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Item 2. Management’s Discussion and Analysis

2023-04-28 compared with 2022-10-27 · 70 added, 162 removed, 167 unchanged (58% of the section changed)

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Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such.

Without limiting the foregoing, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “forecasts,” “plans,” “projects,” “should,” “targets,” “will” and similar words and expressions, and variations and negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Without limiting the foregoing, the words “assumes,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” "forecasts," “plans,” “projects,” “should,” “seeks,” “sees,” “targets,” “will,” “would” and similar words and expressions, and variations and negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We assume no obligation to update any such forward-looking information to reflect actual results or changes in our outlook or the factors affecting such forward-looking information.

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hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements;

the rate at which our backlog converts to revenue;

the rate at which our backlog converts to revenues;

our ability to acquire, develop and implement technology necessary for our business;

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With approximately 87,000 employees, we conduct operations in more than 100 countries.

Table of conten t s

We are a global leader in protecting individual patient privacy.

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Our insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures.

We are managed through three reportable segments, Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions.

We are managed through three reportable segments:

Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions.

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

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Foreign Currency Translation

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.

In the first three months of 2023, approximately 30% 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.

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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 September 30, Change

(in millions)

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

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.

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions)

Revenues $ 3,652 $ 3,568 $ 84 2.4 %

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.

For the first quarter of 2023, our revenues increased $84 million, or 2.4%, as compared to the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $166 million, or 4.7%, reflecting a $42 million increase in Technology & Analytics Solutions, a $126 million increase in Research & Development Solutions, and a $2 million decrease in Contract Sales & Medical Solutions.

Cost of Revenues, exclusive of Depreciation and Amortization

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

Three Months Ended March 31,

(in millions)

2022 2021 2022 2021

Cost of revenues, exclusive of depreciation and amortization $ 2,398 $ 2,323

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65.7 % 65.1 %

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.

The $75 million increase in cost of revenues, exclusive of depreciation and amortization, for the three months ended March 31, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $185 million, or 8.0%, reflecting a $52 million increase in Technology & Analytics Solutions, a $136 million increase in Research & Development Solutions, and a $3 million decrease in Contract Sales & Medical Solutions.

Selling, General and Administrative Expenses

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

Three Months Ended March 31,

(in millions)

2022 2021 2022 2021

Selling, general and administrative expenses $ 513 $ 488

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14.0 % 13.7 %

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

The $25 million increase in selling, general and administrative expenses for the three months ended March 31, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $48 million, or 9.8%, reflecting a $19 million increase in Technology & Analytics Solutions, a $7 million increase in Research & Development Solutions, a $1 million decrease in Contract Sales & Medical Solutions, and a $23 million increase in general corporate and unallocated expenses.

Depreciation and Amortization

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

Three Months Ended March 31,

(in millions) 2023 2022

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% of revenues

7.0 % 9.9 % 7.2 % 9.8 %

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.

Depreciation and amortization was relatively consistent for the three months ended March 31, 2023 compared to the same period in 2022.

Restructuring Costs

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

Three Months Ended March 31,

(in millions) 2023 2022

Restructuring costs $ 17 $ 7

The restructuring costs incurred during 2022 and 2021 were due to ongoing efforts to streamline our global operations.

The restructuring costs incurred during 2023 and 2022 were due to ongoing efforts to streamline our global operations and reduce overcapacity to adapt to changing market conditions and integrate acquisitions.

The remaining actions under these plans are expected to occur throughout 2023 and into 2024 and are expected to consist of consolidating functional activities, eliminating redundant positions and aligning resources with customer requirements.

Interest Income and Interest Expense

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

Three Months Ended March 31,

(in millions) 2023 2022

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

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 September 30, Nine Months Ended September 30,

(in millions) 2022 2021 2022 2021

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

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 September 30, Nine Months Ended September 30,

The increase for the three months ended March 31, 2023 as compared to the same period in 2022 is primarily a result of higher deposit rates.

Interest expense during the three months ended March 31, 2023 was higher than the same period in 2022 due primarily to higher base rate interest costs across the floating rate debt portfolio as well as from an increase in our net debt.

