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Item 7. Management’s Discussion and Analysis

2024-02-15 compared with 2023-02-15 · 154 added, 88 removed, 297 unchanged (45% of the section changed)

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

IQVIA creates intelligent connections across all aspects of healthcare through its analytics, transformative technology, big data resources and extensive domain expertise.

IQVIA Connected Intelligence™ delivers powerful insights with speed and agility — enabling customers to accelerate the clinical development and commercialization of innovative medical treatments that improve healthcare outcomes for patients.

IQVIA creates intelligent connections across all aspects of healthcare through its analytics, transformative technology, big data resources, extensive domain expertise and network of partners.

IQVIA Connected Intelligence delivers actionable insights and powerful solutions with speed and agility — enabling customers to accelerate the clinical development and commercialization of innovative medical treatments that improve healthcare outcomes for patients.

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

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For a description of our service offerings within our segments, refer to Part I, Item 1, “Business.”

Throughout 2022 we experienced broad, robust demand for all our offerings as demonstrated by our results for the year ended December 31, 2022, and our remaining performance obligations of approximately $ 29.2 billion as of December 31, 2022.

We produced these results in the face of significant unforeseen challenges presented by the global macro environment including wage inflation and attrition, general inflation, staff shortages affecting investigator sites, along with the slow recovery of patient visits.

As a response to these challenges, we have decided to accelerate targeted productivity initiatives so we can mitigate the impact in 2023.

Overall, the life sciences industry that we serve is a long-cycle business and is well placed to weather uncertainties.

The COVID-19 pandemic continued to impact operations in 2022.

While we expanded our decentralized clinical trials capabilities and other more remote and technology-based offerings throughout 2022, due to the progression of the world’s overall response to the pandemic and specifically work related to clinical development of COVID-19 vaccines, we experienced a decline in revenues in 2022 from COVID-19 related work.

If current trends for the pandemic continue, we expect to see a continued decline in COVID-19 related work in 2023 compared to 2022.

Throughout 2023 we experienced strong demand and operational results for our Research & Development Solutions offerings.

Our Technology & Analytics Solutions offerings were relatively more impacted by a tougher macro environment, including more cautious spending by our clients on extended timelines than what we have experienced in the past.

We experienced growth in certain Technology & Analytics Solutions offerings, such as multi-channel marketing and real world solutions.

Our targeted productivity initiatives contributed to overall net income and earnings per share growth, and we ended the year with our highest ever remaining performance obligations of approximately $31.7 billion as of December 31, 2023.

While we experienced a decline in COVID-19 related work in 2023 versus 2022, overall COVID-19 related work was not material to operations.

As of December 31, 2023, COVID-19 related work did not represent a material amount of our remaining performance obligations.

The Company continues to maintain strong liquidity.

As of December 31, 2022, cash and cash equivalents were $ 1,216 million and the Company had $ 425 million drawn under its $ 1.5 billion revolving credit facility.

As of December 31, 2022, the Company was in compliance with the financial covenants under its debt agreements in all material respects and does not have material uncertainty about ongoing ability to meet the covenants of our credit arrangements.

We continue to maintain strong liquidity.

As of December 31, 2023, cash and cash equivalents were $1,376 million and we had $100 million drawn under our $2,000 million revolving credit facility.

As of December 31, 2023, we were in compliance with the financial covenants under our debt agreements in all material respects and do not have material uncertainty about ongoing ability to meet the covenants of our credit arrangements.

Industry Outlook

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We have completed and will continue to consider strategic business combinations to enhance our capabilities and offerings in certain areas, including various individually immaterial acquisitions during the years ended December 31, 2023 and 2022.

These transactions were accounted for as business combinations and the acquired results of operations are included in our consolidated financial information since the acquisition date.

These transactions were accounted for as business combinations and the acquired results of operations are included in our consolidated financial information since their respective closing dates.

See Note 14 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to these business combinations.

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In 2023, our revenues increased $574 million, or 4.0%, as compared to 2022.

This increase was comprised of constant currency revenue growth of approximately $1,084 million, or 7.8%, reflecting a $483 million increase in Technology & Analytics Solutions, a $580 million increase in Research & Development Solutions, and a $21 million increase in Contract Sales & Medical Solutions.

This increase was comprised of constant currency revenue growth of approximately $596 million, or 4.1%, reflecting a $121 million increase in Technology & Analytics Solutions, a $477 million increase in Research & Development Solutions, and a $2 million decrease in Contract Sales & Medical Solutions.

Cost of Revenues, exclusive of Depreciation and Amortization

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When compared to 2022, cost of revenues, exclusive of depreciation and amortization increased $363 million in 2023, or 3.9%.

This increase included a constant currency increase of approximately $674 million, or 7.3%, comprised of a $228 million increase in Technology & Analytics Solutions, a $408 million increase in Research & Development Solutions, and a $38 million increase in Contract Sales & Medical Solutions.

