Document
false--12-31Q120200001613859P6MP6MP1MP3MP2MP1D11000000.01100000000063491550636257426349155063625742000P1YP3Y404100051400011570003080006790000.011000000000000P1Y 0001613859 2020-01-01 2020-03-31 0001613859 2020-04-24 0001613859 2019-12-31 0001613859 2020-03-31 0001613859 2019-01-01 2019-03-31 0001613859 prah:DirectCostsMember 2020-01-01 2020-03-31 0001613859 prah:DirectCostsMember 2019-01-01 2019-03-31 0001613859 prah:ReimbursableOutOfPocketCostsMember 2019-01-01 2019-03-31 0001613859 prah:ReimbursableOutOfPocketCostsMember 2020-01-01 2020-03-31 0001613859 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001613859 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001613859 prah:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:AccountingStandardsUpdate201802Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001613859 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001613859 us-gaap:NoncontrollingInterestMember 2019-03-31 0001613859 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001613859 us-gaap:CommonStockMember 2019-03-31 0001613859 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001613859 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001613859 2018-12-31 0001613859 us-gaap:CommonStockMember 2018-12-31 0001613859 prah:CumulativeEffectPeriodofAdoptionAdjustmentMember us-gaap:AccountingStandardsUpdate201802Member us-gaap:RetainedEarningsMember 2018-12-31 0001613859 2019-03-31 0001613859 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001613859 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001613859 us-gaap:RetainedEarningsMember 2018-12-31 0001613859 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001613859 us-gaap:RetainedEarningsMember 2019-03-31 0001613859 us-gaap:NoncontrollingInterestMember 2018-12-31 0001613859 prah:CumulativeEffectPeriodofAdoptionAdjustedBalanceMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001613859 prah:CumulativeEffectPeriodofAdoptionAdjustedBalanceMember us-gaap:RetainedEarningsMember 2018-12-31 0001613859 us-gaap:NoncontrollingInterestMember 2020-03-31 0001613859 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001613859 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001613859 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001613859 us-gaap:CommonStockMember 2019-12-31 0001613859 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001613859 us-gaap:CommonStockMember 2020-03-31 0001613859 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001613859 us-gaap:RetainedEarningsMember 2020-03-31 0001613859 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001613859 us-gaap:NoncontrollingInterestMember 2019-12-31 0001613859 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001613859 us-gaap:RetainedEarningsMember 2019-12-31 0001613859 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001613859 prah:CareInnovationsIncMember 2020-01-31 0001613859 prah:CareInnovationsIncMember 2020-01-01 2020-01-31 0001613859 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2020-03-31 0001613859 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001613859 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001613859 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001613859 us-gaap:FairValueMeasurementsRecurringMember 2020-03-31 0001613859 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0001613859 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-01-01 2020-03-31 0001613859 prah:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-03-31 0001613859 prah:CustomerAMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2019-01-01 2019-12-31 0001613859 prah:CustomerBMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-03-31 0001613859 prah:CustomerAMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-03-31 0001613859 prah:CustomerBMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2019-01-01 2019-12-31 0001613859 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2020-03-31 0001613859 srt:MaximumMember 2020-04-01 2020-03-31 0001613859 2020-04-01 2020-03-31 0001613859 srt:MinimumMember 2020-04-01 2020-03-31 0001613859 srt:MaximumMember 2020-03-31 0001613859 srt:MinimumMember 2020-03-31 0001613859 prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 prah:DataSolutionsMember 2019-12-31 0001613859 prah:ClinicalResearchMember 2019-12-31 0001613859 prah:DataSolutionsMember 2020-03-31 0001613859 prah:ClinicalResearchMember 2020-03-31 0001613859 us-gaap:OtherIntangibleAssetsMember 2019-12-31 0001613859 us-gaap:DatabasesMember 2020-03-31 0001613859 us-gaap:CustomerRelationshipsMember 2020-03-31 0001613859 us-gaap:CustomerRelationshipsMember 2019-12-31 0001613859 us-gaap:OtherIntangibleAssetsMember 2020-03-31 0001613859 us-gaap:TradeNamesMember 2019-12-31 0001613859 us-gaap:DatabasesMember 2019-12-31 0001613859 us-gaap:TradeNamesMember 2020-03-31 0001613859 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2020-01-01 2020-03-31 0001613859 srt:MaximumMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0001613859 srt:MinimumMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2020-01-01 2020-03-31 0001613859 prah:AccountsReceivableFinancingAgreementMember us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0001613859 prah:FirstLienTermLoanMember us-gaap:LineOfCreditMember 2020-01-01 2020-03-31 0001613859 prah:AccountsReceivableFinancingAgreementMember us-gaap:SecuredDebtMember 2020-01-01 2020-03-31 0001613859 prah:AccountsReceivableFinancingAgreementMember us-gaap:SecuredDebtMember 2019-12-31 0001613859 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2020-01-01 2020-03-31 0001613859 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2020-03-31 0001613859 us-gaap:LineOfCreditMember 2020-03-31 0001613859 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2019-12-31 0001613859 srt:MinimumMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-03-31 0001613859 prah:FirstLienTermLoanMember us-gaap:LineOfCreditMember 2020-03-31 0001613859 srt:MaximumMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2020-01-01 2020-03-31 0001613859 prah:AccountsReceivableFinancingAgreementMember us-gaap:SecuredDebtMember 2020-03-31 0001613859 prah:FirstLienTermLoanMember us-gaap:LineOfCreditMember 2019-12-31 0001613859 us-gaap:LineOfCreditMember 2020-01-01 2020-03-31 0001613859 2019-08-30 0001613859 prah:DirectCostsMember 2019-01-01 2019-03-31 0001613859 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-03-31 0001613859 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-01-01 2020-03-31 0001613859 prah:DirectCostsMember 2020-01-01 2020-03-31 0001613859 2019-01-01 2019-12-31 0001613859 2018-05-31 0001613859 prah:RestrictedStockAwardMember 2020-01-01 2020-03-31 0001613859 srt:MaximumMember us-gaap:EmployeeStockMember 2020-01-01 2020-03-31 0001613859 us-gaap:EmployeeStockMember 2020-01-01 2020-03-31 0001613859 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0001613859 us-gaap:EmployeeStockMember 2020-03-31 0001613859 prah:RestrictedStockAwardsRsasAndRestrictedStockUnitsRsusMember 2020-03-31 0001613859 prah:RestrictedStockAwardsRsasAndRestrictedStockUnitsRsusMember 2020-01-01 2020-03-31 0001613859 prah:RestrictedStockAwardsRsasAndRestrictedStockUnitsRsusMember 2019-12-31 0001613859 us-gaap:EmployeeStockMember 2019-01-01 2019-03-31 0001613859 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember 2019-01-01 2019-03-31 0001613859 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember 2020-01-01 2020-03-31 0001613859 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0001613859 us-gaap:OtherCurrentLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0001613859 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31 0001613859 us-gaap:OtherCurrentLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0001613859 us-gaap:AccumulatedTranslationAdjustmentMember 2020-03-31 0001613859 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-03-31 0001613859 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-03-31 0001613859 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-12-31 0001613859 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-03-31 0001613859 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0001613859 currency:RUB prah:ForeignCurrencyTranslationMember 2020-01-01 2020-03-31 0001613859 currency:EUR prah:ForeignCurrencyTranslationMember 2020-01-01 2020-03-31 0001613859 currency:GBP prah:ForeignCurrencyTranslationMember 2020-01-01 2020-03-31 0001613859 currency:CAD prah:ForeignCurrencyTranslationMember 2020-01-01 2020-03-31 0001613859 srt:AmericasMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 prah:OtherEuropeAfricaAndAsiaPacificMember 2019-01-01 2019-03-31 0001613859 prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 prah:OtherEuropeAfricaAndAsiaPacificMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 country:US prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 srt:AmericasMember 2019-01-01 2019-03-31 0001613859 country:NL prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 prah:OtherEuropeAfricaAndAsiaPacificMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 prah:OtherAmericasMember 2019-01-01 2019-03-31 0001613859 prah:OtherEuropeAfricaAndAsiaPacificMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 prah:EuropeAfricaAndAsiaPacificMember 2019-01-01 2019-03-31 0001613859 country:GB prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 country:NL 2020-01-01 2020-03-31 0001613859 prah:EuropeAfricaAndAsiaPacificMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 country:US prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 prah:EuropeAfricaAndAsiaPacificMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 country:GB 2020-01-01 2020-03-31 0001613859 country:GB prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 srt:AmericasMember 2020-01-01 2020-03-31 0001613859 country:GB prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 prah:OtherAmericasMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 prah:OtherAmericasMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 country:US 2020-01-01 2020-03-31 0001613859 country:US 2019-01-01 2019-03-31 0001613859 prah:EuropeAfricaAndAsiaPacificMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 country:NL prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 prah:OtherEuropeAfricaAndAsiaPacificMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 prah:OtherAmericasMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 country:GB 2019-01-01 2019-03-31 0001613859 srt:AmericasMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 prah:OtherAmericasMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 prah:EuropeAfricaAndAsiaPacificMember 2020-01-01 2020-03-31 0001613859 country:NL prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 country:GB prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 country:NL 2019-01-01 2019-03-31 0001613859 country:US prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 srt:AmericasMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 country:NL prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 prah:EuropeAfricaAndAsiaPacificMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 prah:OtherEuropeAfricaAndAsiaPacificMember 2020-01-01 2020-03-31 0001613859 prah:OtherAmericasMember 2020-01-01 2020-03-31 0001613859 country:US prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 srt:AmericasMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember 2019-01-01 2019-03-31 0001613859 us-gaap:MaterialReconcilingItemsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ReimbursableOutOfPocketCostsMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ReimbursableOutOfPocketCostsMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DirectCostsMember prah:ClinicalResearchMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ReimbursableOutOfPocketCostsMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DirectCostsMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DirectCostsMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DirectCostsMember prah:ClinicalResearchMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ReimbursableOutOfPocketCostsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DirectCostsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ReimbursableOutOfPocketCostsMember prah:DataSolutionsMember 2019-01-01 2019-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:DirectCostsMember prah:DataSolutionsMember 2020-01-01 2020-03-31 0001613859 us-gaap:OperatingSegmentsMember prah:ReimbursableOutOfPocketCostsMember 2019-01-01 2019-03-31 iso4217:USD xbrli:shares xbrli:pure prah:segment xbrli:shares iso4217:USD
Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended March 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                 to                .
 