Other (Income) Expense, Net

Three Months Ended March 31,

(in millions) 2023 2022

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

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

Other (income) expense, net $ (26) $ 10

Other (income) expense, net for the three months ended March 31, 2023 increased as compared to the same period in 2022 primarily due to foreign currency gain and gains on investments.

Income Tax Expense

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

Three Months Ended March 31,

(in millions) 2023 2022

Income tax expense $ 71 $ 71

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 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 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 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'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.

Our effective income tax rate was 19.6% and 17.8% in the first quarter of 2023 and 2022, respectively.

Our effective income tax rate in the first quarter of 2023 and 2022 was favorably impacted by $8 million and $13 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

Segment Results of Operations

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

Three Months Ended September 30, 2022 and 2021

Segment Revenues Segment Profit

(in millions) 2022 2021 2022 2021

Technology & Analytics Solutions $ 1,400 $ 1,337 $ 359 $ 343

Research & Development Solutions 1,979 1,853 445 364

Contract Sales & Medical Solutions 183 201 8 20

Total 3,562 3,391 812 727

General corporate and unallocated (88) (87)

Depreciation and amortization (248) (336)

Restructuring costs (4) (2)

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

Table of conten t s

Nine Months Ended September 30, 2022 and 2021

Revenues and profit by segment are as follows:

Three Months Ended March 31, 2023 and 2022

Segment Revenues Segment Profit

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Technology & Analytics Solutions

Three Months Ended September 30, Change

(in millions) 2022 2021 $ %

Revenues $ 1,400 $ 1,337 $ 63 4.7 %

Cost of revenues, exclusive of depreciation and amortization 828 795 33 4.2

Selling, general and administrative expenses 213 199 14 7.0

Segment profit $ 359 $ 343 $ 16 4.7 %

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions) 2023 2022 $ %

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Segment profit $ 361 $ 386 $ (25) (6.5) %

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 $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 nine months ended September 30, 2022 was driven by higher technology, real-world and consulting and analytical services.

Technology & Analytics Solutions’ revenues were $1,444 million for the first quarter of 2023, an increase of $5 million, or 0.3%, over the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $42 million, or 2.9%, reflecting revenue growth in the Americas and Asia-Pacific regions.

The constant currency revenue growth for the three months ended March 31, 2023 was driven by an increase in real world services and information and technology services.

The constant currency revenue growth was impacted by a decrease in COVID-19 related work.

Cost of Revenues, exclusive of Depreciation and Amortization

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%.

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.

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $24 million, or 2.9%, in the first quarter of 2023 over the same period in 2022.

This increase included a constant currency increase of approximately $52 million, or 6.2%.

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.

The constant currency increase for the three months ended March 31, 2023 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 $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.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $6 million, or 2.7%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $19 million, or 8.7%.

The constant currency increase for the three months ended March 31, 2023 was primarily related to an increase in compensation and related expenses.

Research & Development Solutions

Three Months Ended September 30, Change

(in millions)

Revenues $ 1,979 $ 1,853 $ 126 6.8 %

Cost of revenues, exclusive of depreciation and amortization 1,335 1,291 44 3.4

Selling, general and administrative expenses 199 198 1 0.5

Segment profit $ 445 $ 364 $ 81 22.3 %

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions)

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Segment profit $ 428 $ 401 $ 27 6.7 %

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.

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

Research & Development Solutions’ contracted backlog increased from $27.2 billion as of December 31, 2022 to $27.9 billion as of March 31, 2023, and we expect approximately $7.3 billion of this backlog to convert to revenue in the next twelve months.

Research & Development Solutions’ revenues were $2,026 million for the first quarter of 2023, an increase of $92 million, or 4.8%, over the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $126 million, or 6.5%, reflecting revenue growth in the Americas and Asia-Pacific regions.

The constant currency revenue growth for the three months ended March 31, 2023 was primarily the result of volume-related increases in clinical services and to a lesser extent from volume-related increases in lab testing.

The constant currency revenue growth was impacted by a decrease in COVID-19 related work.

Cost of Revenues, exclusive of Depreciation and Amortization

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.

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $64 million, or 4.8%, in the first quarter of 2023 over the same period in 2022.