As a percent of revenues, cost of revenues, exclusive of depreciation and amortization in 2022 decreased compared to 2021.

This increase included a constant currency increase of approximately $550 million, or 5.9%, comprised of a $163 million increase in Technology & Analytics Solutions, a $393 million increase in Research & Development Solutions, and a $6 million decrease in Contract Sales & Medical Solutions.

As a percentage of revenues, cost of revenues, exclusive of depreciation and amortization in 2023 remained relatively consistent with 2022.

Selling, General and Administrative Expenses

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2023 compared to 2022

The $107 million increase in selling, general and administrative expenses in 2022 as compared to 2021 included a constant currency increase of approximately $211 million, or 10.7%, comprised of a $107 million increase in Technology & Analytics Solutions, a $81 million increase in Research & Development Solutions, a $8 million increase in Contract Sales & Medical Solutions, and a $15 million increase in general corporate and unallocated expenses.

The $18 million decrease in selling, general and administrative expenses in 2023 as compared to 2022 included a constant currency increase of approximately $8 million, or 0.4%, comprised of a $40 million increase in Technology & Analytics Solutions, a $30 million increase in Research & Development Solutions, offset by a $4 million decrease in Contract Sales & Medical Solutions and a $58 million decrease in general corporate and unallocated expenses.

Depreciation and Amortization

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% of revenues 7.5 % 7.8 % 9.1 %

The $134 million decrease in depreciation and amortization in 2022 as compared to 2021 was primarily due to certain intangible assets from the merger between Quintiles and IMS Health becoming fully amortized in 2021, offset by higher intangible asset balances as a result of acquisitions occurring in 2021 and 2022, increased amortization due to higher capitalized software balances and accelerated amortization related to the abandonment of certain internally developed software assets.

The $5 million decrease in depreciation and amortization in 2023 as compared to 2022 was primarily the result of less amortization from certain intangible assets from the merger between Quintiles and IMS Health, offset by an increase in amortization of capitalized software and of intangible assets from acquisitions occurring in 2022 and 2023.

Restructuring Costs

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The restructuring costs incurred 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 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 2024 and are expected to consist of consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements.

Interest Income and Interest Expense

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Loss on extinguishment of debt $ 6 $ — $ 26

During 2021, we recognized a loss on extinguishment of debt of $26 million for fees and expenses incurred related to the refinancing of our 3.250% Senior Notes due 2025 and Prior Credit Agreement as discussed further in Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Other expense (income), net

In 2023, we recognized a loss on extinguishment of debt of $6 million for fees and expenses incurred related to the refinancing of our Credit Agreement as discussed further in Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Other (income) expense, net

Year Ended December 31,

(in millions) 2023 2022 2021

Other expense (income), net $ 33 $ (130) $ (65)

Other expense (income), net for 2022 increased compared to 2021 primarily due to foreign currency losses and losses on investments.

Other (income) expense, net $ (124) $ 33 $ (130)

Other (income) expense, net for 2023 increased compared to 2022 primarily due to foreign currency gain on transactions, and to a lesser extent from revaluations of contingent consideration and gains on investments.

Income Tax Expense

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Effective income tax rate 6.9 % 19.1 % 14.5 %

In 2023, we completed an internal legal entity restructuring that resulted in a benefit of $125 million.

Historically, we recorded deferred tax assets related to certain foreign tax credits, and a full valuation allowance in relation to these foreign tax credits was established as it was not expected the credits would be utilized prior to expiration.

We now believe it is reasonably possible that these foreign tax credits will be utilized and therefore we recorded a tax benefit of $64 million related to the valuation allowance release and establishing related uncertain tax positions.

Additionally, due to the restructuring we also reversed a deferred tax liability of $61 million due to a basis difference that was recovered in a tax-free manner.

The effective tax rate was also favorably impacted by a reversal of uncertain tax positions relating to tax credit carryforwards in the amount of $21 million due to an audit settlement.

Lastly, the effective tax rate was also impacted by changes in the geographical mix of earnings amongst foreign tax jurisdictions as well as state and local tax rates.

In 2022, we recorded a benefit of $6 million related to a 2021 U.S.

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In addition, our effective tax rate was impacted by changes in the geographical mix of earnings amongst foreign tax jurisdictions as well as state and local tax rates.

In 2021, we recorded a benefit of $29 million related to a 2020 U.S.

Federal tax return position associated with FDII and GILTI tax credits.

Also in 2021, we recorded a $9 million tax expense as a result of the U.S.

Treasury Department issuing final regulations on foreign tax credits.

Equity in (Losses) Earnings of Unconsolidated Affiliates

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Equity in (losses) earnings of unconsolidated affiliates $ — $ (12) $ 6

Equity in (losses) earnings of unconsolidated affiliates decreased in 2022 compared to 2021 due to the losses in the operations of our unconsolidated affiliates.

