IQVIA HOLDINGS INC. 10-Q

Item 1. Financial Statements IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended March 31, (in millions, except per share data) 2024 2023 Revenues $ 3,737 $ 3,652 Cost of revenues, exclusive of depreciation and amortization 2,444 2,398 Selling, general and administrative expenses 508 513 Depreciation and amortization 264 253 Restructuring costs 15 17 Income from operations 506 471 Interest income ( 11 ) ( 6 ) Interest expense 166 141 Other expense (income), net 11 ( 26 ) Income before income taxes and equity in losses of unconsolidated affiliates 340 362 Income tax expense 49 71 Income before equity in losses of unconsolidated affiliates 291 291 Equity in losses of unconsolidated affiliates ( 3 ) ( 2 ) Net income $ 288 $ 289 Earnings per share attributable to common stockholders: Basic $ 1.58 $ 1.56 Diluted $ 1.56 $ 1.53 Weighted average common shares outstanding: Basic 181.9 185.8 Diluted 184.3 188.6 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) Three Months Ended March 31, (in millions) 2024 2023 Net income $ 288 $ 289 Comprehensive income adjustments: Unrealized gains on derivative instruments, net of income tax expense of $ 12 , $ 3 34 10 Defined benefit plan adjustments, net of income tax expense of $ — , $ — — 1 Foreign currency translation, net of income tax expense (benefit) of $ 37 , $( 29 ) ( 69 ) 10 Reclassification adjustments: Reclassifications on derivative instruments included in net income, net of income tax (expense) of $( 3 ), $( 8 ) ( 9 ) ( 25 ) Comprehensive income $ 244 $ 285 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in millions, except per share data) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 1,444 $ 1,376 Trade accounts receivable and unbilled services, net 3,426 3,381 Prepaid expenses 173 141 Income taxes receivable 35 32 Investments in debt, equity and other securities 131 120 Other current assets and receivables 442 546 Total current assets 5,651 5,596 Property and equipment, net 513 523 Operating lease right-of-use assets 278 296 Investments in debt, equity and other securities 109 105 Investments in unconsolidated affiliates 154 134 Goodwill 14,516 14,567 Other identifiable intangibles, net 4,725 4,839 Deferred income taxes 152 166 Deposits and other assets, net 476 455 Total assets $ 26,574 $ 26,681 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 3,455 $ 3,564 Unearned income 1,914 1,799 Income taxes payable 155 116 Current portion of long-term debt 717 718 Other current liabilities 207 294 Total current liabilities 6,448 6,491 Long-term debt, less current portion 12,819 12,955 Deferred income taxes 164 202 Operating lease liabilities 204 223 Other liabilities 595 698 Total liabilities 20,230 20,569 Commitments and contingencies (Note 8) Stockholders’ equity: Common stock and additional paid-in capital, 400.0 shares authorized as of March 31, 2024 and December 31, 2023, $ 0.01 par value, 257.9 shares issued and 182.2 shares outstanding as of March 31, 2024; 257.2 shares issued and 181.5 shares outstanding as of December 31, 2023 11,016 11,028 Retained earnings 4,980 4,692 Treasury stock, at cost, 75.7 and 75.7 shares as of March 31, 2024 and December 31, 2023, respectively ( 8,741 ) ( 8,741 ) Accumulated other comprehensive loss ( 911 ) ( 867 ) Total stockholders’ equity 6,344 6,112 Total liabilities and stockholders’ equity $ 26,574 $ 26,681 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 31, (in millions) 2024 2023 Operating activities: Net income $ 288 $ 289 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 264 253 Amortization of debt issuance costs and discount 5 4 Stock-based compensation 56 75 Losses from unconsolidated affiliates 3 2 Gain on investments, net ( 12 ) ( 4 ) Benefit from deferred income taxes ( 66 ) ( 27 ) Changes in operating assets and liabilities: Change in accounts receivable, unbilled services and unearned income 65 ( 107 ) Change in other operating assets and liabilities ( 81 ) ( 68 ) Net cash provided by operating activities 522 417 Investing activities: Acquisition of property, equipment and software ( 145 ) ( 164 ) Acquisition of businesses, net of cash acquired ( 142 ) ( 18 ) Purchases of marketable securities, net ( 1 ) ( 4 ) Investments in unconsolidated affiliates, net of payments received ( 24 ) ( 7 ) Investments in debt and equity securities ( 2 ) ( 36 ) Other — 7 Net cash used in investing activities ( 314 ) ( 222 ) Financing activities: Repayment of debt and principal payments on finance leases ( 43 ) ( 39 ) Proceeds from revolving credit facility 275 475 Repayment of revolving credit facility ( 275 ) ( 100 ) Payments related to employee stock incentive plans ( 60 ) ( 58 ) Repurchase of common stock — ( 129 ) Contingent consideration and deferred purchase price payments ( 3 ) ( 62 ) Net cash (used in) provided by financing activities ( 106 ) 87 Effect of foreign currency exchange rate changes on cash ( 34 ) ( 4 ) Increase in cash and cash equivalents 68 278 Cash