IQVIA HOLDINGS INC. 10-Q

Item 1. Financial Statements IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share data) 2021 2020 2021 2020 Revenues $ 3,438 $ 2,521 $ 6,847 $ 5,275 Costs of revenue, exclusive of depreciation and amortization 2,323 1,704 4,616 3,528 Selling, general and administrative expenses 482 431 924 838 Depreciation and amortization 343 308 666 624 Restructuring costs 4 16 13 30 Income from operations 286 62 628 255 Interest income ( 1 ) ( 1 ) ( 2 ) ( 3 ) Interest expense 94 108 193 214 Loss on extinguishment of debt — 12 24 12 Other income, net ( 29 ) ( 32 ) ( 66 ) ( 45 ) 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 (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 Diluted $ 0.90 $ ( 0.12 ) $ 1.99 $ 0.30 Weighted average common shares outstanding: Basic 191.6 190.9 191.6 191.3 Diluted 194.9 190.9 194.9 195.0 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) Three Months Ended June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 Net income (loss) $ 175 $ ( 21 ) $ 392 $ 70 Comprehensive income (loss) adjustments: 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 (gains) on derivative instruments included in net income, net of income tax benefit of $ — , $ 1 , $ 1 , $ 1 3 ( 12 ) 4 4 Comprehensive income (loss) 234 19 280 ( 68 ) Comprehensive income attributable to non-controlling interests — ( 1 ) ( 5 ) ( 6 ) Comprehensive income (loss) attributable to IQVIA Holdings Inc. $ 234 $ 18 $ 275 $ ( 74 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except per share data) June 30, 2021 December 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,807 $ 1,814 Trade accounts receivable and unbilled services, net 2,276 2,410 Prepaid expenses 178 159 Income taxes receivable 69 56 Investments in debt, equity and other securities 104 88 Other current assets and receivables 634 563 Total current assets 5,068 5,090 Property and equipment, net 470 482 Operating lease right-of-use assets 430 471 Investments in debt, equity and other securities 74 78 Investments in unconsolidated affiliates 84 84 Goodwill 12,551 12,654 Other identifiable intangibles, net 4,770 5,205 Deferred income taxes 105 114 Deposits and other assets 385 386 Total assets $ 23,937 $ 24,564 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 2,756 $ 2,813 Unearned income 1,597 1,252 Income taxes payable 101 102 Current portion of long-term debt 147 149 Other current liabilities 218 242 Total current liabilities 4,819 4,558 Long-term debt, less current portion 12,140 12,384 Deferred income taxes 266 338 Operating lease liabilities 345 371 Other liabilities 607 633 Total liabilities 18,177 18,284 Commitments and contingencies (Note 8) Stockholders’ equity: 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 10,696 11,095 Retained earnings 1,664 1,277 Treasury stock, at cost, 64.0 and 63.5 shares as of June 30, 2021 and December 31, 2020, respectively ( 6,273 ) ( 6,166 ) Accumulated other comprehensive loss ( 327 ) ( 205 ) Equity attributable to IQVIA Holdings Inc.’s stockholders 5,760 6,001 Non-controlling interests — 279 Total stockholders’ equity 5,760 6,280 Total liabilities and stockholders’ equity $ 23,937 $ 24,564 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) 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: Depreciation and amortization 666 624 Amortization of debt issuance costs and discount 10 8 Stock-based compensation 80 36 Earnings from unconsolidated affiliates ( 5 ) ( 5 ) Gain on investments, net ( 9 ) ( 14 ) Benefit from deferred income taxes ( 43 ) ( 102 ) Changes in operating assets and liabilities: Change in accounts receivable, unbilled services and unearned income 481 208 Change in other operating assets and liabilities ( 166 ) ( 190 ) Net cash provided by operating activities 1,406 635 Investing activities: Acquisition of property, equipment and software ( 294 ) ( 283 ) Acquisition of businesses, net of cash acquired ( 65 ) ( 92 ) Purchases of marketable securities, net ( 8 ) ( 7 ) Investments in unconsolidated affiliates, net of payments received ( 3 ) 15 Proceeds from sale of (investments in) equity securities 9 ( 2 ) Net cash used in investing activities ( 361 ) ( 369 ) Financing activities: Proceeds from issuance of debt 1,751 1,590 Payment of debt issuance costs ( 32 ) ( 33 ) Repayment of debt and principal payments on capital lease obligations ( 1,794 ) ( 755 ) Proceeds from revolving credit facility — 1,250 Repayment of revolving credit facility — ( 1,610 ) (Payments) related to employee stock option plans ( 55 ) ( 41 ) Repurchase of common stock ( 107 ) ( 346 ) Distributions to non-controlling interest, net — ( 5 ) Acquisition of Quest's non-controlling interest ( 756 ) — Contingent consideration and deferred