Net Income Attributable to Non-controlling Interests

Year Ended December 31,

(in millions) 2022 2021 2020

Net income attributable to non-controlling interests $ — $ (5) $ (29)

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 in 2022 compared to 2021.

See Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details regarding this transaction.

Equity in (losses) earnings of unconsolidated affiliates decreased in 2023 compared to 2022 due to the results in the operations of our unconsolidated affiliates.

Segment Results of Operations

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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 restructuring costs, depreciation and amortization, or impairment charges, if any, to our segments.

Technology & Analytics Solutions

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Revenues $ 5,862 $ 5,746 $ 5,534 $ 116 2.0% $ 212 3.8%

Cost of revenues, exclusive of depreciation

and amortization 3,348 3,278 2,900 70 2.1 378 13.0

Cost of revenues, exclusive of depreciation and amortization 3,496 3,348 3,278 148 4.4 70 2.1

Selling, general and administrative expenses 876 848 798 28 3.3 50 6.3

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Technology & Analytics Solutions’ revenues were $5,862 million in 2023, an increase of $116 million, or 2.0%, over 2022.

This increase was comprised of constant currency revenue growth of approximately $483 million, or 8.7%, reflecting revenue growth across all regions.

The constant currency revenue growth was primarily driven by an increase in real world services, and to a lesser extent by increases in consulting and analytical services and information and technology services.

This increase was comprised of constant currency revenue growth of approximately $121 million, or 2.1%, reflecting revenue growth primarily in the Americas region and to a lesser extent in the Asia-Pacific region.

The constant currency revenue growth was primarily driven by an increase in information and technology services and by a lesser extent in real world services.

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

Cost of Revenues, exclusive of Depreciation and Amortization

2023 compared to 2022

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, was $3,348 million in 2022, an increase of $70 million over 2021.

This increase was comprised of constant currency increase of approximately $228 million, or 7.0%, reflecting an increase in compensation and related expenses to support revenue growth.

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $148 million, or 4.4%, in 2023 as compared to 2022.

This increase included a constant currency increase of approximately $163 million, or 4.9%, reflecting an increase in costs of acquiring and processing data and an increase in compensation and related expenses to support revenue growth.

Selling, General and Administrative Expenses

2023 compared to 2022

Technology & Analytics Solutions’ selling, general and administrative expenses increased $50 million in 2022 as compared to 2021.

This increase was comprised of a constant currency increase of approximately $107 million, or 13.4%, reflecting an increase in compensation and related expenses.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $28 million, or 3.3%, in 2023 as compared to 2022.

This increase included a constant currency increase of approximately $40 million, or 4.7%, reflecting an increase in compensation and related expenses.

Research & Development Solutions

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Revenues $ 8,395 $ 7,921 $ 7,556 $ 474 6.0% $ 365 4.8%

Cost of revenues, exclusive of depreciation

and amortization 5,395 5,303 3,974 92 1.7 1,329 33.4

Cost of revenues, exclusive of depreciation and amortization 5,629 5,395 5,303 234 4.3 92 1.7

Selling, general and administrative expenses 851 831 777 20 2.4 54 6.9

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Research & Development Solutions’ revenues were $8,395 million in 2023, an increase of $474 million, or 6.0%, over 2022.

This increase was comprised of constant currency revenue growth of approximately $580 million, or 7.7%, 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.

This increase was comprised of constant currency revenue growth of approximately $477 million, or 6.0%, reflecting revenue growth primarily in the Americas region and to a lesser extent in the Europe and Africa and Asia-Pacific regions.

The constant currency revenue growth 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

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Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $234 million, or 4.3%, in 2023 as compared to 2022.

This increase included a constant currency increase of approximately $408 million, or 7.7%, reflecting an increase in compensation and related expenses as a result of volume-related increases in clinical services and lab testing.

This increase included a constant currency increase of approximately $393 million, or 7.3%, reflecting primarily an increase in compensation and related expenses and to a lesser extent an increase in other direct costs as a result of volume-related increases in clinical services and lab testing.

Selling, General and Administrative Expenses

2023 compared to 2022

Research & Development Solutions’ selling, general and administrative expenses increased $54 million, or 6.9%, in 2022 as compared to 2021, which included a constant currency increase of approximately $81 million, or 10.4%, reflecting an increase in compensation and related expenses.

Research & Development Solutions’ selling, general and administrative expenses increased $20 million, or 2.4%, in 2023 as compared to 2022.

This increase included a constant currency increase of approximately $30 million, or 3.6%, reflecting an increase in compensation and related expenses.

Contract Sales & Medical Solutions

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Revenues $ 727 $ 743 $ 784 $ (16) (2.2)% $ (41) (5.2)%

Cost of revenues, exclusive of depreciation

and amortization 639 652 626 (13) (2.0) 26 4.2

Cost of revenues, exclusive of depreciation and amortization 620 639 652 (19) (3.0) (13) (2.0)

Selling, general and administrative expenses 58 62 57 (4) (6.5) 5 8.8

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Contract Sales & Medical Solutions’ revenues were $727 million in 2023, a decrease of $16 million, or 2.2%, over 2022.

This decrease included constant currency revenue growth of approximately $21 million, or 2.7%, reflecting revenue growth primarily in the Europe and Africa region.

The constant currency revenue growth was largely due to a volume-related increase in services performed.

This decrease included a constant currency revenue decrease of approximately $2 million, or 0.3%.

Cost of Revenues, exclusive of Depreciation and Amortization

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Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $19 million, or 3.0%, in 2023 as compared to 2022.

This decrease included a constant currency increase of approximately $38 million, or 5.8%, reflecting an increase in compensation and related expenses and reimbursed expenses.

This decrease included a constant currency decrease of approximately $6 million, or 0.9%.

Selling, General and Administrative Expenses

2023 compared to 2022

Contract Sales & Medical Solutions’ selling, general and administrative expenses increased $5 million, or 8.8%, in 2022 as compared to 2021.

This increase included a constant currency increase of approximately $8 million, or 14.0%, reflecting an increase in compensation and related expenses and IT-related expenses.

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $4 million, or 6.5%, in 2023 as compared to 2022.

This decrease included a constant currency decrease of approximately $4 million, or 6.5%.

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 $1,216 million as of December 31, 2022 ($349 million of which was in the United States), a decrease from $1,366 million as of December 31, 2021.

We had a cash balance of $1,376 million as of December 31, 2023 ($471 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 Company's equity repurchase program (the “Repurchase Program”) with respect to the repurchase of the Company's common stock by an additional $2.0 billion, which increased the total amount that has been authorized under the Repurchase Program to $9.725 billion since the program's inception in October 2013.

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

As of December 31, 2022, the Company had remaining authorization to repurchase up to approximately $1.36 billion of its common stock under the Repurchase Program.

In addition, from time to time, the Company has repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

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 addition al $2,000 million, which increased the total amount that has been authorized under the Repurchase Program to $11,725 million.

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

As of December 31, 2023, we had remaining authorization to repurchase up to $2,363 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.

Additional information regarding the Repurchase Program is presented in Part II, Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” and Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

As of December 31, 2022, we had $12.8 billion of total indebtedness, excluding $1.1 billion of additional available borrowings under our revolving credit facility.

As of December 31, 2023, we had $13,752 million of total indebtedness, excluding $1,900 million of additional available borrowings under our revolving credit facility.

See Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details regarding our credit arrangements.

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Senior Secured Credit Facilities

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

1 to the Company’s Fifth Amended and Restated Credit Agreement (as amended, the “Fifth Amended and Restated 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.

On October 13, 2022, the Company elected to prepay $510 million, the entire outstanding balance, of its U.S.

Dollar Term B Loan due 2024.

As of December 31, 2022, the Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $7,637 million, which consisted of $6,562 million principal amounts of debt outstanding and $1,070 million of available borrowing capacity on the revolving credit facility and standby letters of credit, with a total capacity of $1,500 million.

On November 28, 2023, we entered into an amendment (the “Amendment”) to our Fifth Amended and Restated Credit Agreement (the “Credit Agreement”).

Pursuant to the Amendment, we borrowed $1,500 million in incremental Term B-4 Dollar Loans (as defined in the Credit Agreement) due January 2, 2031.

The net proceeds from the Term B-4 Dollar Loans were used to repay certain of the outstanding term loans due in 2024 and in 2025 under our senior secured credit facilities, and to pay fees and expenses related to the related to the Amendment and the offering of 2029 Senior Secured Notes (as defined below).

In connection with this Amendment, we recognized a $6 million loss on extinguishment of debt, which includes fees and expenses.

In connection with the allocation of the Term B-4 Dollar Loans, we entered into cross-currency swaps with a combined notional value of $1,500 million to effectively convert $1,500 million of the Term B-4 Dollar Loans into euro-denominated borrowings at prevailing euro interest rates through January 2031.

The effective net borrowing rate to us for these loans, inclusive of the yield on the loans and the beneficial impact of the cross-currency swaps and of the interest rate swaps entered on November 17, 2023 in connection with the allocation of the loans, is approximately 4.9015%.

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

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

At the same time, we also amended the benchmark rate of our U.S.

dollar revolving credit facility and the U.S.

dollar Term A Loans from U.S.

dollar LIBOR to U.S.

dollar Term SOFR plus a 10 basis point Credit Spread Adjustment.