and cash equivalents at beginning of period 1,376 1,216 Cash and cash equivalents at end of period $ 1,444 $ 1,494 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) (in millions) Common Stock Shares Treasury Stock Shares Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive (Loss) Income Total Balance, December 31, 2023 257.2 ( 75.7 ) $ 3 $ 11,025 $ 4,692 $ ( 8,741 ) $ ( 867 ) $ 6,112 Issuance of common stock 0.7 — — ( 61 ) — — — ( 61 ) Stock-based compensation — — — 49 — — — 49 Net income — — — — 288 — — 288 Unrealized gains on derivative instruments, net of tax — — — — — — 34 34 Foreign currency translation, net of tax — — — — — — ( 69 ) ( 69 ) Reclassification adjustments, net of tax — — — — — — ( 9 ) ( 9 ) Balance, March 31, 2024 257.9 ( 75.7 ) $ 3 $ 11,013 $ 4,980 $ ( 8,741 ) $ ( 911 ) $ 6,344 (in millions) Common Stock Shares Treasury Stock Shares Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive (Loss) Income Total Balance, December 31, 2022 256.4 ( 70.7 ) $ 3 $ 10,895 $ 3,334 $ ( 7,740 ) $ ( 727 ) $ 5,765 Issuance of common stock 0.5 — — ( 58 ) — — — ( 58 ) Repurchase of common stock — ( 0.7 ) — — — ( 129 ) — ( 129 ) Stock-based compensation — — — 69 — — — 69 Net income — — — — 289 — — 289 Unrealized gains on derivative instruments, net of tax — — — — — — 10 10 Defined benefit plan adjustments, net of tax — — — — — — 1 1 Foreign currency translation, net of tax — — — — — — 10 10 Reclassification adjustments, net of tax — — — — — — ( 25 ) ( 25 ) Balance, March 31, 2023 256.9 ( 71.4 ) $ 3 $ 10,906 $ 3,623 $ ( 7,869 ) $ ( 731 ) $ 5,932 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of contents IQVIA HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited) 1. Summary of Significant Accounting Policies The Company IQVIA Holdings Inc. (together with its subsidiaries, the “Company” or “IQVIA”) is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry. With approximately 87,000 employees, the Company conducts business in more than 100 countries. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the Company’s financial condition and results of operations have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements of the Company, but does not include all the disclosures required by GAAP. Recently Issued Accounting Standards Accounting pronouncements issued but not adopted as of March 31, 2024 In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , to improve reportable segment disclosure requirements. The new guidance requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included in the reported measure of segment profit or loss. It does not change the definition of a segment or the guidance for determining reportable segments. The new guidance is effective for the Company in the annual period beginning January 1, 2024 and in 2025 for interim periods. Adoption of this ASU will result in additional disclosure, but it will not impact the Company’s consolidated financial position, results of operations or cash flows. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU require additional disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The new guidance will be effective for the Company in the annual period beginning January 1, 2025. The Company is assessing the impacts of this ASU on its disclosures within the consolidated financial statements. 8 Table of contents 2. Revenues by Geography, Concentration of Credit Risk and Remaining Performance Obligations The following tables represent revenues by geographic region and reportable segment for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 (in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Total Revenues: Americas $ 743 $ 986 $ 73 $ 1,802 Europe and Africa 562 535 60 1,157 Asia-Pacific 148 574 56 778 Total revenues $ 1,453 $ 2,095 $ 189 $ 3,737 Three Months Ended March 31, 2023 (in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Total Revenues: Americas $ 735 $ 986 $ 80 $ 1,801 Europe and Africa 556 491 47 1,094 Asia-Pacific 153 549 55 757 Total revenues $ 1,444 $ 2,026 $ 182 $ 3,652 No individual customer represented 10% or more of consolidated revenues for the three months ended March 31, 2024 or 2023. Transaction Price Allocated to the Remaining Performance Obligations As of March 31, 2024, approximately $ 33.0 billion of revenues are expected to be recognized in the future from remaining performance obligations. The Company expects to recognize revenues on approximately 30 % of these remaining performance obligations over the next twelve months , on approximately 85 % over the next five years, with the balance recognized thereafter. Most of the Company's remaining performance obligations where revenues are expected to be recognized beyond the next twelve months are for service contracts for clinical research in the Company's Research & Development Solutions segment. The customer contract transaction price allocated to the remaining performance obligations differs from backlog in that it does not include wholly unperformed contracts under which the customer has a unilateral right to cancel the arrangement . 