What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-10-27 compared with 2022-07-22 · 105 added, 99 removed, 224 unchanged (48% of the section changed)

35 unchanged sentences

With approximately 85,000 employees, we conduct operations in more than 100 countries.

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

Table of conten t s

We are a global leader in protecting individual patient privacy.

17 unchanged sentences

Foreign Currency Translation

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.

In the first nine 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.

6 unchanged sentences

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

Three Months Ended June 30, Change

Three Months Ended September 30, Change

(in millions)

Revenues $ 3,562 $ 3,391 $ 171 5.0 %

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.

Table of conten t s

For the third quarter of 2022, our revenues increased $171 million, or 5.0%, as compared to the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $355 million, or 10.5%, reflecting an $155 million increase in Technology & Analytics Solutions, an $198 million increase in Research & Development Solutions, and a $2 million increase in Contract Sales & Medical Solutions.

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

(in millions)

Revenues $ 10,671 $ 10,238 $ 433 4.2 %

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

For the first nine months of 2022, our revenues increased $433 million, or 4.2%, as compared to the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $830 million, or 8.1%, reflecting a $414 million increase in Technology & Analytics Solutions, a $399 million increase in Research & Development Solutions, and a $17 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,

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

(in millions)

3 unchanged sentences

65.2 % 66.4 % 65.4 % 67.1 %

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.

The $68 million increase in cost of revenues, exclusive of depreciation and amortization, for the three months ended September 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $237 million, or 10.5%, reflecting an $86 million increase in Technology & Analytics Solutions, an $144 million increase in Research & Development Solutions, and a $7 million increase in Contract Sales & Medical Solutions.

The $106 million increase in cost of revenues, exclusive of depreciation and amortization, for the nine months ended September 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $466 million, or 6.8%, reflecting an $188 million increase in Technology & Analytics Solutions, a $250 million increase in Research & Development Solutions, and a $28 million increase in Contract Sales & Medical Solutions.

Selling, General and Administrative Expenses

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

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

(in millions)

3 unchanged sentences

14.5 % 14.7 % 13.9 % 13.9 %

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

The $19 million increase in selling, general and administrative expenses for the three months ended September 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $54 million, or 10.8%, reflecting a $34 million increase in Technology & Analytics Solutions, a $9 million increase in Research & Development Solutions, a $4 million increase in Contract Sales & Medical Solutions, and a $7 million increase in general corporate and unallocated expenses.

The $66 million increase in selling, general and administrative expenses for the nine months ended September 30, 2022 as compared to the same period in 2021 included a constant currency increase of approximately $137 million, or 9.6%, reflecting a $90 million increase in Technology & Analytics Solutions, a $55 million increase in Research & Development Solutions, a $9 million increase in Contract Sales & Medical Solutions, offset by a $(17) million decrease in general corporate and unallocated expenses.

Table of conten t s

Depreciation and Amortization

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

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

(in millions) 2022 2021 2022 2021

2 unchanged sentences

7.0 % 9.9 % 7.2 % 9.8 %

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.

The $88 million and $229 million decrease in depreciation and amortization for the three and nine months ended September 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 June 30, Six Months Ended June 30,

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

(in millions) 2022 2021 2022 2021

3 unchanged sentences

Interest Income and Interest Expense

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

Three Months Ended September 30, Nine Months Ended September 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 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.

The increase is primarily a result of higher deposit rates.

Interest expense during the three and nine months ended September 30, 2022 was higher than the same period in 2021 due primarily to higher base rate interest costs across the floating rate debt portfolio.

Loss on Extinguishment of Debt

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

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

(in millions) 2022 2021 2022 2021

Loss on extinguishment of debt $ — $ 1 $ — $ 25

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.

During the three and nine months ended September 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 and Prior Credit Agreement.

Other Expense (Income), Net

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

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

(in millions) 2022 2021 2022 2021

Other expense (income), net $ 8 $ (62) $ 51 $ (128)

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

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

Table of conten t s

Income Tax Expense

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

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

(in millions) 2022 2021 2022 2021

Income tax expense $ 70 $ 12 $ 212 $ 104

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.

Our effective income tax rate was 19.4% and 4.4% in the third quarter of 2022 and 2021, respectively, and 19.5% and 13.8% in the first nine months of 2022 and 2021, respectively.

Our effective income tax rate in the third quarter and the first nine months of 2022 and 2021 was favorably impacted by recording a benefit related to the 2021 and 2020 U.S.

Federal tax return position associated with FDII and GILTI tax credits of $6 million and $29 million, respectively.

Additionally, our effective income tax rate in the third quarter and in the first nine 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 third quarter of 2022 and 2021 this impact was $1 million and $3 million, respectively, and for the first nine months of 2022 and 2021 this impact was $15 million and $26 million, respectively.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.

We are assessing these impacts on our condensed consolidated financial statements.

Equity in (Losses) Earnings of Unconsolidated Affiliates

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

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

(in millions) 2022 2021 2022 2021

Equity in (losses) earnings of unconsolidated affiliates $ (7) $ — $ (12) $ 5

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.

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

Net Income Attributable to Non-controlling Interests

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

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

(in millions) 2022 2021 2022 2021

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

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 six months ended June 30, 2022 as compared to the prior period.

Net income attributable to non-controlling interests included Quest Diagnostics Incorporated's ("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 nine months ended September 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 June 30, 2022 and 2021

Three Months Ended September 30, 2022 and 2021

Segment Revenues Segment Profit

8 unchanged sentences

Consolidated $ 3,562 $ 3,391 $ 472 $ 302

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

Six Months Ended June 30, 2022 and 2021

Table of conten t s

Nine Months Ended September 30, 2022 and 2021

Segment Revenues Segment Profit

12 unchanged sentences

Technology & Analytics Solutions

Three Months Ended June 30, Change

Three Months Ended September 30, Change

(in millions) 2022 2021 $ %

3 unchanged sentences

Segment profit $ 359 $ 343 $ 16 4.7 %

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

(in millions) 2022 2021 $ %

3 unchanged sentences

Segment profit $ 1,129 $ 1,044 $ 85 8.1 %

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.

Technology & Analytics Solutions’ revenues were $1,400 million for the third quarter of 2022, an increase of $63 million, or 4.7%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $155 million, or 11.6%, reflecting revenue growth across all regions.

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.

Technology & Analytics Solutions’ revenues were $4,247 million for the first nine months of 2022, an increase of $209 million, or 5.2%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $414 million, or 10.3%, 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.

The revenue growth for the three and nine months ended September 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.

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $33 million, or 4.2%, in the third quarter of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $86 million, or 10.8%.

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.

Table of conten t s

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $75 million, or 3.1%, in the first nine months of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $188 million, or 7.8%.

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.

The constant currency increase for the three and nine months ended September 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 $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.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $14 million, or 7.0%, in the third quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $34 million, or 17.1%.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $49 million, or 8.5%, in the first nine months of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $90 million, or 15.5%.

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

Research & Development Solutions

Three Months Ended June 30, Change

Three Months Ended September 30, Change

(in millions)

3 unchanged sentences

Segment profit $ 445 $ 364 $ 81 22.3 %

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

(in millions)

3 unchanged sentences

Segment profit $ 1,244 $ 1,069 $ 175 16.4 %

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.

Research & Development Solutions’ contracted backlog increased from $24.8 billion as of December 31, 2021 to $25.8 billion as of September 30, 2022 and we expect approximately $7.1 billion of this backlog to convert to revenue in the next twelve months.

Research & Development Solutions’ revenues were $1,979 million in the third quarter of 2022, an increase of $126 million, or 6.8%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $198 million, or 10.7%, reflecting revenue growth across all regions.

Research & Development Solutions’ revenues were $5,863 million in the first nine months of 2022, an increase of $251 million, or 4.5%, over the same period in 2021.

This increase was comprised of constant currency revenue growth of approximately $399 million, or 7.1%, 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.

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

Table of conten t s

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.

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $44 million, or 3.4%, in the third quarter of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $144 million, or 11.2%.

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $38 million, or 1.0%, in the first nine months of 2022 over the same period in 2021.

This increase included a constant currency increase of approximately $250 million, or 6.3%.

The constant currency increase for the three and nine months ended September 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.

Research & Development Solutions’ selling, general and administrative expenses increased $1 million, or 0.5%, in the third quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $9 million, or 4.5%.

Research & Development Solutions’ selling, general and administrative expenses increased $38 million, or 6.6%, in the first nine months of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $55 million, or 9.5%.

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

Contract Sales & Medical Solutions

Three Months Ended June 30, Change

Three Months Ended September 30, Change

(in millions)

3 unchanged sentences

Segment profit $ 8 $ 20 $ (12) (60.0) %

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

(in millions)

3 unchanged sentences

Segment profit $ 33 $ 60 $ (27) (45.0) %

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.

Contract Sales & Medical Solutions’ revenues were $183 million in the third quarter of 2022, a decrease of $18 million, or 9.0%, over the same period in 2021.

This decrease included a constant currency revenue growth of approximately $2 million, or 1.0%, reflecting revenue growth in the Europe and Africa region.

Contract Sales & Medical Solutions’ revenues were $561 million in the first nine months of 2022, a decrease of $27 million, or 4.6%, over the same period in 2021.

This decrease included a constant currency revenue growth of approximately $17 million, or 2.9%, 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.

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

Table of conten t s

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.

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $9 million, or 5.4%, in the third quarter of 2022 as compared to the same period in 2021.

This decrease included a constant currency increase of approximately $7 million, or 4.2%.

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 and six months ended June 30, 2022 was primarily related to an increase in compensation and related expenses and reimbursed expenses.

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $7 million, or 1.4%, in the first nine months of 2022 as compared to the same period in 2021.

This decrease included a constant currency increase of approximately $28 million, or 5.7%.

The constant currency increase for the three and nine months ended September 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 $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.

Contract Sales & Medical Solutions’ selling, general and administrative expenses increased $3 million, or 21.4%, in the third quarter of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $4 million, or 28.6%.

Contract Sales & Medical Solutions’ selling, general and administrative expenses increased $7 million, or 17.1%, in the first nine months of 2022 as compared to the same period in 2021, which included a constant currency increase of approximately $9 million, or 22.0%.

The constant currency increase for the three and nine months ended September 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 $1,428 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

We had a cash balance of $1,274 million as of September 30, 2022 ($512 million of which was in the United States), a decrease from $1,366 million as of December 31, 2021.

Table of conten 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.

6 unchanged sentences

Equity Repurchase Program

On February 10, 2022 the Board increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of the Company's common stock by an additional $2.0 billion, which increased the total amount that has been authorized under the Repurchase Program to $9.725 billion since the plan’s inception in October 2013.

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 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.

During the nine months ended September 30, 2022, we repurchased 5.3 million shares of our common stock for $1,143 million under the Repurchase Program.

These amounts include approximately 0.2 million of shares valued at approximately $40 million which were accrued for as of September 30, 2022 based on when the trade and settlement dates occurred.

As of September 30, 2022, we have remaining authorization to repurchase up to approximately $1.4 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 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.

As of September 30, 2022, we had $12.4 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 September 30, 2022, we believe we were in compliance with our restrictive covenants in all material respects.

Senior Secured Credit Facilities

3 unchanged sentences

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

As of 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.

As of September 30, 2022, the Company’s Fifth Amended and Restated Credit Agreement provided financing through the senior secured credit facilities of up to approximately $8,009 million , which consisted of $6,509 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 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

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

Table of conten t s

Nine months ended September 30, 2022 and 2021

Cash Flow from Operating Activities

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2022 2021

Net cash provided by operating activities $ 1,700 $ 2,250

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 provided by operating activities decreased $550 million during the first nine 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 ($444 million), a decrease in cash from accounts receivable and unbilled services ($307 million), offset by an increase in cash from other operating assets and liabilities ($122 million) and cash related net income ($79 million).

Cash Flow from Investing Activities

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2022 2021

Net cash used in investing activities $ (1,529) $ (1,456)

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 used in investing activities increased $73 million during the first nine months of 2022 as compared to the same period in 2021, primarily driven by more cash used for acquisitions of property, equipment, and software ($47 million), acquisitions of businesses ($18 million) and investments in unconsolidated affiliates ($11 million), as well as less net proceeds from sale of equity securities ($5 million), offset by less purchases of marketable securities, net ($5 million) and an increase in cash from other investing activities ($3 million).

Cash Flow from Financing Activities

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2022 2021

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

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).

Net cash used in financing activities $ (136) $ (1,097)

Cash used in financing activities decreased $961 million during the first nine months of 2022 as compared to the same period in 2021, primarily due to a decrease in debt and principal payments ($1,982 million), the absence of cash payments for the Company's acquisition of Quest's non-controlling interest in Q 2 Solutions ($758 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 ($901 million), a decrease in cash provided by proceeds from debt issuances, net of debt issuance costs ($666 million), a decrease in cash proceeds from revolving credit facilities, net of repayments ($210 million) and an increase in cash payments related to employee stock option plans ($19 million).

Off-Balance Sheet Arrangements

7 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

Table of conten 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