As of December 31, 2023, the Credit Agreement provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $6,808 million, which consisted of $4,908 million principal amounts of debt outstanding and $1,900 million of available borrowing capacity on the revolving credit facility and standby letters of credit, with a total capacity of $2,000 million.

The revolving credit facility is comprised of a $1,175 million senior secured revolving facility available in U.S.

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dollars and Yen.

The term A loans and revolving credit facility under the Fifth Amended and Restated Credit Agreement mature in August 2026, the Additional Term A Loans mature June 2027, while the term B loans under the Fifth Amended and Restated Credit Agreement mature in 2024 and 2025.

The term A loans and revolving credit facility under the Credit Agreement mature in August 2026, the Additional Term A Loans mature June 2027, while the term B loans under the Credit Agreement mature in 2025 and 2031.

We are required to make scheduled quarterly payments on the term A loans and the Additional Term A Loans equal to 1.25% of the original principal amount, with the remaining balance paid at maturity.

In addition, beginning with fiscal year ending December 31, 2017, we were required to apply 50% of excess cash flow (as defined in the Fifth Amended and Restated Credit Agreement), subject to a reduction to 25% or 0% depending upon our senior secured first lien net leverage ratio, for prepayment of the term loans, with any such prepayment to be applied toward principal payments due in subsequent quarters.

The Term B-4 Dollar Loans require us to make scheduled quarterly payments equal to 0.25% of the original principal balance amount, with the remaining principal balance due at maturity.

In addition, beginning with fiscal year ending December 31, 2017, we were required to apply 50% of excess cash flow (as defined in the Credit Agreement), subject to a reduction to 25% or 0% depending upon our senior secured first lien net leverage ratio, for prepayment of the term loans, with any such prepayment to be applied toward principal payments due in subsequent quarters.

We are also required to pay an annual commitment fee that ranges from 0.20% to 0.35% in respect of any unused commitments under the revolving credit facility.

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For information regarding the senior secured credit facilities, see Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Senior Secured Notes

On November 28, 2023, we completed the issuance and sale of $1,250 million in gross proceeds of 6.250% senior secured notes due 2029 (the “2029 Senior Secured Notes”).

The net proceeds from the 2029 Senior Secured Notes offering were used to repay certain of the outstanding term loans due in 2024 and in 2025 under our senior secured credit facilities, and to pay fees and expenses related to the 2029 Senior Secured Notes offering and the Amendment.

The 2029 Senior Secured Notes are secured obligations, will mature on February 1, 2029, unless earlier repurchased or redeemed in accordance with their terms, and bear interest at the rate of 6.250% per year, with interest payable semi-annually on February 1 and August 1 of each year, beginning on February 1, 2024.

We may redeem the 2029 Senior Secured Notes prior to February 1, 2029 subject to a customary make-whole premium, and thereafter subject to a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest.

In connection with the pricing of the 2029 Senior Secured Notes, we entered into cross-currency swaps with a combined notional value of $1,250 million to effectively convert $1,250 million of the 2029 Senior Secured Notes into euro-denominated borrowings at prevailing euro interest rates through February 2029.

The effective net borrowing rate to us is approximately 4.8555%, inclusive of the yield on the notes and the beneficial impact of the cross-currency swaps.

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 “2028 Senior Secured Notes”).

The net proceeds from the 2028 Senior Secured Notes offering were used to repay existing borrowings under our revolving credit facility, and to pay fees and expenses related to the 2028 Senior Secured Notes offering and offering of 2030 Senior Notes (as defined below).

The 2028 Senior Secured Notes are secured obligations, will mature on May 15, 2028, unless earlier repurchased or redeemed in accordance with their terms, and bear interest at the rate of 5.700% per year, with interest payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2023.

We may redeem the 2028 Senior Secured Notes prior to April 15, 2028 subject to a customary make-whole premium, and thereafter subject to a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest.

The 2028 Senior Secured Notes and 2029 Senior Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction.

In January 2024, we filed a registration statement with respect to an offer (the “Exchange Offer”) to exchange the 2028 Senior Secured Notes for an equal amount of $750 million aggregate principal amount of 5.700% Senior Secured Notes due 2028 registered under the Securities Act (the “2028 Registered Notes”) and the 2029 Senior Secured Notes for an equal amount of $1,250 million aggregate principal amount of 6.250% Senior Secured Notes due 2029 registered under the Securities Act (the “2029 Registered Notes”).

The Exchange Offer commenced on January 26, 2024 and will expire on February 23, 2024, unless we extend the offer.

The terms of the 2028 Registered Notes and the 2029 Registered Notes to be issued in the Exchange Offer are substantially identical in all material respects to the terms of the 2028 Senior Secured Notes and 2029 Senior Secured Notes, respectively, except that the registered notes will not be subject to restrictions on transfer or to any increase in the annual interest rate for failure to comply with the applicable registration rights agreement.