3. Trade Accounts Receivable, Unbilled Services and Unearned Income Trade accounts receivables and unbilled services consist of the following: (in millions) March 31, 2024 December 31, 2023 Trade accounts receivable $ 1,437 $ 1,473 Unbilled services 2,019 1,942 Trade accounts receivable and unbilled services 3,456 3,415 Allowance for doubtful accounts ( 30 ) ( 34 ) Trade accounts receivable and unbilled services, net $ 3,426 $ 3,381 9 Table of contents Unbilled services and unearned income were as follows: (in millions) March 31, 2024 December 31, 2023 Change Unbilled services $ 2,019 $ 1,942 $ 77 Unearned income ( 1,914 ) ( 1,799 ) ( 115 ) Net balance $ 105 $ 143 $ ( 38 ) Unbilled services, which is comprised of approximately 67 % and 66 % of unbilled receivables and 33 % and 34 % of contract assets as of March 31, 2024 and December 31, 2023, respectively, increased by $ 77 million as compared to December 31, 2023. Contract assets are unbilled services for which invoicing is based on the timing of certain milestones related to service contracts for clinical research whereas unbilled receivables are billable upon the passage of time. Unearned income increased by $ 115 million over the same period resulting in a decrease of $ 38 million in the net balance of unbilled services and unearned income between March 31, 2024 and December 31, 2023. The change in the net balance is driven by the difference in timing of revenue recognition in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers , primarily related to the Company’s Research & Development Solutions contracts (which is based on the percentage of costs incurred) versus the timing of invoicing, which is based on certain milestones. The majority of the unearned income balance as of the beginning of the year is expected to be recognized in revenues during the year ended December 31, 2024. Bad debt expense recognized on the Company’s trade accounts receivable was immaterial for the three months ended March 31, 2024 and 2023. Accounts Receivable Factoring Arrangements The Company has accounts receivable factoring agreements to sell certain eligible unsecured trade accounts receivable, either based on automatic arrangements or at its option, without recourse, to unrelated third-party financial institutions for cash. During the three months ended March 31, 2024, through its accounts receivable factoring arrangements that the Company utilizes most frequently, the Company factored approximately $ 211 million of customer invoices on a non-recourse basis and received approximately $ 206 million in cash proceeds from the sales. The fees associated with these transactions were immaterial. The Company has other accounts receivable arrangements for which the activity associated with them is immaterial. 4. Goodwill The following is a summary of goodwill by reportable segment for the three months ended March 31, 2024: (in millions) Technology & Analytics Solutions Research & Development Solutions Contract Sales & Medical Solutions Consolidated Balance as of December 31, 2023 $ 11,976 $ 2,439 $ 152 $ 14,567 Business combinations 103 — — 103 Impact of foreign currency fluctuations and other ( 144 ) ( 6 ) ( 4 ) ( 154 ) Balance as of March 31, 2024 $ 11,935 $ 2,433 $ 148 $ 14,516 10 Table of contents 5. Derivatives The fair values of the Company’s derivative instruments and the line items on the accompanying condensed consolidated balance sheets to which they were recorded are summarized in the following table: (in millions) Balance Sheet Classification March 31, 2024 December 31, 2023 Assets Liabilities Notional Assets Liabilities Notional Derivatives designated as hedging instruments: Interest rate swaps Other current assets, other assets and other current liabilities $ 15 $ 17 $ 3,296 $ 13 $ 51 $ 3,300 Cross-currency swaps Other current liabilities — 52 2,746 — 108 2,750 Foreign exchange forward contracts Other current assets and other current liabilities 1 1 119 2 — 121 Total derivatives $ 16 $ 70 $ 15 $ 159 The pre-tax effect of the Company’s cash flow hedging instruments on other comprehensive income is summarized in the following table: Three Months Ended March 31, (in millions) 2024 2023 Interest rate swaps $ 36 $ ( 23 ) Foreign exchange forward contracts ( 2 ) 3 Total $ 34 $ ( 20 ) The Company expects approximately $ 38 million of pre-tax unrealized gains related to its foreign exchange contracts and interest rate derivatives included in accumulated other comprehensive (loss) income (“AOCI”) as of March 31, 2024 to be reclassified into earnings within the next twelve months. The total amount, net of income taxes, of the cash flow hedge effect on the accompanying condensed consolidated financial statements of income was $ 9 million and $ 25 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the Company's cross-currency swaps were designated as a hedge of its net