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Item 1. Financial Statements

2021-07-28 compared with 2021-04-23 · 195 added, 144 removed, 365 unchanged (48% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions, except per share data) 2021 2020 2021 2020

9 unchanged sentences

Other income, net ( 29 ) ( 32 ) ( 66 ) ( 45 )

Income before income taxes and equity in earnings of unconsolidated affiliates 257 102

Income tax expense 44 17

Income before equity in earnings of unconsolidated affiliates 213 85

Equity in earnings of unconsolidated affiliates 4 6

Net income 217 91

Income (loss) before income taxes and equity in earnings of unconsolidated affiliates 222 ( 25 ) 479 77

Income tax expense (benefit) 48 ( 5 ) 92 12

Income (loss) before equity in earnings of unconsolidated affiliates 174 ( 20 ) 387 65

Equity in earnings (loss) of unconsolidated affiliates 1 ( 1 ) 5 5

Net income (loss) 175 ( 21 ) 392 70

Net income attributable to non-controlling interests — ( 2 ) ( 5 ) ( 11 )

Net income attributable to IQVIA Holdings Inc.

Earnings per share attributable to common stockholders:

Net income (loss) attributable to IQVIA Holdings Inc.

$ 175 $ ( 23 ) $ 387 $ 59

Earnings (loss) per share attributable to common stockholders:

Basic $ 0.91 $ ( 0.12 ) $ 2.02 $ 0.31

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in millions) 2021 2020 2021 2020

Net income $ 217 $ 91

Net income (loss) $ 175 $ ( 21 ) $ 392 $ 70

Comprehensive income (loss) adjustments:

Unrealized gains (losses) on derivative instruments, net of income tax expense (benefit) of $ 1 , $( 7 )

Foreign currency translation, net of income tax expense of $ 62 , $ 23

Unrealized (losses) gains on derivative instruments, net of income tax expense (benefit) of $( 1 ), $( 3 ), $ — , $( 11 )

( 2 ) 7 4 ( 32 )

Foreign currency translation, net of income tax (benefit) expense of $( 23 ), $( 29 ), $ 39 , $( 6 )

58 45 ( 120 ) ( 110 )

Reclassification adjustments:

Losses on derivative instruments included in net income, net of income tax benefit of $ 1 , $ —

Losses (gains) on derivative instruments included in net income, net of income tax benefit of $ — , $ 1 , $ 1 , $ 1

Comprehensive income (loss) 234 19 280 ( 68 )

6 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data) March 31, 2021 December 31, 2020

(in millions, except per share data) June 30, 2021 December 31, 2020

Current assets:

23 unchanged sentences

Total current liabilities 4,819 4,558

Long-term debt 12,092 12,384

Long-term debt, less current portion 12,140 12,384

Deferred income taxes 266 338

2 unchanged sentences

Total liabilities 18,177 18,284

Commitments and contingencies

Commitments and contingencies (Note 8)

Stockholders’ equity:

Common stock and additional paid-in capital, 400.0 shares authorized as of March 31, 2021 and December 31, 2020, $ 0.01 par value, 255.4 shares issued and 191.6 shares outstanding as of March 31, 2021;

Common stock and additional paid-in capital, 400.0 shares authorized as of June 30, 2021 and December 31, 2020, $ 0.01 par value, 255.6 shares issued and 191.6 shares outstanding as of June 30, 2021;

254.7 shares issued and 191.2 shares outstanding as of December 31, 2020

1 unchanged sentence

Retained earnings 1,664 1,277

Treasury stock, at cost, 63.8 and 63.5 shares as of March 31, 2021 and December 31, 2020, respectively

Treasury stock, at cost, 64.0 and 63.5 shares as of June 30, 2021 and December 31, 2020, respectively

( 6,273 ) ( 6,166 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2021 2020

Operating activities:

Net income $ 392 $ 70

Adjustments to reconcile net income to cash provided by operating activities:

5 unchanged sentences

Benefit from deferred income taxes ( 43 ) ( 102 )

( 39 ) ( 40 )

Changes in operating assets and liabilities:

1 unchanged sentence

Change in other operating assets and liabilities ( 166 ) ( 190 )

