What changed in this filing

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Item 1A. Risk Factors

2023-02-15 compared with 2022-02-16 · 46 added, 64 removed, 594 unchanged (16% of the section changed)

5 unchanged sentences

Risks Relating to Our Business

• Our business and operations may be adversely affected by the COVID-19 pandemic.

• The potential loss or delay of contracts could adversely affect our results.

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• If we lose the services of key personnel or are unable to recruit additional qualified personnel, our business could be adversely affected.

• Our business and operations may be adversely affected by the COVID-19 pandemic.

Intellectual Property

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• Interest rate fluctuations and our ability to deduct interest expense may affect our results of operations and financial condition.

• We may be adversely affected by changes in the method of determining the London Interbank Offered Rate (“LIBOR”), or the replacement of LIBOR with an alternative reference rate.

Risks Related to Ownership of Our Common Stock

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Risks Relating to Our Business

Our business and operations has been and may in the future be adversely affected by the novel coronavirus (COVID-19) pandemic.

The COVID-19 pandemic, and the various governmental, industry and consumer actions related thereto, had, and may continue to have, an adverse effect on our business, financial condition and results of operations.

These effects have included, and may include in the future, a negative impact on the availability of our key personnel, temporary closures of our facilities or the facilities of our business partners, customers, suppliers, third party service providers or other vendors, an increased risk of customer defaults or delays in payments or purchasing decisions, and the interruption of domestic and global supply chains, distribution channels, liquidity and capital or financial markets.

As COVID-19, including any variants, continues to spread, we have and may in the future experience disruptions that could severely impact our business, including:

• closure or inaccessibility of clinical site locations;

• delays or difficulties in enrolling patients in our clinical trials and starting new clinical trials;

• delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

• interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;

• delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;

• significant disruption in our businesses that rely on face-to-face interactions or are dependent on in-person gatherings, events or conferences;

• significant and unpredictable reductions or increases in demand for certain of our offerings.

In addition, we have directed a substantial portion of our workforce to work from home while the outbreak persists in order to help minimize the risk of COVID-19 to our employees.

Having a significant portion of our workforce working from home has caused an increased risk of loss of productivity, greater cybersecurity risk, and increased risk to our system of internal controls over financial reporting.

To the extent global conditions improve, the duration and sustainability of any such improvements will be uncertain and continuing adverse impacts and/or the degree of improvement may vary by geography.

The actions we take in response to any improvements in conditions, such as our return-to-office plans, may also vary by geography and by business and will likely be made with incomplete information.

There is a risk that such actions may prove to be premature, incorrect or insufficient and could have a material and adverse impact on our business and results of operations.

Further, the effects of the pandemic may also increase our cost of capital or make additional capital more difficult or available only on terms less favorable to us.

The potential loss or delay of our large contracts or of multiple contracts could adversely affect our results.

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For example, we are expanding our services and technology offerings, such as the development of a cloud-based platform with a growing number of applications to support commercial and clinical operations for life sciences companies (e.g., multi-channel marketing, marketing campaign management, customer relationship management, incentive compensation management, targeting and segmentation, performance management, site engagement payments, trial master file, risk based monitoring, in-home nursing and other services, clinical trial management and decentralized trials and other applications).

We also continue to invest significantly in growth opportunities in emerging markets, such as the development, launch and enhancement of services in China, India, Russia, Turkey, and other countries.

We also continue to invest significantly in growth opportunities in emerging markets, such as the development, launch and enhancement of services in China, India, Turkey, and other countries.

We consider our presence in these markets to be an important component of our growth strategy.

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Moreover, the steps we take to protect our intellectual property may not adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights.

These incidents and claims could harm our business, reduce revenue, increase expenses and harm our reputation.

These incidents and claims could harm our business, reduce revenues, increase expenses and harm our reputation.

We may be subject to claims by others that we are infringing on their intellectual property rights.

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Backlog represents future revenues for our Research & Development Solutions business from work not yet completed or performed under signed binding commitments and signed contracts.

Once work begins on a project, revenue is recognized over the duration of the project.

Once work begins on a project, revenues are recognized over the duration of the project.

Projects may be terminated or delayed by the client or delayed by regulatory authorities for reasons beyond our control.

To the extent projects are delayed, the timing of our revenue could be affected.

To the extent projects are delayed, the timing of our revenues could be affected.

In the event that a client cancels a contract, we typically would be entitled to receive payment for all services performed up to the cancellation date and subsequent client-authorized services related to terminating the canceled project.

Typically, however, we have no contractual right to the full amount of the revenue reflected in our backlog in the event of a contract cancellation.

Typically, however, we have no contractual right to the full amount of the revenues reflected in our backlog in the event of a contract cancellation.

The duration of the projects included in our backlog, and the related revenue recognition, range from a few weeks to many years.

Our backlog may not be indicative of our future revenues from our Research & Development Solutions business, and we may not realize all the anticipated future revenue reflected in our backlog.

Our backlog may not be indicative of our future revenues from our Research & Development Solutions business, and we may not realize all the anticipated future revenues reflected in our backlog.

A number of factors may affect backlog, including:

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Although an increase in backlog will generally result in an increase in revenues to be recognized over time (depending on the level of cancellations), an increase in backlog at a particular point in time does not necessarily correspond directly to an increase in revenues during a particular period.

The extent to which contracts in backlog will result in revenue depends on many factors, including but not limited to delivery against projected schedules, the need for scope changes (change orders), contract cancellations and the nature, duration, size, complexity and phase of the contracts, each of which factors can vary significantly from time to time.

The rate at which our backlog converts to revenue may vary over time for a variety of reasons.

The extent to which contracts in backlog will result in revenues depends on many factors, including but not limited to delivery against projected schedules, the need for scope changes (change orders), contract cancellations and the nature, duration, size, complexity and phase of the contracts, each of which factors can vary significantly from project to project.

The rate at which our backlog converts to revenues may vary over time for a variety of reasons.

The revenue recognition on larger, more global projects could be slower than on smaller, less global projects for a variety of reasons, including but not limited to an extended period of negotiation between the time the project is awarded to us and the actual execution of the contract, as well as an increased timeframe for obtaining the necessary regulatory approvals.

Additionally, the increased complexity of the drug development pipeline and the need to enroll precise patient populations could extend the length of clinical trials causing revenue to be recognized over a longer period of time.

Further, delayed projects will remain in backlog, unless otherwise canceled by the client, and will not generate revenue at the rate originally expected.

Additionally, the increasing complexity of the drug development pipeline and the need to enroll precise patient populations could extend the length of clinical trials causing revenues to be recognized over a longer period of time.

Further, delayed projects will remain in backlog, unless otherwise canceled by the client, and will not generate revenues at the rate originally expected.

Thus, the relationship of backlog to realized revenues may vary over time.

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Mergers or consolidations among our clients have in the past and could in the future reduce the number of our clients and potential clients.

When companies consolidate, overlapping services previously purchased separately are usually purchased only once by the combined entity, leading to loss of revenue.

When companies consolidate, overlapping services previously purchased separately are usually purchased only once by the combined entity, leading to loss of revenues.

Other services that were previously purchased by one of the merged or consolidated entities may be deemed unnecessary or cancelled.

If our clients merge with or are acquired by other entities that are not our clients, or that use fewer of our services, they may discontinue or reduce their use of our services.

There can be no assurance as to the degree to which we may be able to address the revenue impact of such consolidation.

There can be no assurance as to the degree to which we may be able to address the revenues impact of such consolidation.

Any of these developments could materially harm our operating results and financial condition.

