What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-22 compared with 2022-04-28 · 152 added, 80 removed, 171 unchanged (58% of the section changed)

24 unchanged sentences

risks related to client or therapeutic concentration;

government regulators or our customers may limit the scope of prescription or withdraw products from the market, and government regulators may impose new regulatory requirements or may adopt new regulations affecting the biopharmaceutical industry;

government regulators or our customers may limit the number or scope of indications for medicines and treatments or withdraw products from the market, and government regulators may impose new regulatory requirements or may adopt new regulations affecting the biopharmaceutical industry;

the risks associated with operating on a global basis, including currency or exchange rate fluctuations and legal compliance, including anti-corruption laws;

risks related to changes in accounting standards;

general economic conditions in the markets in which we operate, including financial market conditions and risks related to sales to government entities;

general economic conditions in the markets in which we operate, including financial market conditions, inflation, and risks related to sales to government entities;

the impact of changes in tax laws and regulations;

and our ability to successfully integrate, and achieve expected benefits from, our acquired businesses.

For a further discussion of the risks relating to our business, see Part I—Item 1A—“Risk Factors” in our 2021 Form 10-K, as updated in this Quarterly Report on Form 10-Q.

For a further discussion of the risks relating to our business, see Part I—Item 1A—“Risk Factors” in our 2021 Form 10-K, as updated in our subsequently filed Quarterly Reports on Form 10-Q.

IQVIA is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry.

2 unchanged sentences

With approximately 83,000 employees, we conduct operations in more than 100 countries.

Ta b l e o f c o n t e n t s

We are a global leader in protecting individual patient privacy.

9 unchanged sentences

Costs and Expenses

Our costs and expenses are comprised primarily of our costs of revenue, reimbursed expenses and selling, general and administrative expenses.

Costs of revenue include compensation and benefits for billable employees and personnel involved in production, trial monitoring, data management and delivery, and the costs of acquiring and processing data for our information offerings;

Our costs and expenses are comprised primarily of our cost of revenues including reimbursed expenses and selling, general and administrative expenses.

Cost of revenues includes compensation and benefits for billable employees and personnel involved in production, trial monitoring, data management and delivery, and the costs of acquiring and processing data for our information offerings;

costs of staff directly involved with delivering technology-related services offerings and engagements, related accommodations and the costs of data purchased specifically for technology services engagements;

and other expenses directly related to service contracts such as courier fees, laboratory supplies, professional services and travel expenses.

Reimbursed expenses are comprised principally of payments to investigators who oversee clinical trials and travel expenses for our clinical monitors and sales representatives.

Reimbursed expenses, which are included in cost of revenues, are comprised principally of payments to investigators who oversee clinical trials and travel expenses for our clinical monitors and sales representatives.

Selling, general and administrative expenses include costs related to sales, marketing and administrative functions (including human resources, legal, finance, quality assurance, compliance and general management) for compensation and benefits, travel, professional services, training and expenses for information technology and facilities.

1 unchanged sentence

Foreign Currency Translation

In the first three months of 2022, 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 2022, 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.

3 unchanged sentences

This constant currency information assumes the same foreign currency exchange rates that were in effect for the comparable prior-year period were used in translation of the current period results.

As such, the differences noted below between reported results of operations and constant currency information is wholly attributable to the effects of foreign currency rate fluctuations.

Consolidated Results of Operations

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)

Revenues $ 3,541 $ 3,438 $ 103 3.0 %

For the first quarter of 2022, our revenues increased $159 million, or 4.7%, as compared to the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $231 million, or 6.8%, reflecting an $132 million increase in Technology & Analytics Solutions, an $88 million increase in Research & Development Solutions, and an $11 million increase in Contract Sales & Medical Solutions.

