What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-01 compared with 2023-04-28 · 118 added, 57 removed, 180 unchanged (49% of the section changed)

7 unchanged sentences

We caution you that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation, business disruptions caused by natural disasters, pandemics such as the COVID-19 (coronavirus) outbreak, including any variants, and the public health policy responses to the outbreak, and international conflicts or other disruptions outside of our control such as the current situation in Ukraine and Russia;

our ability to accurately model or forecast the impact of the spread and/or containment of COVID-19, including any variants, among other sources of business interruption, on our operations and financial results;

most of our contracts may be terminated on short notice, and we may lose or experience delays with large client contracts or be unable to enter into new contracts;

45 unchanged sentences

Foreign Currency Translation

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.

In the first six 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.

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 March 31, Change

Three Months Ended June 30, Change

(in millions)

Revenues $ 3,728 $ 3,541 $ 187 5.3 %

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

For the second quarter of 2023, our revenues increased $187 million, or 5.3%, as compared to the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $196 million, or 5.5%, reflecting a $48 million increase in Technology & Analytics Solutions and a $148 million increase in Research & Development Solutions.

Contract Sales & Medical Solutions constant currency results for the second quarter of 2023 were consistent with the same period in 2022.

Six Months Ended June 30, Change

(in millions)

Revenues $ 7,380 $ 7,109 $ 271 3.8 %

For the first six months of 2023, our revenues increased $271 million, or 3.8%, as compared to the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $362 million, or 5.1%, reflecting a $90 million increase in Technology & Analytics Solutions, a $274 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 March 31,

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

(in millions)

2023 2022 2023 2022

Cost of revenues, exclusive of depreciation and amortization $ 2,443 $ 2,331 $ 4,841 $ 4,654

1 unchanged sentence

65.5 % 65.8 % 65.6 % 65.5 %

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.

The $112 million increase in cost of revenues, exclusive of depreciation and amortization, for the three months ended June 30, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $165 million, or 7.1%, reflecting a $55 million increase in Technology & Analytics Solutions, a $111 million increase in Research & Development Solutions, and a $1 million decrease in Contract Sales & Medical Solutions.

The $187 million increase in cost of revenues, exclusive of depreciation and amortization, for the six months ended June 30, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $350 million, or 7.5%, reflecting a $107 million increase in Technology & Analytics Solutions, a $247 million increase in Research & Development Solutions, and a $4 million decrease in Contract Sales & Medical Solutions.

Selling, General and Administrative Expenses

Three Months Ended March 31,

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

(in millions)

2023 2022 2023 2022

Selling, general and administrative expenses $ 482 $ 483 $ 995 $ 971

1 unchanged sentence

12.9 % 13.6 % 13.5 % 13.7 %

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.

The $1 million decrease in selling, general and administrative expenses for the three months ended June 30, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $7 million, or 1.4%, reflecting an $18 million increase in Technology & Analytics Solutions and a $10 million increase in Research & Development Solutions, offset by a $1 million decrease in Contract Sales & Medical Solutions and a $20 million decrease in general corporate and unallocated expenses.

The $24 million increase in selling, general and administrative expenses for the six months ended June 30, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $55 million, or 5.7%, reflecting a $37 million increase in Technology & Analytics Solutions, a $17 million increase in Research & Development Solutions, and a $3 million increase in general corporate and unallocated expenses, offset by a $2 million decrease in Contract Sales & Medical Solutions.

Depreciation and Amortization

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

1 unchanged sentence

% of revenues

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

6.9 % 7.6 % 6.9 % 7.4 %

The $11 million and $13 million decrease in depreciation and amortization for the three and six months ended June 30, 2023 compared to the same periods in 2022 was primarily the result of less accelerated amortization related to the abandonment of certain software assets and to a lesser extent less amortization from certain intangible assets from the merger between Quintiles and IMS Health, offset by an increase in amortization of intangible assets from acquisitions occurring in 2022 and 2023 and capitalized software.

Restructuring Costs

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

1 unchanged sentence

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.

These restructuring actions 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 March 31,

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

(in millions) 2023 2022 2023 2022

2 unchanged sentences

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

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.

The increase for the three and six months ended June 30, 2023 as compared to the same periods in 2022 is primarily a result of higher deposit rates.

Interest expense during the three and six months ended June 30, 2023 increased compared to the same periods in 2022 primarily due 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,

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

(in millions) 2023 2022 2023 2022

Other (income) expense, net $ (16) $ 33 $ (42) $ 43

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.

Other (income) expense, net for the three months ended June 30, 2023 increased compared to the same period in 2022 primarily due to less foreign currency loss and gains on investments.

Other (income) expense, net for the six months ended June 30, 2023 increased compared to the same period in 2022 primarily due to foreign currency gain and gains on investments.

Income Tax Expense

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

Income tax expense $ 81 $ 71 $ 152 $ 142

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.

Our effective income tax rate was 21.6% and 21.6% in the second quarter of 2023 and 2022, and 20.6% and 19.5% in the first six months of 2023 and 2022, respectively.