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• required compliance with a variety of local laws and regulations which may be materially different than those to which we are subject in the United States or which may change unexpectedly;

for example, conducting a single clinical trial across multiple countries is complex, and issues in one country, such as a failure to comply with local regulations or restrictions, may affect the progress of the clinical trial in the other countries, for example, by limiting the amount of data necessary for a clinical trial to proceed, resulting in delays or potential cancellation of contracts, which in turn may result in loss of revenue;

• the United States or foreign countries could enact legislation or impose regulations or other restrictions, including unfavorable labor regulations, tax policies or economic sanctions, which could have an adverse effect on our ability to conduct business in or expatriate profits from the countries in which we operate, including hiring, retaining and overseeing qualified management personnel for managing operations in multiple countries, differing employment practices and labor issues, and tax-related risks, including the imposition of taxes and the lack of beneficial treaties, that result in a higher effective tax rate for us;

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• the regulatory or judicial authorities of foreign countries may not enforce legal rights and recognize business procedures in a manner in which we are accustomed or would reasonably expect;

• local, economic, political and social conditions, including potential hyperinflationary conditions, political instability, and potential nationalization, repatriation, expropriation, price controls or other restrictive government actions, including changes in political and economic conditions may lead to changes in the business environment in which we operate, as well as changes in foreign currency exchange rates;

• local, economic, political and social conditions, including sustained increases in inflation rates and/or potential hyperinflationary conditions, political instability, and potential nationalization, repatriation, expropriation, price controls or other restrictive government actions, including changes in political and economic conditions may lead to changes in the business environment in which we operate, as well as changes in foreign currency exchange rates;

• immigration laws are subject to legislative change and varying standards of application and enforcement due to political forces, economic conditions or other events (including proposals in the U.S.

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• clients in foreign jurisdictions may have longer payment cycles, and it may be more difficult to collect receivables in foreign jurisdictions;

• natural disasters, public health emergencies and pandemics such as the COVID-19, including any variants, or international conflict, including terrorist acts, could interrupt our services, endanger our personnel, lower patient visits and increase patient drop-out rates, cause delays in recruitment of new patients, decrease the productivity of our clinical research associates, cause other project delays or loss of clinical trial materials or results.

• natural disasters, public health emergencies and pandemics such as the COVID-19, including any variants, or international conflict, such as the ongoing conflict between Russia and Ukraine, or terrorist acts, could interrupt our services, endanger our personnel, lower patient visits and increase patient drop-out rates, cause delays in recruitment of new patients, decrease the productivity of our clinical research associates, cause other project delays or loss of clinical trial materials or results.

These risks and uncertainties could negatively impact our ability to, among other things, perform large, global projects for our clients.

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• Foreign Currency Translation Risk.

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

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

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

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We are subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cash settlement of a transaction.

We earn revenue from our service contracts over a period of several months and, in some cases, over several years.

We earn revenues from our service contracts over a period of several months and, in some cases, over several years.

Accordingly, exchange rate fluctuations during this period may affect our profitability with respect to such contracts.

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We face risks related to sales to government entities.

We derive a portion of our revenue from sales to government entities in the United States.

In general, our contracts with United States government entities are terminable at will by the government entity at any time.

We derive a portion of our revenues from sales to government entities around the world.

In general, our contracts with government entities are terminable at will by the government entity at any time.

Government demand and payment for our services may be affected by public-sector budgetary cycles and funding authorizations, including government shutdowns.

Government contracts are subject to oversight, including special rules on accounting, expenses, reviews and security.

Failure to comply with these rules could result in civil and criminal penalties and sanctions, including termination of contracts, fines and suspensions, or debarment from future business with the United States government.

Government contracts are typically subject to oversight, including special rules on accounting, expenses, reviews and security.

As a result, failure to comply with these rules could have an adverse effect on our future business, reputation, operating results and financial condition.

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However, it is possible we could be found liable for claims with respect to the actions of third-party investigators, which may adversely affect our financial condition, results of operations and reputation.

Our business and operations have been and may in the future be adversely affected by the novel coronavirus (COVID-19) pandemic.

As COVID-19, including any variants, continues to spread, we have and may in the future experience disruptions that could severely impact our business, including:

• closure or inaccessibility of clinical site locations;

• delays or difficulties in enrolling patients in our clinical trials and starting new clinical trials;

• delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

• interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;

• delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;

• significant disruption in our businesses that rely on face-to-face interactions or are dependent on in-person gatherings, events or conferences;

• significant and unpredictable reductions or increases in demand for certain of our offerings.

Any of the foregoing could have a material and adverse effect on our business, operating results and financial condition.

Some of our services involve direct interaction with clinical trial subjects or volunteers and subcontracting into a network of Phase I clinical facilities, which could create potential liability that may adversely affect our results of operations, financial condition and reputation.

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or an equivalent degree, or relevant experience in the industry, including highly technical specialties such as clinical research associates, project managers and technology developers, and in the locations in which we operate.

This increase in competition and shortage of qualified personnel in certain specialty areas may make it more difficult to hire and retain our key employees and could result in substantial increased costs, such as increased wage rates to attract and retain employees.

Increases in inflation, competition and shortages of qualified personnel in certain specialty areas may make it more difficult to hire and retain our key employees and could result in substantial increased costs, such as increased wage rates to attract and retain employees.

The departure of our key employees, or our inability to continue to identify, attract and retain qualified personnel or replace departed personnel in a timely fashion, may impact our ability to grow our business and compete effectively in our industry and may negatively affect our ability to meet financial and operational goals.

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• the establishment of valuation allowances against deferred income tax assets if we determined that it is more likely than not that future income tax benefits will not be realized.

In addition, our effective income tax rate is influenced by U.S.

tax law which has been substantially modified by the Tax Cuts and Jobs Act enacted in 2017 (“Tax Act”).

In the course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain which may require the use of estimates and significant judgement to account for their impact on the effective income tax rate in our consolidated financial statements.

As the regulations and guidance evolve with respect to the Tax Act, our results may differ from previous estimates and may materially affect our consolidated financial statements.

All of these items described above may cause fluctuations in our effective income tax rate through increased U.S.

tax liability and/or the loss of tax attributes in any given year that could adversely affect our results of operations and impact our earnings and earnings per share.

As the regulations and guidance evolve with respect to current and newly enacted tax law, our results may differ from previous estimates and may materially affect our consolidated financial statements.

All of these items described above may cause fluctuations in our effective income tax rate through increased income tax liability and/or the loss of tax attributes in any given year that could adversely affect our results of operations and impact our earnings and earnings per share.

Additional information regarding our income taxes is presented in Note 16 to our audited consolidated financial statements included in this Annual Report on Form 10-K.

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The success of any acquisition will depend upon, among other things, our ability to effectively integrate acquired personnel, operations, services and technologies into our business and to retain the key personnel and clients of our acquired businesses.

In addition, we may be unable to identify suitable acquisition opportunities or obtain any necessary financing on commercially acceptable terms.

In addition, we may be unable to identify suitable acquisition opportunities, obtain any necessary financing on commercially acceptable terms or receive regulatory approvals to move forward with the transaction as contemplated in a timely manner or at all.

We may also spend time and money investigating and negotiating with potential acquisition targets but not complete the transaction.

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Our business may be materially and adversely impacted by factors affecting the biopharmaceutical and healthcare industries.

The vast majority of our revenue is generated from sales to the biopharmaceutical and healthcare industries.

The vast majority of our revenues are generated from sales to the biopharmaceutical and healthcare industries.

The clients we serve in these industries are commonly subject to financial pressures, including, but not limited to, increased costs, reduced demand for their products, reductions in pricing and reimbursement for products and services, formulary approval and placement, government approval to market their products and limits on the manner by which they market their products, loss of patent exclusivity (whether due to patent expiration or as a result of a successful legal challenge) and the proliferation of or changes to regulations applicable to these industries.

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If our competitors introduce superior technologies or services, including in the provision of clinical services, and if we cannot make enhancements to remain competitive, our competitive position would be harmed.

If we are unable to compete successfully, we may lose clients or be unable to attract new clients, which could lead to a decrease in our revenue and financial condition.

If we are unable to compete successfully, we may lose clients or be unable to attract new clients, which could lead to a decrease in our revenues and financial condition.

Laws restricting biopharmaceutical sales and marketing practices may adversely impact demand for our services.

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Interest rate fluctuations and our ability to deduct interest expense may affect our results of operations and financial condition.

Because we have variable rate debt, fluctuations in interest rates affect our business.

In 2022, financial regulators in various jurisdictions, including where we have variable-rate indebtedness outstanding, increased interest rates on multiple occasions and in amounts greater than we have seen in recent years, and signaled that additional interest rate increases may occur in 2023 and beyond in an effort to lower inflation.

Because we have variable rate debt, increases in interest rates will lead to increases in our borrowing costs and may adversely affect our results of operations and financial condition.

We attempt to minimize interest rate risk and lower our overall borrowing costs through the utilization of derivative financial instruments, primarily swaps.

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In addition, the deduction for our interest expense may be limited, which could have an adverse impact on our taxes and net income.

We may be adversely affected by changes in the method of determining the London Interbank Offered Rate (“LIBOR”), or the replacement of LIBOR with an alternative reference rate, for our variable rate loans, derivative contracts and other financial assets and liabilities.

The interest rates under our credit facilities and related interest rate swaps may be impacted by the discontinuation of LIBOR for various currencies.

LIBOR is used as a reference rate to calculate interest rates under our credit facilities.

In 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR.

In March 2021, the ICE Benchmark Administration announced that it would cease to publish LIBOR for U.S.

Dollar borrowings after June 30, 2023.

The Alternative Reference Rates Committee convened by the Board of Governors of the Federal Reserve System has recommended the use of the Secured Overnight Funding Rate (“SOFR”) as a replacement benchmark index for borrowings of U.S.

Our credit facilities will need to be amended to give effect to SOFR as the benchmark rate with respect to our U.S.

Dollar-denominated term B loans.

Market terms are still developing for loans and other products linked to SOFR, EURIBOR and other benchmark replacements and there can be no assurance that rates linked to SOFR, EURIBOR and other benchmark replacements or related administrative terms will be as favorable to us as those rates and terms under our existing credit facilities, derivatives and other contracts.

Risks Relating to Ownership of Our Common Stock

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Our certificate of incorporation and Delaware bylaws and the General Corporation Law of Delaware (the “DGCL”) contain provisions that could make it difficult for a third party to acquire IQVIA even if doing so might be beneficial to its stockholders, including:

• the division of the board of directors into three classes and the election of each class for three-year terms;

• the division of the board of directors into three classes (subject to gradual declassification beginning at the 2023 annual meeting of stockholders, such that our board of directors will be fully declassified and each director will be elected to a one-year term beginning at the 2025 annual meeting of stockholders);

• the sole ability of the board of directors to fill a vacancy created by the death or resignation of a director or the expansion of the board of directors;

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• limitations on the ability of stockholders to call special meetings and to take action by written consent;

• the approval of holders of at least seventy-five percent (75%) of the outstanding shares of IQVIA entitled to vote on any amendment, alteration, change, addition or repeal of the Delaware bylaws is required to amend, alter, change, add to or repeal the Delaware bylaws;

• the required approval of holders of at least seventy-five percent (75%) of the outstanding shares of IQVIA to remove directors, which removal may only be for cause;

• the approval of holders of a majority of the outstanding shares of IQVIA entitled to vote on any amendment, alteration, change, addition or repeal of the Delaware bylaws is required to amend, alter, change, add to or repeal the Delaware bylaws;

• the required approval of holders of a majority of the outstanding shares of IQVIA to remove directors, which removal may only be for cause;

• the ability of the board of directors to issue new series of, and designate the terms of, preferred stock, without stockholder approval, which could be used to, among other things, institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by the board of directors.

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Since we have no current plans to pay regular cash dividends on our common stock, stockholders may not receive any return on investment unless they sell their common stock for a price greater than that which they paid for it.

Although we have previously declared dividends to our stockholders prior to our initial public offering in May 2013, we do not currently anticipate paying any regular cash dividends on our common stock.

We do not currently anticipate paying any regular cash dividends on our common stock.

Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board may deem relevant.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors