What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-07-28 compared with 2021-04-23 · 139 added, 69 removed, 185 unchanged (53% of the section changed)

36 unchanged sentences

We are a global leader in protecting individual patient privacy.

We use a wide variety of privacy-enhancing technologies and safeguards to protect individual privacy while generating and analyzing information on a scale that helps healthcare stakeholders identify disease patterns and correlate with the precise treatment path and therapy needed for better

Our insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures.

15 unchanged sentences

Foreign Currency Translation

In the first three months of 2021, approximately 35% of our revenues were denominated in currencies other than the United States dollar, which represents approximately 60 currencies.

In the first six months of 2021, approximately 35% of our revenues were denominated in currencies other than the United States dollar, which represents approximately 60 currencies.

Because a large portion of our revenues and expenses are denominated in foreign currencies and our financial statements are reported in United States dollars, changes in foreign currency exchange rates can significantly affect our results of operations.

The revenue and expenses of our foreign operations are generally denominated in local currencies and translated into United States dollars for financial reporting purposes.

The revenues and expenses of our foreign operations are generally denominated in local currencies and translated into United States dollars for financial reporting purposes.

Accordingly, exchange rate fluctuations will affect the translation of foreign results into United States dollars for purposes of reporting our condensed consolidated results.

3 unchanged sentences

For information regarding our results of operations for Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions, refer to “Segment Results of Operations” later in this section.

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions)

$ 3,409 $ 2,754 $ 655 23.8

For the first quarter of 2021, our revenues increased $655 million, or 23.8%, as compared to the same period in 2020.

This increase was comprised of constant currency revenue growth of approximately $588 million, or 21.4%, reflecting a $405 million increase in Research & Development Solutions, an $8 million decrease in Contract Sales & Medical Solutions, and a $191 million increase in Technology & Analytics Solutions.

Costs of Revenue, exclusive of Depreciation and Amortization

Three Months Ended March 31,

Revenues $ 3,438 $ 2,521 $ 917 36.4 %

For the second quarter of 2021, our revenues increased $917 million, or 36.4%, as compared to the same period in 2020.

This increase was comprised of constant currency revenue growth of approximately $838 million, or 33.2%, reflecting an $199 million increase in Technology & Analytics Solutions, a $626 million increase in Research & Development Solutions, and a $13 million increase in Contract Sales & Medical Solutions.

Six Months Ended June 30, Change

(in millions)

Revenues $ 6,847 $ 5,275 $ 1,572 29.8 %

For the first six months of 2021, our revenues increased $1,572 million, or 29.8%, as compared to the same period in 2020.

This increase was comprised of constant currency revenue growth of approximately $1,426 million, or 27.0%.

The constant currency revenue growth was comprised of a $390 million increase in Technology & Analytics Solutions, a $1,031 million increase in Research & Development Solutions, and a $5 million increase in Contract Sales & Medical Solutions .

Costs of Revenue, exclusive of Depreciation and Amortization

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

(in millions)

2021 2020 2021 2020

Costs of revenue, exclusive of depreciation and amortization $ 2,323 $ 1,704 $ 4,616 $ 3,528

% of revenues

67.6 % 67.6 % 67.4 % 66.9 %

The $469 million increase in costs of revenues, exclusive of depreciation and amortization, for the three months ended March 31, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $410 million, or 22.5%, reflecting a $305 million increase in Research & Development Solutions, a $14 million decrease in Contract Sales & Medical Solutions, and an $119 million increase in Technology & Analytics Solutions.

The $619 million increase in costs of revenue, exclusive of depreciation and amortization, for the three months ended June 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $536 million, or 31.5%, reflecting an $119 million increase in Technology & Analytics Solutions, a $412 million increase in Research & Development Solutions, and a $5 million increase in Contract Sales & Medical Solutions.

The $1,088 million increase in costs of revenue, exclusive of depreciation and amortization, for the six months ended June 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $946 million, or 26.8%, reflecting a $238 million increase in Technology & Analytics Solutions, a $717 million increase in Research & Development Solutions, and a $(9) million decrease in Contract Sales & Medical Solutions.