Our effective income tax rate in the second quarter and in the first six months of 2023 and 2022 was favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

For the second quarter of 2023 and 2022 this impact was $2 million and $1 million, respectively, and for the first six months of 2023 and 2022 this impact was $10 million and $14 million, respectively.

Segment Results of Operations

Revenues and profit by segment are as follows:

Three Months Ended March 31, 2023 and 2022

Three Months Ended June 30, 2023 and 2022

Segment Revenues Segment Profit

8 unchanged sentences

Consolidated $ 3,728 $ 3,541 $ 524 $ 453

Six Months Ended June 30, 2023 and 2022

Segment Revenues Segment Profit

(in millions) 2023 2022 2023 2022

Technology & Analytics Solutions $ 2,900 $ 2,847 $ 731 $ 770

Research & Development Solutions 4,122 3,884 896 799

Contract Sales & Medical Solutions 358 378 25 25

Total 7,380 7,109 1,652 1,594

General corporate and unallocated (108) (110)

Depreciation and amortization (512) (525)

Restructuring costs (37) (11)

Consolidated $ 7,380 $ 7,109 $ 995 $ 948

Certain costs are not allocated to our segments and are reported as general corporate and unallocated expenses.

These costs primarily consist of stock-based compensation and expenses related to integration activities and acquisitions.

We also do not allocate depreciation and amortization or impairment charges to our segments.

We also do not allocate depreciation and amortization or impairment charges, if any, to our segments.

Technology & Analytics Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions) 2023 2022 $ %

3 unchanged sentences

Segment profit $ 370 $ 384 $ (14) (3.6) %

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.

Six Months Ended June 30, Change

(in millions) 2023 2022 $ %

Revenues $ 2,900 $ 2,847 $ 53 1.9 %

Cost of revenues, exclusive of depreciation and amortization 1,734 1,662 72 4.3

Selling, general and administrative expenses 435 415 20 4.8

Segment profit $ 731 $ 770 $ (39) (5.1) %

Technology & Analytics Solutions’ revenues were $1,456 million for the second quarter of 2023, an increase of $48 million, or 3.4%, over the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $48 million, or 3.4%, 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.

Technology & Analytics Solutions’ revenues were $2,900 million for the first six months of 2023, an increase of $53 million, or 1.9%, over the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $90 million, or 3.2%, reflecting revenue growth in the Americas and Asia-Pacific regions.

The constant currency revenue growth for the three and six months ended June 30, 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 $24 million, or 2.9%, in the first quarter of 2023 over the same period in 2022.

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $48 million, or 5.8%, in the second quarter of 2023 over the same period in 2022.

This increase included a constant currency increase of approximately $55 million, or 6.6%.

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.

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $72 million, or 4.3%, in the first six months of 2023 over the same period in 2022.

This increase included a constant currency increase of approximately $107 million, or 6.4%.

The constant currency increase for the three and six months ended June 30, 2023 was related to an increase in compensation and related expenses and an increase in costs of acquiring and processing data to support revenue growth.

Selling, General and Administrative 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.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $14 million, or 7.1%, in the second quarter of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $18 million, or 9.2%.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $20 million, or 4.8%, in the first six months of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $37 million, or 8.9%.

The constant currency increase for the three and six months ended June 30, 2023 was primarily related to an increase in compensation and related expenses.

Research & Development Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions)

3 unchanged sentences

Segment profit $ 468 $ 398 $ 70 17.6 %

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.

Six Months Ended June 30, Change

(in millions)

Revenues $ 4,122 $ 3,884 $ 238 6.1 %

Cost of revenues, exclusive of depreciation and amortization 2,803 2,670 133 5.0

Selling, general and administrative expenses 423 415 8 1.9

Segment profit $ 896 $ 799 $ 97 12.1 %

Research & Development Solutions’ contracted backlog increased from $27.2 billion as of December 31, 2022 to $28.4 billion as of June 30, 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 $2,096 million for the second quarter of 2023, an increase of $146 million, or 7.5%, over the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $148 million, or 7.6%, 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.

Research & Development Solutions’ revenues were $4,122 million in the first six months of 2023, an increase of $238 million, or 6.1%, over the same period in 2022.

This increase was comprised of constant currency revenue growth of approximately $274 million, or 7.1%, reflecting revenue growth in the Americas and Asia-Pacific regions.

The constant currency revenue growth for the three and six months ended June 30, 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 $64 million, or 4.8%, in the first quarter of 2023 over the same period in 2022.

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $69 million, or 5.1%, in the second quarter of 2023 over the same period in 2022.

This increase included a constant currency increase of approximately $111 million, or 8.2%.

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.

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $133 million, or 5.0%, in the first six months of 2023 over the same period in 2022.

This increase included a constant currency increase of approximately $247 million, or 9.3%.

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

Research & Development Solutions’ selling, general and administrative expenses increased $7 million, or 3.4%, in the second quarter of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $10 million, or 4.9%.

Research & Development Solutions’ selling, general and administrative expenses increased $8 million, or 1.9%, in the first six months of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $17 million, or 4.1%.

The constant currency increase for the three and six months ended June 30, 2023 was primarily related to an increase in compensation and related expenses.

Contract Sales & Medical Solutions

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions)

3 unchanged sentences

Segment profit $ 12 $ 13 $ (1) (7.7) %

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%.

Six Months Ended June 30, Change

(in millions)

Revenues $ 358 $ 378 $ (20) (5.3) %

Cost of revenues, exclusive of depreciation and amortization 304 322 (18) (5.6)

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 29 31 (2) (6.5)

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%.

Segment profit $ 25 $ 25 $ — 0.0 %

Contract Sales & Medical Solutions’ revenues were $176 million for the second quarter of 2023, a decrease of $7 million, or 3.8%, over the same period in 2022, which is wholly attributable to the effects of foreign currency rate fluctuations.

Contract Sales & Medical Solutions’ revenues were $358 million in the first six months of 2023, a decrease of $20 million, or 5.3%, over the same period in 2022.

This decrease included a constant currency revenue decrease of approximately $2 million, or 0.5%.

Cost of Revenues, exclusive of Depreciation and Amortization

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $5 million, or 3.2%, in the second quarter of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $1 million, or 0.6%.

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $18 million, or 5.6%, in the first six months of 2023 as compared to the same period in 2022.

This decrease included a constant currency decrease of approximately $4 million, or 1.2%.

Selling, General and Administrative Expenses

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $1 million, or 6.7%, in the second quarter of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $1 million, or 6.7%.

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $2 million, or 6.5%, in the first six months of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $2 million, or 6.5%.

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 $1,494 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.

We had a cash balance of $1,382 million as of June 30, 2023 ($568 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.

6 unchanged sentences

Equity Repurchase Program

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

As of June 30, 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 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.

During the six months ended June 30, 2023, we repurchased 3.2 million shares of our common stock for $619 million under the Repurchase Program.

As of June 30, 2023, we had remaining authorization to repurchase up to $736 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 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.

On July 31, 2023, our Board of Directors increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of our common stock by an additional $2,000 million, which increased the total amount that has been authorized under the Repurchase Program to $11,725 million.

After this $2,000 million increase in stock repurchase authorization, we have remaining authorization to repurchase up to $2,736 million of our common stock under the Repurchase Program.

As of June 30, 2023, we had $13,839 million of total indebtedness, excluding $1,795 million of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of June 30, 2023, we believe we were in compliance with our restrictive covenants in all material respects.

Senior Secured Credit Facilities

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.

As of June 30, 2023, the Company’s Fifth Amended and Restated Credit Agreement provided financing through the senior secured credit facilities of up to $8,095 million, which consisted of $6,295 million principal amounts of debt outstanding, and $1,795 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.

On May 23, 2023, we completed the issuance and sale of $750 million in gross proceeds of 5.700% senior secured notes due 2028 (the “Senior Secured Notes”) and $500 million in gross proceeds of 6.500% senior notes due 2030 (the “Senior Notes” and, together with the Senior Secured Notes, the “Notes”).

The net proceeds from the notes offering were used to repay existing borrowings under our revolving credit facility and to pay fees and expenses related to the Notes offering.

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.

Receivables Financing Facility

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

As of June 30, 2023, no additional amounts of revolving loan commitments were available under the receivables financing facility.

Six months ended June 30, 2023 and 2022

Cash Flow from Operating Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2023 2022

Net cash provided by operating activities $ 819 $ 837

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 provided by operating activities decreased $18 million during the first six months of 2023 as compared to the same period in 2022.

The decrease was primarily due to a decrease in cash from cash-related net income ($44 million) and unearned income ($23 million), offset by an increase in cash from accounts receivable and unbilled services ($32 million) and other operating assets and liabilities ($17 million).

Cash Flow from Investing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2023 2022

Net cash used in investing activities $ (818) $ (812)

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 used in investing activities increased $6 million during the first six months of 2023 as compared to the same period in 2022, primarily driven by more cash used in investments in debt and equity securities ($36 million), investments in unconsolidated affiliates, net ($3 million) and purchases of marketable securities, net ($1 million), offset by less cash used for acquisitions of businesses ($20 million) and acquisitions of property, equipment and software ($14 million).

Cash Flow from Financing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2023 2022

Net cash provided by financing activities $ 182 $ 115

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).

Cash provided by financing activities increased $67 million during the first six months of 2023 as compared to the same period in 2022, primarily due to a decrease in cash used to repurchase common stock ($274 million) and cash payments related to employee stock option plans ($11 million), offset by an increase in cash payments on revolving credit facilities, net of proceeds ($125 million), contingent consideration and deferred purchase price accruals ($50 million), debt and principal payments on finance leases ($30 million) and debt issuance costs ($13 million).

Off-Balance Sheet Arrangements

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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-Q

Item 2. Management’s Discussion and Analysis