investment in certain foreign subsidiaries. For the three months ended March 31, 2024, the Company recorded a gain of $ 56 million within AOCI as a result of these cross-currency swaps. The Company recognized approximately $ 9 million related to the excluded component as a reduction of interest expense for the three months ended March 31, 2024. As of March 31, 2024, the portion of the Company's foreign currency denominated debt balance (net of original issue discount) designated as a hedge of its net investment in certain foreign subsidiaries totaled € 2,789 million ($ 3,011 million). The amount of foreign exchange gains (losses) related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the three months ended March 31, 2024 and 2023 was $ 68 million and $( 89 ) million, respectively. 6. Fair Value Measurements The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. 11 Table of contents • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of March 31, 2024 and December 31, 2023 due to their short-term nature. As of March 31, 2024 and December 31, 2023, the fair value of total debt was $ 13,397 million and $ 13,597 million, respectively, as determined under Level 2 measurements for these financial instruments. Recurring Fair Value Measurements The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of March 31, 2024: (in millions) Level 1 Level 2 Level 3 Total Assets: Marketable securities $ 158 $ — $ — $ 158 Derivatives — 16 — 16 Total $ 158 $ 16 $ — $ 174 Liabilities: Derivatives $ — $ 70 $ — $ 70 Contingent consideration — — 119 119 Total $ — $ 70 $ 119 $ 189 The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of December 31, 2023: (in millions) Level 1 Level 2 Level 3 Total Assets: Marketable securities $ 146 $ — $ — $ 146 Derivatives — 15 — 15 Total $ 146 $ 15 $ — $ 161 Liabilities: Derivatives $ — $ 159 $ — $ 159 Contingent consideration — — 106 106 Total $ — $ 159 $ 106 $ 265 Below is a summary of the valuation techniques used in determining fair value: Marketable securities — The Company values trading and available-for-sale securities using the quoted market value of the securities held. 12 Table of contents Derivatives — Derivatives consist of foreign exchange contracts, interest rate swaps, and cross-currency swaps. The fair value of foreign exchange contracts is based on observable market inputs of spot and forward rates or using other observable inputs. The fair value of the interest rate swaps is the estimated amount that the Company would receive or pay to terminate such agreements, taking into account market interest rates and the remaining time to maturities or using market inputs with mid-market pricing as a practical expedient for bid-ask spread. The fair value of the cross-currency swaps is the estimated amount that the Company would receive or pay to terminate such agreements, taking into account the effective interest rates, foreign exchange rates and the remaining time to maturities. Contingent consideration — The Company values contingent consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows. Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenues performance targets and operating forecasts) and the probability of achieving the specific targets. Based on the assessments of the probability of achieving specific targets, as of March 31, 2024, the Company has accrued approximately 42 % of the maximum contingent consideration payments that could potentially become payable. The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the three months ended March 31, 2024: (in millions) Contingent Consideration Balance as of December 31, 2023 $ 106 Business combinations 17 Contingent consideration paid ( 3 ) Revaluations included in earnings and foreign currency translation adjustments ( 1 ) Balance as of March 31, 2024 $ 119 The current portion of contingent consideration is included within accrued expenses and the long-term portion is included within other liabilities on the accompanying condensed consolidated balance sheets. Revaluations of contingent consideration are recognized in other expense (income), net on the accompanying condensed consolidated statements of income. A change in significant unobservable inputs could result in a higher or lower fair value measurement of contingent consideration. Non-recurring Fair Value Measurements As of March 31, 2024, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled $ 19,477 million and were identified as Level 3. These assets are comprised of debt investments and cost and equity method investments of $ 236 million, goodwill of $ 14,516 million and other identifiable intangibles, net of $ 4,725 million. 7. Credit Arrangements The following is a summary of the Company’s revolving credit facilities as of March 31, 2024: Facility Interest Rates $ 2,000 million (revolving credit facility) U.S. Dollar Term SOFR plus a margin of 1.25 % plus a 10 basis credit spread adjustment as of March 31, 2024 $ 110 million (receivables financing facility) U.S. Dollar Term SOFR plus a margin of 0.90 % plus a 11 basis credit spread adjustment as of March 31, 2024 13 Table of contents The following table summarizes the Company’s debt at the dates indicated: (dollars in millions) March 31, 2024 December 31, 2023 Revolving Credit Facility due 2026: U.S. Dollar denominated borrowings—U.S. Dollar Term SOFR at average floating rates of 6.68 % $ 100 $ 100 Senior Secured Credit Facilities: Term A Loan due 2026—U.S. Dollar Term SOFR at average floating rates of 6.68 % 1,252 1,270 Term A Loan due 2026—Euribor at average floating rates of 5.15 % 295 306 Term A Loan due 2027—U.S. Dollar Term SOFR at average floating rates of 6.69 % 1,141 1,156 Term B Loan due 2025—Euribor at average floating rates of 5.90 % 564 576 Term B Loan due 2031—U.S. Dollar Term SOFR at average floating rates of 7.31 % 1,496 1,500 5.700 % Senior Secured Notes due 2028—U.S. Dollar denominated 750 750 6.250 % Senior Secured Notes due 2029—U.S. Dollar denominated 1,250 1,250 5.0 % Senior Notes due 2027—U.S. Dollar denominated 1,100 1,100 5.0 % Senior Notes due 2026—U.S. Dollar denominated 1,050 1,050 6.500 % Senior Notes due 2030—U.S. Dollar denominated 500 500 2.875 % Senior Notes due 2025—Euro denominated 453 464 2.25 % Senior Notes due 2028—Euro denominated 777 795 2.875 % Senior Notes due 2028—Euro denominated 767 785 1.750 % Senior Notes due 2026—Euro denominated 594 607 2.250 % Senior Notes due 2029—Euro denominated 972 993 Receivables financing facility due 2024—U.S. Dollar Term SOFR at average floating rates of 6.34 %: Revolving Loan Commitment 110 110 Term Loan 440 440 Principal amount of debt 13,611 13,752 Less: unamortized discount and debt issuance costs ( 75 ) ( 79 ) Less: current portion ( 717 ) ( 718 ) Long-term debt $ 12,819 $ 12,955 Contractual maturities of long-term debt as of March 31, 2024 are as follows: (in millions) Remainder of 2024 $ 675 2025 1,184 2026 3,211 2027 2,084 2028 2,310 Thereafter 4,147 $ 13,611 14 Table of contents Senior Secured Credit Facilities As of March 31, 2024, the Company’s Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities of up to $ 6,743 million, which consisted of $ 4,848 million principal amounts of debt outstanding (as detailed in the table above), and $ 1,895 million of available borrowing capacity on the $ 2,000 million revolving credit facility and standby letters of credit. The revolving credit facility is comprised of a $ 1,175 million senior secured revolving facility available in U.S. dollars, a $ 600 million senior secured revolving facility available in U.S. dollars, Euros, Swiss Francs and other foreign currencies, and a $ 225 million senior secured revolving facility available in U.S. dollars and Yen. Restrictive Covenants The Company’s debt agreements provide for certain covenants and events of default customary for similar instruments, including a covenant not to exceed a specified ratio of consolidated senior secured net indebtedness to Consolidated EBITDA, as defined in the senior secured credit facility agreement and a covenant to maintain a specified minimum interest coverage ratio. If an event of default occurs under any of the Company’s or the Company’s subsidiaries’ financing arrangements, the creditors under such financing arrangements will be entitled to take various actions, including the acceleration of amounts due under such arrangements, and in the case of the lenders under the revolving credit facility and term loans, other actions permitted to be taken by a secured creditor. The Company’s long-term debt arrangements contain other usual and customary restrictive covenants that, among other things, place limitations on the Company’s ability to declare dividends. As of March 31, 2024, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements . 8. Contingencies The Company and its subsidiaries are involved in legal and tax proceedings, claims and litigation arising in the ordinary course of business. Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. For those matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss can be reasonably estimated, the Company has recorded an accrual in the consolidated financial statements based on its best estimates of such loss. In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any. However, even in many instances where the Company has recorded an estimated liability, the Company is unable to predict with certainty the final outcome of the matter or whether resolution of the matter will materially affect the Company’s results of operations, financial position or cash flows. As additional information becomes available, the Company adjusts its assessments and estimates of such liabilities accordingly. The Company routinely enters into agreements with third parties, including its clients and suppliers, all in the normal course of business. In these agreements, the Company sometimes agrees to indemnify and hold harmless the other party for any damages such other party may suffer as a result of potential intellectual property infringement and other claims. The Company has not accrued a liability with respect to these matters generally, as the exposure is considered remote. Based on its review of the latest information available, management does not expect the impact of pending legal and tax proceedings, claims and litigation, either individually or in the aggregate, to have a material adverse effect on the Company’s results of operations, cash flows or financial position. However, one or more unfavorable outcomes in any claim or litigation against the Company could have a material adverse effect for the period in which it is resolved. The following is a summary of certain legal matters involving the Company. 15 Table of contents On February 13, 2014, a group of approximately 1,200 medical doctors and 900 private individuals filed a civil lawsuit with the Seoul Central District Court against IMS Korea and two other defendants, the Korean Pharmaceutical Association (“KPA”) and the Korean Pharmaceutical Information Center (“KPIC”). The civil lawsuit alleges KPA and KPIC collected their personal information in violation of applicable privacy laws without the necessary consent through a software system installed on pharmacy computer systems in Korea, and that personal information was transferred to IMS Korea and sold to pharmaceutical companies. On September 11, 2017, the District Court issued a final decision that the encryption in use by the defendants since June 2014 was adequate to meet the requirements of the Korean Personal Information Protection Act (“PIPA”) and the sharing of non-identified information for market research purposes was allowed under PIPA. The District Court also found an earlier version of encryption was insufficient to meet PIPA requirements, but no personal data had been leaked or re-identified. The District Court did not award any damages to plaintiffs. Approximately 280 medical doctors and 200 private individuals appealed the District Court decision. On May 3, 2019, the Appellate Court issued a final decision in which it concluded all of the non-identified information transferred by KPIC to IMS Korea for market research purposes violated PIPA, but did not award any damages to plaintiffs (affirming the District Court’s decision on this latter point). On May 24, 2019, approximately 247 plaintiffs appealed the Appellate Court’s decision to the Supreme Court. The Company believes the appeal is without merit and is vigorously defending its position. On July 23, 2015, indictments were issued by the Seoul Central District Prosecutors’ Office in South Korea against 24 individuals and companies alleging improper handling of sensitive health information in violation of, among others, South Korea’s PIPA. IMS Korea and two of its employees were among the individuals and organizations indicted. Although there is no assertion that IMS Korea used patient identified health information in any of its offerings, prosecutors allege that certain of IMS Korea’s data suppliers should have obtained patient consent when they converted sensitive patient information into non-identified data and that IMS Korea had not taken adequate precautions to reduce the risk of re-identification. On February 14, 2020, the Seoul Central District Court acquitted IMS Korea and its two employees of the charges of improper handling of sensitive health information, and the Prosecutor's Office appealed. On December 23, 2021, the appellate court affirmed the judgment of the Seoul Central District Court. The Prosecutor's Office has appealed to the Supreme Court. The Company intends to vigorously defend its position on appeal. On January 10, 2017, Quintiles IMS Health Incorporated and IMS Software Services Ltd. (collectively “IQVIA Parties”), filed a lawsuit in the U.S. District Court for the District of New Jersey against Veeva Systems, Inc. (“Veeva”) alleging Veeva unlawfully used IQVIA Parties intellectual property to improve Veeva data offerings, to promote and market Veeva data offerings and to improve Veeva technology offerings. IQVIA Parties seek injunctive relief, appointment of a monitor, the award of compensatory and punitive damages and reimbursement of all litigation expenses, including reasonable attorneys’ fees and costs. On March 13, 2017, Veeva filed counterclaims alleging anticompetitive business practices in violation of the Sherman Act and state laws. Veeva claims damages in excess of $ 200 million, and is seeking punitive damages and litigation costs, including attorneys’ fees. The Company believes the counterclaims are without merit, rejects all counterclaims raised by Veeva and intends to vigorously defend IQVIA Parties’ position and pursue its claims against Veeva. Since the initial filings, the parties have filed additional litigations against each other, primarily concerning the use of IQVIA data with various other Veeva products. Trial has been scheduled for early 2025. On May 7, 2021, the Court issued an order and opinion (the “Order”) in which it found significant evidence that Veeva had (1) misappropriated IQVIA data and unlawfully used it to improve Veeva data offerings, (2) engaged in a cover-up by deleting significant evidence of its theft of IQVIA’s trade secrets, and (3) improperly withheld certain evidence under privilege in furtherance of a crime and/or fraud against IQVIA. The Court imposed five sanctions against Veeva, including ordering three separate adverse inference instructions be issued to the jury and that IQVIA be permitted to present evidence to the jury of Veeva’s destruction efforts. Veeva appealed the Order. On March 30, 2024, the Court denied Veeva’s appeal with regard to its rejected privilege claims, while reserving ruling on the appropriate sanctions to be imposed for a later time. 9. Stockholders’ Equity Preferred Stock The Company is authorized to issue 1.0 million shares of preferred stock, $ 0.01 per share par value. No shares of preferred stock were issued or outstanding as of March 31, 2024 or December 31, 2023. 16 Table of contents Equity Repurchase Program As of March 31, 2024, the total stock repurchase authorization under the Company's equity repurchase program (the "Repurchase Program") was $ 11,725 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, 2024, the Company did not repurchase any shares of its common stock under the Repurchase Program. As of March 31, 2024, the Company had remaining authorization to repurchase up to $ 2,363 million 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. 10. Business Combinations The Company completed several individually immaterial acquisitions during the three months ended March 31, 2024. The Company’s assessment of fair value, including the valuation of certain identified intangibles, and the purchase price allocation related to these acquisitions is preliminary and subject to change upon completion. Further adjustments, largely related to acquired intangible assets and related deferred taxes, may be necessary as additional information related to the fair values of assets acquired and liabilities assumed is assessed during the measurement period (up to one year from the acquisition date). The Company recorded goodwill from these acquisitions, primarily attributable to assembled workforce, expected synergies and new customer relationships. The condensed consolidated financial statements include the results of the acquisitions subsequent to their respective closing dates. Pro forma information is not presented as pro forma results of operations would not be materially different to the actual results of operations of the Company. The following table provides certain preliminary financial information for these acquisitions: (in millions) March 31, 2024 Assets acquired: Cash and cash equivalents $ 3 Accounts receivable 4 Other assets 1 Goodwill 103 Other identifiable intangibles 56 Liabilities assumed: Other liabilities ( 3 ) Deferred income taxes, long-term ( 2 ) Net assets acquired (1) $ 162 (1) Net assets acquired includes contingent consideration and deferred purchase price of $ 17 million. The portion of goodwill deductible for income tax purposes was preliminarily assessed as $ 87 million. The following table provides a summary of the preliminary estimated fair value of certain intangible assets acquired: (in millions) Amortization Period March 31, 2024 Other identifiable intangibles: Customer relationships 12 - 13 years $ 52 Backlog 1 year 4 Total Other identifiable intangibles $ 56 11. Restructuring The Company has continued to take restructuring actions in 2024 to align its resources and reduce overcapacity to adapt to changing market conditions and integrate acquisitions. These actions include consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements. These restructuring actions are expected to continue throughout 2024 and into 2025. 17 Table of contents The following amounts were recorded for the restructuring plans: (in millions) Severance and Related Costs Balance as of December 31, 2023 $ 36 Expense, net of reversals 15 Payments ( 16 ) Foreign currency translation and other ( 1 ) Balance as of March 31, 2024 $ 34 The reversals were due to changes in estimates primarily resulting from the redeployment of staff and higher than expected voluntary terminations. Restructuring costs are not allocated to the Company’s reportable segments as they are not part of the segment performance measures regularly reviewed by management. The Company expects that the majority of the restructuring accruals as of March 31, 2024 will be paid in 2024 and 2025. 12. Income Taxes The Company's effective income tax rate was 14.4 % and 19.6 % in the first quarter of 2024 and 2023, respectively. The effective income tax rate in the first quarter of 2024 was favorably impacted compared to the first quarter of 2023 due to changes in the geographical mix of earnings amongst the United States and foreign tax jurisdictions. The effective income tax rate in the first quarter of 2024 and 2023 was also favorably impacted by $ 9 million and $ 8 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards. Numerous foreign jurisdictions have agreed to implement the Organization for Economic Co-operation and Development’s (“OECD”) Pillar 2 global corporate minimum tax rate of 15% on companies with revenues of at least €750 million, which went into effect in 2024. The Company has evaluated the effect of this for the first quarter of 2024 and does not expect any material impacts for 2024 . The Company will continue to monitor as additional jurisdictions enact Pillar 2 legislation. 13. Accumulated Other Comprehensive (Loss) Income Below is a summary of the components of AOCI: (in millions) Foreign Currency Translation Derivative Instruments Defined Benefit Plans Income Taxes Total Balance as of December 31, 2023 $ ( 969 ) $ ( 34 ) $ 3 $ 133 $ ( 867 ) Other comprehensive (loss) income before reclassifications ( 32 ) 46 — ( 49 ) ( 35 ) Reclassification adjustments — ( 12 ) — 3 ( 9 ) Balance as of March 31, 2024 $ ( 1,001 ) $ — $ 3 $ 87 $ ( 911 ) Below is a summary of the adjustments for amounts reclassified from AOCI into the condensed consolidated statements of income and the affected financial statement line item: (in millions) Affected Financial Statement Line Item Three Months Ended March 31, 2024 2023 Derivative instruments: Interest rate swaps Interest expense $ 15 $ 16 Foreign exchange forward contracts Revenues ( 3 ) 17 Total before income taxes 12 33 Income taxes 3 8 Total net of income taxes $ 9 $ 25 18 Table of contents 14. Segments The following table presents the Company’s operations by reportable segment. The Company is 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 the Company's life science clients. Research & Development Solutions, which primarily serves biopharmaceutical customers, provides outsourced clinical research and clinical trial related services. Contract Sales & Medical Solutions provides health care provider (including contract sales) and patient engagement services to both biopharmaceutical clients and the broader healthcare market. 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. The Company also does not allocate restructuring costs, depreciation and amortization, or impairment charges, if any, to its segments. Asset information by segment is not presented, as this measure is not used by the chief operating decision maker to assess the Company’s performance. The Company’s reportable segment information is presented below: Three Months Ended March 31, (in millions) 2024 2023 Revenues Technology & Analytics Solutions $ 1,453 $ 1,444 Research & Development Solutions 2,095 2,026 Contract Sales & Medical Solutions 189 182 Total revenues 3,737 3,652 Cost of revenues, exclusive of depreciation and amortization Technology & Analytics Solutions 889 858 Research & Development Solutions 1,395 1,386 Contract Sales & Medical Solutions 160 154 Total cost of revenues, exclusive of depreciation and amortization 2,444 2,398 Selling, general and administrative expenses Technology & Analytics Solutions 229 225 Research & Development Solutions 221 212 Contract Sales & Medical Solutions 16 15 General corporate and unallocated 42 61 Total selling, general and administrative expenses 508 513 Segment profit Technology & Analytics Solutions 335 361 Research & Development Solutions 479 428 Contract Sales & Medical Solutions 13 13 Total segment profit 827 802 General corporate and unallocated ( 42 ) ( 61 ) Depreciation and amortization ( 264 ) ( 253 ) Restructuring costs ( 15 ) ( 17 ) Total income from operations $ 506 $ 471 19 Table of contents 15. Earnings Per Share The following table presents the computation of basic and diluted earnings per share: Three Months Ended March 31, (in millions, except per share data) 2024 2023 Numerator: Net income $ 288 $ 289 Denominator: Basic weighted average common shares outstanding 181.9 185.8 Effect of dilutive stock options and share awards 2.4 2.8 Diluted weighted average common shares outstanding 184.3 188.6 Earnings per share attributable to common stockholders: Basic $ 1.58 $ 1.56 Diluted $ 1.56 $ 1.53 Stock-based awards will have a dilutive effect under the treasury method when the respective period's average market value of the Company's common stock exceeds the exercise proceeds. Performance awards are included in diluted earnings per share based on if the performance targets have been met at the end of the reporting period. For the three months ended March 31, 2024 and 2023, the weighted average number of outstanding stock-based awards not included in the computation of diluted earnings per share because they are subject to performance conditions that have not been met at the end of the reporting period or the effect of including such stock-based awards in the computation would be anti-dilutive was 0.8 million and 1.0 million, respectively. 20 Table of contents