Costs of Revenue, exclusive of Depreciation and Amortization

Three Months Ended March 31,

Ta b l e o f c o n t e n t s

For the second quarter of 2022, our revenues increased $103 million, or 3.0%, as compared to the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $244 million, or 7.1%, reflecting an $127 million increase in Technology & Analytics Solutions, an $113 million increase in Research & Development Solutions, and a $4 million increase in Contract Sales & Medical Solutions.

Six Months Ended June 30, Change

(in millions)

Costs of revenue, exclusive of depreciation and amortization $ 2,323 $ 2,293

Revenues $ 7,109 $ 6,847 $ 262 3.8 %

For the first six months of 2022, our revenues increased $262 million, or 3.8%, as compared to the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $475 million, or 6.9%, reflecting a $259 million increase in Technology & Analytics Solutions, a $201 million increase in Research & Development Solutions, and a $15 million increase in Contract Sales & Medical Solutions.

Cost of Revenues, exclusive of Depreciation and Amortization

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

(in millions)

2022 2021 2022 2021

Cost of revenues, exclusive of depreciation and amortization $ 2,331 $ 2,323 $ 4,654 $ 4,616

% of revenues

65.8 % 67.6 % 65.5 % 67.4 %

The $30 million increase in costs of revenue, exclusive of depreciation and amortization, for the three months ended March 31, 2022 as compared to the same period in 2021 included a constant currency growth of approximately $95 million, or 4.1%, reflecting a $44 million increase in Technology & Analytics Solutions, a $36 million increase in Research & Development Solutions, and a $15 million increase in Contract Sales & Medical Solutions.

The $8 million increase in cost of revenues, exclusive of depreciation and amortization, for the three months ended June 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $134 million, or 5.8%, reflecting a $58 million increase in Technology & Analytics Solutions, a $70 million increase in Research & Development Solutions, and a $6 million increase in Contract Sales & Medical Solutions.

The $38 million increase in cost of revenues, exclusive of depreciation and amortization, for the six months ended June 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $229 million, or 5.0%, reflecting an $102 million increase in Technology & Analytics Solutions, an $106 million increase in Research & Development Solutions, and a $21 million increase 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)

2022 2021 2022 2021

Selling, general and administrative expenses $ 483 $ 482 $ 971 $ 924

1 unchanged sentence

13.6 % 14.0 % 13.7 % 13.5 %

The $46 million increase in selling, general and administrative expenses for the three months ended March 31, 2022 as compared to the same period in 2021 included a constant currency growth of approximately $58 million, or 13.1%, reflecting a $39 million increase in Technology & Analytics Solutions, a $29 million increase in Research & Development Solutions, a $4 million increase in Contract Sales & Medical Solutions, offset by a $(14) million decrease in general corporate and unallocated expenses.

The $1 million increase in selling, general and administrative expenses for the three months ended June 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $25 million, or 5.2%, reflecting a $17 million increase in Technology & Analytics Solutions, a $17 million increase in Research & Development Solutions, an $1 million increase in Contract Sales & Medical Solutions, offset by a $(10) million decrease in general corporate and unallocated expenses.

The $47 million increase in selling, general and administrative expenses for the six months ended June 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $83 million, or 9.0%, reflecting a $56 million increase in Technology & Analytics Solutions, a $46 million increase in Research & Development Solutions, a $5 million increase in Contract Sales & Medical Solutions, offset by a $(24) million decrease in general corporate and unallocated expenses.

Ta b l e o f c o n t e n t s

Depreciation and Amortization

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

1 unchanged sentence

% of revenues

The $68 million decrease in depreciation and amortization in the three months ended March 31, 2022 as compared to the same period in 2021 was primarily due to certain intangible assets from the merger between Quintiles and IMS Health becoming fully amortized in 2021, offset by an increase in amortization from intangible assets associated with acquisitions occurring in 2021 and higher capitalized software balances.

7.6 % 10.0 % 7.4 % 9.7 %

The $73 million and $141 million decrease in depreciation and amortization in the three and six months ended June 30, 2022 as compared to the same periods in 2021 was primarily due to certain intangible assets from the merger between Quintiles and IMS Health becoming fully amortized in 2021, offset by an increase in amortization from intangible assets associated with acquisitions occurring in 2021 and 2022 as well as higher capitalized software balances.

Restructuring Costs

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

3 unchanged sentences

Interest Income and Interest Expense

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

2 unchanged sentences

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

Interest expense during the three months ended March 31, 2022 was lower than the same period in 2021 due to the refinancing in 2021 of our existing term A loans and the redemption of our 3.250% senior notes due 2025, which was offset by the interest expense on the issuance in 2021 of our 1.750% senior notes due 2026 and 2.250% senior notes due 2029.

Interest expense during the six months ended June 30, 2022 was lower than the same period in 2021 due to the refinancing in 2021 of our existing term A loans and the redemption of our 3.250% senior notes due 2025, which was offset by the interest expense on the issuance in 2021 of our 1.750% senior notes due 2026 and 2.250% senior notes due 2029, as well as interest expense on the revolving credit facility.

Loss on Extinguishment of Debt

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

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

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 Expense (Income), Net

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

Other expense (income), net $ 33 $ (29) $ 43 $ (66)

Other expense (income), net for the three months ended March 31, 2022 increased as compared to the same period in the prior year, primarily due to less foreign currency gain and losses on investments in mutual funds.

Other expense (income), net for the three and six months ended June 30, 2022 increased as compared to the same periods in the prior year, primarily due to foreign currency losses and losses on investments in mutual funds.

Ta b l e o f c o n t e n t s

Income Tax Expense

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

Income tax expense $ 71 $ 48 $ 142 $ 92

Our effective income tax rate was 17.8% and 17.1% in the first quarter of 2022 and 2021, respectively.

Our effective income tax rate in the first quarter of 2022 and 2021 was favorably impacted by $13 million and $17 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

Our effective income tax rate was 21.6% in the second quarter of 2022 and 2021, and 19.5% and 19.2% in the first six months of 2022 and 2021, respectively.

Our effective income tax rate in the second quarter and in the first six months of 2022 and 2021 was favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

For the second quarter of 2022 and 2021 this impact was $1 million and $6 million, respectively, and for the first six months of 2022 and 2021 this impact was $14 million and $23 million, respectively.

Equity in (Losses) Earnings of Unconsolidated Affiliates

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

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

Equity in (losses) earnings of unconsolidated affiliates for the three months ended March 31, 2022 decreased as compared to the same period in the prior year due to losses in the operations of our unconsolidated affiliates.

Equity in (losses) earnings of unconsolidated affiliates for the three and six months ended June 30, 2022 decreased as compared to the same period in the prior year due to losses in the operations of our unconsolidated affiliates.

Net Income Attributable to Non-controlling Interests

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

1 unchanged sentence

Net income attributable to non-controlling interests included Quest Diagnostics Incorporated ("Quest") interest in Q 2 Solutions.

On April 1, 2021 the Company acquired the 40% non-controlling interest in Q 2 Solutions from Quest which resulted in a decrease in the net income attributable to non-controlling interests for the three months ended March 31, 2022 as compared to the prior period.

On April 1, 2021 the Company acquired the 40% non-controlling interest in Q 2 Solutions from Quest which resulted in a decrease in the net income attributable to non-controlling interests for the six months ended June 30, 2022 as compared to the prior period.

Segment Results of Operations

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

Three Months Ended March 31, 2022 and 2021

Three Months Ended June 30, 2022 and 2021

Segment Revenues Segment Profit

8 unchanged sentences

Consolidated $ 3,541 $ 3,438 $ 453 $ 286

Ta b l e o f c o n t e n t s

Six Months Ended June 30, 2022 and 2021

Segment Revenues Segment Profit

(in millions) 2022 2021 2022 2021

Technology & Analytics Solutions $ 2,847 $ 2,701 $ 770 $ 701

Research & Development Solutions 3,884 3,759 799 705

Contract Sales & Medical Solutions 378 387 25 40

Total 7,109 6,847 1,594 1,446

General corporate and unallocated (110) (139)

Depreciation and amortization (525) (666)

Restructuring costs (11) (13)

Consolidated $ 7,109 $ 6,847 $ 948 $ 628

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) 2022 2021 $ %

Revenues $ 1,408 $ 1,353 $ 55 4.1 %

Costs of revenue, exclusive of depreciation and amortization 834 812 22 2.7

Cost of revenues, exclusive of depreciation and amortization 828 808 20 2.5

Selling, general and administrative expenses 196 193 3 1.6

Segment profit $ 384 $ 352 $ 32 9.1 %

Technology & Analytics Solutions’ revenues were $1,439 million for the first quarter of 2022, an increase of $91 million, or 6.8%, over the same period in 2021.

Six Months Ended June 30, Change

(in millions) 2022 2021 $ %

Revenues $ 2,847 $ 2,701 $ 146 5.4 %

Cost of revenues, exclusive of depreciation and amortization 1,662 1,620 42 2.6

Selling, general and administrative expenses 415 380 35 9.2

Segment profit $ 770 $ 701 $ 69 9.8 %

Technology & Analytics Solutions’ revenues were $1,408 million for the second quarter of 2022, an increase of $55 million, or 4.1%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $127 million, or 9.4%, reflecting revenue growth across all regions.

The revenue growth for the three months ended March 31, 2022 was driven by higher technology, real-world and consulting and analytical services.

Costs of Revenue, exclusive of Depreciation and Amortization

Technology & Analytics Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $22 million, or 2.7%, in the first quarter of 2022 over the same period in 2021.

Technology & Analytics Solutions’ revenues were $2,847 million for the first six months of 2022, an increase of $146 million, or 5.4%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $259 million, or 9.6%, reflecting revenue growth across all regions.

The revenue growth for the three and six months ended June 30, 2022 was driven by higher technology, real-world and consulting and analytical services.

Cost of Revenues, exclusive of Depreciation and Amortization

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $20 million, or 2.5%, in the second quarter of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $58 million, or 7.2%.

The constant currency increase for the three months ended March 31, 2022 was primarily related to an increase in compensation and related expenses to support revenue growth.

Ta b l e o f c o n t e n t s

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $42 million, or 2.6%, in the first six months of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $102 million, or 6.3%.

The constant currency increase for the three and six months ended June 30, 2022 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 $32 million, or 17.1%, in the first quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $39 million, or 20.9%.

The constant currency increase for the three months ended March 31, 2022 was primarily related to an increase in compensation and related expenses.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $3 million, or 1.6%, in the second quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $17 million, or 8.8%.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $35 million, or 9.2%, in the first six months of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $56 million, or 14.7%.

The constant currency increase for the three and six months ended June 30, 2022 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)

Revenues $ 1,950 $ 1,891 $ 59 3.1 %

Costs of revenue, exclusive of depreciation and amortization 1,322 1,321 1 0.1

Cost of revenues, exclusive of depreciation and amortization 1,348 1,355 (7) (0.5)

Selling, general and administrative expenses 204 193 11 5.7

Segment profit $ 398 $ 343 $ 55 16.0 %

Research & Development Solutions’ contracted backlog increased from $24.8 billion as of December 31, 2021 to $25.3 billion as of March 31, 2022 and we expect approximately $7.0 billion of this backlog to convert to revenue in the next twelve months.

Research & Development Solutions’ revenues were $1,934 million in the first quarter of 2022, an increase of $66 million, or 3.5%, over the same period in 2021.

This increase was comprised of constant currency revenue increase of approximately $88 million, or 4.7%, reflecting revenue growth in the Europe and Africa and Asia-Pacific regions.

The revenue growth for the three months ended March 31, 2022 was primarily the result of volume-related increases in clinical services and lab testing.

Costs of Revenue, exclusive of Depreciation and Amortization

Research & Development Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $1 million, or 0.1%, in the first quarter of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $36 million, or 2.7%.

The constant currency increase for the three months ended March 31, 2022 was primarily related to an increase in compensation and related expenses as a result of volume-related increases in clinical services and lab testing.

Six Months Ended June 30, Change

(in millions)

Revenues $ 3,884 $ 3,759 $ 125 3.3 %

Cost of revenues, exclusive of depreciation and amortization 2,670 2,676 (6) (0.2)

Selling, general and administrative expenses 415 378 37 9.8

Research & Development Solutions’ selling, general and administrative expenses increased $26 million, or 14.1%, in the first quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $29 million, or 15.7%.

The constant currency increase for the three months ended March 31, 2022 was primarily related to an increase in compensation and related expenses.

Segment profit $ 799 $ 705 $ 94 13.3 %

Research & Development Solutions’ contracted backlog increased from $24.8 billion as of December 31, 2021 to $25.6 billion as of June 30, 2022 and we expect approximately $7.0 billion of this backlog to convert to revenue in the next twelve months.

Research & Development Solutions’ revenues were $1,950 million in the second quarter of 2022, an increase of $59 million, or 3.1%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $113 million, or 6.0%, reflecting revenue growth in the Europe and Africa and Asia-Pacific regions, partially offset by a decrease in COVID-19 related work in the Americas region.

Research & Development Solutions’ revenues were $3,884 million in the first six months of 2022, an increase of $125 million, or 3.3%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $201 million, or 5.3%, reflecting revenue growth in the Europe and Africa and Asia-Pacific regions, partially offset by a decrease in COVID-19 related work in the Americas region.

Ta b l e o f c o n t e n t s

The revenue growth for the three and six months ended June 30, 2022 was primarily the result of volume-related increases in clinical services and lab testing.

Cost of Revenues, exclusive of Depreciation and Amortization

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $7 million, or 0.5%, in the second quarter of 2022 over the same period in 2021.

This decrease included a constant currency increase of approximately $70 million, or 5.2%.

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $6 million, or 0.2%, in the first six months of 2022 over the same period in 2021.

This decrease included a constant currency increase of approximately $106 million, or 4.0%.

The constant currency increase for the three and six months ended June 30, 2022 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 $11 million, or 5.7%, in the second quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $17 million, or 8.8%.

Research & Development Solutions’ selling, general and administrative expenses increased $37 million, or 9.8%, in the first six months of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $46 million, or 12.2%.

The constant currency increase for the three and six months ended June 30, 2022 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)

Revenues $ 183 $ 194 $ (11) (5.7) %

Costs of revenue, exclusive of depreciation and amortization 167 160 7 4.4

Cost of revenues, exclusive of depreciation and amortization 155 160 (5) (3.1)

Selling, general and administrative expenses 15 14 1 7.1

Segment profit $ 13 $ 20 $ (7) (35.0) %

Contract Sales & Medical Solutions’ revenues were $195 million in the first quarter of 2022, an increase of $2 million, or 1.0%, over the same period in 2021.

This increase included a constant currency revenue increase of approximately $11 million, or 5.7%.

The revenue growth for the three months ended March 31, 2022 was largely due to a volume increase in the Americas region.

Costs of Revenue, exclusive of Depreciation and Amortization

Contract Sales & Medical Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $7 million, or 4.4%, in the first quarter of 2022 as compared to the same period in 2021.

Six Months Ended June 30, Change

(in millions)

Revenues $ 378 $ 387 $ (9) (2.3) %

Cost of revenues, exclusive of depreciation and amortization 322 320 2 0.6

Selling, general and administrative expenses 31 27 4 14.8

Segment profit $ 25 $ 40 $ (15) (37.5) %

Contract Sales & Medical Solutions’ revenues were $183 million in the second quarter of 2022, a decrease of $11 million, or 5.7%, over the same period in 2021.

This decrease included a constant currency revenue growth of approximately $4 million, or 2.1%, reflecting revenue growth in the Americas and Europe and Africa regions.

Contract Sales & Medical Solutions’ revenues were $378 million in the first six months of 2022, a decrease of $9 million, or 2.3%, over the same period in 2021.

This increase included a constant currency revenue growth of approximately $15 million, or 3.9%, reflecting revenue growth in the Americas and Europe and Africa regions.

Ta b l e o f c o n t e n t s

The constant currency revenue growth for the three and six months ended June 30, 2022 was largely due to volume increases in services performed.

Cost of Revenues, exclusive of Depreciation and Amortization

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $5 million, or 3.1%, in the second quarter of 2022 as compared to the same period in 2021.

This decrease included a constant currency increase of approximately $6 million, or 3.8%.

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $2 million, or 0.6%, in the first six months of 2022 as compared to the same period in 2021.

This increase included a constant currency increase of approximately $21 million, or 6.6%.

The constant currency increase for the three months ended March 31, 2022 was primarily related to an increase in compensation and related expenses.

The constant currency increase for the three and six months ended June 30, 2022 was primarily related to an increase in compensation and related expenses and reimbursed expenses.

Selling, General and Administrative Expenses

Contract Sales & Medical Solutions’ selling, general and administrative expenses increased $3 million or 23.1% in the first quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $4 million, or 30.8%.

The constant currency increase for the three months ended March 31, 2022 was primarily related to an increase in compensation and related expenses and IT related expenses.

Contract Sales & Medical Solutions’ selling, general and administrative expenses increased $1 million, or 7.1%, in the second quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $1 million, or 7.1%.

Contract Sales & Medical Solutions’ selling, general and administrative expenses increased $4 million, or 14.8%, in the first six months of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $5 million, or 18.5%.

The constant currency increase for the three and six months ended June 30, 2022 was primarily related to an increase in compensation and related expenses and IT 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 $1,387 million as of March 31, 2022 ($334 million of which was in the United States), an increase from $1,366 million as of December 31, 2021.

We had a cash balance of $1,428 million as of June 30, 2022 ($672 million of which was in the United States), an increase from $1,366 million as of December 31, 2021.

Ta b l e o f c o n t e n t s

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 credit and receivables financing facilities will enable us to fund our operating requirements, capital expenditures, contractual obligations, and meet debt obligations for at least the next 12 months.

8 unchanged sentences

The Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it may be modified, extended, suspended or discontinued at any time.

During the three months ended March 31, 2022, we repurchased 1.7 million shares of our common stock for $403 million under the Repurchase Program.

As of March 31, 2022, we have remaining authorization to repurchase up to approximately $2.1 billion of our common stock under the Repurchase Program.

During the six months ended June 30, 2022, we repurchased 4.5 million shares of our common stock for $993 million under the Repurchase Program.

These amounts include approximately 0.5 million of shares valued at approximately $100 million which were accrued for as of June 30, 2022 based on the terms of the transactions.

As of June 30, 2022, we have remaining authorization to repurchase up to approximately $1.5 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.

As of March 31, 2022, we had $12.7 billion of total indebtedness, excluding $750 million of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of March 31, 2022, we believe we were in compliance with our restrictive covenants in all material respects.

As of June 30, 2022, we had $12.8 billion of total indebtedness, excluding $1,500 million of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of June 30, 2022, we believe we were in compliance with our restrictive covenants in all material respects.

Senior Secured Credit Facilities

As of March 31, 2022, the Company’s Fifth Amended and Restated Credit Agreement provided financing through the senior secured credit facilities of up to approximately $7,075 million , which consisted of $6,325 million principal amounts of debt outstanding, and $750 million of available borrowing capacity on the revolving credit facility and standby letters of credit.

On June 16, 2022, the Company entered into Amendment No.

1 to the Company’s Credit Agreement to borrow $1,250 million in Additional Term A Loans.

The proceeds from the Additional Term A Loans were used to repay approximately $950 million of outstanding revolving credit loans under the Company's senior secured credit facilities and for general corporate purposes.

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 June 30, 2022, the Company’s Fifth Amended and Restated Credit Agreement provided financing through the senior secured credit facilities of up to approximately $8,173 million , which consisted of $6,673 million principal amounts of debt outstanding, and $1,500 million of available borrowing capacity on the revolving credit facility and standby letters of credit.

Receivables Financing Facility

As of March 31, 2022, no additional amounts of revolving loan commitments were available under the receivables financing facility.

Three months ended March 31, 2022 and 2021

As of June 30, 2022, no additional amounts of revolving loan commitments were available under the receivables financing facility.

Ta b l e o f c o n t e n t s

Six months ended June 30, 2022 and 2021

Cash Flow from Operating Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2022 2021

Net cash provided by operating activities $ 837 $ 1,406

Cash provided by operating activities decreased $359 million during the first three months of 2022 as compared to the same period in 2021.

The decrease was primarily due to a decrease in cash collections from unearned income ($198 million), less cash from other operating assets and liabilities ($153 million) and a decrease in cash from accounts receivable and unbilled services ($90 million), offset by higher cash related net income ($82 million).

Cash provided by operating activities decreased $569 million during the first six months of 2022 as compared to the same period in 2021.

The decrease was primarily due to a decrease in cash collections from unearned income ($286 million), a decrease in cash from accounts receivable and unbilled services ($338 million) and less cash from other operating assets and liabilities ($48 million), offset by higher cash related net income ($103 million).

Cash Flow from Investing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2022 2021

Net cash used in investing activities $ (812) $ (361)

Cash used in investing activities increased $437 million during the first three months of 2022 as compared to the same period in 2021, primarily driven by more cash used for acquisitions of businesses ($411 million), acquisitions for property, equipment, and software ($28 million) and investments in unconsolidated affiliates ($5 million), offset by less purchases of marketable securities, net ($4 million), net proceeds from sale of equity securities ($1 million) and other investing activities ($2 million).

Cash used in investing activities increased $451 million during the first six months of 2022 as compared to the same period in 2021, primarily driven by more cash used for acquisitions of businesses ($399 million), acquisitions for property, equipment, and software ($44 million) and investments in unconsolidated affiliates ($7 million), as well as less net proceeds from sale of equity securities ($9 million), offset by less purchases of marketable securities, net ($5 million) and other investing activities ($3 million).

Cash Flow from Financing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2022 2021

Net cash provided by (used in) financing activities $ 115 $ (1,031)

Cash provided by financing activities increased $312 million during the first three months of 2022 as compared to the same period in 2021, primarily due to a decrease in debt and principal payments ($1,734 million), an increase in cash proceeds from revolving credit facilities, net of repayments ($650 million), offset by a decrease in cash provided by proceeds from debt issuances, net of debt issuance costs ($1,719 million), an increase in cash used to repurchase common stock ($341 million), an increase in cash payments related to employee stock option plans ($11 million), and an increase in cash payments on contingent consideration and deferred purchase price accruals ($1 million).

Cash provided by financing activities increased $1,146 million during the first six months of 2022 as compared to the same period in 2021, primarily due to a decrease in debt and principal payments ($1,747 million), the absence of cash payments for the Company's acquisition of Quest's non-controlling interest in Q 2 Solutions ($756 million) and a decrease in cash payments on contingent consideration and deferred purchase price accruals ($17 million), offset by an increase in cash used to repurchase common stock ($786 million), a decrease in cash provided by proceeds from debt issuances, net of debt issuance costs ($474 million), a decrease in cash proceeds from revolving credit facilities, net of repayments ($100 million) and an increase in cash payments related to employee stock option plans ($14 million).

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

We do not have any material off-balance sheet arrangements.

Contractual Obligations and Commitments

5 unchanged sentences

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our 2021 Form 10-K.

Ta b l e o f c o n t e n t s

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