purchase price payments ( 38 ) ( 16 ) Net cash (used in) provided by financing activities ( 1,031 ) 34 Effect of foreign currency exchange rate changes on cash ( 21 ) ( 28 ) (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 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) (in millions) Common Stock Shares Treasury Stock Shares Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive (Loss) Income Non- controlling Interests Total Balance, December 31, 2020 254.7 ( 63.5 ) $ 3 $ 11,092 $ 1,277 $ ( 6,166 ) $ ( 205 ) $ 279 $ 6,280 Issuance of common stock 0.7 — — ( 57 ) — — — — ( 57 ) Repurchase of common stock — ( 0.3 ) — — — ( 62 ) — — ( 62 ) Stock-based compensation — — — 30 — — — — 30 Net income — — — — 212 — — 5 217 Unrealized gains on derivative instruments, net of tax — — — — — — 6 — 6 Foreign currency translation, net of tax — — — — — — ( 178 ) — ( 178 ) Reclassification adjustments, net of tax — — — — — — 1 — 1 Balance, March 31, 2021 255.4 ( 63.8 ) $ 3 $ 11,065 $ 1,489 $ ( 6,228 ) $ ( 376 ) $ 284 $ 6,237 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 Stock Shares Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non- controlling Interests Total Balance, December 31, 2019 253.0 ( 60.7 ) $ 3 $ 11,046 $ 998 $ ( 5,733 ) $ ( 311 ) $ 260 $ 6,263 Issuance of common stock 0.8 — — ( 44 ) — — — — ( 44 ) Repurchase of common stock — ( 2.1 ) — — — ( 332 ) — — ( 332 ) Stock-based compensation — — — 7 — — — — 7 Distributions to non-controlling interests, net — — — — — — — ( 5 ) ( 5 ) Net income — — — — 82 — — 9 91 Unrealized losses on derivative instruments, net of tax — — — — — — ( 39 ) — ( 39 ) Foreign currency translation, net of tax — — — — — — ( 151 ) ( 4 ) ( 155 ) Reclassification adjustments, net of tax — — — — — — 16 — 16 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. 7 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited) 1. Summary of Significant Accounting Policies The Company IQVIA Holdings Inc. (together with its subsidiaries, the “Company” or “IQVIA”) is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry. With approximately 74,000 employees, IQVIA conducts business in more than 100 countries. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the Company’s financial condition and results of operations have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The balance sheet as of December 31, 2020 has been derived from the audited consolidated financial statements of the Company, but does not include all the disclosures required by GAAP. Recently Issued Accounting Standards Accounting pronouncements adopted In March 2020, the Financial Accounting Standards Board ("FASB") issued new accounting guidance that provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The new accounting guidance became effective for the Company as of March 12, 2020 through December 31, 2022. The Company adopted this new accounting guidance on January 1, 2021. The adoption of this new accounting guidance did not have a material effect on the Company’s consolidated financial statements. In January 2020, the FASB issued new accounting guidance that states any equity security transitioning from the alternative method of accounting to the equity method, or vice versa, due to an observable transaction, will be remeasured immediately before the transition. In addition, the new accounting guidance clarifies the accounting for certain non-derivative forward contracts or purchased call options to acquire equity securities stating such instruments will be measured using the fair value principles before settlement or exercise. The Company adopted this new accounting guidance on January 1, 2021. The adoption of this new accounting guidance did not have a material effect on the Company’s consolidated financial statements. In December 2019, the FASB issued new accounting guidance to clarify and simplify the accounting for income taxes. Changes under the new guidance includes eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The Company adopted this new accounting guidance on January 1, 2021. The adoption of this new accounting guidance did not have a material effect on the Company’s consolidated financial statements. 8 Table of contents 2. 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 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 Revenues: Americas $ 635 $ 935 $ 86 $ 1,656 Europe and Africa 565 507 42 1,114 Asia-Pacific 153 449 66 668 Total revenues $ 1,353 $ 1,891 $ 194 $ 3,438 Three Months Ended June 30, 2020 (in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Total Revenues: Americas $ 567 $ 528 $ 80 $ 1,175 Europe and Africa 401 375 40 816 Asia-Pacific 141 332 57 530 Total revenues $ 1,109 $ 1,235 $ 177 $ 2,521 Six Months Ended June 30, 2021 (in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Total Revenues: 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 Revenues: 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 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. The customer contract transaction price allocated to the remaining performance obligations differs from backlog in that it does not include wholly unperformed contracts under which the customer has a unilateral right to cancel the arrangement . 9 Table of contents 3. Trade Accounts Receivable, Unbilled Services and Unearned Income Trade accounts receivables and unbilled services consist of the following: (in millions) June 30, 2021 December 31, 2020 Trade accounts receivable: Billed $ 1,146 $ 1,181 Unbilled services 1,161 1,263 Trade accounts receivable and unbilled services 2,307 2,444 Allowance for doubtful accounts ( 31 ) ( 34 ) Trade accounts receivable and unbilled services, net $ 2,276 $ 2,410 Unbilled services and unearned income were as follows: (in millions, except percentages) June 30, 2021 December 31, 2020 Change Unbilled services $ 1,161 $ 1,263 $ ( 102 ) Unearned income ( 1,597 ) ( 1,252 ) ( 345 ) 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 $ 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 and six months ended June 30, 2021 and 2020. 4. Goodwill 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 Business combinations 43 25 — 68 Impact of foreign currency fluctuations and other ( 181 ) ( 3 ) 13 ( 171 ) Balance as of June 30, 2021 $ 10,726 $ 1,668 $ 157 $ 12,551 10 Table of contents 5. Derivatives 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 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 $ 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 Total derivatives $ 1 $ 42 $ 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 June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 Foreign exchange forward contracts $ ( 2 ) $ — $ ( 4 ) $ ( 6 ) Interest rate derivatives 3 ( 10 ) 13 ( 33 ) Total $ 1 $ ( 10 ) $ 9 $ ( 39 ) 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 six months ended June 30, 2021 was $ 206 million. 6. Fair Value Measurements The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying 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. 11 Table of contents 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 June 30, 2021: (in millions) Level 1 Level 2 Level 3 Total Assets: Marketable securities $ 137 $ — $ — $ 137 Derivatives — 1 — 1 Total $ 137 $ 1 $ — $ 138 Liabilities: Derivatives $ — $ 42 $ — $ 42 Contingent consideration — — 86 86 Total $ — $ 42 $ 86 $ 128 Below is a summary of the valuation techniques used in determining fair value: Marketable securities — The Company values trading and available-for-sale securities using the quoted market value of the securities held. Derivatives — Derivatives consist of foreign exchange contracts and interest rate swaps. The fair value of foreign exchange contracts is based on observable market inputs of spot and forward rates or using other observable inputs. The fair value of the interest rate swaps is the estimated amount that the Company would receive or pay to terminate such agreements, taking into account market interest rates and the remaining time to maturities or using market inputs with mid-market pricing as a practical expedient for bid-ask spread. Contingent consideration — The Company values contingent 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. 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, 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 (in millions) 2021 2020 Balance as of January 1 $ 119 $ 113 Business combinations 23 28 Contingent consideration paid ( 35 ) ( 17 ) Revaluations included in earnings and foreign currency translation adjustments ( 21 ) ( 13 ) 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 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. 12 Table of contents 7. Credit Arrangements The following is a summary of the Company’s revolving credit facilities as of June 30, 2021: Facility Interest Rates $ 1,500 million (revolving credit facility) 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 ( 0.10 % 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 June 30, 2021 plus 1 % The following table summarizes the Company’s debt at the dates indicated: (in millions) June 30, 2021 December 31, 2020 Senior Secured Credit Facilities: Term A Loan due 2023—U.S. Dollar LIBOR at average floating rates of 1.70 % $ 708 $ 728 Term A Loan due 2023—U.S. Dollar LIBOR at average floating rates of 2.50 % 744 766 Term A Loan due 2023—Euro LIBOR at average floating rates of 1.50 % 377 400 Term B Loan due 2024—U.S. Dollar LIBOR at average floating rates of 1.84 % 535 535 Term B Loan due 2024—Euro LIBOR at average floating rates of 2.00 % 1,361 1,413 Term B Loan due 2025—U.S. Dollar LIBOR at average floating rates of 1.84 % 722 726 Term B Loan due 2025—U.S. Dollar LIBOR at average floating rates of 1.95 % 922 926 Term B Loan due 2025—Euro LIBOR at average floating rates of 2.00 % 671 697 5.0 % Senior Notes due 2027—U.S. Dollar denominated 1,100 1,100 5.0 % Senior Notes due 2026—U.S. Dollar denominated 1,050 1,050 2.875 % Senior Notes due 2025—Euro denominated 499 515 3.25 % Senior Notes due 2025—Euro denominated — 1,748 2.25 % Senior Notes due 2028—Euro denominated 855 883 2.875 % Senior Notes due 2028—Euro denominated 845 872 1.750 % Senior Notes due 2026—Euro denominated 653 — 2.250 % Senior Notes due 2029—Euro denominated 1,069 — Receivables financing facility due 2022—U.S. Dollar LIBOR at average floating rates of 1.00 % 240 240 Principal amount of debt 12,351 12,600 Less: unamortized discount and debt issuance costs ( 64 ) ( 67 ) Less: current portion ( 147 ) ( 149 ) Long-term debt $ 12,140 $ 12,384 Contractual maturities of long-term debt are as follows as of June 30, 2021: (in millions) Remainder of 2021 $ 71 2022 388 2023 1,704 2024 1,885 2025 3,586 Thereafter 4,717 $ 12,351 13 Table of contents 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 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. Senior Notes On March 3, 2021, IQVIA Inc. (the “Issuer”), a wholly owned subsidiary of the Company, completed the issuance and sale of € 1,450,000,000 in gross proceeds of the Issuer's (i) € 550,000,000 aggregate principal amount of its 1.750 % Senior Notes due 2026 (the “2026 Notes”) and (ii) € 900,000,000 aggregate principal amount of its 2.250 % Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The Notes were issued pursuant to an Indenture, dated March 3, 2021, among the Issuer, U.S. Bank National Association, as trustee of the Notes, and certain subsidiaries of the Issuer as guarantors. The 2026 Notes are unsecured obligations of the Issuer, will mature on March 15, 2026 and bear interest at the rate of 1.750 % per year, with interest payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2021. The 2029 Notes are unsecured obligations of the Issuer, will mature on March 15, 2029 and bear interest at the rate of 2.250 % per year, with interest payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2021. The Issuer may redeem (i) the 2026 Notes prior to their final stated maturity, subject to a customary make-whole premium, at any time prior to March 15, 2023 (subject to a customary “equity claw” redemption right) and thereafter subject to a redemption premium declining from 0.875 % to 0.000 % and (ii) the 2029 Notes prior to their final stated maturity, subject to a customary make-whole premium, at any time prior to March 15, 2024 (subject to a customary “equity claw” redemption right) and thereafter subject to a redemption premium declining from 1.125 % to 0.000 %. The Issuer may choose to redeem the 2026 Notes and the 2029 Notes, either together or separately, on a non-ratable basis. The proceeds from the Notes offering were used to redeem all of the Issuer’s outstanding 3.250 % senior notes due 2025 (the “ 3.250 % Notes”), including the payment of premiums in respect thereof and to pay fees and expenses related to the Notes offering. On February 16, 2021, the Issuer issued a conditional notice of redemption with respect to the 3.250 % Notes, for a total redemption price equal to the sum of the principal amount of the 3.250 % Notes, accrued and unpaid interest on the 3.250 % Notes to the redemption date and the applicable redemption premium. The Issuer’s obligations with respect to the 3.250 % Notes were discharged on the same day as the Issuer completed the issuance of the Notes. Restrictive Covenants The Company’s debt agreements provide for certain covenants and events of default customary for similar instruments, including a covenant not to exceed a specified ratio of consolidated senior secured net indebtedness to Consolidated EBITDA, as defined in the senior secured credit facility agreement and a covenant to maintain a specified minimum interest coverage ratio. If an event of default occurs under any of the Company’s or the Company’s subsidiaries’ financing arrangements, the creditors under such financing arrangements will be entitled to take various actions, including the acceleration of amounts due under such arrangements, and in the case of the lenders under the revolving credit facility and term loans, other actions permitted to be taken by a secured creditor. 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 June 30, 2021, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements. 14 Table of contents 8. 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 15 Table of contents 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. 9. Stockholders’ Equity Preferred Stock 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 June 30, 2021 or December 31, 2020. Equity 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 . 10. Restructuring The Company has continued to take restructuring actions in 2021 to align its resources and reduce overcapacity to adapt to changing market conditions and integrate acquisitions. These actions include consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements. These restructuring actions are expected to continue into 2022. The following amounts were recorded for the restructuring plans: (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 Payments ( 24 ) ( 1 ) ( 25 ) Foreign currency translation and other ( 1 ) — ( 1 ) 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 June 30, 2021 will be paid in 2021 and 2022. 16 Table of contents 11. Income Taxes 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. 12. Comprehensive Income (Loss) Below is a summary of the components of AOCI: (in millions) Foreign Currency Translation Derivative Instruments Defined Benefit Plans Income Taxes Total Balance as of December 31, 2020 $ ( 395 ) $ ( 48 ) $ ( 85 ) $ 323 $ ( 205 ) Other comprehensive income (loss) before reclassifications ( 81 ) 4 — ( 39 ) ( 116 ) Reclassification adjustments — 5 — ( 1 ) 4 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 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 Revenues ( 2 ) 3 ( 4 ) 5 Foreign exchange forward contracts Other income, net — ( 14 ) — — Total before income taxes 3 ( 11 ) 5 5 Income tax benefit — 1 1 1 Total net of income taxes $ 3 $ ( 12 ) $ 4 $ 4 13. Segments The following table presents the Company’s operations by reportable segment. The Company is managed through three reportable segments, Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions. 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. Contract Sales & Medical Solutions provides health care provider (including contract sales) and patient engagement services to both biopharmaceutical customers and the broader healthcare market. Certain costs are not allocated to the Company’s segments and are reported as general corporate and unallocated expenses. These costs primarily consist of stock-based compensation and expenses related to integration activities and acquisitions. The Company also does not allocate depreciation and amortization or impairment charges to its segments. Asset information by segment is not presented, as this measure is not used by the chief operating decision maker to assess the Company’s performance. The Company’s reportable segment information is presented below: 17 Table of contents Three Months Ended June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 Revenues Technology & Analytics Solutions $ 1,353 $ 1,109 $ 2,701 $ 2,226 Research & Development Solutions 1,891 1,235 3,759 2,676 Contract Sales & Medical Solutions 194 177 387 373 Total revenues 3,438 2,521 6,847 5,275 Costs of revenue, exclusive of depreciation and amortization Technology & Analytics Solutions 808 655 1,620 1,321 Research & Development Solutions 1,355 898 2,676 1,886 Contract Sales & Medical Solutions 160 151 320 321 Total costs of revenue 2,323 1,704 4,616 3,528 Selling, general and administrative expenses Technology & Analytics Solutions 193 178 380 361 Research & Development Solutions 193 175 378 360 Contract Sales & Medical Solutions 14 15 27 30 General corporate and unallocated 82 63 139 87 Total selling, general and administrative expenses 482 431 924 838 Segment profit Technology & Analytics Solutions 352 276 701 544 Research & Development Solutions 343 162 705 430 Contract Sales & Medical Solutions 20 11 40 22 Total segment profit 715 449 1,446 996 General corporate and unallocated ( 82 ) ( 63 ) ( 139 ) ( 87 ) Depreciation and amortization ( 343 ) ( 308 ) ( 666 ) ( 624 ) Restructuring costs ( 4 ) ( 16 ) ( 13 ) ( 30 ) Total income from operations $ 286 $ 62 $ 628 $ 255 14. Earnings Per Share 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 June 30, Six Months Ended June 30, (in millions) 2021 2020 2021 2020 Shares subject to performance conditions 0.8 1.1 0.8 1.2 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 The vesting of performance awards is contingent upon the achievement of certain performance targets. The performance awards are not included in diluted earnings per share until the performance targets have been met. 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. 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. 18 Table of contents