Commission file number: 001-36732 
 
PRA Health Sciences, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
    
46-3640387
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
4130 ParkLake Avenue, Suite 400, Raleigh, NC 27612
(Address of principal executive offices) (Zip Code)
(919786-8200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class
 
Name of exchange on which registered
 
Trading symbol
Common Stock $0.01 par value
 
Nasdaq Global Select Market
 
PRAH
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No  
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
Large accelerated filer
 
Accelerated filer
 
 
 
 
 
 
 
 
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No  
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
     
Number of Shares Outstanding
Common Stock $0.01 par value
 
63,723,442
shares outstanding as of April 24, 2020
 



Table of Contents

PRA HEALTH SCIENCES, INC.
FORM 10-Q
FOR QUARTERLY PERIOD ENDED MARCH 31, 2020
TABLE OF CONTENTS
 
Item Number
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share amounts)
 
 
March 31,
 
December 31,
 
 
2020
 
2019
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
150,804

 
$
236,232

Restricted cash
 
36

 
38

Accounts receivable and unbilled services, net of allowance for credit losses of $2,603 at March 31, 2020
 
692,251

 
658,517

Other current assets
 
111,832

 
90,780

Total current assets
 
954,923

 
985,567

Fixed assets, net
 
184,899

 
180,716

Operating lease right-of-use assets
 
185,483

 
186,343

Goodwill
 
1,659,891

 
1,502,756

Intangible assets, net
 
646,290

 
638,577

Other assets
 
49,670

 
50,471

Total assets
 
$
3,681,156

 
$
3,544,430

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Current portion of borrowings under credit facilities
 
$

 
$
88,800

Current portion of long-term debt
 
25,000

 
25,000

Accounts payable
 
57,728

 
55,293

Accrued expenses and other current liabilities
 
372,327

 
304,799

Current portion of operating lease liabilities
 
37,347

 
37,603

Advanced billings
 
534,233

 
505,714

Total current liabilities
 
1,026,635

 
1,017,209

Long-term debt, net
 
1,267,973

 
1,140,178

Long-term portion of operating lease liabilities
 
171,277

 
172,370

Deferred tax liabilities
 
60,994

 
78,511

Other long-term liabilities
 
46,860

 
46,171

Total liabilities
 
2,573,739

 
2,454,439

Commitments and contingencies (Note 13)
 

 

Stockholders' equity:
 
 
 
 
Preferred stock (100,000,000 authorized shares; $0.01 par value)
 
 
 
 
Issued and outstanding -- none
 

 

Common stock (1,000,000,000 authorized shares; $0.01 par value)
 
 
 
 
Issued and outstanding -- 63,625,742 and 63,491,550 at March 31, 2020 and December 31, 2019, respectively
 
636

 
635

Additional paid-in capital
 
1,027,099

 
1,006,182

Accumulated other comprehensive loss
 
(204,260
)
 
(160,108
)
Retained earnings
 
283,942

 
243,282

Total stockholders' equity
 
1,107,417

 
1,089,991

Total liabilities and stockholders' equity
 
$
3,681,156

 
$
3,544,430


The accompanying notes are an integral part of the consolidated condensed financial statements.

3

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Revenue
 
$
783,708

 
$
722,022

Operating expenses:
 
 
 
 
Direct costs (exclusive of depreciation and amortization)
 
403,862

 
377,888

Reimbursable expenses
 
176,841

 
140,620

Selling, general and administrative expenses
 
106,957

 
97,095

Transaction-related costs
 
609

 

Depreciation and amortization expense
 
32,278

 
27,608

(Gain) loss on disposal of fixed assets, net
 
(19
)
 
88

Income from operations
 
63,180

 
78,723

Interest expense, net
 
(13,487
)
 
(12,369
)
Foreign currency gains, net
 
7,842

 
6,128

Other expense, net
 
(4
)
 
(88
)
Income before income taxes
 
57,531

 
72,394

Provision for income taxes
 
16,871

 
28,138

Net income
 
40,660

 
44,256

Net income attributable to noncontrolling interest
 

 
(172
)
Net income attributable to PRA Health Sciences, Inc.
 
$
40,660

 
$
44,084

Net income per share attributable to common stockholders:
 
 
 
 
Basic
 
$
0.65

 
$
0.68

Diluted
 
$
0.63

 
$
0.66

Weighted average common shares outstanding:
 
 
 
 
Basic
 
62,933

 
65,192

Diluted
 
64,339

 
66,847

 
The accompanying notes are an integral part of the consolidated condensed financial statements.


4

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
(in thousands)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net income
 
$
40,660

 
$
44,256

Other comprehensive loss:
 
 
 
 
Foreign currency translation adjustments, net of income tax of $4,041 and $0
 
(42,756
)
 
143

Unrealized losses on derivative instruments, net of income tax of $(1,157) and $(514)
 
(3,377
)
 
(1,433
)
Reclassification adjustments:
 
 
 
 
Losses on derivatives included in net income, net of income taxes of $679 and $308
 
1,981

 
861

Comprehensive (loss) income
 
(3,492
)
 
43,827

Comprehensive income attributable to noncontrolling interest
 

 
(127
)
Comprehensive (loss) income attributable to PRA Health Sciences, Inc.
 
$
(3,492
)
 
$
43,700

 
The accompanying notes are an integral part of the consolidated condensed financial statements.


5

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands)
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive
Loss (Note 15)
 
Retained
Earnings
 
Non-controlling Interest
 
 
 
Common Stock
 
Additional
Paid-in
Capital
 
 
 
 
 
 
Shares
 
 Amount
 
 
 
 
 
Total
Balance at December 31, 2019
63,492

 
$
635

 
$
1,006,182

 
$
(160,108
)
 
$
243,282

 
$

 
$
1,089,991

Exercise of common stock options and stock award distribution
90

 
1

 
2,907

 

 

 

 
2,908

Stock-based compensation

 

 
15,425

 

 

 

 
15,425

Net income

 

 

 

 
40,660

 

 
40,660

Issuance of restricted stock for acquisition
44

 

 
2,585

 

 

 

 
2,585

Other comprehensive loss, net of tax

 

 

 
(44,152
)
 

 

 
(44,152
)
Balance at March 31, 2020
63,626

 
$
636

 
$
1,027,099

 
$
(204,260
)
 
$
283,942

 
$

 
$
1,107,417


 
 
 
 
 
 
 
Accumulated
Other Comprehensive
Loss (Note 15)
 
Retained
Earnings
 
Non-controlling Interest
 
 
 
Common Stock
 
Additional
Paid-in
Capital
 
 
 
 
 
 
Shares
 
 Amount
 
 
 
 
 
Total
Balance at December 31, 2018
65,395

 
$
654

 
$
960,535

 
$
(170,659
)
 
$
254,500

 
$
6,390

 
$
1,051,420

Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income

 

 

 
1,419

 
(1,419
)
 

 

Balance at January 1, 2019
65,395

 
654

 
960,535

 
(169,240
)
 
253,081

 
6,390

 
1,051,420

Exercise of common stock options and employee stock purchase plan purchases
219

 
2

 
10,668

 

 

 

 
10,670

Stock-based compensation
33

 

 
9,247

 

 

 

 
9,247

Net income

 

 

 

 
44,084

 
172

 
44,256

Other comprehensive loss, net of tax

 

 

 
(384
)
 

 
(45
)
 
(429
)
Balance at March 31, 2019
65,647

 
$
656

 
$
980,450

 
$
(169,624
)
 
$
297,165

 
$
6,517

 
$
1,115,164

 
The accompanying notes are an integral part of the consolidated condensed financial statements.

6

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Net income
 
$
40,660

 
$
44,256

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization expense
 
32,278

 
27,608

Amortization of debt issuance costs
 
421

 
448

Amortization of terminated interest rate swaps
 
1,565

 
1,631

Stock-based compensation expense
 
15,425

 
9,247

Change in fair value of acquisition-related contingent consideration
 
574

 

Unrealized foreign currency gains, net
 
(4,788
)
 
(7,967
)
Deferred income tax benefit
 
(18,524
)
 
(10,521
)
Other reconciling items
 
135

 
(78
)
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
 
 
 
 
Accounts receivable, unbilled services and advanced billings
 
(7,600
)
 
(36,848
)
Other operating assets and liabilities
 
436

 
13,250

Net cash provided by operating activities
 
60,582

 
41,026

Cash flows from investing activities:
 
 
 
 
Purchase of fixed assets
 
(21,460
)
 
(19,895
)
Proceeds from the sale of fixed assets
 
26

 

(Cash paid) proceeds received for interest on interest rate swap, net
 
(780
)
 
416

Distributions from unconsolidated joint ventures
 

 
418

Acquisition of Care Innovations, Inc., net of cash acquired
 
(159,078
)
 

Net cash used in investing activities
 
(181,292
)
 
(19,061
)
Cash flows from financing activities:
 
 
 
 
Borrowings on line of credit
 
100,000

 

Repayments of line of credit
 
(55,000
)
 

Repayments of long-term debt
 
(6,250
)
 

Proceeds from stock issued under employee stock purchase plan and stock option exercises
 
2,908

 
10,419

Payments for debt issuance costs
 
(470
)
 

Net cash provided by financing activities
 
41,188

 
10,419

Effects of foreign exchange changes on cash, cash equivalents, and restricted cash
 
(5,908
)
 
506

Change in cash, cash equivalents, and restricted cash
 
(85,430
)
 
32,890

Cash, cash equivalents, and restricted cash, beginning of period
 
236,270

 
144,709

Cash, cash equivalents, and restricted cash, end of period
 
$
150,840

 
$
177,599


 The accompanying notes are an integral part of the consolidated condensed financial statements.


7

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
 
(1) Basis of Presentation
 
The Company
 
PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of product development and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting.
 
Unaudited Interim Financial Information
 
The interim consolidated condensed financial statements include the accounts of the Company and variable interest entities where the Company is the primary beneficiary. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
 
The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Recently Implemented Accounting Pronouncements
 
In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2020 and the application of ASU 2016-13 did not have a material impact on the Company's consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this standard effective January 1, 2020 and the application of ASU 2017-04 did not have a material impact on the Company's consolidated condensed financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The Company adopted this standard effective January 1, 2020 and the application of ASU 2018-15 did not have a material impact on the Company's consolidated condensed financial statements.
 