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

The net proceeds from the 2030 Senior Notes offering were used to repay existing borrowings under our revolving credit facility, and to pay fees and expenses related to the 2030 Senior Notes offering and 2028 Senior Secured Notes offering.

The 2030 Senior Notes are unsecured obligations, will mature on May 15, 2030, unless earlier repurchased or redeemed in accordance with their terms, and bear interest at the rate of 6.500% per year, with interest payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2023.

We may redeem the 2030 Senior Notes prior to their final stated maturity, subject to a customary make-whole premium, at any time prior to May 15, 2026 (subject to a customary “equity claw” redemption right) and thereafter subject to a redemption premium declining from 3.250% to 0.000%.

For information regarding the senior secured notes and senior notes, see Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Receivables Financing Facility

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Cash provided by operating activities decreased $111 million in 2023 as compared to 2022.

The decrease is primarily due to a decrease in cash from unearned income ($560 million) and accounts receivable and unbilled services ($283 million) and an increase in cash used for income tax and other payables ($126 million), offset by a decrease in cash for accounts payable and accrued expenses ($183 million), an increase in cash-related net income ($82 million) and less cash used for prepaid expenses and other assets ($22 million).

The decrease is primarily due to more cash used in accounts payable and accrued expenses ($160 million), less cash from unearned income ($60 million) and more cash used in income tax and other payables ($36 million), offset by an increase in cash-related net income ($85 million), more cash from accounts receivable and unbilled services ($33 million) and less cash used in prepaid expenses and other assets ($27 million).

Cash Flow from Investing Activities

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2023 compared to 2022

Cash used in investing activities decreased $97 million in 2022 as compared to 2021.

The decrease was primarily driven by less cash used for the acquisition of businesses, net of cash acquired ($143 million), a decrease in purchase of marketable securities ($5 million) and an increase in cash from other sources ($3 million), offset by an increase in acquisitions of property, equipment, and software ($34 million), an increase in investments in unconsolidated affiliates ($15 million) and a decrease in net proceeds from the sale of equity securities ($5 million).

Cash used in investing activities decreased $403 million in 2023 as compared to 2022, primarily due to less cash used for the acquisition of businesses, net of cash acquired ($439 million) and acquisition of property, equipment, and software ($25 million), offset by more cash used for investments in debt and equity securities ($38 million), investments in unconsolidated affiliates ($19 million), purchases of marketable securities ($1 million) and less cash from other sources ($3 million).

Cash Flow from Financing Activities

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2023 compared to 2022

Cash used in financing activities decreased $906 million in 2022 as compared to 2021, primarily due to a decrease in debt payments ($1,457 million), the absence of cash payments for the Company's acquisition of Quest's non-controlling interest in Q2 Solutions ($758 million), a decrease in cash used in repayments of revolving credit facilities, net of proceeds ($115 million), a decrease in cash payments on contingent consideration and deferred purchase price accruals ($16 million), offset by an increase in cash used to repurchase common stock ($762 million), a decrease in cash provided by proceeds from debt issuances, net of payment of debt issuance costs ($666 million) and an increase in cash payments related to employee stock option plans ($12 million).

Cash used in financing activities increased $53 million in 2023 as compared to 2022, primarily due to more debt payments ($2,239 million), cash used in repayments of revolving credit facilities, net of proceeds ($650 million), and cash payments on contingent consideration and deferred purchase price accruals ($55 million), offset by more cash provided by proceeds from debt issuances, net of payment of debt issuance costs ($2,705 million), less cash used to repurchase common stock ($176 million) and less cash payments related to employee stock option plans ($10 million).

Contingencies

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We also believe that the amount of cash available to us from our operations, together with cash from financing, will be sufficient for us to pay any known contingencies as they become due without materially affecting our ability to conduct our operations and invest in the growth of our business.

Information about our Guarantors and the Issuer of our Guaranteed Securities

The accompanying summarized financial information has been prepared and presented pursuant to Rule 3-10 of Regulation S-X, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered,” and Rule 13-01 of Regulation S-X, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralized a Registrant’s Securities.” Each of our current direct and indirect material U.S.

wholly owned restricted subsidiaries (excluding IQVIA Solutions Japan LLC and IQVIA Services Japan LLC) (the "Guarantor subsidiaries" and, together with IQVIA Holdings Inc., the “Guarantors”), have jointly and severally, irrevocably and unconditionally, on a senior secured basis, guaranteed the obligations under the 2028 Senior Secured Notes and the 2029 Senior Secured Notes (together, the “Notes”) issued by IQVIA Inc.

(the "Issuer").

The following presents the summarized financial information on a combined basis for IQVIA Holdings Inc.

(parent company), IQVIA Inc.

(issuer of the guaranteed obligations) and the Guarantor subsidiaries, which are collectively referred to as the “obligated group.”

Each Guarantor subsidiary is consolidated by IQVIA Holdings Inc.

as of December 31, 2023 and December 31, 2022.

Refer to Exhibit 22.1 to this Annual Report on Form 10-K for the detailed list of entities included within the obligated group as of December 31, 2023 and December 31, 2022.

The guarantee of a Guarantor subsidiary with respect to the Notes will be automatically and unconditionally released and discharged and shall terminate and be of no further force and effect, and no further action by such Guarantor subsidiary, the Issuer, or U.S.

Bank Trust Company, National Association, as trustee, be required upon the occurrence of any of the following:

any sale, exchange, issuance, disposition or transfer (by merger, amalgamation, consolidation or otherwise) of (i) the capital stock of such Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary, or (ii) all or substantially all of the assets of such Guarantor, in each case if such sale, exchange, issuance, disposition or transfer is made in compliance with the applicable provisions of this Indenture;

the release or discharge of the guarantee by such Guarantor of indebtedness under the senior secured term loan facilities and the senior secured revolving credit facilities under that certain Fifth Amended and Restated Credit Agreement, or the release or discharge of such other guarantee that resulted in the creation of such Guarantee, except, in each case, a discharge or release by or as a result of payment of such Indebtedness or under such guarantee (it being understood that a release subject to a contingent reinstatement is still a release, and that if any such guarantee is so reinstated, such Guarantee shall also be reinstated to the extent that such Guarantor would then be required to provide a Guarantee pursuant to Section 4.11 of the Indenture);

the designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary in compliance with the applicable provisions of the Indenture;

the exercise by the Issuer of its Legal Defeasance option or Covenant Defeasance option in accordance with Article VIII of the Indenture or the discharge of the Issuer’s obligations under the Indenture in accordance with the terms of this Indenture;

the merger, amalgamation or consolidation of any Guarantor with and into the Issuer or a Guarantor that is the surviving Person in such merger, amalgamation or consolidation, or upon the liquidation of a Guarantor following the transfer of all or substantially all of its assets, in each case in a transaction that complies with the applicable provisions of this Indenture;

as described in Article IX of the Indenture.

Summarized Combined Financial Information of the Issuer and Guarantors:

Each entity in the summarized combined financial information follows the same accounting policies as described in the consolidated financial statements, see Note 1 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Information for the non-Guarantor subsidiaries has been excluded from the combined summarized financial information of the obligated group.

The accompanying summarized combined financial information does not reflect investments of the obligated group in non-Guarantor subsidiaries.

The financial information of the obligated group is presented on a combined basis;

intercompany balances and transactions within the obligated group have been eliminated.

The obligated group’s amounts due from and amounts due to non-Guarantor subsidiaries and related parties have been presented in separate line items.

The following table contains summarized combined financial information from the Statements of Unaudited Condensed Consolidated Financial Position of the obligated group as of:

(in millions) December 31, 2023 December 31, 2022

Total current assets (excluding amounts due from subsidiaries that are non-Guarantors) $ 805 $ 474

Total noncurrent assets $ 9,622 $ 8,875

Amounts due from subsidiaries that are non-Guarantors $ 4,762 $ 3,305

Total current liabilities $ 3,471 $ 2,598

Total noncurrent liabilities $ 12,334 $ 12,270

Amounts due to subsidiaries that are non-Guarantors $ 5,556 $ 5,409

The following table contains summarized combined financial information from the Statements of Unaudited Condensed Consolidated Operations of the obligated group:

Twelve months ended Twelve months ended

(in millions) December 31, 2023 December 31, 2022

Net revenues $ 6,299 $ 5,910

Costs and expenses applicable to net revenues $ 4,190 $ 4,066

Income from operations $ 912 $ 491

Net income (loss) $ 86 $ (73)

Off-Balance Sheet Arrangements

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Revenue Recognition

The majority of the Company’s contracts within the Research & Development Solutions segment are service contracts for clinical research that represent a single performance obligation.

The Company provides a significant integration service resulting in a combined output, which is clinical trial data that meets the relevant regulatory standards and can be used by the customer to progress to the next phase of a clinical trial or solicit approval of a treatment by the applicable regulatory body.

The majority of our contracts within the Research & Development Solutions segment are service contracts for clinical research that represent a single performance obligation.

We provide a significant integration service resulting in a combined output, which is clinical trial data that meets the relevant regulatory standards and can be used by the customer to progress to the next phase of a clinical trial or solicit approval of a treatment by the applicable regulatory body.

The performance obligation is satisfied over time as the output is captured in data and documentation that is available for the customer to consume over the course of the arrangement and furthers progress of the clinical trial.

The Company recognizes revenues over time using a cost-based input method since there is no single output measure that would fairly depict the transfer of control over the life of the performance obligation.