Selling, General and Administrative Expenses

Three Months Ended March 31,

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

(in millions)

2021 2020 2021 2020

Selling, general and administrative expenses $ 482 $ 431 $ 924 $ 838

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14.0 % 17.1 % 13.5 % 15.9 %

The $35 million increase in selling, general and administrative expenses for the three months ended March 31, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $25 million, or 6.1%, reflecting a $3 million decrease in Research & Development Solutions, an $1 million decrease in Technology & Analytics Solutions, a $2 million decrease in Contract Sales & Medical Solutions, offset by a $31 million increase in general corporate and unallocated expenses.

The $51 million increase in selling, general and administrative expenses for the three months ended June 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $36 million, or 8.4%, reflecting a

$7 million increase in Technology & Analytics Solutions, a $14 million increase in Research & Development Solutions, and a $17 million increase in general corporate and unallocated expenses, offset by a $(2) million decrease in Contract Sales & Medical Solutions.

The $86 million increase in selling, general and administrative expenses for the six months ended June 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $61 million, or 7.3%, reflecting a $6 million increase in Technology & Analytics Solutions, an $11 million increase in Research & Development Solutions, and a $48 million increase in general corporate and unallocated expenses, offset by a $(4) million decrease in Contract Sales & Medical Solutions.

Depreciation and Amortization

Three Months Ended March 31,

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

(in millions)

2021 2020 2021 2020

Depreciation and amortization 343 308 666 624

% of revenues

The $7 million increase in depreciation and amortization in the three months ended March 31, 2021 as compared to the same period in 2020 was primarily due to higher intangible asset balances as a result of acquisitions occurring in 2020 and increased amortization due to higher capitalized software balances.

10.0 % 12.2 % 9.7 % 11.8 %

The $35 million and $42 million increases in depreciation and amortization in the three and six months ended June 30, 2021 as compared to the same periods in 2020 was primarily due to higher intangible asset balances as a result of acquisitions occurring in 2020 and 2021, increased amortization due to higher capitalized software balances, and accelerated amortization related to intangibles impacted by the acquisition of Quest's non-controlling interest.

Restructuring Costs

Three Months Ended March 31,

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

(in millions) 2021 2020 2021 2020

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Interest Income and Interest Expense

Three Months Ended March 31,

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

(in millions) 2021 2020 2021 2020

2 unchanged sentences

Interest income includes interest received primarily from bank balances and investments.

Interest expense during the three months ended March 31, 2021 was lower than the same period in 2020 due to lower interest rates attributed to lower LIBOR rates and the redemption of the €1,425 million of 3.250% senior notes due 2025, partially offset by an increase in the average debt outstanding.

Interest expense during the three and six months ended June 30, 2021 was lower than the same periods in 2020 due to lower interest rates attributed to lower LIBOR rates and the redemption of the €1,425 million of 3.250% senior notes due 2025, partially offset by an increase in the average debt outstanding.

See “Liquidity and Capital Resources” for more information on this transaction.

Loss on Extinguishment of Debt

Three Months Ended March 31,

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

(in millions) 2021 2020 2021 2020

Loss on extinguishment of debt $ — $ 12 $ 24 $ 12

During the three months ended March 31, 2021, we recognized a loss on extinguishment of debt for fees and expenses incurred related to the refinancing of our 3.250% senior notes due 2025.

During the six months ended June 30, 2021, we recognized a loss on extinguishment of debt for fees and expenses incurred related to the refinancing of our 3.250% senior notes due 2025.

Other Income, Net

Three Months Ended March 31,

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

(in millions) 2021 2020 2021 2020

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

Other income, net for the three months ended March 31, 2021 increased as compared to the same period in the prior year, primarily due to foreign currency gain, as well as gain on investments in mutual funds.

Income Tax Expense

Three Months Ended March 31,

Other income, net for the three months ended June 30, 2021 decreased as compared to the same period in the prior year, primarily due to less investment gain on marketable securities, offset by less foreign currency loss.

Other income, net for the six months ended June 30, 2021 increased as compared to the same period in the prior year, primarily due to foreign currency gain, offset by less investment gain on marketable securities.

