What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-10-22 compared with 2026-07-23 · 65 added, 60 removed, 190 unchanged (40% of the section changed)

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We focus on conducting clinical trials across all major therapeutic areas, with particular strength in Oncology, Metabolic Disease, Cardiology, Central Nervous System, or CNS, and Antiviral and Anti-infective, or AVAI.

Our global platform includes approximately 6,500 employees across 46 countries as of June 30, 2026, providing our customers with broad access to diverse markets and patient populations as well as local regulatory expertise and market knowledge.

Our global platform includes approximately 6,600 employees across 46 countries as of September 30, 2026, providing our customers with broad access to diverse markets and patient populations as well as local regulatory expertise and market knowledge.

How We Generate Revenue

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Net new business awards represent gross new business awards received in a period offset by total cancellations in that period.

Net new business awards were $795.7 million and $1,414.2 million for the three and six months ended June 30, 2026, respectively.

Net new business awards were $620.5 million and $1,120.6 million for the three and six months ended June 30, 2025, respectively.

Net new business awards were $873.4 million and $2,287.6 million for the three and nine months ended September 30, 2026, respectively.

Net new business awards were $789.6 million and $1,910.2 million for the three and nine months ended September 30, 2025, respectively.

Backlog represents anticipated future net revenue from net new business awards that have not commenced or are currently in process but not complete.

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dollar denominated backlog.

As of June 30, 2026, our backlog increased by $140.6 million, or 4.9%, to $3,014.2 million compared to $2,873.6 million as of June 30, 2025.

Included within backlog as of June 30, 2026 was approximately $1,950.0 million to $1,970.0 million that we expect to convert to net revenue over the next twelve months, with the remainder expected to convert to net revenue thereafter.

As of September 30, 2026, our backlog increased by $166.6 million, or 5.6%, to $3,167.2 million compared to $3,000.6 million as of September 30, 2025.

Included within backlog as of September 30, 2026 was approximately $1,980.0 million to $2,000.0 million that we expect to convert to net revenue over the next twelve months, with the remainder expected to convert to net revenue thereafter.

The effect of foreign currency adjustments on backlog was as follows:

favorable foreign currency adjustments of $0.1 million for the three months ended June 30, 2026;

unfavorable foreign currency adjustments of $3.6 million for the six months ended June 30, 2026;

favorable foreign currency adjustments of $14.5 million for the three months ended June 30, 2025;

and favorable foreign currency adjustments of $21.4 million for the six months ended June 30, 2025.

favorable foreign currency adjustments of $0.2 million for the three months ended September 30, 2026;

unfavorable foreign currency adjustments of $3.4 million for the nine months ended September 30, 2026;

favorable foreign currency adjustments of $2.6 million for the three months ended September 30, 2025;

and favorable foreign currency adjustments of $24.0 million for the nine months ended September 30, 2025.

Backlog and net new business award metrics may not be reliable indicators of our future period revenue as they are subject to a variety of factors that may cause material fluctuations from period to period.

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dollars using the following average exchange rates based on data obtained from www.xe.com:

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

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

2026 2025 2026 2025

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Results of Operations

Three Months Ended June 30, 2026 compared to Three Months Ended June 30, 2025

Three Months Ended June 30,

Three Months Ended September 30, 2026 compared to Three Months Ended September 30, 2025

Three Months Ended September 30,

(Amounts in thousands, except percentages) 2026 2025 Change

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Income from operations 165,540 141,808 23,732

Miscellaneous expense, net (147) (2,875) 2,728

Miscellaneous income (expense), net 17 (489) 506

Interest income, net 5,349 1,517 3,832

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Net income $ 137,460 $ 111,135 $ 26,325

Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025

Six Months Ended June 30,

Nine Months Ended September 30, 2026 compared to Nine Months Ended September 30, 2025

Nine Months Ended September 30,

(Amounts in thousands, except percentages) 2026 2025 Change

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Total revenue

Total revenue increased by $104.0 million, to $707.3 million for the three months ended June 30, 2026, from $603.3 million for the three months ended June 30, 2025.

Total revenue increased by $252.1 million, to $1,413.9 million for the six months ended June 30, 2026, from $1,161.9 million for the six months ended June 30, 2025.

The increase for the three and six months ended June 30, 2026 was primarily driven by growth within the Metabolic, Oncology, Central Nervous System and AVAI therapeutic areas, compared to the same periods in the prior year.

