What changed in this filing

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Item 1. Financial Statements

2021-10-22 compared with 2021-07-28 · 142 added, 81 removed, 479 unchanged (32% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

Three Months Ended September 30, Nine Months Ended September 30,

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

9 unchanged sentences

Other income, net ( 62 ) ( 14 ) ( 128 ) ( 59 )

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

Income before income taxes and equity in earnings of unconsolidated affiliates 273 102 752 179

Income tax expense (benefit) 12 ( 3 ) 104 9

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

Income before equity in earnings of unconsolidated affiliates 261 105 648 170

Equity in earnings of unconsolidated affiliates — 3 5 8

Net income 261 108 653 178

Net income attributable to non-controlling interests — ( 7 ) ( 5 ) ( 18 )

Net income (loss) attributable to IQVIA Holdings Inc.

Net income attributable to IQVIA Holdings Inc.

$ 261 $ 101 $ 648 $ 160

Earnings (loss) per share attributable to common stockholders:

Earnings per share attributable to common stockholders:

Basic $ 1.36 $ 0.53 $ 3.38 $ 0.84

6 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020 2021 2020

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

Comprehensive income (loss) adjustments:

Net income $ 261 $ 108 $ 653 $ 178

Comprehensive income adjustments:

Unrealized (losses) gains on derivative instruments, net of income tax expense (benefit) of $ — , $( 8 ), $ — , $( 11 )

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Reclassification adjustments:

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 )

Losses on derivative instruments included in net income, net of income tax benefit of $ 1 , $ 1 , $ 2 , $ 2

Comprehensive income 143 239 423 171

Comprehensive income attributable to non-controlling interests — ( 11 ) ( 5 ) ( 17 )

Comprehensive income (loss) attributable to IQVIA Holdings Inc.

Comprehensive income attributable to IQVIA Holdings Inc.

$ 143 $ 228 $ 418 $ 154

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

Current assets:

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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;

Common stock and additional paid-in capital, 400.0 shares authorized as of September 30, 2021 and December 31, 2020, $ 0.01 par value, 255.6 shares issued and 191.1 shares outstanding as of September 30, 2021;

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

1 unchanged sentence

Retained earnings 1,925 1,277

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

Treasury stock, at cost, 64.5 and 63.5 shares as of September 30, 2021 and December 31, 2020, respectively

( 6,398 ) ( 6,166 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2021 2020

22 unchanged sentences

Payment of debt issuance costs ( 40 ) ( 33 )

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

Repayment of debt and principal payments on finance leases ( 2,068 ) ( 792 )

Proceeds from revolving credit facility 410 1,250

5 unchanged sentences

Contingent consideration and deferred purchase price payments ( 39 ) ( 20 )

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

Net cash used in financing activities ( 1,097 ) ( 19 )

Effect of foreign currency exchange rate changes on cash ( 41 ) ( 3 )

33 unchanged sentences

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

Issuance of common stock — — — 4 — — — — 4

Repurchase of common stock — ( 0.5 ) — — — ( 125 ) — — ( 125 )

Stock-based compensation — — — 48 — — — — 48

Acquisition of Quest's non-controlling interest, net of tax — — ( 1 ) — — — — ( 1 )

Net income — — — — 261 — — — 261

Unrealized losses on derivative instruments, net of tax — — — — — — ( 4 ) — ( 4 )

Foreign currency translation, net of tax — — — — — — ( 117 ) — ( 117 )

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

Balance, September 30, 2021 255.6 ( 64.5 ) $ 3 $ 10,744 $ 1,925 $ ( 6,398 ) $ ( 445 ) $ — $ 5,829

IQVIA HOLDINGS INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions) Common Stock Shares Treasury

19 unchanged sentences

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

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

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

3 unchanged sentences

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

Issuance of common stock 0.4 — — ( 3 ) — — — — ( 3 )

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

Distributions to non-controlling interest, net — — — — — — — ( 11 ) ( 11 )

Net income — — — — 101 — — 7 108

Unrealized losses on derivative instruments, net of tax — — — — — — ( 1 ) — ( 1 )

Foreign currency translation, net of tax — — — — — — 126 4 130

Reclassification adjustments, net of tax — — — — — — 2 — 2

Balance, September 30, 2020 254.5 ( 62.8 ) $ 3 $ 11,067 $ 1,158 $ ( 6,065 ) $ ( 317 ) $ 261 $ 6,107

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

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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

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

Three Months Ended September 30, 2021

(in millions) Technology &

6 unchanged sentences

Total revenues $ 1,337 $ 1,853 $ 201 $ 3,391

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

(in millions) Technology &

6 unchanged sentences

Total revenues $ 1,207 $ 1,400 $ 179 $ 2,786

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

(in millions) Technology &

6 unchanged sentences

Total revenues $ 4,038 $ 5,612 $ 588 $ 10,238

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

(in millions) Technology &

6 unchanged sentences

Total revenues $ 3,433 $ 4,076 $ 552 $ 8,061

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

No customer accounted for 10% or more of consolidated revenues for the three and nine months ended September 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.

As of September 30, 2021, approximately $ 25.5 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) June 30, 2021 December 31, 2020

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

Trade accounts receivable:

5 unchanged sentences

Unbilled services and unearned income were as follows:

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

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

Unbilled services $ 1,219 $ 1,263 $ ( 44 )

1 unchanged sentence

Net balance $ ( 607 ) $ 11 $ ( 618 )

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.

Unbilled services, which is comprised of approximately 63 % of unbilled receivables and 37 % of contract assets as of September 30, 2021, decreased by $ 44 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.

Unearned income increased by $ 574 million over the same period resulting in a decrease of $ 618 million in the net balance of unbilled services and unearned income between December 31, 2020 and September 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.

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

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

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

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

2 unchanged sentences

Impact of foreign currency fluctuations and other ( 293 ) ( 4 ) ( 5 ) ( 302 )

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

Balance as of September 30, 2021 $ 11,158 $ 1,802 $ 164 $ 13,124

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

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

Assets Liabilities Notional Assets Liabilities Notional

6 unchanged sentences

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,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

2 unchanged sentences

Total $ ( 1 ) $ 3 $ 8 $ ( 36 )

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.

Fair Value Measurements

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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.

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

As of September 30, 2021 and December 31, 2020, the fair value of total debt approximated $ 12,333 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 June 30, 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 September 30, 2021:

(in millions) Level 1 Level 2 Level 3 Total

Marketable securities $ 137 $ — $ — $ 137

Derivatives — 1 — 1

Total $ 137 $ — $ — $ 137

9 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, 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:

Based on the assessments of the probability of achieving specific targets, as of September 30, 2021 the Company has accrued approximately 66 % 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 nine months ended September 30:

Contingent Consideration

4 unchanged sentences

Revaluations included in earnings and foreign currency translation adjustments ( 25 ) ( 15 )

Balance as of June 30 $ 86 $ 111

Balance as of September 30 $ 96 $ 108

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.

2 unchanged sentences

Credit Arrangements

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

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

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

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

$ 110 million (receivables financing facility)

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

LIBOR Market Index Rate ( 0.08 % as of September 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 %

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

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

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

(in millions) September 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 %

Term A Loan due 2023—U.S.

Term A Loan due 2026—U.S.

Dollar LIBOR at average floating rates of 1.33 %

Term A Loan due 2023—Euro

Term A Loan due 2026—Euro LIBOR at average floating rates of 1.25 %

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Receivables financing facility due 2022—U.S.

Receivables financing facility due 2024—U.S.

Dollar LIBOR at average floating rates of 0.98 %

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Long-term debt $ 12,081 $ 12,384

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

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

(in millions)

1 unchanged sentence

Thereafter 6,898

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.

As of September 30, 2021, there were bank guarantees totaling approximately £ 0.8 million (approximately $ 1.0 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.

On August 25, 2021, we entered into Amendment No.

9 (the “Amendment”) to the Company’s Fourth Amended and Restated Credit Agreement (the “Prior Credit Agreement,” and together with the Amendment, the "Fifth Amended and Restated Credit Agreement") to (i) extend the maturity of our revolving credit facility to 2026, (ii) refinance our existing term A loans with a new class of term A loans that mature in 2026 and (iii) add IQVIA RDS Inc.

as a borrower under the senior secured credit facilities.

In connection with this Amendment, we recognized a $ 1 million loss on extinguishment of debt, which includes fees and related expenses.

As of September 30, 2021, the Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $ 7.2 billion, which consisted of $ 5.7 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 September 14, 2021, we repaid $ 250 million of our term B loans under the senior secured credit facilities using the proceeds from the increased loans under our receivables financing facility.

Receivables Financing Facility

On August 13, 2021, the Company amended its receivables financing facility (the “Receivables Amendment”) to extend the term of the facility to October 1, 2024 and to increase the size of the facility to $ 550 million from $ 300 million.

Under the receivables financing facility, certain of our accounts receivable are sold on a non-recourse basis by certain of our consolidated subsidiaries (each, an “Originator”) to another of our consolidated subsidiaries, a bankruptcy-remote special purpose entity (the “SPE”).

The SPE obtained a term loan and revolving loan commitment from a third-party lender, secured by liens on the assets of the SPE, to finance the purchase of the accounts receivable, which includes a $ 440 million term loan and a $ 110 million revolving loan commitment.

Pursuant to the Receivables Amendment, we also added three additional subsidiaries as Originators.

As of September 30, 2021, no additional amounts of revolving loans were available under the receivables financing facility.

On March 3, 2021, IQVIA Inc.

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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 %.

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.

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

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

Contingencies

17 unchanged sentences

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).

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.

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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.

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.

1 unchanged sentence

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.

The parties are engaged in the discovery process in connection with these lawsuits.

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.

4 unchanged sentences

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.

No shares of preferred stock were issued or outstanding as of September 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.

During the nine months ended September 30, 2021, the Company repurchased 973,313 shares of its common stock for $ 221 million under its equity repurchase program (the “Repurchase Program”).

As of September 30, 2021, the Company has remaining authorization to repurchase up to approximately $ 0.7 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.

1 unchanged sentence

On April 1, 2021 the Company acquired the 40 % non-controlling interest in Q 2 Solutions from Quest Diagnostics Incorporated ("Quest") for approximately $ 758 million, financed with cash on hand.

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

The $ 758 million reflects post-closing adjustments to date.

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 .

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

Business Combinations

The Company completed several individually immaterial acquisitions during the nine months ended September 30, 2021.

The Company’s assessment of fair value and the purchase price allocation related to these acquisitions is preliminary and subject to change upon completion.

Further adjustments may be necessary as additional information related to the fair values of assets acquired and liabilities assumed is assessed during the measurement period (up to one year from the acquisition date).

The Company recorded goodwill from these acquisitions, primarily attributable to assembled workforce and expected synergies.

The condensed consolidated financial statements include the results of the acquisitions subsequent to their respective closing dates.

Pro forma information is not presented as pro forma results of operations would not be materially different to the actual results of operations of the Company.

The following table provides certain financial information for these acquisitions, including the preliminary allocation of the purchase price to certain intangible assets acquired and goodwill:

(in millions) 2021 Amortization Period

Assets acquired:

Cash and cash equivalents $ 7

Other assets 40

Other identifiable intangibles, net

Customer relationships 208 16 years

Non-compete agreements 2 5 years

Software and related assets 72 8 years

Trade names 7 10 years

Backlog 17 2 years

Liabilities assumed:

Other liabilities ( 21 )

Deferred income taxes, long-term ( 60 )

Net assets acquired $ 1,044

The portion of goodwill deductible for income tax purposes was preliminarily assessed as $ 503 million.

Restructuring

10 unchanged sentences

Foreign currency translation and other ( 2 ) — ( 2 )

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

Balance as of September 30, 2021 $ 29 $ 1 $ 30

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.

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.

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

The effective income tax rate was 4.4 % and ( 2.9 )% in the third quarter of 2021 and 2020, respectively, and 13.8 % and 5.0 % in the first nine months of 2021 and 2020, respectively.

In the third quarter of 2021 the Company recorded a benefit related to a 2020 U.S.

Federal tax return position associated with Foreign Derived Intangible Income (“FDII”) and Global Intangible Low-Taxed Income (“GILTI”) tax credits of $ 29 million.

In the third quarter of 2020, the U.S.

Treasury Department issued final regulations regarding FDII and GILTI and the Company had determined it would elect the GILTI high tax exception as allowed by the final regulations.

As a result, the Company amended its 2018 U.S.

Federal consolidated income tax return and plans to amend its 2019 U.S.

Federal consolidated income tax return.

This resulted in a favorable impact of $ 24 million, which the Company recorded in the third quarter of 2020.

Additionally, the effective income tax rate in the third quarter and first nine 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 third quarter of 2021 and 2020 this impact was $ 3 million and $ 9 million, respectively, and for the first nine months of 2021 and 2020 this impact was $ 26 million and $ 35 million, respectively.

Also, the effective income tax rate in the first nine 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.

Comprehensive Income (Loss)

Comprehensive Income

Below is a summary of the components of AOCI:

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

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

Balance as of September 30, 2021 $ ( 575 ) $ ( 40 ) $ ( 85 ) $ 255 $ ( 445 )

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,

Line Item Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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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.

Technology & Analytics Solutions provides critical information, technology solutions and real world insights and services to our life science clients.

Research & Development Solutions, which primarily serves biopharmaceutical clients, is engaged in research and development and provides clinical research and clinical trial services.

Contract Sales & Medical Solutions provides contract sales to both biopharmaceutical clients and the broader healthcare market.

Certain costs are not allocated to the Company’s segments and are reported as general corporate and unallocated expenses.

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The Company’s reportable segment information is presented below:

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

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

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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,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

1 unchanged sentence

Shares subject to anti-dilutive stock-based awards — 1.1 0.1 1.3

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

Total shares excluded from diluted earnings per share 0.9 2.2 0.9 2.5

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.

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