Income Tax Expense (Benefit)

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

(in millions) 2021 2020 2021 2020

Income tax expense $ 44 $ 17

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

Our 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, our 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.

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

Our 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 .

Our effective income tax rate in the second quarter and in the 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, our 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.

Equity in Earnings of Unconsolidated Affiliates

Three Months Ended March 31,

Equity in Earnings (Loss) of Unconsolidated Affiliates

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

(in millions) 2021 2020 2021 2020

Equity in earnings of unconsolidated affiliates $ 4 $ 6

Equity in earnings of unconsolidated affiliates for the three months ended March 31, 2021 remained relatively consistent with the same period in the prior year.

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

Equity in earnings (loss) of unconsolidated affiliates for the three and six months ended June 30, 2021 remained relatively consistent with the same periods in the prior year.

Net Income Attributable to Non-controlling Interests

Three Months Ended March 31,

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

(in millions) 2021 2020 2021 2020

1 unchanged sentence

Net income attributable to non-controlling interests included Quest Diagnostics Incorporated’s interest in Q 2 Solutions.

On April 1, 2021 the Company acquired the 40% non-controlling interest in Q 2 Solutions from Quest Diagnostics Incorporated which will result in a decrease in the net income attributable to non-controlling interests in future periods.

On April 1, 2021 the Company acquired the 40% non-controlling interest in Q 2 Solutions from Quest Diagnostics Incorporated which resulted in a decrease in the net income attributable to non-controlling interests for the three and six months ended June 30, 2021 as compared to prior periods.

See Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding this transaction.

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The Company’s revenues and profit by segment are as follows:

Three Months Ended March 31, 2021 and 2020

Three Months Ended June 30, 2021 and 2020

Segment Revenues Segment Profit

8 unchanged sentences

Consolidated $ 3,438 $ 2,521 $ 286 $ 62

Six Months Ended June 30, 2021 and 2020

Segment Revenues Segment Profit

(in millions) 2021 2020 2021 2020

Technology & Analytics Solutions $ 2,701 $ 2,226 $ 701 $ 544

Research & Development Solutions 3,759 2,676 705 430

Contract Sales & Medical Solutions 387 373 40 22

Total 6,847 5,275 1,446 996

General corporate and unallocated (139) (87)

Depreciation and amortization (666) (624)

Restructuring costs (13) (30)

Consolidated $ 6,847 $ 5,275 $ 628 $ 255

Certain costs are not allocated to our segments and are reported as general corporate and unallocated expenses.

2 unchanged sentences

Technology & Analytics Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions) 2021 2020 $ %

3 unchanged sentences

Segment profit $ 352 $ 276 $ 76 27.5 %

Technology & Analytics Solutions’ revenues were $1,348 million for the first quarter of 2021, an increase of $231 million, or 20.7%, over the same period in 2020.

Six Months Ended June 30, Change

(in millions) 2021 2020 $ %

Revenues $ 2,701 $ 2,226 $ 475 21.3 %

Costs of revenue, exclusive of depreciation and amortization 1,620 1,321 299 22.6

Selling, general and administrative 380 361 19 5.3

Segment profit $ 701 $ 544 $ 157 28.9 %

Technology & Analytics Solutions’ revenues were $1,353 million for the second quarter of 2021, an increase of $244 million, or 22.0%, over the same period in 2020.

This increase was comprised of constant currency revenue growth of approximately $199 million, or 17.9%, reflecting revenue growth across all regions.

The revenue growth in these regions was driven by higher real-world and analytical services and COVID-19 related work.

Technology & Analytics Solutions’ revenues were $2,701 million for the first six months of 2021, an increase of $475 million, or 21.3%, over the same period in 2020.

This increase was comprised of constant currency revenue growth of approximately $390 million, or 17.5%, reflecting revenue growth across all regions.

The revenue growth for the three months ended June 30, 2021 was driven by higher technology, real-world and analytical services and COVID-19 related work.

The revenue growth for the six months ended June 30, 2021 was driven by higher real-world and analytical services and COVID-19 related work.

Costs of Revenue, exclusive of Depreciation and Amortization

Technology & Analytics Solutions’ costs of revenue increased $146 million, or 21.9%, in the first quarter of 2021 over the same period in 2020.

This increase included a constant currency increase of approximately $119 million, or 17.9%, reflecting an increase in compensation and related expenses to support revenue growth.

Technology & Analytics Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $153 million, or 23.4%, in the second quarter of 2021 over the same period in 2020.

This increase included a constant currency increase of approximately $119 million, or 18.2%.

Technology & Analytics Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $299 million, or 22.6%, in the first six months of 2021 over the same period in 2020.

This increase included a constant currency increase of approximately $238 million, or 18.0%.

The constant currency increase for the three and six months ended June 30, 2021 was primarily related to an increase in compensation and related expenses to support revenue growth.

Selling, General and Administrative Expenses

Technology & Analytics Solutions’ selling, general and administrative expenses increased $4 million, or 2.2%, in the first quarter of 2021 as compared to the same period in 2020, which included a constant currency decrease of approximately $1 million, or (0.5)%, reflecting the impact of on-going cost containment actions.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $15 million, or 8.4%, in the second quarter of 2021 as compared to the same period in 2020, which included a constant currency increase of approximately $7 million, or 3.9%.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $19 million, or 5.3%, in the first six months of 2021 as compared to the same period in 2020, which included a constant currency increase of approximately $6 million, or 1.7%.

The constant currency increase for the three and six months ended June 30, 2021 was primarily related to an increase in compensation and related expenses.

Research & Development Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions)

3 unchanged sentences

Selling, general and administrative expenses

193 175 18 10.3

Segment profit

$ 343 $ 162 $ 181 111.7 %

Research & Development Solutions’ contracted backlog increased from $22.6 billion as of December 31, 2020 to $23.2 billion as of March 31, 2021 and we expect approximately $6.5 billion of this backlog to convert to revenue in the next twelve months.

Research & Development Solutions’ revenues were $1,868 million in the first quarter of 2021, an increase of $427 million, or 29.6%, over the same period in 2020.

This increase was comprised of constant currency revenue increase of approximately $405 million, or 28.1%, reflecting volume-related increases in clinical services and lab testing, including incremental revenue from large COVID-19 vaccine clinical trials.

Six Months Ended June 30, Change

(in millions)

$ 3,759 $ 2,676 $ 1,083 40.5 %

Costs of revenue, exclusive of depreciation and amortization

Research & Development Solutions’ costs of revenue increased $333 million, or 33.7%, in the first quarter of 2021 over the same period in 2020.

This increase included a constant currency increase of approximately $305 million, or 30.9%, reflecting an increase in compensation and related expenses as a result of volume-related increases in clinical services and lab testing.

2,676 1,886 790 41.9

Selling, general and administrative expenses

Research & Development Solutions’ selling, general and administrative expenses remained flat in the first quarter of 2021 as compared to the same period in 2020, and included a constant currency decrease of approximately $3 million, or (1.6)%.

378 360 18 5.0

Segment profit

$ 705 $ 430 $ 275 64.0 %

Research & Development Solutions’ contracted backlog increased from $22.6 billion as of December 31, 2020 to $23.9 billion as of June 30, 2021 and we expect approximately $6.6 billion of this backlog to convert to revenue in the next twelve months.

Research & Development Solutions’ revenues were $1,891 million in the second quarter of 2021, an increase of $656 million, or 53.1%, over the same period in 2020.

This increase was comprised of constant currency revenue increase of approximately $626 million, or 50.7%, reflecting revenue growth across all regions.

Research & Development Solutions’ revenues were $3,759 million in the first six months of 2021, an increase of $1,083 million, or 40.5%, over the same period in 2020.

This increase was comprised of constant currency revenue increase of approximately $1,031 million, or 38.5%, reflecting revenue growth across all regions.

The revenue growth for the three and six months ended June 30, 2021 was primarily the result of volume-related increases in clinical services and lab testing, including incremental revenue from large COVID-19 vaccine clinical trials.

Costs of Revenue, exclusive of Depreciation and Amortization

Research & Development Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $457 million, or 50.9%, in the second quarter of 2021 over the same period in 2020.

This increase included a constant currency increase of approximately $412 million, or 45.9%.

Research & Development Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $790 million, or 41.9%, in the first six months of 2021 over the same period in 2020.

This increase included a constant currency increase of approximately $717 million, or 38.0%.

The constant currency increase for the three and six months ended June 30, 2021 was primarily related to an increase in compensation and related expenses as a result of volume-related increases in clinical services and lab testing.

Selling, General and Administrative Expenses

Research & Development Solutions’ selling, general and administrative expenses increased $18 million, or 10.3% in the second quarter of 2021 as compared to the same period in 2020, and included a constant currency increase of approximately $14 million, or 8.0%.

Research & Development Solutions’ selling, general and administrative expenses increased $18 million, or 5.0% in the first six months of 2021 as compared to the same period in 2020, and included a constant currency increase of approximately $11 million, or 3.1%.

The constant currency increase for the three and six months ended June 30, 2021 was primarily related to an increase in compensation and related expenses.

Contract Sales & Medical Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions)

6 unchanged sentences

$ 20 $ 11 $ 9 81.8 %

Contract Sales & Medical Solutions’ revenues were $193 million in the first quarter of 2021, a decrease of $3 million, or (1.5)%, over the same period in 2020.

This decrease included a constant currency revenue decrease of approximately $8 million, or (4.1)%, reflecting a volume decrease in the Americas region, partially offset by a volume increase in the Asia-Pacific region.

Six Months Ended June 30, Change

(in millions)

Revenues $ 387 $ 373 $ 14 3.8 %

Costs of revenue, exclusive of depreciation and amortization

Contract Sales & Medical Solutions’ costs of revenue decreased $10 million, or (5.9)%, in the first quarter of 2021 as compared to the same period in 2020.

This decrease included a constant currency decrease of approximately $14 million, or (8.2)%, reflecting a decrease in compensation and related expenses as a result of reduced volume in the Americas region.

320 321 (1) (0.3)

Selling, general and administrative expenses 27 30 (3) (10.0)

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $2 million, or (13.3)%, in the first quarter of 2021 as compared to the same period in 2020.

This decrease included a constant currency decrease of approximately $2 million, or (13.3)%, reflecting a decrease in compensation and related expenses.

Segment profit $ 40 $ 22 $ 18 81.8 %

Contract Sales & Medical Solutions’ revenues were $194 million in the second quarter of 2021, an increase of $17 million, or 9.6%, over the same period in 2020.

This increase included a constant currency revenue increase of approximately $13 million, or 7.3%.

Contract Sales & Medical Solutions’ revenues were $387 million in the first six months of 2021, an increase of $14 million, or 3.8%, over the same period in 2020.

This increase included a constant currency revenue increase of approximately $5 million, or 1.3%.

The revenue growth for the three and six months ended June 30, 2021 was largely due to a volume increase in the Asia-Pacific region.

Costs of Revenue, exclusive of Depreciation and Amortization

Contract Sales & Medical Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $9 million, or 6.0%, in the second quarter of 2021 as compared to the same period in 2020.

This increase included a constant currency increase of approximately $5 million, or 3.3%, primarily as a result of an increase in compensation and related expenses.

Contract Sales & Medical Solutions’ costs of revenue, exclusive of depreciation and amortization, decreased $(1) million, or (0.3)%, in the first six months of 2021 as compared to the same period in 2020.

This decrease included a constant currency decrease of approximately $(9) million, or (2.8)%, primarily as a result of a decrease in compensation and related expenses.

Selling, General and Administrative Expenses

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $(1) million, or (6.7)%, in the second quarter of 2021 as compared to the same period in 2020.

This decrease included a constant currency decrease of approximately $(2) million, or (13.3)%.

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $(3) million, or (10.0)%, in the first six months of 2021 as compared to the same period in 2020.

This decrease included a constant currency decrease of approximately $(4) million, or (13.3)%.

The constant currency decrease for the three and six months ended June 30, 2021 was primarily related to a decrease in compensation and related expenses.

Liquidity and Capital Resources

7 unchanged sentences

We have and expect to transfer cash from those subsidiaries to the United States and to other international subsidiaries when it is cost effective to do so.

We had a cash balance of $2,305 million as of March 31, 2021 ($933 million of which was in the United States), an increase from $1,814 million as of December 31, 2020.

We had a cash balance of $1,807 million as of June 30, 2021 ( $924 million of which was in the United States), a decrease from $1,814 million as of December 31, 2020.

Based on our current operating plan, we believe that our available cash and cash equivalents, future cash flows from operations and our ability to access funds under our revolving and other credit facilities will enable us to fund our operating requirements and capital expenditures and meet debt obligations for at least the next 12 months.

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We cannot provide assurances that we will be able to complete any such financing arrangements or other transactions on favorable terms or at all.

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.

See Note 14 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding this transaction.

Equity Repurchase Program

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

During the six months ended June 30, 2021, we repurchased 459,309 shares of our common stock for $95.5 million under the Repurchase Program.

See Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding the Repurchase Program.

As of March 31, 2021, we have remaining authorization to repurchase up to approximately $0.9 billion of our common stock under the Repurchase Program.

As of June 30, 2021, we have remaining authorization to repurchase up to approximately $0.8 billion of our common stock under the Repurchase Program.

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

2 unchanged sentences

See Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding our credit arrangements.

As of March 31, 2021, we had $12.3 billion of total indebtedness, excluding $1.5 billion of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of March 31, 2021, we believe we were in compliance with our restrictive covenants in all material respects.

Three months ended March 31, 2021 and 2020

As of June 30, 2021, we had $12.4 billion of total indebtedness, excluding $1.5 billion of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of June 30, 2021, we believe we were in compliance with our restrictive covenants in all material respects.

Six months ended June 30, 2021 and 2020

Cash Flow from Operating Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2021 2020

Net cash provided by operating activities $ 1,406 $ 635

Cash provided by operating activities increased $704 million during the first three months of 2021 as compared to the same period in 2020.

The increase was primarily due to an increase in cash collections from clients resulting in a decrease in accounts receivable and unbilled services ($132 million), an increase in unearned income ($294 million), higher cash related net income ($165 million) and higher cash from other operating assets and liabilities ($113 million).

Cash provided by operating activities increased $771 million during the first six months of 2021 as compared to the same period in 2020.

The increase was primarily due to higher cash related net income ($474 million), an increase in cash collections from unearned income ($298 million) and higher cash from other operating assets and liabilities ($24 million), offset by a decrease in cash from accounts receivable and unbilled services ($25 million).

Cash Flow from Investing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2021 2020

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

Cash used in investing activities increased $26 million during the first three months of 2021 as compared to the same period in 2020 primarily driven by lower payments received from unconsolidated affiliates ($18 million) and increased cash used for the purchase of property and equipment ($8 million).

Cash used in investing activities decreased $8 million during the first six months of 2021 as compared to the same period in 2020 primarily driven by less cash used for acquisitions of businesses ($27 million), offset by lower payments received from unconsolidated affiliates ($18 million).

Cash Flow from Financing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2021 2020

Net cash (used in) provided by financing activities $ (1,031) $ 34

Cash used in financing activities increased $275 million during the first three months of 2021 as compared to the same period in 2020 primarily due to a decrease in cash provided by proceeds from debt issuances, net of repayments and debt issuance costs ($803 million) and an increase in cash payments related to employee stock option plans ($15 million), offset by a decrease in cash used in repayments of revolving credit facilities, net of proceeds ($260 million), and a decrease in cash used to repurchase common stock ($283 million).

Cash used in financing activities increased $1,065 million during the first six months of 2021 as compared to the same period in 2020 primarily due to an increase in debt and principal payments ($1,039 million), cash payments for the acquisition of Quest's non-controlling interest ($756 million), an increase in cash payments on contingent consideration and deferred purchase price accruals ($22 million), and an increase in cash payments related to employee stock option plans ($14 million), offset by a decrease in cash used in repayments of revolving credit facilities, net of proceeds ($360 million), a decrease in cash used to repurchase common stock ($239 million), an increase in cash provided by proceeds from debt issuances, net of repayments and debt issuance costs ($162 million), and a decrease in cash distributions to non-controlling interests ($5 million).

Off-Balance Sheet Arrangements

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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 2. Management’s Discussion and Analysis