Total revenue increased by $56.1 million, to $716.0 million for the three months ended September 30, 2026, from $659.9 million for the three months ended September 30, 2025.

Total revenue increased by $308.2 million, to $2,129.9 million for the nine months ended September 30, 2026, from $1,821.8 million for the nine months ended September 30, 2025.

The increase for the three and nine months ended September 30, 2026 was primarily driven by growth within the Metabolic, Oncology and Central Nervous System therapeutic areas, compared to the same periods in the prior year.

Total direct costs

Total direct costs increased by $82.4 million, to $505.7 million for the three months ended June 30, 2026 from $423.3 million for the three months ended June 30, 2025.

Total direct costs increased by $212.5 million, to $1,016.0 million for the six months ended June 30, 2026 from $803.5 million for the six months ended June 30, 2025.

Total direct costs increased by $29.2 million, to $492.1 million for the three months ended September 30, 2026 from $463.0 million for the three months ended September 30, 2025.

Total direct costs increased by $241.6 million, to $1,508.1 million for the nine months ended September 30, 2026 from $1,266.5 million for the nine months ended September 30, 2025.

The increase was primarily attributed to higher reimbursed out-of-pocket expenses and higher personnel costs to support the growth in service activities.

Reimbursed out-of-pocket expenses, which can fluctuate significantly from period to period based on the timing of program initiation and closeout, increased by $65.7 million and $175.3 million for the three and six months ended June 30, 2026, compared to the same periods in the prior year.

The higher personnel costs portion increased by $15.1 million and $35.8 million for the three and six months ended June 30, 2026, compared to the same periods in the prior year.

Reimbursed out-of-pocket expenses, which can fluctuate significantly from period to period based on the timing of program initiation and closeout, increased by $10.6 million and $185.9 million for the three and nine months ended September 30, 2026, compared to the same periods in the prior year.

The higher personnel costs portion increased by $16.2 million and $52.0 million for the three and nine months ended September 30, 2026, compared to the same periods in the prior year.

Selling, general and administrative

Selling, general and administrative expenses increased by $1.4 million, to $48.1 million for the three months ended June 30, 2026 from $46.7 million for the three months ended June 30, 2025.

Selling, general and administrative expenses decreased by $8.5 million, to $96.0 million for the six months ended June 30, 2026 from $104.6 million for the six months ended June 30, 2025.

The increase for the three months ended June 30, 2026 was primarily attributed to higher personnel costs to support the growth in service activities of $0.8 million, compared to the same period in the prior year.

The decrease for the six months ended June 30, 2026 was primarily attributed to a decrease in stock-based compensation expense of $12.9 million, partially offset by higher personnel costs, excluding stock-based compensation expense, to support the growth in service activities of $3.3 million, compared to the same period in the prior year.

Selling, general and administrative expenses increased by $3.7 million, to $51.8 million for the three months ended September 30, 2026 from $48.1 million for the three months ended September 30, 2025.

Selling, general and administrative expenses decreased by $4.9 million, to $147.8 million for the nine months ended September 30, 2026 from $152.6 million for the nine months ended September 30, 2025.

The increase for the three months ended September 30, 2026 was primarily attributed to higher personnel costs to support the growth in service activities of $3.1 million, compared to the same period in the prior year.

The decrease for the nine months ended September 30, 2026 was primarily attributed to a decrease in stock-based compensation expense of $11.2 million, partially offset by higher personnel costs, excluding stock-based compensation expense, to support the growth in service activities of $4.7 million, compared to the same period in the prior year.

Depreciation and Amortization

Depreciation and amortization expense of $6.7 million for the three months ended June 30, 2026, remained relatively consistent with $7.0 million for the three months ended June 30, 2025.

Depreciation and amortization expense of $13.6 million for the six months ended June 30, 2026, remained relatively consistent with $13.9 million for the six months ended June 30, 2025.

Depreciation and amortization expense of $6.6 million for the three months ended September 30, 2026, remained relatively consistent with $7.0 million for the three months ended September 30, 2025.

Depreciation and amortization expense of

$20.2 million for the nine months ended September 30, 2026, remained relatively consistent with $21.0 million for the nine months ended September 30, 2025.

Miscellaneous income (expense), net

Miscellaneous expense, net decreased by $2.7 million, to $0.1 million for the three months ended June 30, 2026, from $2.9 million for the three months ended June 30, 2025.

Miscellaneous income (expense), net changed by $5.5 million, to $0.8 million of income for the six months ended June 30, 2026 from $4.7 million of expense for the six months ended June 30, 2025.

Miscellaneous income (expense), net changed by $0.5 million, to less than $0.1 million of income for the three months ended September 30, 2026, from $0.5 million of expense for the three months ended September 30, 2025.

Miscellaneous income (expense), net changed by $6.0 million, to $0.8 million of income for the nine months ended September 30, 2026 from $5.2 million of expense for the nine months ended September 30, 2025.

These changes were mainly attributable to foreign exchange gains or losses, such as those that arise in connection with the revaluation of short-term intercompany balances between our domestic and international subsidiaries and from the settlement of third-party accounts receivables and payables denominated in a currency other than the local currency of the entity making the payment, and third-party investment gains or losses, compared to the same periods in the prior year.

Interest income, net

Interest income, net increased by $3.9 million, to $5.0 million for the three months ended June 30, 2026, from $1.1 million for the three months ended June 30, 2025.

Interest income, net increased by $2.6 million, to $10.1 million for the six months ended June 30, 2026, from $7.5 million for the six months ended June 30, 2025.

Interest income, net increased by $3.8 million, to $5.3 million for the three months ended September 30, 2026, from $1.5 million for the three months ended September 30, 2025.

Interest income, net increased by $6.4 million, to $15.5 million for the nine months ended September 30, 2026, from $9.1 million for the nine months ended September 30, 2025.

These changes were mainly attributable to increased interest income on Cash and cash equivalents, compared to the same periods in the prior year.

Income tax provision

Income tax provision decreased by $4.0 million, to $30.3 million for the three months ended June 30, 2026 from $34.3 million for the three months ended June 30, 2025.

Income tax provision increased by $16.2 million, to $54.0 million for the six months ended June 30, 2026 from $37.9 million for the six months ended June 30, 2025.

The overall effective tax rate for the three months ended June 30, 2026 was 20.0%, compared to an overall effective tax rate of 27.5% for the three months ended June 30, 2025.

The overall effective tax rate for the six months ended June 30, 2026 was 18.1% compared to an overall effective tax rate of 15.6% for the six months ended June 30, 2025.

The decrease in the income tax provision and overall effective tax rate for the three months ended June 30, 2026 was primarily attributable to an increase in the estimated tax benefits related to Foreign Derived Deduction Eligible Income, and an increase in the benefit of uncertain tax positions which was partially offset by an increase in pre-tax book income compared to the same period in the prior year.

The increase in the income tax provision and overall effective tax rate for the six months ended June 30, 2026 was primarily attributable to an increase in pre-tax book income and a decrease in excess tax benefits recognized from share-based compensation, which was partially offset by an increase in the estimated tax benefits related to Foreign Derived Deduction Eligible Income compared to the same period in the prior year.

Income tax provision increased by $1.7 million, to $33.4 million for the three months ended September 30, 2026 from $31.7 million for the three months ended September 30, 2025.

Income tax provision increased by $17.9 million, to $87.5 million for the nine months ended September 30, 2026 from $69.6 million for the nine months ended September 30, 2025.

The overall effective tax rate for the three months ended September 30, 2026 was 19.6%, compared to an overall effective tax rate of 22.2% for the three months ended September 30, 2025.

The overall effective tax rate for the nine months ended September 30, 2026 was 18.6% compared to an overall effective tax rate of 18.0% for the nine months ended September 30, 2025.

The increase in the income tax provision for the three months ended September 30, 2026 was primarily attributable to an increase in pre-tax book income which was partially offset by an increase in tax benefits related to Foreign Derived Deduction Eligible Income compared to the same period in the prior year.

The decrease in the overall effective tax rate for the three months ended September 30, 2026 was primarily attributable to an increase in tax benefits related to Foreign Derived Deduction Eligible Income compared to the same period in the prior year.

The increase in the income tax provision and overall effective tax rate for the nine months ended September 30, 2026 was primarily attributable to an increase in pre-tax book income and a decrease in excess tax benefits recognized from share-based compensation, which was partially offset by an increase in the estimated tax benefits related to Foreign Derived Deduction Eligible Income compared to the same period in the prior year.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

Where relevant, the Company has reflected any material items that were enacted in the condensed consolidated financial statements for the three and six months ended June 30, 2026.

Where relevant, the Company has reflected any material items that were enacted in the condensed consolidated financial statements for the three and nine months ended September 30, 2026 and 2025.

Liquidity and Capital Resources

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Our principal sources of liquidity are operating cash flows and from borrowings under our unsecured credit facility consisting of up to a $10.0 million revolving line of credit which we entered into on September 30, 2019 (the “Credit Facility”).

All $10.0 million of the line of credit is available for borrowing as of June 30, 2026.

As of June 30, 2026, we had cash and cash equivalents of $502.7 million which increased from $497.0 million as of December 31, 2025.

Approximately $26.3 million of cash and cash equivalents, none of which was restricted, was held by our foreign subsidiaries as of June 30, 2026.

All $10.0 million of the line of credit is available for borrowing as of September 30, 2026.

As of September 30, 2026, we had cash and cash equivalents of $705.3 million which increased from $497.0 million as of December 31, 2025.

Approximately $28.7 million of cash and cash equivalents, none of which was restricted, was held by our foreign subsidiaries as of September 30, 2026.

Our expected primary cash needs on both a short and long-term basis are for investment in operational growth, including additional lease commitments, capital expenditures, share repurchases, selective strategic bolt-on acquisitions, other investments, and other general corporate needs.

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We expect to continue expanding our operations through organic growth and potentially highly selective bolt-on acquisitions and investments.

As of June 30, 2026, cash commitments to support operating business needs include lease liabilities discussed in Note 8 of the Condensed Consolidated Financial Statements, purchase commitments discussed in Note 11 of the Condensed Consolidated Financial Statements and capital expenditures primarily related to infrastructure investments in our facilities, equipment and technology.

Capital spending as a percentage of revenue increased by 78 basis points to 2.17% in the six months ended June 30, 2026, compared to the same period in the prior year.

As of September 30, 2026, cash

commitments to support operating business needs include lease liabilities discussed in Note 8 of the Condensed Consolidated Financial Statements, purchase commitments discussed in Note 11 of the Condensed Consolidated Financial Statements and capital expenditures primarily related to infrastructure investments in our facilities, equipment and technology.

Capital spending as a percentage of revenue increased by 92 basis points to 2.39% in the nine months ended September 30, 2026, compared to the same period in the prior year.

We expect these activities will be funded from existing cash, cash flow from operations and, if necessary, borrowings under our existing or future credit facilities or other debt.

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However, we cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our Credit Facility or otherwise, in an amount sufficient to fund our liquidity needs.

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows (Amounts in thousands) 2026 2025

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Net cash used in financing activities (269,174) (883,117)

Effect of exchange rates on cash, cash equivalents, and restricted cash (1,857) 5,069

Increase (decrease) in cash, cash equivalents, and restricted cash $ 5,639 $ (623,106)

Effect of exchange rates on cash and cash equivalents (2,185) 5,128

Increase (decrease) in cash and cash equivalents $ 208,266 $ (384,085)

Cash Flow from Operating Activities

Cash flows from operations are driven mainly by net income, deferred income tax provision, depreciation, noncash lease expense, stock-based compensation expense and net movement in advanced billings, accrued expenses, accounts receivable and unbilled, net, prepaid expenses and other current assets, lease liabilities and other assets and liabilities, net.

Cash flows from operations are driven mainly by net income, deferred income tax provision, depreciation, noncash lease expense, stock-based compensation expense and net movement in advanced billings, accounts receivable and unbilled, net, accrued expenses, lease liabilities and other assets and liabilities, net.

Advanced billings and accounts receivable and unbilled, net fluctuate on a regular basis as we perform our services, bill our customers and ultimately collect on those receivables.

We attempt to negotiate payment terms in order to provide for payments prior to or soon after the provision of services, but this timing of collection can vary significantly on a period by period comparative basis.

Net cash flows provided by operating activities was $313.8 million for the six months ended June 30, 2026 beginning with net income of $245.2 million.

Net cash flows provided by operating activities was $530.4 million for the nine months ended September 30, 2026 beginning with net income of $382.7 million.

Adjustments to reconcile net income to net cash provided by operating activities were $84.0 million, primarily related to deferred income tax provision of $28.2 million, depreciation of $19.7 million, noncash lease expense of $18.1 million and stock-based compensation expense of $16.9 million.

Changes in operating assets and liabilities provided $10.7 million in operating cash flows and was primarily driven by increased advanced billings of $50.3 million and increased accrued expenses of $43.7 million, partially offset by increased accounts receivable and unbilled, net of $39.4 million, increased prepaid expenses and other current assets of $15.9 million, changes in other assets and liabilities, net of $15.6 million and decreased lease liabilities of $12.4 million.

Net cash flows provided by operating activities was $274.4 million for the six months ended June 30, 2025 beginning with net income of $204.9 million.

Changes in operating assets and liabilities provided $63.7 million in operating cash flows and was primarily driven by increased advanced billings of $107.5 million and increased accrued expenses of $36.1 million, partially offset by increased accounts receivable and unbilled, net of $45.1 million, decreased lease liabilities of $17.8 million and changes in other assets and liabilities, net of $15.8 million.

Net cash flows provided by operating activities was $520.6 million for the nine months ended September 30, 2025 beginning with net income of $316.0 million.

Adjustments to reconcile net income to net cash provided by operating activities were $130.4 million, primarily related to deferred income tax provision of $63.4 million, stock-based compensation expense of $29.2 million, depreciation of $20.3 million and noncash lease expense of $17.3 million.

Changes in operating assets and liabilities used $13.3 million in operating cash flows and was primarily driven by increased accounts receivable and unbilled, net of $82.0 million and increased prepaid expenses and other current assets of $33.1 million, partially offset by increased advanced billings of $98.2 million.

Changes in operating assets and liabilities provided $74.2 million in operating cash flows and was primarily driven by increased advanced billings of $123.7 million and increased accrued expenses of $57.5 million, partially offset by increased accounts receivable and unbilled, net of $77.1 million, decreased lease liabilities of $18.1 million and increased prepaid expenses and other current assets of $15.6 million.

Cash Flow from Investing Activities

Net cash used in investing activities was $30.6 million for the six months ended June 30, 2026 primarily consisting of property and equipment expenditures.

Net cash used in investing activities was $16.0 million for the six months ended June 30, 2025 primarily consisting of property and equipment expenditures.

Net cash used in investing activities was $50.8 million for the nine months ended September 30, 2026 primarily consisting of property and equipment expenditures.

Net cash used in investing activities was $26.7 million for the nine months ended September 30, 2025 primarily consisting of property and equipment expenditures.

Cash Flow from Financing Activities

Net cash used in financing activities was $275.7 million for the six months ended June 30, 2026 primarily related to $294.8 million in repurchases of common stock, partially offset by proceeds from stock option exercises of $19.1 million.

Net cash used in financing activities was $886.5 million for the six months ended June 30, 2025 primarily related to $912.8 million in repurchases of common stock, partially offset by proceeds from stock option exercises of $26.3 million.

Net cash used in financing activities was $269.2 million for the nine months ended September 30, 2026 primarily related to $294.8 million in repurchases of common stock, partially offset by proceeds from stock option exercises of $25.6 million.

Net cash used in financing activities was $883.1 million for the nine months ended September 30, 2025 primarily related to $917.4 million in repurchases of common stock, partially offset by proceeds from stock option exercises of $34.3 million.

Share Repurchases

In 2022, the Company’s Board of Directors (the “Board”) approved a share repurchase program which has been amended several times to increase the aggregate amount of the share repurchase authorization.

During the three and six months ended June 30, 2026, the Company repurchased 705,616 shares for $294.7 million.

During the three and six months ended June 30, 2025, the Company repurchased 1,754,264 shares and 2,947,275 shares for $518.5 million and $908.4 million, respectively.

As of June 30, 2026, the Company has remaining authorization of $527.0 million under the repurchase program.

The Company did not execute any share repurchases during the three months ended September 30, 2026.

During the nine months ended September 30, 2026, the Company repurchased 705,616 shares for $294.7 million.

During the three and nine months ended September 30, 2025, the Company repurchased 14,649 shares and 2,961,924 shares for $4.5 million and $912.9 million, respectively.

As of September 30, 2026, the Company has remaining authorization of $527.0 million under the repurchase program.

Effective October 20, 2026, the Board approved the termination of the current share repurchase authorization and approved a new share repurchase authorization of up to $1.0 billion.

Repurchases under the share repurchase program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1.

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Retired share repurchase amounts paid in excess of par value are reflected within Accumulated deficit/Retained earnings in the Company’s condensed consolidated balance sheets.

As of June 30, 2026, we had no indebtedness.

As of September 30, 2026, we had no indebtedness.

Refer to Note 7 of the Notes to Condensed Consolidated Financial Statements for details regarding our Credit Facility.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis