock liability was recorded in Accrued expenses and other current liabilities and is classified as Level 2 in the fair value hierarchy.

The liability was settled by the issuance of ordinary shares on January 21, 2021.

This fair value measurement is based on observable market data and other indirect observable market inputs and thus represents a Level 2 measurement as defined in ASC 820.

As of December 31, 2020, the Company maintains an employee phantom share plan receivable asset and liability, including an accrued liability for the employer's portion of payroll withholding taxes, which was recorded in connection with the acquisition opening balance sheet.

The legacy CPA Global phantom share plan contained a change in control provision for an exit event which included the sale of CPA Global.

Upon the exit event, the phantom shares converted into CLVT shares and the funds were placed into an employee benefit trust to be passed to the Company for payment to the respective employees via Clarivate payroll.

The Company is required to withhold employee payroll taxes and will be required to fund and pay employer payroll taxes.

The associated asset and liability balances are based on observable market data relating to the CPA Global acquisition that occurred on October 1, 2020.

Changes in the receivable asset and liability are recorded to Selling, general and administrative costs in the Consolidated Statements of Operations.

Employee Phantom Share Plan - As of December 31, 2021 and December 31, 2020, the Company maintains a liability associated with the CPA Global Phantom Equity Plan, a portion of which was recorded in connection with the acquisition opening balance sheet.

Changes in the liability are recorded to Selling, general and administrative costs and Cost of revenues in the Consolidated Statements of Operations, which is primarily driven by the change in fair value pertaining to Clarivate's share price that is marked to market at the end of each reporting period.

To the extent vesting of awards were accelerated for colleagues, the Company accounted for these as a modification and acceleration of share-based compensation charges within the Restructuring and impairment line item of the Consolidated Statement of Operations.

The current and non-current portions of the liability are recorded in Accrued expenses and other current liabilities and Other non-current liabilities, respectively.

The current and non-current portions of the receivable asset is recorded in Other current assets and Other non-current assets, respectively.

The balances are classified as Level 2 in the fair value hierarchy.

This fair value measurement is based on observable market data and other indirect observable market inputs and thus represents a Level 2 measurement as defined in ASC 820.

This fair value measurement is based on observable market data and other indirect observable market input such as, the expected volatility of the Company’s stock price, the DLOM, and the discount for potential forfeiture or modification.

Private Placement Warrants - The following table summarizes the changes in Private Placement Warrant liability for the year ended December 31, 2021 and 2020:

Balance at December 31, 2019 $ 111,813

Mark to market adjustment on financial instruments 205,062

Exercise of Private Placement Warrants ( 4,124 )

Balance at December 31, 2020 $ 312,751

Mark to market adjustment on financial instruments ( 81,320 )

Exercise of Private Placement Warrants ( 3,592 )

Balance at December 31, 2021 $ 227,839

There were no transfers of assets or liabilities between levels during the year ended December 31, 2021 and 2020.

The following table presents the changes in the earn-out for the year ended December 31, 2021 and 2020:

CLARIVATE PLC

1 unchanged sentence

(In thousands, except share and per share data, option prices, ratios or as noted)

The Company enters into foreign currency contracts that are not designated as hedges as defined under ASC 815.

The purpose of these derivatives instruments is to help manage the Company's exposure to foreign exchange rate risks.

These contracts are initially recognized at fair value at the date of the contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period.

The Company receives third party valuation reports to corroborate our determination of fair value.

Accordingly, these instruments are classified as Level 2 inputs.

There were no transfers of assets or liabilities between levels during the years ended December 31, 2020 and 2019.

The following table presents the changes in the earn-out, the only Level 3 item, for the years ended December 31, 2020 and 2019:

Balance at December 31, 2019 $ 11,100

6 unchanged sentences

(1) See Note 23 - Commitments and Contingencies for further details.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

The following table provides a summary of the Company’s assets and liabilities that were recognized at fair value on a recurring basis as at December 31, 2021 and 2020:

2 unchanged sentences

Forward contracts asset $ — $ 2,205 $ — $ 2,205

Employee phantom share receivable asset — 188,770 — 188,770

Interest rate swap asset — 1,957 — 1,957

— 4,162 — 4,162

Warrant liability — — 227,839 227,839

Employee phantom share liability - current — 152,422 — 152,422

Employee phantom share liability - non-current — 18,670 — 18,670

Forward contracts liability — 641 — 641

Interest rate swap liability — 5,159 — 5,159

Earn-out liability — — — —

Contingent stock liability — 130,594 — 130,594

Total $ — $ 153,063 $ 227,839 $ 380,902

1 unchanged sentence

Level 1 Level 2 Level 3 Total Fair Value

Forward contracts asset $ — $ 8,574 $ — $ 8,574

— 8,574 — 8,574

Warrant liability — — 312,751 312,751

Employee phantom share liability - current — 57,752 — 57,752

Employee phantom share liability - non-current — 393 — 393

Forward contracts liability — 106 — 106

Interest rate swap liability — 5,159 — 5,159

Earn-out liability — — 11,100 11,100

Contingent stock liability — 130,594 — 130,594

Total $ — $ 194,004 $ 312,751 $ 506,755

3 unchanged sentences

Finite-lived Intangible Assets — If a triggering event occurs, the Company determines the estimated fair value of finite-lived intangible assets by determining the present value of the expected cash flows.