We recognize revenues over time using a cost-based input method since there is no single output measure that would fairly depict the transfer of control over the life of the performance obligation.

Progress on the performance obligation is measured by the proportion of actual costs incurred to the total costs expected to complete the contract.

Costs included in the measure of progress include direct labor and third-party costs (such as payments to investigators and other reimbursed expenses for the Company’s clinical monitors).

This cost-based method of revenue recognition requires the Company to make estimates of costs to complete its projects on an ongoing basis.

Costs included in the measure of progress include direct labor and third-party costs (such as payments to investigators and other reimbursed expenses for our clinical monitors).

This cost-based method of revenue recognition requires us to make estimates of costs to complete our projects on an ongoing basis.

Significant judgment is required to evaluate assumptions related to these estimates.

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We perform our annual goodwill impairment evaluation as of July 31.

The impairment analysis requires significant judgments, estimates and assumptions, including those related to macroeconomic conditions, industry and market considerations, cost factors, financial performance, fair value history and other company specific events.

For the years ended December 31, 2022, 2021 and 2020, the Company determined that there was no impairment of goodwill.

For the year ended December 31, 2023, we elected to perform a quantitative impairment evaluation for each of our reporting units.

We estimated the fair value of each reporting by weighting results of the income and market approaches, with greater weight given to the income approach.

Significant estimates used in the income approach include estimates of future revenues, EBITDA, cash flows, long-term growth rates, tax rates, and discount rates.

The selected discount rates consider the risk and nature of the respective reporting unit’s cash flows, and the rates of return a market participant would expect to earn by investing in our reporting units.

The market approach uses information about the Company as well as other publicly traded guideline companies, including revenue and EBITDA-related multiples and estimates of control premiums.

As part of the quantitative impairment evaluation, we compared the fair value of each reporting unit to its carrying value.

If results of the evaluation indicate the carrying amount of a reporting unit exceeds its fair value, an impairment charge would be recorded by calculating the implied fair value of the reporting unit goodwill as compared to its carrying amount.

For the year ended December 31, 2022, we performed a qualitative impairment evaluation.

The qualitative evaluation requires significant judgments, estimates and assumptions, including those related to macroeconomic conditions, industry and market considerations, cost factors, financial performance, fair value history and other company specific events.

For the years ended December 31, 2023, 2022 and 2021, we determined that there was no impairment of goodwill.

We review the carrying values of other identifiable intangible assets if the facts and circumstances indicate a possible impairment.

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In developing our assumptions, we take into account the following:

• We calculate expected volatility based on an analysis of the historical volatility of the Company's stock since the Merger in October 2016 and reported data for selected reasonably similar publicly traded companies for which the historical information is available.

We plan to continue to use an analysis that incorporates the selected reasonably similar publicly traded companies volatility information and the historical volatility of our common shares to measure expected volatility for future award grants;

• We calculate expected volatility based on an analysis of the historical volatility of our stock since the Merger in October 2016 and reported data for selected reasonably similar publicly traded companies for which the historical information is available;

• We determine the risk-free interest rate by reference to implied yields available from United States Treasury securities with a remaining term equal to the expected life assumed at the date of grant;

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• We estimate forfeitures based on our historical analysis of actual forfeitures.

The Company accounts for its stock-based compensation for performance awards related to compound annual earnings per share (“EPS”) growth over a three year period based on the closing market price of the Company’s common stock on the date of grant, and for performance awards related to relative total shareholder return (“TSR”) based on a Monte Carlo simulation model.

The Company records the expense amount of the EPS awards based on its estimates of the likelihood that the various performance targets will be achieved.

We account for our stock-based compensation for performance awards related to compound annual earnings per share (“EPS”) growth over a three year period based on the closing market price of our common stock on the date of grant, and for performance awards related to relative total shareholder return (“TSR”) based on a Monte Carlo simulation model.

We record the expense amount of the EPS awards based on our estimates of the likelihood that the various performance targets will be achieved.

The estimates are assessed on a quarterly basis.

For the TSR awards the Company records the expense amount evenly over the service period.

For the TSR awards we record the expense amount evenly over the service period.

Pensions and Other Postretirement Benefits

We provide retirement benefits to certain employees, including defined benefit pension plans and postretirement medical plans.

We provide retirement benefits to certain employees, including defined benefit pension plans.

The determination of benefit obligations and expense is based on actuarial models.

In order to measure benefit costs and obligations using these models, critical assumptions are made with regard to the discount rate, expected return on plan assets, cash balance crediting rate, lump sum conversion rate and the assumed rate of compensation increases.

In addition, retiree medical care cost trend rates are a key assumption used exclusively in determining costs for our postretirement health care and life insurance benefit plans.

Recently Issued Accounting Standards

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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 7. Management’s Discussion and Analysis