This increase included a constant currency increase of approximately $136 million, or 10.3%.

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.

The constant currency increase for the three months ended March 31, 2023 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 $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.

Research & Development Solutions’ selling, general and administrative expenses increased $1 million, or 0.5%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $7 million, or 3.3%.

The constant currency increase for the three months ended March 31, 2023 was primarily related to an increase in compensation and related expenses.

Contract Sales & Medical Solutions

Three Months Ended September 30, Change

(in millions)

Revenues $ 183 $ 201 $ (18) (9.0) %

Cost of revenues, exclusive of depreciation and amortization 158 167 (9) (5.4)

Selling, general and administrative expenses 17 14 3 21.4

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

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions)

3 unchanged sentences

Segment profit $ 13 $ 12 $ 1 8.3 %

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.

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

Contract Sales & Medical Solutions’ revenues were $182 million for the first quarter of 2023, a decrease of $13 million, or 6.7%, over the same period in 2022, which included a constant currency revenue decrease of approximately $2 million, or 1.0%.

Cost of Revenues, exclusive of Depreciation and Amortization

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, 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.

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $13 million, or 7.8%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $3 million, or 1.8%.

Selling, General and Administrative 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.

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $1 million, or 6.3%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $1 million, or 6.3%.

Liquidity and Capital Resources

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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 $1,274 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

We had a cash balance of $1,494 million as of March 31, 2023 ($532 million of which was in the United States), an increase from $1,216 million as of December 31, 2022.

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.

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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.

As of March 31, 2023, the total stock repurchase authorization under the Company's equity repurchase program (the “Repurchase Program”) was $9,725 million.

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 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.

During the three months ended March 31, 2023, we repurchased 0.7 million shares of our common stock for $129 million under the Repurchase Program.

As of March 31, 2023, we have remaining authorization to repurchase up to $1,226 million 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 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.

As of March 31, 2023, we had $13,222 million of total indebtedness, excluding $695 million of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of March 31, 2023, we believe we were in compliance with our restrictive covenants in all material respects.

Senior Secured Credit Facilities

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 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.

As of March 31, 2023, the Company’s Fifth Amended and Restated Credit Agreement provided financing through the senior secured credit facilities of up to $7,632 million , which consisted of $6,932 million principal amounts of debt outstanding, and $695 million of available borrowing capacity on the revolving credit facility and standby letters of credit.

On April 17, 2023, we increased the capacity of the Company's senior secured revolving credit facility by $500 million U.S.

dollars, bringing the total capacity of the revolving credit facility to $2,000 million.

Receivables Financing Facility

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

As of March 31, 2023, no additional amounts of revolving loan commitments were available under the receivables financing facility.

Three months ended March 31, 2023 and 2022

Cash Flow from Operating Activities

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

Net cash provided by operating activities $ 417 $ 508

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 provided by operating activities decreased $91 million during the first three months of 2023 as compared to the same period in 2022.

The decrease was primarily due to a decrease in cash from unearned income ($95 million) and accounts receivable and unbilled services ($66 million) and from cash-related net income ($27 million), offset by an increase in cash from other operating assets and liabilities ($97 million).

Cash Flow from Investing Activities

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

Net cash used in investing activities $ (222) $ (613)

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 used in investing activities decreased $391 million during the first three months of 2023 as compared to the same period in 2022, primarily driven by less cash used for acquisitions of businesses ($412 million) and acquisitions of property, equipment and software ($13 million) and an increase in cash from other investing activities ($4 million), offset by more cash used in investments in debt and equity securities ($36 million), purchases of marketable securities, net ($1 million) and investments in unconsolidated affiliates, net ($1 million).

Cash Flow from Financing Activities

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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).

Net cash provided by financing activities $ 87 $ 144

Cash provided by financing activities decreased $57 million during the first three months of 2023 as compared to the same period in 2022, primarily due to a decrease in cash proceeds from revolving credit facilities, net of repayments ($275 million), an increase in cash payments on contingent consideration and deferred purchase price accruals ($50 million) and debt and principal payments on finance leases ($15 million), offset by a decrease in cash used to repurchase common stock ($274 million) and cash payments related to employee stock option plans ($9 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 2022 Form 10-K.

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