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

Indefinite-lived Intangible Asset — If a qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the carrying value of an indefinite-lived intangible asset, the Company determines the estimated fair value of the indefinite-lived intangible asset (trade name) by determining the present value of the estimated royalty payments on an after-tax basis that it would be required to pay the owner for the right to use such trade name.

3 unchanged sentences

The Company performs qualitative analysis of macroeconomic conditions, industry and market considerations, internal cost factors, financial performance, fair value history and other company specific events.

If this qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the book value for the respective reporting unit, the Company applies a two-step impairment test in which the Company determines whether the estimated fair value of the reporting unit is in excess of its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the estimated fair value of the reporting

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

unit, the Company performs the second step of the impairment test to determine the implied estimated fair value of the reporting unit’s goodwill.

If this qualitative analysis indicates that it is more likely than not that the estimated fair value is less than the book value for the respective reporting unit, the Company applies a one-step impairment test in which the Company determines whether the estimated fair value of the reporting unit is in excess of its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the estimated fair value of the reporting unit, the Company performs the second step of the impairment test to determine the implied estimated fair value of the reporting unit’s goodwill.

The Company determines the implied estimated fair value of goodwill by determining the present value of the estimated future cash flows for each reporting unit and comparing the reporting unit’s risk profile and growth prospects to selected, reasonably similar publicly traded companies.

5 unchanged sentences

See Note 5 - Assets Held for Sale and Divested Operations for additional information.

Right of Use Asset — The guidance in ASC 360-10 requires three steps to identify, recognize and measure the impairment of a long-lived asset (asset group) to be held and used.

The Company evaluates whether there are indicators of impairment present (i.e., whether there are any events or changes in circumstances that indicate that the carrying amount of the long-lived asset (group) might not be recoverable, including the ceased use of the leased property).

The Company performs tests for recoverability and if indicators of impairment are present, the Company perform a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the long-lived asset (asset group) in question to the carrying amount of the long-lived asset (asset group).

If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of the long-lived asset (asset group), the Company determines the fair value of the long-lived asset (asset group) and recognizes an impairment loss if the carrying amount of the long-lived asset (asset group) exceeds its fair value.

For the year ended December 31, 2021, an impairment charge was recorded where the carrying value of the operating lease right of use asset was reduced by $ 57,305 , which are non-cash charges.

Additionally, the Company incurred $ 3,325 and $ 2,384 in lease termination fees during the year ended December 31, 2021 and 2020, respectively.

Fair value assumptions including sublease probabilities and the present value factor were used in the impairment calculation.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities, consisted of the following as of December 31, 2021 and December 31, 2020:

CLARIVATE PLC

1 unchanged sentence

(In thousands, except share and per share data, option prices, ratios or as noted)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities, consisted of the following as of December 31, 2020 and December 31, 2019:

December 31, December 31,

Employee phantom share plan liability (1)

5 unchanged sentences

39,440 57,151

Accrued legal liability (5)

79,013 11,965

Tax related accruals (6)

28,538 45,127

Accrued royalty costs (7)

Other accrued expenses and other current liabilities (8)

1 unchanged sentence

Total accrued expenses and other current liabilities $ 679,603 $ 569,682

(1) See Note 11 - Fair Value Measurements for further information with respect to the employee phantom share plan liabilities.

(2) Contingent stock consideration associated with the CPA Global and DRG acquisitions.

(1) See Note 4 - Business Combinations, Note 11 - Fair Value Measurements, Note 17 - Employment and Compensation Arrangements and Note 25 - Restructuring and Impairment, for further information with respect to the employee phantom share plan liabilities.

(2) Represents contingent stock consideration associated with the CPA Global and DRG acquisitions.

See Note 4 - Business Combinations and Note 23 - Commitments and Contingencies for further information.

(3) Employee related accruals include accrued payroll, bonus and employee commissions.

(4) Professional fee related accruals include accrued legal fees, audit fees and contractor fees.

(4) Professional and outside service-related fees include accrued legal fees, audit fees, outside services, technology, and contractor fees.

(5) Of the balance as of December 31, 2021, our best estimate of the Company's potential liability for the larger legal claims is $ 60,500 , which includes estimated legal costs and accrued interest.

See Note 23 - Commitments and Contingencies for further information with respect to the probable claim reserves.

(6) Tax related accruals include value-added tax payable and other current taxes payable.

(6) Includes current liabilities due to customers, royalty accruals, interest payable, and a collection of miscellaneous other current liabilities .

CLARIVATE PLC

Notes to the Consolidated Financial Statements

(In thousands, except share and per share data, option prices, ratios or as noted)

(7) Represents accrued royalty costs associated with licensee agreements.

(8) Includes current liabilities due to customers, interest payable, and a collection of miscellaneous other current liabilities.

Pension and Other Post‑Retirement Benefits

Retirement Benefits