( 12 ) ( 125 )

Net cash provided by operating activities 1,406 635

1 unchanged sentence

Acquisition of property, equipment and software ( 294 ) ( 283 )

( 149 ) ( 141 )

Acquisition of businesses, net of cash acquired ( 65 ) ( 92 )

( 19 ) ( 14 )

Purchases of marketable securities, net ( 8 ) ( 7 )

Investments in unconsolidated affiliates, net of payments received ( 3 ) 15

Investments in equity securities

Proceeds from sale of (investments in) equity securities 9 ( 2 )

Net cash used in investing activities ( 361 ) ( 369 )

( 176 ) ( 150 )

Financing activities:

1 unchanged sentence

Payment of debt issuance costs ( 32 ) ( 33 )

( 32 ) ( 11 )

Repayment of debt and principal payments on capital lease obligations ( 1,794 ) ( 755 )

( 1,758 ) ( 25 )

Proceeds from revolving credit facility — 1,250

2 unchanged sentences

Repurchase of common stock ( 107 ) ( 346 )

( 62 ) ( 345 )

Distributions to non-controlling interests, net — ( 5 )

Distributions to non-controlling interest, net — ( 5 )

Acquisition of Quest's non-controlling interest ( 756 ) —

Contingent consideration and deferred purchase price payments ( 38 ) ( 16 )

1 unchanged sentence

Effect of foreign currency exchange rate changes on cash ( 21 ) ( 28 )

( 32 ) ( 30 )

Increase in cash and cash equivalents 491 90

(Decrease) increase in cash and cash equivalents ( 7 ) 272

Cash and cash equivalents at beginning of period 1,814 837

Cash and cash equivalents at end of period $ 1,807 $ 1,109

$ 2,305 $ 927

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

15 unchanged sentences

Stock-based compensation — — — 30 — — — — 30

Distributions to non-controlling interests, net — — — — — — — — —

Net income — — — — 212 — — 5 217

3 unchanged sentences

Balance, March 31, 2021 255.4 ( 63.8 ) $ 3 $ 11,065 $ 1,489 $ ( 6,228 ) $ ( 376 ) $ 284 $ 6,237

(in millions)

Retained Earnings

Issuance of common stock 0.2 — — 1 — — — — 1

Repurchase of common stock — ( 0.2 ) — — — ( 45 ) — — ( 45 )

Stock-based compensation — — — 42 — — — — 42

Acquisition of Quest's non-controlling interest, net of tax — — — ( 415 ) — — ( 10 ) ( 284 ) ( 709 )

Net income — — — — 175 — — — 175

Unrealized losses on derivative instruments, net of tax — — — — — — ( 2 ) — ( 2 )

Foreign currency translation, net of tax — — — — — — 58 — 58

Reclassification adjustments, net of tax — — — — — — 3 — 3

Balance, June 30, 2021 255.6 ( 64.0 ) $ 3 $ 10,693 $ 1,664 $ ( 6,273 ) $ ( 327 ) $ — $ 5,760

(in millions) Common Stock Shares Treasury

Shares Common

Stock Additional

Capital Retained Earnings Treasury

Stock Accumulated

Comprehensive

(Loss) Income Non-

Income (Loss) Non-

Interests Total

Balance, December 31, 2019 253.0 ( 60.7 ) $ 3 $ 11,046 $ 998 $ ( 5,733 ) $ ( 311 ) $ 260 $ 6,263

8 unchanged sentences

Balance, March 31, 2020 253.8 ( 62.8 ) $ 3 $ 11,009 $ 1,080 $ ( 6,065 ) $ ( 485 ) $ 260 $ 5,802

Issuance of common stock 0.3 — — 1 — — — — 1

Repurchase of common stock — — — — — — — — —

Stock-based compensation — — — 30 — — — — 30

Distributions to non-controlling interests, net — — — — — — — — —

Net income — — — — ( 23 ) — — 2 ( 21 )

Unrealized gains on derivative instruments, net of tax — — — — — — 7 — 7

Foreign currency translation, net of tax — — — — — — 46 ( 1 ) 45

Reclassification adjustments, net of tax — — — — — — ( 12 ) — ( 12 )

Balance, June 30, 2020 254.1 ( 62.8 ) $ 3 $ 11,040 $ 1,057 $ ( 6,065 ) $ ( 444 ) $ 261 $ 5,852

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

28 unchanged sentences

Revenues by Geography, Concentration of Credit Risk and Remaining Performance Obligations

The following tables represent revenues by geographic region and reportable segment for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, 2021

(in millions)

Analytics Solutions

Development Solutions

Contract Sales &

Medical Solutions

$ 600 $ 1,034 $ 78 $ 1,712

The following tables represent revenues by geographic region and reportable segment for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

(in millions) Technology &

Analytics Solutions Research &

Development Solutions Contract Sales &

Medical Solutions Total

Americas $ 635 $ 935 $ 86 $ 1,656

Europe and Africa 565 507 42 1,114

590 443 49 1,082

158 391 66 615

Asia-Pacific 153 449 66 668

Total revenues $ 1,353 $ 1,891 $ 194 $ 3,438

$ 1,348 $ 1,868 $ 193 $ 3,409

Three Months Ended March 31, 2020

(in millions)

Analytics Solutions

Development Solutions

Contract Sales &

Medical Solutions

$ 581 $ 670 $ 91 $ 1,342

Three Months Ended June 30, 2020

(in millions) Technology &

Analytics Solutions Research &

Development Solutions Contract Sales &

Medical Solutions Total

Americas $ 567 $ 528 $ 80 $ 1,175

Europe and Africa 401 375 40 816

396 428 50 874

140 343 55 538

Asia-Pacific 141 332 57 530

Total revenues $ 1,109 $ 1,235 $ 177 $ 2,521

$ 1,117 $ 1,441 $ 196 $ 2,754

No customer accounted for 10% or more of consolidated revenues for the three months ended March 31, 2021 or 2020.

Six Months Ended June 30, 2021

(in millions) Technology &

Analytics Solutions Research &

Development Solutions Contract Sales &

Medical Solutions Total

Americas $ 1,235 $ 1,969 $ 164 $ 3,368

Europe and Africa 1,155 950 91 2,196

Asia-Pacific 311 840 132 1,283

Total revenues $ 2,701 $ 3,759 $ 387 $ 6,847

Six Months Ended June 30, 2020

(in millions) Technology &

Analytics Solutions Research &

Development Solutions Contract Sales &

Medical Solutions Total

Americas $ 1,148 $ 1,198 $ 171 $ 2,517

Europe and Africa 797 803 90 1,690

Asia-Pacific 281 675 112 1,068

Total revenues $ 2,226 $ 2,676 $ 373 $ 5,275

No customer accounted for 10% or more of consolidated revenues for the three and six months ended June 30, 2021 or 2020.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2021, approximately $ 26.1 billion of revenue is expected to be recognized in the future from remaining performance obligations.

As of June 30, 2021, approximately $ 26.2 billion of revenue is expected to be recognized in the future from remaining performance obligations.

The Company expects to recognize revenue on approximately 35 % of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

2 unchanged sentences

Trade accounts receivables and unbilled services consist of the following:

(in millions)

March 31, 2021 December 31, 2020

(in millions) June 30, 2021 December 31, 2020

Trade accounts receivable:

$ 1,159 $ 1,181

Billed $ 1,146 $ 1,181

Unbilled services 1,161 1,263

1 unchanged sentence

Allowance for doubtful accounts ( 31 ) ( 34 )

( 31 ) ( 34 )

Trade accounts receivable and unbilled services, net $ 2,276 $ 2,410

$ 2,361 $ 2,410

Unbilled services and unearned income were as follows:

(in millions) March 31, 2021 December 31, 2020 Change

(in millions, except percentages) June 30, 2021 December 31, 2020 Change

Unbilled services $ 1,161 $ 1,263 $ ( 102 )

$ 1,233 $ 1,263 $ ( 30 )

Unearned income ( 1,597 ) ( 1,252 ) ( 345 )

( 1,554 ) ( 1,252 ) ( 302 )

$ ( 321 ) $ 11 $ ( 332 )

Unbilled services, which is comprised of approximately 60 % of unbilled receivables and 40 % of contract assets as of March 31, 2021, decreased by $ 30 million as compared to December 31, 2020.

Net balance $ ( 436 ) $ 11 $ ( 447 )

Unbilled services, which is comprised of approximately 64 % of unbilled receivables and 36 % of contract assets as of June 30, 2021, decreased by $ 102 million as compared to December 31, 2020.

Contract assets are unbilled services for which invoicing is based on the timing of certain milestones related to service contracts for clinical research whereas unbilled receivables are billable upon the passage of time.

Unearned income increased by $ 302 million over the same period resulting in a decrease of $ 332 million in the net balance of unbilled services and unearned income between December 31, 2020 and March 31, 2021.

Unearned income increased by $ 345 million over the same period resulting in a decrease of $ 447 million in the net balance of unbilled services and unearned income between December 31, 2020 and June 30, 2021.

The change in the net balance is driven by the difference in timing of revenue recognition in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, related to the Company’s Research & Development Solutions contracts (which is based on the percentage of costs incurred) versus the timing of invoicing, which is based on certain milestones.

Bad debt expense recognized on the Company’s receivables and unbilled services was not material for the three months ended March 31, 2021 and 2020.

The following is a summary of goodwill by reportable segment for the three months ended March 31, 2021:

(in millions)

Technology & Analytics Solutions

Research & Development Solutions

Contract Sales & Medical Solutions

Bad debt expense recognized on the Company’s receivables and unbilled services was not material for the three and six months ended June 30, 2021 and 2020.

The following is a summary of goodwill by reportable segment for the six months ended June 30, 2021:

(in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Consolidated

Balance as of December 31, 2020 $ 10,864 $ 1,646 $ 144 $ 12,654

1 unchanged sentence

Impact of foreign currency fluctuations and other ( 181 ) ( 3 ) 13 ( 171 )

( 264 ) ( 4 ) 14 ( 254 )

Balance as of March 31, 2021 $ 10,615 $ 1,642 $ 158 $ 12,415

Balance as of June 30, 2021 $ 10,726 $ 1,668 $ 157 $ 12,551

The fair values of the Company’s derivative instruments and the line items on the accompanying condensed consolidated balance sheets to which they were recorded are summarized in the following table:

(in millions)

Balance Sheet Classification

March 31, 2021 December 31, 2020

(in millions) Balance Sheet Classification June 30, 2021 December 31, 2020

Assets Liabilities Notional Assets Liabilities Notional

Derivatives designated as hedging instruments:

Foreign exchange forward contracts

Other current assets and liabilities

$ 3 $ — $ 64 $ 5 $ — $ 70

Interest rate swaps

Other assets and liabilities

— 44 1,800 — 55 1,800

Foreign exchange forward contracts Other current assets and liabilities $ 1 $ — $ 65 $ 5 $ — $ 70

Interest rate swaps Other assets and liabilities — 42 1,800 — 55 1,800

Derivatives not designated as hedging instruments:

Interest rate swaps

Other liabilities

— — — — 1 356

Interest rate swaps Other liabilities — — — — 1 356

Total derivatives $ 1 $ 42 $ 5 $ 56

$ 3 $ 44 $ 5 $ 56

The effect of the Company’s cash flow hedging instruments on other comprehensive income is summarized in the following table:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

Foreign exchange forward contracts $ ( 2 ) $ — $ ( 4 ) $ ( 6 )

$ ( 2 ) $ ( 6 )

Interest rate derivatives 3 ( 10 ) 13 ( 33 )

The amount of foreign exchange losses related to the net investment hedge included in the cumulative translation adjustment component of accumulated other comprehensive loss (“AOCI”) for the three months ended March 31, 2021 was $ 285 million.

Total $ 1 $ ( 10 ) $ 9 $ ( 39 )

Fair Value Measurements

10 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of March 31, 2021 and December 31, 2020 due to their short-term nature.

As of March 31, 2021 and December 31, 2020, the fair value of total debt approximated $ 12,392 million and $ 12,746 million, respectively, as determined under Level 1 and Level 2 measurements for these financial instruments.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of June 30, 2021 and December 31, 2020 due to their short-term nature.

As of June 30, 2021 and December 31, 2020, the fair value of total debt approximated $ 12,439 million and $ 12,746 million, respectively, as determined under Level 1 and Level 2 measurements for these financial instruments.

Recurring Fair Value Measurements

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of March 31, 2021:

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of June 30, 2021:

(in millions) Level 1 Level 2 Level 3 Total

12 unchanged sentences

Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and operating forecasts) and the probability of achieving the specific targets.

Based on the assessments of the probability of achieving specific targets, the Company has accrued approximately 84 % of the maximum contingent consideration payments that could potentially become payable.

The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the three months ended March 31:

Based on the assessments of the probability of achieving specific targets, as of June 30, 2021 the Company has accrued approximately 71 % of the maximum contingent consideration payments that could potentially become payable.

The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the six months ended June 30:

Contingent Consideration

4 unchanged sentences

Revaluations included in earnings and foreign currency translation adjustments ( 21 ) ( 13 )

Balance as of March 31 $ 109 $ 98

Balance as of June 30 $ 86 $ 111

The current portion of contingent consideration is included within accrued expenses and the long-term portion is included within other liabilities on the accompanying condensed consolidated balance sheets.

Revaluations of the contingent consideration are recognized in other expense (income), net on the accompanying condensed consolidated statements of income.

Revaluations of the contingent consideration are recognized in other income, net on the accompanying condensed consolidated statements of income.

A change in significant unobservable inputs above could result in a higher or lower fair value measurement of contingent consideration.

Credit Arrangements

The following is a summary of the Company’s revolving credit facilities as of March 31, 2021:

The following is a summary of the Company’s revolving credit facilities as of June 30, 2021:

Interest Rates

$ 1,500 million (revolving credit facility)

LIBOR in the relevant currency borrowed plus a margin of 1.50 % as of March 31, 2021

LIBOR in the relevant currency borrowed plus a margin of 1.25 % as of June 30, 2021

$ 25 million (receivables financing facility)

LIBOR Market Index Rate ( 0.11 % as of March 31, 2021) plus 0.90 %

LIBOR Market Index Rate ( 0.10 % as of June 30, 2021) plus 0.90 %

£ 10 million (approximately $ 14 million) (general banking facility)

Bank’s base rate of 0.10 % as of March 31, 2021 plus 1 %

Bank’s base rate of 0.10 % as of June 30, 2021 plus 1 %

The following table summarizes the Company’s debt at the dates indicated:

(in millions) March 31, 2021 December 31, 2020

(in millions) June 30, 2021 December 31, 2020

Senior Secured Credit Facilities:

28 unchanged sentences

Long-term debt $ 12,140 $ 12,384

Contractual maturities of long-term debt are as follows as of March 31, 2021:

Contractual maturities of long-term debt are as follows as of June 30, 2021:

(in millions)

1 unchanged sentence

Thereafter 4,717

As of March 31, 2021, there were bank guarantees totaling approximately £ 0.8 million (approximately $ 1.1 million) issued against the availability of the general banking facility.

As of June 30, 2021, there were bank guarantees totaling approximately £ 0.8 million (approximately $ 1.1 million) issued against the availability of the general banking facility.

Senior Secured Credit Facilities

As of March 31, 2021, the Company’s Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $ 7.5 billion, which consisted of $ 6.0 billion principal amounts of debt outstanding (as detailed in the table above), and $ 1.5 billion of available borrowing capacity on the revolving credit facility and standby letters of credit.

As of June 30, 2021, the Company’s Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $ 7.5 billion, which consisted of $ 6.0 billion principal amounts of debt outstanding (as detailed in the table above), and $ 1.5 billion of available borrowing capacity on the revolving credit facility and standby letters of credit.

On March 3, 2021, IQVIA Inc.

13 unchanged sentences

The Company’s long-term debt arrangements contain other usual and customary restrictive covenants that, among other things, place limitations on the Company’s ability to declare dividends.

As of March 31, 2021, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements.

As of June 30, 2021, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements.

Contingencies

The Company and its subsidiaries are involved in legal and tax proceedings, claims and litigation arising in the ordinary course of business.

Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available.

For those matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss can be reasonably estimated, the Company has recorded reserves in the consolidated financial statements based on its best estimates of such loss.

In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any.

However, even in many instances where the Company has recorded an estimated liability, the Company is unable to predict with certainty the final outcome of the matter or whether resolution of the matter will materially affect the Company’s results of operations, financial position or cash flows.

As additional information becomes available, the Company adjusts its assessments and estimates of such liabilities accordingly.

The Company routinely enters into agreements with third parties, including our clients and suppliers, all in the normal course of business.

In these agreements, the Company sometimes agrees to indemnify and hold harmless the other party for any damages such other party may suffer as a result of potential intellectual property infringement and other claims.

The Company has not accrued a liability with respect to these matters generally, as the exposure is considered remote.

Based on its review of the latest information available, management does not expect the impact of pending legal and tax proceedings, claims and litigation, either individually or in the aggregate, to have a material adverse effect on the Company’s results of operations, cash flows or financial position.

However, one or more unfavorable outcomes in any claim or litigation against the Company could have a material adverse effect for the period in which it is resolved.

The following is a summary of certain legal matters involving the Company.

On February 13, 2014, a group of approximately 1,200 medical doctors and 900 private individuals filed a civil lawsuit with the Seoul Central District Court against IMS Korea and two other defendants, KPA and the Korean Pharmaceutical Information Center (“KPIC”).

The civil lawsuit alleges KPA and KPIC collected their personal information in violation of applicable privacy laws without the necessary consent through a software system installed on pharmacy computer systems in Korea, and that personal information was transferred to IMS Korea and sold to pharmaceutical companies.

On September 11, 2017, the District Court issued a final decision that the encryption in use by the defendants since June 2014 was adequate to meet the requirements of the Korean Personal Information Privacy Act (“PIPA”) and the sharing of non-identified information for market research purposes was allowed under PIPA.

The District Court also found an earlier version of encryption was insufficient to meet PIPA requirements, but no personal data had been leaked or re-identified.

The District Court did not award any damages to plaintiffs.

Approximately 280 medical doctors and 200 private individuals appealed the District Court decision.

On May 3, 2019, the Appellate Court issued a final decision in which it concluded all of the non-identified information transferred by KPIC to IMS Korea for market research purposes violated PIPA, but did not award any damages to plaintiffs (affirming the District Court’s decision on this latter point).

On May 24, 2019, approximately 247 plaintiffs appealed the Appellate Court’s decision to the Supreme Court.

The Company believes the appeal is without merit and is vigorously defending its position.

On July 23, 2015, indictments were issued by the Seoul Central District Prosecutors’ Office in South Korea against 24 individuals and companies alleging improper handling of sensitive health information in violation of, among others, South Korea’s Personal Information Protection Act.

IMS Korea and two of its employees were among the individuals and organizations indicted.

Although there is no assertion that IMS Korea used patient identified health information in any of its offerings, prosecutors allege that certain of IMS Korea’s data suppliers should have obtained patient consent when they converted sensitive patient information into non-identified data and that IMS Korea had not taken adequate precautions to reduce the risk of re-identification.

On February 14, 2020, the Seoul Central District Court acquitted IMS Korea and its two employees of the charges of improper handling of sensitive health information.

The matter is now on appeal.

The Company intends to vigorously defend its position on appeal.

On January 10, 2017, Quintiles IMS Health Incorporated and IMS Software Services Ltd.

(collectively “IQVIA Parties”), filed a lawsuit in the U.S.

District Court for the District of New Jersey against Veeva Systems, Inc.

(“Veeva”) alleging Veeva unlawfully used IQVIA Parties intellectual property to improve Veeva data offerings, to promote and market Veeva data offerings and to improve Veeva technology offerings.

IQVIA Parties seek injunctive relief, appointment of a monitor, the award of compensatory and punitive damages and reimbursement of all litigation expenses, including reasonable attorneys’ fees and costs.

On March 13, 2017, Veeva filed counterclaims alleging anticompetitive business practices in violation of the Sherman Act

and state laws.

Veeva claims damages in excess of $ 200 million, and is seeking punitive damages and litigation costs, including attorneys’ fees.

We believe the counterclaims are without merit, reject all counterclaims raised by Veeva and intend to vigorously defend IQVIA Parties’ position and pursue our claims against Veeva.

Since the initial filings, the parties have filed additional litigations against each other, primarily concerning the use of IQVIA data with various other Veeva products.

The parties have been engaged in the discovery process in connection with the first lawsuit.

On May 7, 2021, the Court issued a 115-page order and opinion (the “Order”) in which it found significant evidence that Veeva had (1) misappropriated IQVIA data and unlawfully used it to improve Veeva data offerings, (2) engaged in a cover-up by deleting significant evidence of its theft of IQVIA’s trade secrets, and (3) improperly withheld certain evidence in furtherance of a crime and/or fraud against IQVIA.

The Court imposed five serious sanctions against Veeva, including ordering three separate adverse inference instructions be issued to the jury and that IQVIA be permitted to present evidence to the jury of Veeva’s destruction efforts.

Veeva is currently appealing the Order.

Stockholders’ Equity

1 unchanged sentence

The Company is authorized to issue 1.0 million shares of preferred stock, $ 0.01 per share par value.

No shares of preferred stock were issued or outstanding as of March 31, 2021 or December 31, 2020.

No shares of preferred stock were issued or outstanding as of June 30, 2021 or December 31, 2020.

Equity Repurchase Program

During the three months ended March 31, 2021, the Company repurchased 265,809 shares of its common stock for $ 50.5 million under the Repurchase Program.

As of March 31, 2021, the Company has remaining authorization to repurchase up to approximately $ 0.9 billion of its common stock under the Repurchase Program.

During the six months ended June 30, 2021, the Company repurchased 459,309 shares of its common stock for $ 95.5 million under its equity repurchase program (the “Repurchase Program”).

As of June 30, 2021, the Company has remaining authorization to repurchase up to approximately $ 0.8 billion of its common stock under the Repurchase Program.

In addition, from time to time, the Company has repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

Non-controlling Interests

On April 1, 2021 the Company acquired the 40 % non-controlling interest in Q 2 Solutions from Quest Diagnostics Incorporated ("Quest") for approximately $ 756 million, financed with cash on hand.

The $ 756 million reflects post-closing adjustments, which are still being finalized.

The transaction resulted in the Company having 100 % ownership in Q 2 Solutions.

As of June 30, 2021 the Company had no other material non-controlling interests .

Restructuring

3 unchanged sentences

The following amounts were recorded for the restructuring plans:

(in millions)

Severance and

Related Costs

(in millions) Severance and

Related Costs Facility

Exit Costs Total

Balance as of December 31, 2020 $ 51 $ 2 $ 53

Expense, net of reversals 13 — 13

( 14 ) — ( 14 )

Payments ( 24 ) ( 1 ) ( 25 )

Foreign currency translation and other ( 1 ) — ( 1 )

( 2 ) — ( 2 )

Balance as of March 31, 2021 $ 44 $ 2 $ 46

Balance as of June 30, 2021 $ 39 $ 1 $ 40

Restructuring costs are not allocated to the Company’s reportable segments as they are not part of the segment performance measures regularly reviewed by management.

The Company expects that the majority of the restructuring accruals as of March 31, 2021 will be paid in 2021 and 2022.

The effective income tax rate was 17.1 % and 16.7 % in the first quarter of 2021 and 2020, respectively.

The effective income tax rate in the first quarter of 2021 and 2020 was favorably impacted by $ 17 million and $ 21 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

Also, the effective income tax rate in the first quarter of 2020 was unfavorably impacted by a $ 10 million discrete tax expense related to change in the measurement of U.S.

The Company expects that the majority of the restructuring accruals as of June 30, 2021 will be paid in 2021 and 2022.

The effective income tax rate was 21.6 % and 20.0 % in the second quarter of 2021 and 2020, respectively, and 19.2 % and 15.6 % in the first six months of 2021 and 2020, respectively.

The effective income tax rate in the second quarter and first six months of 2021 and 2020 was favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

For the second quarter of 2021 and 2020 this impact was $ 6 million and $ 5 million, respectively, and for the first six months of 2021 and 2020 this impact was $ 23 million and $ 26 million, respectively.

Also, the effective income tax rate in the first six months of 2020 was unfavorably impacted by a $ 10 million discrete tax expense related to change in the measurement of U.S.

tax on undistributed foreign earnings.

1 unchanged sentence

Below is a summary of the components of AOCI:

(in millions)

(in millions) Foreign

Translation Derivative

Instruments Defined

Balance as of December 31, 2020 $ ( 395 ) $ ( 48 ) $ ( 85 ) $ 323 $ ( 205 )

Other comprehensive income (loss) before reclassifications ( 81 ) 4 — ( 39 ) ( 116 )

( 116 ) 7 — ( 63 ) ( 172 )

Reclassification adjustments — 5 — ( 1 ) 4

— 2 — ( 1 ) 1

Balance as of March 31, 2021 $ ( 511 ) $ ( 39 ) $ ( 85 ) $ 259 $ ( 376 )

Acquisition of Quest's non-controlling interest ( 10 ) — — — ( 10 )

Balance as of June 30, 2021 $ ( 486 ) $ ( 39 ) $ ( 85 ) $ 283 $ ( 327 )

Below is a summary of the adjustments for (gains) losses reclassified from AOCI into the condensed consolidated statements of income and the affected financial statement line item:

(in millions)

Affected Financial Statement

Three Months Ended March 31,

(in millions) Affected Financial Statement

Line Item Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Derivative instruments:

Interest rate swaps and caps Interest expense $ 5 $ — $ 9 $ —

Foreign exchange forward contracts

Other income, net — 14

Foreign exchange forward contracts Revenues ( 2 ) 3 ( 4 ) 5

Foreign exchange forward contracts Other income, net — ( 14 ) — —

Total before income taxes 3 ( 11 ) 5 5

4 unchanged sentences

Technology & Analytics Solutions provides mission-critical information, technology solutions and real-world insights and services to the Company’s life sciences customers.

Research & Development Solutions, which primarily serves

biopharmaceutical customers, provides outsourced clinical research and clinical trial related services.

Research & Development Solutions, which primarily serves biopharmaceutical customers, provides outsourced clinical research and clinical trial related services.

Contract Sales & Medical Solutions provides health care provider (including contract sales) and patient engagement services to both biopharmaceutical customers and the broader healthcare market.

4 unchanged sentences

The Company’s reportable segment information is presented below:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

Technology & Analytics Solutions $ 1,353 $ 1,109 $ 2,701 $ 2,226

$ 1,348 $ 1,117

Research & Development Solutions 1,891 1,235 3,759 2,676

18 unchanged sentences

General corporate and unallocated ( 82 ) ( 63 ) ( 139 ) ( 87 )

( 57 ) ( 24 )

Depreciation and amortization ( 343 ) ( 308 ) ( 666 ) ( 624 )

( 323 ) ( 316 )

Restructuring costs ( 4 ) ( 16 ) ( 13 ) ( 30 )

2 unchanged sentences

The following table presents the weighted average number of outstanding stock-based awards not included in the computation of diluted earnings per share because they are subject to performance conditions or the effect of including such stock-based awards in the computation would be anti-dilutive:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

1 unchanged sentence

Shares subject to anti-dilutive stock-based awards 0.2 1.8 0.2 1.4

Dilutive shares excluded from dilutive earnings per share — 3.3 — —

Total shares excluded from diluted earnings per share 1.0 6.2 1.0 2.6

2 unchanged sentences

Stock-based awards will have a dilutive effect under the treasury method when the respective period’s average market value of the Company’s common stock exceeds the exercise proceeds.

Subsequent Events

On April 1, 2021 the Company acquired the 40 % non-controlling interest in Q 2 Solutions from Quest Diagnostics Incorporated for $ 760 million, financed with cash on hand.

The transaction will result in the Company having 100 % ownership in Q 2 Solutions.

The Company previously held a controlling interest in, and consolidated the financial results of the joint venture.

The transaction will be recorded in the second quarter of 2021.

For the quarter ended June 30, 2020, all potentially dilutive securities were excluded from the diluted earnings per share calculation because the Company incurred a net loss for this period and their inclusion would be anti-dilutive.

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

What changed 10-Q

Item 1. Financial Statements