Recently Issued Accounting Pronouncements
 
In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes". The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the

8

Table of Contents

methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for the reporting period beginning after December 15, 2020, and the interim periods therein. The Company is currently assessing the potential impact of ASU 2019-12 on the Company's consolidated financial statements.

(2) Significant Accounting Policies
Significant accounting policies are detailed in "Note 3: Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2019.
Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
 
$
150,804

 
$
177,142

 
$
236,232

 
$
144,221

Restricted cash
 
36

 
457

 
38

 
488

Total cash, cash equivalents, and restricted cash
 
$
150,840

 
$
177,599

 
$
236,270

 
$
144,709



(3) Business Combinations

Care Innovations, Inc.
    
In January 2020, the Company acquired all of the outstanding equity interests of Care Innovations, Inc., or Care Innovations, an entity that provides digital health services. The purchase price was $208.6 million, which consisted of $161.5 million of cash, $2.6 million of restricted stock and $44.5 million of estimated contingent consideration in the form of a potential earn-out payment. The earn-out payment, which is capped at $50.0 million, is contingent on the achievement of two 2020 financial targets. The fair value of the contingent consideration was based on significant inputs not observed in the market and thus represented a Level 3 fair value measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments. will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to expand its ability to serve customers with technologies that deliver enhancements to the Company’s mobile health platform and provide expanded remote patient monitoring support to expand the Company's ability to deliver virtual and decentralized trials.

The acquisition of Care Innovations was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The consideration paid was allocated as follows: (i) $33.5 million to definite-lived intangible assets primarily consisting of developed technology with a weighted average amortization period of five years, (ii) $174.3 million to goodwill and (iii) $0.8 million to other net assets. The acquisition costs are included in transaction-related costs in the consolidated condensed statement of operations and were immaterial.
 
Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of September 2020, and in any case, no later than one year from the acquisition date in accordance with GAAP.

The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Care Innovations as they did not have a material effect on the Company’s consolidated results.


9

Table of Contents

(4) 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.
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 amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

Recurring Fair Value Measurements
 
The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of March 31, 2020 (in thousands):
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 
$

 
$

 
$
45,074

 
$
45,074

Interest rate swaps
 

 
6,416

 

 
6,416

Total
 
$

 
$
6,416

 
$
45,074

 
$
51,490


 
The Company values contingent consideration using models that include significant unobservable Level 3 inputs, such as projected market performance over the earnout period along with estimates for market volatility and the discount rate applicable to potential cash payments. Interest rate swaps are measured at fair value using a market approach valuation technique. The valuation is based on an estimate of the net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation.

The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for three months ended March 31, 2020 (in thousands).

 
 
Contingent Consideration
Balance at December 31, 2019
 
$

Initial estimate of Care Innovations contingent consideration
 
44,500

Change in fair value recognized in transaction-related costs
 
574

Balance at March 31, 2020
 
$
45,074



The $45.1 million balance at March 31, 2020, which was valued using a Monte Carlo simulation, relates to the earn-out payments to Care Innovations and is based on the achievement of certain financial targets. The primary assumptions that impact the earn-out valuation are the projected revenues and adjusted earnings before interest, taxes, depreciation and amortization of the acquired business, which are unobservable inputs into the valuation model. The liability is recorded in accrued expenses and other current liabilities in the consolidated condensed balance sheet. Refer to "Note 3 - Business Combinations" for additional information regarding the Care Innovations acquisition.

10

Table of Contents


Non-recurring Fair Value Measurements
 
Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets that are tested for impairment when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets that are tested for impairment annually on October 1 or when a triggering event occurs.
 
As of March 31, 2020, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $2,306.2 million and are identified as Level 3 assets. These assets are comprised of goodwill of $1,659.9 million and identifiable intangible assets, net of $646.3 million.
 
Refer to "Note 9 - Revolving Credit Facilities and Long-Term Debt" for additional information regarding the fair value of long-term debt balances.

(5) Concentration of Credit Risk and Expected Credit Losses
 
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, unbilled services, and derivatives. As of March 31, 2020, substantially all of the Company’s cash and cash equivalents and derivatives were held in or invested with large financial institutions.

Accounts receivable primarily include amounts due from pharmaceutical and biotechnology companies under credit terms that generally do not extend beyond 90 days. The Company maintains an allowance for expected credit losses resulting from the inability of its customers to make required payments. The Company performs credit reviews of each customer, monitors collections and payments from customers, and determines the allowance based upon historical experience and specific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debt expense.

Accounts receivable and unbilled services from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled services at the respective dates were as follows:
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Customer A
 
11.0
%
 
11.2
%
Customer B
 
10.3
%
 
15.6
%
 

Revenue from individual customers greater than 10% of consolidated revenue in the respective periods was as follows:
 
 
Three Months Ended March 31,
 
 
2020

2019
Customer C
 
10.6
%
 
*

* Less than 10%

(6) Accounts Receivable, Unbilled Services and Advanced Billings

Accounts receivable and unbilled services were as follows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Accounts receivable
 
$
515,429

 
$
512,061

Unbilled services
 
179,425

 
149,194

Total accounts receivable and unbilled services
 
694,854

 
661,255

Less allowance for credit losses
 
(2,603
)
 
(2,738
)
Total accounts receivable and unbilled services, net
 
$
692,251

 
$
658,517




11

Table of Contents

Unbilled services as of March 31, 2020 and December 31, 2019 includes $78.0 million and $76.0 million, respectively, of contract assets where the Company’s right to bill is conditioned on criteria other than the passage of time. Impairment losses on contract assets were immaterial in the three months ended March 31, 2020 and 2019.

Advanced billings were as follows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Advanced billings
 
$
534,233

 
$
505,714



The $28.5 million increase in advanced billings from December 31, 2019 to March 31, 2020 was primarily due to the timing of customer payments. During the three months ended March 31, 2020 and 2019, the Company recognized revenue of $307.7 million and $261.1 million related to advanced billings recorded as of January 1, 2020 and 2019, respectively.

Performance Obligations
Revenue recognized for the three months ended March 31, 2020 and 2019 from reimbursable expenses and services completed in prior periods was $7.7 million and $26.5 million, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and from contract modifications on long-term fixed price contracts executed in the current period, which results in changes to the transaction price.

The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year. These contracts are short in duration and revenue recognition generally follows the delivery of the promised services. The total transaction price for the undelivered performance obligation on contracts with an original initial contract term greater than one year is $5.1 billion as of March 31, 2020. This amount includes reimbursement revenue. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from one to five years.


(7) Leases

The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining lease terms of one year to 20 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments to the base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s sublease income is immaterial.

The components of lease cost were as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Lease cost:
 
 
 
   Operating lease cost
$
11,164

 
$
9,469

   Short-term lease cost
570

 
536

   Variable lease cost
1,968

 
1,684

   Lease income
(47
)
 
(39
)
   Net lease cost
$
13,655

 
$
11,650

    
Supplemental cash flow information related to leases was as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows
$
11,674

 
$
9,807

Right-of-use assets obtained in exchange for lease obligations
10,865

 
846


12

Table of Contents


Supplemental balance sheet information related to leases was as follows:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
Weighted average remaining lease term
 
8.1 years
 
7.7 years
Weighted average discount rate
 
4.2%
 
4.3%


Maturities of operating lease liabilities were as follows as of March 31, 2020 (in thousands):
2020 (remaining)
 
$
32,779

2021
 
43,898

2022
 
35,756

2023
 
28,109

2024
 
19,512

Thereafter
 
86,220

Total lease payments
 
246,274

Less imputed interest
 
(37,650
)
Total
 
$
208,624



As of March 31, 2020, the Company has an additional non-cancelable operating lease that has not yet commenced with future lease payments totaling $0.4 million. This lease will commence in April 2020 with an initial lease term of five years.

(8) Goodwill and Intangible Assets
 
Goodwill
 
The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):
 
 
Clinical Research
 
Data Solutions
 
Consolidated
Balance at December 31, 2019
 
$
1,025,897

 
$
476,859

 
$
1,502,756

Acquisition of Care Innovations, Inc.
 
174,334

 

 
174,334

Currency translation
 
(17,199
)
 

 
(17,199
)
Balance at March 31, 2020
 
$
1,183,032

 
$
476,859

 
$
1,659,891


 
There are no accumulated impairment charges as of March 31, 2020 and December 31, 2019.

Goodwill recorded in connection with the acquisition of Care Innovations was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of Care Innovations and expected synergies with the Company’s existing operations.


13

Table of Contents


Intangible Assets
 
Intangible assets consist of the following (in thousands):
 
March 31, 2020
 
December 31, 2019
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
Customer relationships
$
552,840

 
$
(143,610
)
 
$
409,230

 
$
559,768

 
$
(137,728
)
 
$
422,040

Trade names (finite-lived)
29,875

 
(17,318
)
 
12,557

 
28,536

 
(16,582
)
 
11,954

Developed technology and other intangibles
74,174

 
(38,318
)
 
35,856

 
44,474

 
(35,654
)
 
8,820

Database
137,100

 
(66,463
)

70,637

 
137,100

 
(59,347
)
 
77,753

Total finite-lived intangible assets
793,989

 
(265,709
)
 
528,280

 
769,878

 
(249,311
)
 
520,567

Trade names (indefinite-lived)
118,010

 

 
118,010

 
118,010

 

 
118,010

Total intangible assets
$
911,999

 
$
(265,709
)
 
$
646,290

 
$
887,888

 
$
(249,311
)
 
$
638,577


 
Amortization expense was $19.1 million and $17.2 million for the three months ended March 31, 2020 and 2019, respectively.
 
The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):
2020 (remaining)
$
56,957

2021
70,376

2022
55,763

2023
43,561

2024
34,375

2025 and thereafter
267,248

Total
$
528,280


 
(9) Revolving Credit Facilities and Long-Term Debt
 
The Company had the following debt outstanding as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
 
Principal amount
 
 
 
Interest rate as of
 
March 31,
 
December 31,
 
 
 
March 31, 2020
 
2020
 
2019
 
Maturity Date
Senior Secured Credit Facility:
 
 
 
 
 
 
 
First Lien Term Loan
2.52
%
 
$
993,750

 
$
1,000,000

 
October 2024
Revolver
2.52
%
 
133,800

 
88,800

 
October 2024
Accounts receivable financing agreement
3.07
%
 
170,000

 
170,000

 
May 2021
Total debt
 
 
1,297,550

 
1,258,800

 
 
Less current portion of Revolver(1)
 
 

 
(88,800
)
 
 
Less current portion of long-term debt
 
 
(25,000
)
 
(25,000
)
 
 
Total long-term debt
 
 
1,272,550

 
1,145,000

 
 
Less debt issuance costs
 
 
(4,577
)
 
(4,822
)
 
 
Total long-term debt, net
 
 
$
1,267,973

 
$
1,140,178

 
 


(1) The Company assesses its ability and intent to repay the outstanding borrowings on the Revolver at the end of each reporting period in order to determine the proper balance sheet classification. Outstanding borrowings on the Revolver that the Company intends to repay in less than 12 months are classified as current. 




14

Table of Contents

As of March 31, 2020, the contractual maturities of the Company's debt obligations were as follows (in thousands):
Current maturities of long-term debt:
 
2020 (remaining)
$
18,750

2021
195,000

2022
25,000

2023
25,000

2024 and thereafter
1,033,800

Total
$
1,297,550


 
The Company's primary financing arrangements are its senior secured credit facility (the "Senior Secured Credit Facility"), which consists of a first lien term loan ("First Lien Term Loan") and a revolving credit facility (the "Revolver"), and its Accounts Receivable Financing Agreement.

Senior Secured Credit Facility
 
The overall capacity of the Senior Secured Credit Facility is $1.75 billion (consisting of a $1.0 billion First Lien Term Loan and a $750.0 million Revolver). As collateral for borrowings under the Senior Secured Credit Facility, the Company granted a pledge on primarily all of its assets, the interests of wholly-owned U.S. restricted subsidiaries, and a portion of the interests of wholly-owned non-U.S. restricted subsidiaries. The Company is subject to certain financial covenants, which require the Company to maintain certain debt-to-EBITDA and interest expense-to-EBITDA ratios. The Senior Secured Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to create any liens, make investments and acquisitions, incur or guarantee additional indebtedness,  enter into mergers or consolidations and other fundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinated debt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensome agreements with negative pledge clauses, and make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under the Senior Secured Credit Facilities, subject to compliance with applicable law, as of March 31, 2020 and December 31, 2019, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Senior Secured Credit Facility also contains customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.0% to 2.0%, in the case of LIBOR loans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of one-, two-, three- or six-month base interest rates. The credit agreement governing the Senior Secured Credit Facility includes provisions that allow the agreement to be amended to replace the LIBOR rate with a comparable or successor floating rate.

The First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installments beginning March 31, 2020 through September 30, 2024, with the remaining balance due at maturity. There are no voluntary prepayment penalties and prepayment is required upon the issuance of certain debt or asset sales or other events.

The Revolver requires the Company to pay to the lenders a commitment fee for unused commitments of 0.15% to 0.35% based on the Company’s debt-to-EBITDA ratio. Principal amounts are due and payable in full at maturity. In addition, at March 31, 2020 and December 31, 2019, the Company had $5.2 million and $5.4 million, respectively, in letters of credit outstanding, which are secured by the Revolver.
 
Accounts Receivable Financing Agreement
 
Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Company may prepay loans upon one business day's prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice.
 
The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions that provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.
 

15

Table of Contents

As of December 31, 2019, there was $30.0 million of remaining capacity available under the accounts receivable financing agreement. However, as of March 31, 2020, borrowing capacity was limited to $13.2 million due to an increase in the Company's non-U.S. dollar receivables, which are excluded from the calculation of the borrowing base to the extent they exceed 2.5% of the eligible accounts receivable balance.
 
Fair Value of Debt
 
The estimated fair value of the Company’s debt and outstanding borrowings under its revolving credit facilities was $1,292.6 million and $1,255.8 million at March 31, 2020 and December 31, 2019, respectively. The fair values of the term loans, borrowings under credit facilities, and accounts receivable financing agreement were determined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.

(10) Stockholders’ Equity
 
Authorized Shares
 
The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01.

Share Repurchase Program

On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing the repurchase of up to $500.0 million of the Company's common stock in open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amount of its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31, 2021.

As of March 31, 2020, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program.

(11) Stock-Based Compensation
 
Stock Option and RSA/RSU Activity

The 2018 Stock Incentive Plan, or the 2018 Plan, was approved by stockholders at the annual meeting on May 31, 2018. The 2018 Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws. The 2018 Plan authorized the issuance of 2,000,000 shares of common stock plus all shares that remained available under the prior plan on May 31, 2018.

The Company granted 23,300 service-based options and 53,702 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $0.8 million and $5.9 million, respectively, during the three months ended March 31, 2020.
 
Aggregated information regarding the Company’s option plans is summarized below:
 
 
Options
 
Wtd. Average Exercise Price
 
Wtd. Average Remaining Contractual Life (in years)
 
Intrinsic Value (millions)
Outstanding at December 31, 2019
 
4,861,606

 
$
72.45

 
7.5
 
$
188.3

Granted
 
23,300

 
99.69

 
 
 
 
Exercised
 
(74,940
)
 
38.80

 
 
 
 
Expired or forfeited
 
(83,775
)
 
92.92

 
 
 
 
Outstanding at March 31, 2020
 
4,726,191

 
$
72.75

 
7.3
 
$
85.1

Exercisable at March 31, 2020
 
1,892,291

 
$
45.52

 
5.6
 
$
77.2


 

16

Table of Contents

The Company’s RSAs/RSUs activity in 2020 is as follows:
 
 
Awards
 
Wtd. Average Grant-Date Fair Value
 
Intrinsic Value (millions)
Unvested December 31, 2019
 
632,436

 
$
91.07

 
$
70.3

Granted
 
53,702

 
109.04

 
 

Forfeited
 
(5,700
)
 
95.94

 
 

Vested
 
(86,000
)
 
58.95

 
 
Unvested March 31, 2020
 
594,438

 
$
97.30

 
$
49.4


 
Employee Stock Purchase Plan
 
In April 2017, the Board approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of any offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ESPP will generally be in six month increments, with the administrator of the ESPP having the right to establish different offering periods. The Company recognized stock-based compensation expense of $1.1 million associated with the ESPP during the three months ended March 31, 2020 and 2019. As of March 31, 2020, there have been 301,975 shares issued and 2,698,025 shares reserved for future issuance under the ESPP.

Stock-based Compensation Expense

Stock-based compensation expense related to employee stock plans are summarized below (in thousands):
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Direct costs
 
$
3,853

 
$
2,928

Selling, general and administrative
 
11,572

 
6,319

Total stock-based compensation expense
 
$
15,425

 
$
9,247


    

(12) Income Taxes
 
The Company’s effective income tax rate was 29.3% and 38.9% for the three months ended March 31, 2020 and 2019, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 21% for the three months ended March 31, 2020 is primarily due to (i) geographic distribution of global pre-tax income (ii) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, and (iii) state income taxes. The effective tax rate for the three months ended March 31, 2019 included the effect of base erosion anti-abuse tax, or BEAT. No provision for BEAT is included in the effective rate for the three months ended March 31, 2020.

Significant judgment is required related to the application of the recent U.S. tax reform, or the Act, particularly with respect to GILTI and BEAT provisions. If changes occur in the Company’s tax structure, the structure of its arrangements, interpretations, or regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision.

GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities. During the three months ended March 31, 2020, there was no significant change in uncertain tax positions.

(13) Commitments and Contingencies
 

17

Table of Contents

Legal Proceedings
 
The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company.


(14) Derivatives
 
The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk arising from movement in market interest rates. Accordingly, the Company has instituted an interest rate hedging program that uses interest rate swaps designated as cash flow hedges to mitigate interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.
 
The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
March 31, 2020
 
December 31, 2019
Balance Sheet Classification
 
Notional
amount
 
Asset/(Liability)
 
Notional
amount
 
Asset/(Liability)
Accrued expenses and other current liabilities
 
$
625,000

 
$
(6,416
)
 
$
625,000

 
$
(2,976
)
 
 
$
625,000

 
$
(6,416
)
 
$
625,000

 
$
(2,976
)


The Company records the change in the fair value of derivatives designated as hedging instruments under ASC 815 to accumulated other comprehensive loss in the Company's consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings, including the associated tax impact, when the hedged item affects earnings or is no longer expected to occur. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period.
 
The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive (loss) income for the three months ended March 31, 2020 and 2019 (in thousands):
 
 
Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)
 
2020
 
2019
Amount of pre-tax loss recognized in other comprehensive (loss) income
 
$
(4,534
)
 
$
(1,947
)
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net
 
(2,660
)
 
(1,169
)

 
The Company expects that $9.4 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.

The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three months ended March 31, 2020 and 2019, respectively, is as follows (in thousands):
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Interest expense, net
 
$
(13,487
)
 
$
(12,369
)
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
 
 
 
 
Loss reclassified from accumulated other comprehensive loss into interest expense, net
 
(2,660
)
 
(1,169
)


 

18

Table of Contents

(15) Accumulated Other Comprehensive Loss
 
Below is a summary of the components of accumulated other comprehensive loss (in thousands):
 
 
Foreign
Currency
Translation, Net of Tax
 
Derivative
Instruments, Net of Tax
 
Total
Balance at December 31, 2019
 
$
(149,342
)
 
$
(10,766
)
 
$
(160,108
)
Other comprehensive loss before reclassifications
 
(42,756
)
 
(3,377
)
 
(46,133
)
Reclassification adjustments
 

 
1,981

 
1,981

Balance at March 31, 2020
 
$
(192,098
)
 
$
(12,162
)
 
$
(204,260
)

 
Foreign Currency Translation

The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound (GBP), Euro (EUR), Canadian dollar (CAD) and Russian ruble (RUB) exchange rates against the U.S. dollar. The U.S. dollar strengthened by 6.2%, 1.9%, 8.2%, and 21.2% versus the GBP, EUR, CAD, and RUB, respectively, between December 31, 2019 and March 31, 2020. The movement in the GBP, EUR, CAD and RUB contributed to a $17.1 million, $6.6 million, $3.8 million, and $6.9 million increase in other comprehensive loss, respectively, during the three months ended March 31, 2020.

Derivative Instruments

See "Note 14 - Derivatives" for further information on changes to accumulated other comprehensive loss related to the derivative instruments.

(16) Net Income Per Share
 
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicable period. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plans.

The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Basic weighted average common shares outstanding
 
62,933

 
65,192

Effect of dilutive stock options and other awards under share-based compensation programs
 
1,406

 
1,655

Diluted weighted average common shares outstanding
 
64,339

 
66,847

 
 
 
 
 
Anti-dilutive shares
 
2,399

 
1,523


 
The dilutive and anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, and unrecognized compensation expense for outstanding awards.

(17) Segments

The Company is managed through two reportable segments: (i) the Clinical Research segment and (ii) the Data Solutions segment. In accordance with the provisions of ASC 280, "Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company.


19

Table of Contents

Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services.

Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily to the Company’s life science customers.

The Company's chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. 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 (in thousands):
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Clinical Research
 
Data Solutions
 
Total
 
Clinical Research
 
Data Solutions
 
Total
Revenue
 
$
726,135

 
$
57,573

 
$
783,708

 
$
666,631

 
$
55,391

 
$
722,022

 
 
 
 
 
 
 
 
 
 
 
 
 
Direct costs (exclusive of depreciation and amortization)
 
358,351

 
45,511

 
403,862

 
337,515

 
40,373

 
377,888

Reimbursable expenses
 
176,841

 

 
176,841

 
140,620

 

 
140,620

Segment profit
 
190,943

 
12,062

 
203,005

 
188,496

 
15,018

 
203,514

Less expenses not allocated to segments:
 
 
 
 
 

 
 
 
 
 

Selling, general and administrative expenses
 
 
 
 
 
106,957

 
 
 
 
 
97,095

Transaction-related costs
 
 
 
 
 
609

 
 
 
 
 

Depreciation and amortization expense
 
 
 
 
 
32,278

 
 
 
 
 
27,608

(Gain) loss on disposal of fixed assets, net
 
 
 
 
 
(19
)
 
 
 
 
 
88

Income from operations
 
 
 
 
 
63,180

 
 
 
 
 
78,723

Interest expense, net
 
 
 
 
 
(13,487
)
 
 
 
 
 
(12,369
)
Foreign currency gains, net
 
 
 
 
 
7,842

 
 
 
 
 
6,128

Other expense, net
 
 
 
 
 
(4
)
 
 
 
 
 
(88
)
Income before income taxes
 
 
 
 
 
$
57,531

 
 
 
 
 
$
72,394



Revenue by geographic location for each segment is as follows (in thousands):
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Clinical Research
 
Data Solutions
 
Total
 
Clinical Research
 
Data Solutions
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Americas:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
466,863

 
$
57,573

 
$
524,436

 
$
442,969

 
$
55,391

 
$
498,360

Other
 
10,007

 

 
10,007

 
12,573

 

 
12,573

Total Americas
 
476,870

 
57,573

 
534,443

 
455,542

 
55,391

 
510,933

Europe, Africa, and Asia-Pacific
 


 


 


 


 


 


United Kingdom
 
199,764

 

 
199,764

 
171,238

 

 
171,238

Netherlands
 
28,067

 

 
28,067

 
24,367

 

 
24,367

Other
 
21,434

 

 
21,434

 
15,484

 

 
15,484

Total Europe, Africa, and Asia-Pacific
 
249,265

 

 
249,265

 
211,089

 

 
211,089

Total revenue
 
$
726,135

 
$
57,573

 
$
783,708

 
$
666,631

 
$
55,391

 
$
722,022





20

Table of Contents

(18) Overview of the Impact of the COVID-19 Pandemic

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, during the second half of March 2020, the Company experienced disruptions in its global operations as the COVID-19 virus continued to spread and impact countries in which the Company operates. These disruptions are expected to have a more significant adverse impact on the Company's operating results in the second quarter of 2020, and the full extent of the COVID-19 outbreak in 2020 and its impact on its operations is uncertain. A prolonged outbreak could continue to interrupt the operations of the Company and its customers and suppliers.



21

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, or the Annual Report, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
 
We use the terms “we,” “us,” “our,” or the "Company” in this report to refer to PRA Health Sciences, Inc. and its subsidiaries.
 
Overview
 
We are one of the world’s leading global contract research organizations, or CROs, by revenue, providing outsourced clinical development services to the biotechnology and pharmaceutical industries. We believe we are one of a select group of CROs with the expertise and capability to conduct clinical trials across major therapeutic areas on a global basis. Our therapeutic expertise includes areas that are among the largest in pharmaceutical development, and we focus in particular on oncology, immunology, central nervous system inflammation, respiratory, cardiometabolic and infectious diseases. We believe that we further differentiate ourselves from our competitors through our investments in medical informatics and clinical technologies designed to enhance efficiencies, improve study predictability and provide better transparency for our clients throughout their clinical development processes. Our Data Solutions segment allows us to better serve our clients across their entire product lifecycle by (i) improving clinical trial design, recruitment, and execution; (ii) creating real-world data solutions based on the use of medicines by actual patients in normal situations; and (iii) increasing the efficiency of healthcare companies' commercial organizations through enhanced analytics and outsourcing services.  

Overview of the Impact of COVID-19 to our Business

The recent outbreak of novel coronavirus COVID-19, or COVID-19, which surfaced in Wuhan, China, in December 2019, has been declared a pandemic and has spread to multiple global regions, including the United States and Europe. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses around the world. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, have placed significant restrictions on travel and many businesses have announced extended closures. While these actions vary by locale, they have generally been expanding in scope.

The disruptions caused by COVID-19 did not have a material impact on our financial results to start the year; however, as the global spread of the virus began to accelerate late in the first quarter of 2020, we began to experience an adverse impact to our financial results. We believe that we will continue to experience disruptions to our business due to the COVID-19 pandemic through the end of the second quarter and anticipate that the disruption caused by COVID-19 will likely extend into the second half of 2020.

As the COVID-19 pandemic continues to evolve rapidly, we cannot at this time accurately predict the effects of these conditions on our operations. Uncertainties remain as to the ultimate geographic spread of the virus and the severity of the disease, the duration of the outbreak, and the length and scope of the travel restrictions and business closures imposed by the governments of impacted countries. The COVID-19 outbreak has had, and a continuing outbreak or future outbreaks may have, several important impacts on our business:

Workforce: In response to the outbreak and business disruption, first and foremost, we have prioritized the health and safety of our employees and we have closed the majority of our physical office locations worldwide. However, most of our workforce is able to work remotely in an effective way.
Backlog: We have not experienced any material COVID-19 related trial cancellations. However, due to travel restrictions put in place as a result of COVID-19, business development activity began to slow at the end of the quarter, with bid-defense meeting postponements and delays in study award decision-making. This has had an impact on new business awards in both the Clinical Research and Data Solutions segments, leading to a decrease in gross new business awards in the first quarter of 2020 compared to the prior year period as disclosed below.
Clinical Research segment: During March 2020, we began to experience global site closures, which has led to a decline in site-based monitoring. We have been able to implement remote monitoring activities through the use of our technology platforms in an effort to mitigate the impact of these site closures. Limitations on

22

Table of Contents

travel and business closures recommended by federal, state, and local governments, could, among other things, impact our ability to enroll patients in clinical trials, recruit clinical site investigators, and obtain timely approvals from local regulatory authorities.
Data Solutions segment: Our Data Solutions segment is relatively more insulated from the effects of the virus, due to its high proportion of recurring license revenue. However, businesses in this segment that rely on face-to-face interactions or are dependent on in-person gatherings, events or conferences may experience significant disruption.
Mitigation strategies: In light of the current situation, we have initiated proactive cost management strategies. These include, among other things, hiring restrictions, reductions in third-party costs and certain compensation adjustments. We have also implemented proactive cash conservation initiatives, including delaying some capital expenditures and halting voluntary debt repayments.
Liquidity position: We believe that we have a strong liquidity position, which includes cash on hand and access to our revolving credit facility. We are currently subject to two debt covenants in our Senior Secured Credit Facility:
 
 
Requirement:
 
As of March 31, 2020
Total indebtedness to EBITDA
 
≤ 4.25x
 
  1.87x
Interest expense to EBITDA
 
≥ 3.00x
 
11.68x
    
We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

Coronavirus Aid, Relief, and Economic Security Act
    
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. The CARES Act is an approximate $2 trillion emergency economic stimulus package passed in response to the coronavirus outbreak. The CARES Act includes broad sweeping provisions including direct financial assistance to Americans in the form of one-time payments to individuals; aid to small businesses in the form of loans and grants; efforts to stabilize the U.S. economy and keep Americans employed in general; and support for healthcare professionals, patients and hospitals. Also included in the CARES Act are numerous tax provisions including, but not limited to, certain payroll tax benefits, changes to the net operating loss rules, and the business interest expense deduction rules under Code Section 163(j). Due to the recent enactment of this legislation, there is a high degree of uncertainty around its implementation and we continue to assess the potential impacts of this legislation on our business, results of operations, financial condition and cash flows. There can be no assurance that we will receive any funding under the CARES Act.

How We Assess the Performance of Our Business
 
The Company is managed through two reportable segments: (i) the Clinical Research segment; and (ii) the Data Solutions segment. Our chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. In addition to our financial measures in conformity with U.S. generally accepted accounting principles, or GAAP, including revenue, costs and expenses and other measures discussed below, we review various financial and operational metrics. For our Clinical Research segment, we review new business awards, cancellations, and backlog.
 
Our gross new business awards for our Clinical Research segment for the three months ended March 31, 2020 and 2019 were $657.9 million and $747.6 million, respectively. New business awards arise when a client selects us to execute its trial and is documented by written or electronic correspondence, or for our Strategic Solutions offering when the amount of revenue expected to be recognized is measurable. The number of new business awards can vary significantly from year to year, and awards can have terms ranging from several months to several years. For our Strategic Solutions offering, the value of a new business award is the anticipated revenue to be recognized in the corresponding quarter of the next fiscal year. For the remainder of our Clinical Research segment, the value of a new award is the anticipated revenue over the life of the contract, which does not include reimbursable expenses.
 
In the normal course of business, we experience contract cancellations, which are reflected as cancellations when the client provides us with written or electronic correspondence that the work should cease. During the three months ended March

23

Table of Contents

31, 2020 and 2019, we had $53.2 million and $83.0 million, respectively, of cancellations for which we received correspondence from the client for our Clinical Research segment. The number of cancellations can vary significantly from period to period. The value of the cancellation is the remaining amount of unrecognized service revenue, less the estimated effort to transition the work back to the client.
 
Our backlog consists of anticipated revenue from new business awards that either have not started or are in process but have not been completed for our Clinical Research segment. Backlog varies from period to period depending upon new business awards and contract modifications, cancellations, and the amount of revenue recognized under existing contracts. Our backlog at March 31, 2020 and 2019 was $4.7 billion and $4.4 billion, respectively.
 
Sources of Revenue
 
Total revenues are comprised of revenues from the provision of our services and revenues from reimbursed expenses and reimbursable investigator grants that are incurred while providing our services. We do not have any material product revenues. 

Costs and Expenses

Our costs and expenses are comprised primarily of our direct costs, selling, general and administrative costs, depreciation and amortization expense and income taxes.

Direct Costs (Exclusive of Depreciation and Amortization)
 
For our Clinical Research segment, direct costs consist primarily of labor‑related charges. They include elements such as salaries, benefits and incentive compensation for our employees. In addition, we utilize staffing agencies to procure primarily part time individuals to perform work on our contracts. Labor-related charges as a percentage of the Clinical Research segment's total direct costs were 96.9% and 96.5% for the three months ended March 31, 2020 and 2019, respectively. The cost of labor procured through staffing agencies is included in these percentages and represents 2.9% and 3.0% of the Clinical Research segment's total direct costs for the three months ended March 31, 2020 and 2019, respectively. Our remaining direct costs are items such as travel, meals, postage and freight, patient costs, medical waste and supplies. The total of all these items as a percentage of the Clinical Research segment's total direct costs were 3.1% and 3.5% for the three months ended March 31, 2020 and 2019, respectively.

Historically, direct costs have increased with an increase in revenues. The future relationship between direct costs and revenues may vary from historical relationships. Several factors will cause direct costs to decrease as a percentage of revenues. Deployment of our billable staff in an optimally efficient manner has the most impact on our ratio of direct cost to revenue. The most effective deployment of our staff is when they are fully engaged in billable work and are accomplishing contract related activities at a rate that meets or exceeds budgeted targets. We also seek to optimize our efficiency by performing work using the employee with the lowest cost. Generally, the following factors may cause direct costs to increase as a percentage of revenues: our staff are not fully deployed, as is the case when there are unforeseen cancellations or delays, or when our staff are accomplishing tasks at levels of effort that exceed budget, such as rework, as well as pricing pressure from increased competition.

For our Data Solutions segment, direct costs consist primarily of data costs. Data costs as a percentage of the Data Solutions segment's total direct costs were 74.3% and 72.9% for the three months ended March 31, 2020 and 2019, respectively. Labor-related charges, such as salaries, benefits and incentive compensation for our employees, were 20.2% and 19.9% of the Data Solutions segment's total direct costs for the three months ended March 31, 2020 and 2019, respectively. Our remaining direct costs are items such as travel, meals, and supplies and were 5.5% and 7.2% of the Data Solutions segment's total direct costs for the three months ended March 31, 2020 and 2019, respectively.

Reimbursable Expenses
 
As is customary in our industry, we also routinely enter into separate agreements on behalf of our clients with independent physician investigators in connection with clinical trials. We also receive funds from our clients for investigator fees. We are not obligated either to perform the service or to pay the investigator in the event of default by the client. In addition, we do not pay the independent physician investigator until funds are received from the client. We include these investigator fees, as well as our out-of-pocket costs that are reimbursable by our customers, as reimbursable expenses in our consolidated condensed statements of operations.
 

24

Table of Contents

Reimbursable expenses are not included in our backlog because they are pass-through costs to our clients.
 
We believe that the fluctuations in reimbursable expenses are not meaningful to the final economic performance as measured on a net basis given that such costs are passed through to the client. The reimbursable expenses are included in our measure of progress for our long-term contracts.

Selling, General and Administrative Expenses
 
Selling, general and administrative expenses consist of administration payroll and benefits, marketing expenditures, and overhead costs such as information technology and facilities costs. These expenses also include central overhead costs that are not directly attributable to our operating business and include certain costs related to insurance, professional fees and property.

Transaction-related Costs

Transaction-related costs include fees associated with our secondary offerings, costs associated with acquisition related earn-out liabilities, and expenses associated with our acquisitions.

Depreciation and Amortization Expense
 
Depreciation expense represents the depreciation charged on our fixed assets. The charge is recorded on a straight-line method, based on estimated useful lives of three to seven years for computer hardware and software and five to seven years for furniture and equipment. Leasehold improvements are depreciated over the lesser of the life of the lease term or the useful life of the improvements.
 
Amortization expense consists of amortization recorded on acquisition-related intangible assets. Customer relationships, backlog and finite-lived trade names are amortized on an accelerated basis, which coincides with the period of economic benefit we expect to receive. All other finite-lived intangibles are amortized on a straight-line basis. In accordance with GAAP, we do not amortize goodwill and indefinite-lived intangible assets.
 
Income Taxes
 
Because we conduct operations on a global basis, our effective tax rate has depended and will continue to depend upon the geographic distribution of our pre‑tax earnings among several different taxing jurisdictions. Our effective tax rate can also vary based on changes in the tax rates of the different jurisdictions. Our effective tax rate is also impacted by tax credits and the establishment or release of deferred tax asset valuation allowances and tax reserves, as well as significant non‑deductible items such as portions of transaction‑related costs. 

In addition, our effective income tax rate is influenced by U.S. tax law which has been substantially modified by the U.S. Tax Cuts and Jobs Act of 2017, or the Act. The following provisions of the Act could have an adverse effect on our tax rate:
global intangible low-taxed income, or GILTI;
limitations on the U.S. deductions for net business interest;
base erosion anti-abuse provisions, or BEAT; and
performance-based compensation subject to $1 million limit.

Significant judgment is required related to the application of the Act, particularly with respect to GILTI and BEAT provisions. If changes occur in the Company’s tax structure, the structure of its customer arrangements, or interpretations of regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision.

Foreign subsidiaries are taxed separately in their respective jurisdictions. We have foreign net operating loss carryforwards in some jurisdictions. The carryforward periods for these losses vary from four years to an indefinite carryforward period depending on the jurisdiction. Our ability to offset future taxable income with the net operating loss carryforwards may be limited in certain instances, including changes in ownership.
 
Exchange Rate Fluctuations
 

25

Table of Contents

The majority of our foreign operations transact in the Euro, or EUR, or British pound, or GBP. As a result, our revenue and expenses are subject to exchange rate fluctuations with respect to these currencies. We have translated these currencies into U.S. dollars using the following average exchange rates:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
U.S. dollars per:
 
 
 
 
Euro
 
1.10

 
1.14

British pound
 
1.28

 
1.30


Results of Operations
 
Consolidated Results of Operations for the Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019
 
 
Three Months Ended March 31,
 
 
2020
 
2019
(in thousands)
 
 
 
 
Revenue
 
$
783,708

 
$
722,022

Operating expenses:
 
 
 
 
Direct costs (exclusive of depreciation and amortization)
 
403,862

 
377,888

Reimbursable expenses
 
176,841

 
140,620

Selling, general and administrative expenses
 
106,957

 
97,095

Transaction-related costs
 
609

 

Depreciation and amortization expense
 
32,278

 
27,608

(Gain) loss on disposal of fixed assets
 
(19
)
 
88

Income from operations
 
63,180

 
78,723

Interest expense, net
 
(13,487
)
 
(12,369
)
Foreign currency gains, net
 
7,842

 
6,128

Other expense, net
 
(4
)
 
(88
)
Income before income taxes
 
57,531

 
72,394

Provision for income taxes
 
16,871

 
28,138

Net income
 
40,660

 
44,256

Net income attributable to noncontrolling interest
 

 
(172
)
Net income attributable to PRA Health Sciences, Inc.
 
$
40,660

 
$
44,084


Revenue increased by $61.7 million, or 8.5%, from $722.0 million during the three months ended March 31, 2019 to $783.7 million during the three months ended March 31, 2020. Revenue for the three months ended March 31, 2020 benefited from an increase in billable hours and volume-related increases in clinical activities offset by an unfavorable impact of $5.3 million from foreign currency exchange rate fluctuations. The growth in revenue and the increase in billable hours were due largely to the increase in our backlog as we entered the year, the type of services we are providing on our active studies, which was driven by the life cycles of projects that were active during the period.
 
Direct costs, exclusive of depreciation and amortization, increased by $26.0 million, or 6.9%, from $377.9 million during the three months ended March 31, 2019 to $403.9 million during the three months ended March 31, 2020. Salaries and related benefits in our Clinical Research segment increased $27.8 million as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and future growth. Data costs in our Data Solutions segment increased $4.4 million as we continue to expand our sources of data. This was offset by a favorable impact of $6.5 million from foreign currency exchange rate fluctuations. Direct costs as a percentage of revenue were 51.5% and 52.3% during the three months ended March 31, 2020 and 2019, respectively.

Reimbursable expenses increased by $36.2 million from $140.6 million during the three months ended March 31, 2019 to $176.8 million during the three months ended March 31, 2020. We believe that the fluctuations in reimbursable expenses from period to period are not meaningful to our underlying performance over the full terms of the relevant contracts.
 

26

Table of Contents

Selling, general and administrative expenses increased by $9.9 million, or 10.2%, from $97.1 million during the three months ended March 31, 2019 to $107.0 million during the three months ended March 31, 2020. The increase in selling, general and administrative expenses is primarily related to an increase in salaries and related benefits, including stock-based compensation expense, as we continue to hire staff and add additional office space to support our growing business. Selling, general and administrative expenses as a percentage of revenue were 13.6% and 13.4% during the three months ended March 31, 2020 and 2019, respectively.

Transaction-related costs for the three months ended March 31, 2020, totaling $0.6 million, are primarily related to changes in the fair value of contingent consideration and other expenses incurred in conjunction with the acquisition of Care Innovations, Inc. in January 2020.

Depreciation and amortization expense was $32.3 million and $27.6 million during the three months ended March 31, 2020 and 2019, respectively. Depreciation and amortization expense as a percentage of revenue was 4.1% during the three months ended March 31, 2020 and 3.8% during the three months ended March 31, 2019. The increase is due to the amortization of the intangible assets acquired in the acquisition of Care Innovations, Inc. as well as an increase in depreciation expense due to an increase in our depreciable asset base.

Interest expense, net, increased by $1.1 million, or 9.0%, from $12.4 million during the three months ended March 31, 2019 to $13.5 million during the three months ended March 31, 2020. The increase is primarily due to an increase in the average outstanding debt balance and was partially offset by a decrease in the weighted average interest rate as compared to the three months ended March 31, 2019.

Foreign currency gains, net, increased by $1.7 million from $6.1 million during the three months ended March 31, 2019 to $7.8 million during the three months ended March 31, 2020. Foreign currency gains and losses are due to fluctuations in the U.S. dollar, gains or losses that arise in connection with the revaluation of short-term inter-company balances between our domestic and international subsidiaries, and gains or losses from foreign currency transactions, such as those resulting 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. During the three months ended March 31, 2020, foreign currency gains were primarily due to movement of the U.S. dollar versus the British pound, Euro, Canadian dollar and Russian ruble.

Provision for income taxes decreased by $11.3 million from $28.1 million during the three months ended March 31, 2019 to $16.9 million during the three months ended March 31, 2020. Our effective tax rate was 38.9% and 29.3% during the three months ended March 31, 2019 and 2020, respectively. The decrease in the effective tax rate of 9.6% was primarily due to the effect of BEAT included in the provision for the three months ended March 31, 2019 and no provision for BEAT being included in the effective rate for the three months ended March 31, 2020, which reduced the estimated annual effective tax rate for the quarter.

Segment Results of Operations for the Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019

Clinical Research
 
 
Three Months Ended March 31,
 
 
2020
 
2019
(in thousands)
 
 
 
 
Revenue
 
$
726,135

 
$
666,631

Segment profit
 
190,943

 
188,496

Segment profit %
 
26.3
%

28.3
%

Revenue increased by $59.5 million, or 8.9%, from $666.6 million during the three months ended March 31, 2019 to $726.1 million during the three months ended March 31, 2020. Revenue for the three months ended March 31, 2020 benefited from an increase in billable hours and volume-related increases in our clinical activities. The growth in revenue and the increase in billable hours were due largely to the increase in our backlog as we entered the year, the type of services we are providing on our active studies, which was driven by the life cycles of projects that were active during the period, the growth in new business awards as a result of higher demand for our services across the industries we serve, and more effective sales efforts and the growth in the overall CRO market.


27

Table of Contents

Segment profit increased by $2.4 million, or 1.3%, from $188.5 million during the three months ended March 31, 2019 to $190.9 million during the three months ended March 31, 2020 primarily due to an increase in revenue. Segment profit as a percentage of revenue decreased from 28.3% during the three months ended March 31, 2019 to 26.3% for the same period in 2020. Segment profit as a percentage of revenue decreased primarily due to the increase in reimbursable expenses.


Data Solutions
 
 
Three Months Ended March 31,
 
 
2020
 
2019
(in thousands)
 
 
 
 
Revenue
 
$
57,573

 
$
55,391

Segment profit
 
12,062

 
15,018

Segment profit %
 
21.0
%
 
27.1
%

Revenue increased by $2.2 million, or 3.9%, from $55.4 million during the three months ended March 31, 2019 to $57.6 million during the three months ended March 31, 2020. The increase in revenue was related to an increase in services provided during the quarter. Service in kind revenue was $3.3 million and $4.0 million during the three months ended March 31, 2020 and 2019, respectively.

Segment profit decreased by $3.0 million, or 19.7%, from $15.0 million during the three months ended March 31, 2019 to $12.1 million during the three months ended March 31, 2020 due to an increase in direct costs (exclusive of depreciation and amortization). The increase in direct costs is attributable to higher data costs as we have expanded our sources of data and have experienced increased costs on the renewal of existing contracts, as well as an increase in salaries and benefits as we have increased headcount to support segment growth. Segment profit as a percentage of revenue decreased from 27.1% during the three months ended March 31, 2019 to 21.0% for the same period in 2020 primarily due to factors noted above.

Seasonality
 
Although our business is not generally seasonal, we typically experience a slight decrease in our revenue growth rate during the fourth quarter due to holiday vacations and a similar decrease in new business awards in the first quarter due to our clients’ budgetary cycles and vacations during the year-end holiday period.

Liquidity and Capital Resources
 
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal source of liquidity is operating cash flows. As of March 31, 2020, we had approximately $150.8 million of cash and cash equivalents of which $68.0 million was held by our foreign subsidiaries. Additionally, as of March 31, 2020 our Revolver and Accounts Receivable Financing Agreement provided for $624.2 million of potential borrowings. Our expected primary cash needs on both a short and long-term basis are for capital expenditures, expansion of services, geographic expansion, debt repayments, acquisitions and other strategic transactions, and other general corporate purposes. We have historically funded our operations and growth, including acquisitions, with cash flow from operations, borrowings, and issuances of equity securities. We expect to continue expanding our operations through internal growth and strategic acquisitions and investments. We expect these activities will be funded from existing cash, cash flow from operations and, if necessary or appropriate, borrowings under our existing or future credit facilities. Our sources of liquidity could be affected by our dependence on a small number of industries and clients, compliance with regulations, international risks (including the ongoing COVID-19 pandemic), and personal injury, environmental or other material litigation claims.
 
Cash Collections
 
Cash collections from accounts receivable were $784.2 million during the three months ended March 31, 2020, including $116.6 million of funds received from customers to pay independent physician investigators, or investigators, as compared to $702.5 million during the three months ended March 31, 2019, including $81.4 million of funds received from customers to pay investigators. The increase in cash collections during the three months ended March 31, 2020 is related to our increase in revenue, driven by an increase in new business awards and an increase in our backlog.
 
Discussion of Cash Flows
 

28

Table of Contents

Cash Flow from Operating Activities
 
During the three months ended March 31, 2020, net cash provided by operations was $60.6 million compared to $41.0 million provided by operations for the same period of 2019. Cash provided by operating activities increased over the prior year primarily due to increased cash flows from our operating performance as well as a decrease in cash outflows from working capital changes. The changes in working capital were driven by an improvement in our days sales outstanding as compared to the prior year.
 
Cash Flow from Investing Activities
 
Net cash used in investing activities was $181.3 million during the three months ended March 31, 2020 compared to $19.1 million for the same period of 2019. The increase in cash outflows is primarily attributable to the acquisition of Care Innovations, Inc.
 
Cash Flow from Financing Activities
 
Net cash provided by financing activities was $41.2 million during the three months ended March 31, 2020 compared to $10.4 million for the same period of 2019. During the three months ended March 31, 2020 our debt balances increased by $38.8 million. Additionally, cash flows for the three months ended March 31, 2020 include $2.9 million of cash inflows from stock option exercises compared to $10.4 million of cash inflows in the prior year related to option exercises and employee stock purchase plan purchases.

Indebtedness
 
As of March 31, 2020, we had $1,297.6 million of total indebtedness. We do not expect to pay dividends in the foreseeable future. Our long-term debt arrangements contain usual and customary restrictive covenants, and, as of March 31, 2020, we were in compliance with these covenants.

See Note 9 to our consolidated condensed financial statements included in this Quarterly Report on Form 10-Q, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources” and Note 11 to our audited consolidated financial statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for additional details regarding our credit arrangements.
 
Contractual Obligations and Commercial Commitments
 
In January 2020, we acquired Care Innovations, Inc., which was partially funded using borrowings under the Revolver. We also recognized a liability related to contingent consideration associated with the acquisition. As a result of these changes, our long-term debt obligations and contingent consideration as of March 31, 2020 are updated below.

 
 
Payments Due by Period
 
 
Remaining 2020 (9 Months)
 
2021 and 2022
 
2023 and 2024
 
Thereafter
 
Total
Principal payments on long-term debt (1)
 
$
18,750

 
$
220,000

 
$
1,058,800

 
$

 
$
1,297,550

Interest payments on long-term debt (1)
 
25,538

 
57,239

 
48,380

 

 
131,157

Contingent consideration on acquisition (2)
 

 
45,074

 

 

 
45,074

Total
 
$
44,288

 
$
322,313

 
$
1,107,180

 
$

 
$
1,473,781


(1) Principal payments are based on the terms contained in our agreements. Interest payments are based on the interest rate in effect on March 31, 2020.
 
(2) This amount is remeasured at fair value every reporting period with the change in fair value recorded in Transaction-related costs, net (see Note 3 to our consolidated condensed financial statements). The actual amounts ultimately paid out may be different depending on the level of achievement of certain earnings milestones.

Other than the items included above, there have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for fiscal year ended December 31, 2019.

29

Table of Contents


Critical Accounting Policies and Estimates
 
There have been no material changes to our critical accounting policies as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
 
Disclosure Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition to historical consolidated condensed financial information, this Quarterly Report on Form 10-Q contains forward-looking statements that reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may constitute forward-looking statements. Without limiting the foregoing, words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements speak only as of the date hereof, and unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.
 
The Company cautions you that actual results may differ materially from the Company's expectations due to a number of factors, including that the current COVID-19 pandemic has adversely affected and may continue to affect adversely our business and results of operations; most of the Company’s contracts may be terminated on short notice and that the Company may be unable to maintain large customer contracts or to enter into new contracts; the Company may underprice contracts, overrun its cost estimates, or fail to receive approval for, or experience delays in, documenting change orders; the historical indications of the relationship of backlog to revenues may not be indicative of their future relationship; the Company may be unable to attract suitable investigators and patients for its clinical trials; the Company could be subject to employment liability with its embedded and functional outsourcing solutions as it places employees at the physical workplaces of its clients; the Company may lose key personnel or be unable to recruit and retain experienced personnel; the Company may be unable to maintain information systems or effectively update them; a failure or breach of the Company’s IT systems could result in customer information being compromised or otherwise significantly disrupt the Company’s business operations; client or therapeutic concentration or competition among clients could harm the Company’s business; if the Company does not keep pace with rapid technological changes, its services may become less competitive or obsolete; the Company may be unable to successfully identify, acquire and integrate businesses, services and technologies or to manage joint ventures; the Company’s business is subject to economic, political and other risks associated with international operations, including foreign currency exchange rate fluctuations; the Company may be exposed to liabilities under anti-corruption laws due to the global nature of its business; the Company’s failure to perform services in accordance with contractual requirements, certain laws and regulatory standards, and ethical considerations may subject it to significant costs or liability, damage its reputation and cause it to lose existing business or not receive new business; the Company’s services are related to treatment of human patients, and it could face liability if a patient is harmed; the Company’s relationships with existing or potential clients who are in competition with each other may adversely impact the degree to which other clients or potential clients use its services; the Company may be unable to compete effectively with other players in the biopharmaceutical services industry; changes in accounting standards may adversely affect the Company’s financial statements; the Company’s effective income tax rate may fluctuate which may adversely affect its operations, earnings, and earnings per share; the Company may not realize the full value of its goodwill and intangible assets, and may be unable to use net operating loss carry-forwards; the Company’s suppliers may increase its costs to obtain, restrict its use of or refuse to license its data, or the Company may otherwise be unable to continue to obtain products, services and licenses from third parties; the Company may be unable to protect its intellectual property; patent and other intellectual property litigation could be time-consuming and costly; biopharmaceutical industry outsourcing trends could change and adversely affect the Company’s operations and growth rate; government regulators or customers may limit the scope of prescriptions or withdraw products from the market; the U.S. and international healthcare industry is subject to political, economic and/or regulatory influences and changes, such as healthcare reform; current and proposed laws and regulations regarding the protection of personal data could result in increased risks of liability or increased cost or could limit the Company’s service offerings; the Company has substantial indebtedness, some of which have interest rates pricing using a spread over LIBOR, and may incur additional indebtedness in the future, which could adversely affect the Company’s financial condition; circumstances beyond the Company’s control could cause industry-wide reduction in demand for its services; and other factors that are set forth in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed on February 21, 2020.
 
Website and Social Media Disclosure

30

Table of Contents

 
We use our website (www.prahs.com) as a channel of distribution of company information. The information we post through this channel may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, Securities and Exchange Commission, or SEC, filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Item 4. Controls and Procedures
 
As of March 31, 2020, we carried out an evaluation under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Regulations under the Exchange Act require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. In accordance with the SEC's published guidance, the internal control over financial reporting of Care Innovations, Inc., or Care Innovations, which was acquired in January 2020 was excluded from our evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2020. Care Innovations represented 6% of our consolidated total assets and less than 1% of our consolidated revenue and net income as of and for the quarter ended March 31, 2020. Based upon our evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to accomplish their objective at a reasonable assurance level.
 
There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are in the process of reviewing the internal control structure of Care Innovations and, if necessary, will make appropriate changes as we integrate Care Innovations into our overall internal control over financial reporting process.

31

Table of Contents

PART II—OTHER INFORMATION

Item 1. Legal Proceedings
 
The information required with respect to this item can be found under “Commitments and Contingencies” in Note 13 to our consolidated condensed financial statements included elsewhere in this Form 10-Q and is incorporated by reference into this Item 1.
 
Item 1A. Risk Factors
 
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. In addition, we have identified the following additional risk as of March 31, 2020.

The effects of the COVID-19 outbreak could adversely affect our business, results of operations, and financial condition.

In December 2019, a novel strain of coronavirus, now known as COVID-19, was reported to have surfaced in Wuhan, China and to cause a severe respiratory illness. Since then, COVID-19 has spread globally, including to numerous countries in which we have ongoing and planned clinical trials. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, have placed significant restrictions on travel and many businesses have announced extended closures.  While these actions vary by locale, they have generally been expanding in scope. Further, the President of the United States declared the COVID-19 pandemic a national emergency, invoking powers under the Stafford Act, the legislation that directs federal emergency disaster response.

The global COVID-19 pandemic continues to rapidly evolve. The extent to which COVID-19 may impact our business and clinical trials will depend on future developments that are highly uncertain and cannot be predicted with any degree of confidence, such as the following: the ultimate geographic spread and severity of the disease; the duration of the outbreak or future outbreaks; travel restrictions and the implementation of social distancing in the United States and other countries; business closures or business disruptions; and the effectiveness of actions taken in the United States and other countries to contain and treat the disease and current and future outbreaks. We may experience disruptions due to the COVID-19 pandemic that could severely impact our business and clinical trials in our Clinical Research segment, including:

delays, difficulties or a suspension in enrolling patients in our ongoing and planned clinical trials;
delays, difficulties or a suspension in clinical site initiation, including difficulties in recruiting clinical site investigators;
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal, state or local governments; and
limitations in employee resources that would otherwise be focused on our business and the conduct of our clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, and governmental orders that limit the ability of our employees to leave their homes.

For our clinical trials that are planned to be conducted at sites in countries that are experiencing heightened impact from COVID-19, in addition to the risks listed above, we may also experience the following adverse impacts:

delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;
delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;
interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;
changes in local regulations as part of a response to the COVID-19 outbreak that may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and
refusal of the United States Food and Drug Administration to accept data from clinical trials in these affected geographies.


32

Table of Contents

Our Data Solutions business is relatively more insulated from the effects of the virus due to a high portion of recurring license revenue in this segment. However, businesses in this segment that rely on face-to-face interactions or are dependent on in-person gatherings, events or conferences may experience significant disruption.

We have also closed the majority of our physical office locations worldwide, requiring most of our workforce in both our Clinical Research and Data Solutions businesses to work remotely. While we believe that most of our employees are able to work remotely in an effective way, our operations could be disrupted if key members of our senior management or a significant percentage of our workforce are unable to continue to work because of illness, government directives or otherwise. Having shifted to remote working arrangements, we also face a heightened risk of cybersecurity attacks or data security incidents and are more dependent on internet and telecommunications access and capabilities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
(a)
Not applicable.
(b)
Not applicable.
(c)
Purchases of Equity Securities by the Issuer

On August 30, 2019, our board of directors authorized a share repurchase program, or the Repurchase Program, pursuant to which we may repurchase up to $500 million of common stock, effective immediately and through and including December 31, 2021, when the Repurchase Program will expire. Under the repurchase program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Exchange Act.
    
No repurchases were made during the three months ended March 31, 2020. As of March 31, 2020, we have remaining authorization to repurchase up to $200.0 million of common stock under the Repurchase Program.

Item 3. Defaults Upon Senior Securities
 
Not applicable.
 
Item 4. Mine Safety Disclosures
 
Not applicable. 

Item 5. Other Information
 
Not applicable.
 

33

Table of Contents

Item 6. Exhibits
 
Exhibit
 
 
Number
    
Description of Exhibit
 
 
 
31.1*
 
 
 
 
31.2*
 
 
 
 
32.1*
 
 
 
 
32.2*
 
 
 
 
101*
 
The following financial information from PRA Health Sciences, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in inline XBRL (iXBRL): (i) Consolidated Condensed Balance Sheets as of March 31, 2020 and December 31, 2019, (ii) Consolidated Condensed Statements of Operations for the three months ended March 31, 2020 and 2019, (iii) Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31 2020 and 2019, (iv) Consolidated Condensed Statements of Changes in Stockholders' Equity for the three months ended March 31, 2020 and 2019, (v) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2020 and 2019, and (v) Notes to Consolidated Condensed Financial Statements.
 
 
 
104*
 
Cover page from PRA Health Sciences, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted iXBRL and contained in Exhibit 101.

 
 
 
 
 
*
 
Filed herewith


34

Table of Contents

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
PRA HEALTH SCIENCES, INC.
 
 
 
/s/ Michael J. Bonello
 
Michael J. Bonello
 
Executive Vice President and Chief Financial Officer
 
(Authorized Signatory)
 
 
Date: May 1, 2020
 


35
Exhibit


Exhibit 31.1
CERTIFICATION
 
I, Colin Shannon, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of PRA Health Sciences, Inc. (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 
 
Date May 1, 2020
 
 
 
 
/s/ Colin Shannon
 
Colin Shannon
 
President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)






 



Exhibit


Exhibit 31.2
CERTIFICATION
 
I, Michael J. Bonello, certify that:
1.
 I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of PRA Health Sciences, Inc. (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 
 
Date May 1, 2020
 
 
 
 
/s/ Michael J. Bonello
 
Michael J. Bonello
 
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)







 



Exhibit



EXHIBIT 32.1
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of PRA Health Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Colin Shannon, President, Chief Executive Officer and Chairman of the Board of Directors of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
 

 
Date May 1, 2020
By:
/s/ Colin Shannon
 
 
Colin Shannon
 
 
President, Chief Executive Officer and Chairman of the Board of Directors
 
 
(Principal Executive Officer)
 






 



Exhibit



EXHIBIT 32.2
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of PRA Health Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Bonello, Executive Vice President and Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
 

 
Date May 1, 2020
By:
/s/ Michael J. Bonello
 
 
Michael J. Bonello
 
 
Executive Vice President and Chief Financial Officer
 
 
(Principal Financial Officer)
 





 




v3.20.1
Revolving Credit Facilities and Long-Term Debt - Senior Secured Credit Facility (Details) - Senior Secured Credit Facility - USD ($)
3 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Long-term debt    
Maximum borrowing capacity $ 1,750,000,000  
Interest period, option one 1 month  
Interest period, option two 2 months  
Interest period, option three 3 months  
Interest period, option four 6 months  
LIBOR | Minimum    
Long-term debt    
Applicable margin on variable rate basis 1.00%  
LIBOR | Maximum    
Long-term debt    
Applicable margin on variable rate basis 2.00%  
ABR | Minimum    
Long-term debt    
Applicable margin on variable rate basis 0.00%  
ABR | Maximum    
Long-term debt    
Applicable margin on variable rate basis 1.00%  
Revolver    
Long-term debt    
Maximum borrowing capacity $ 750,000,000.0  
Outstanding letters of credit $ 5,200,000 $ 5,400,000
Revolver | Minimum    
Long-term debt    
Commitment fee 0.15%  
Revolver | Maximum    
Long-term debt    
Commitment fee 0.35%  
First Lien Term Loan    
Long-term debt    
Maximum borrowing capacity $ 1,000,000,000.0  
Percent of original principal 2.50%  
Prepayment penalties $ 0  
v3.20.1
Leases - Components of lease cost (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Lease cost:      
Operating lease cost $ 11,164 $ 9,469  
Short-term lease cost 570 536  
Variable lease cost 1,968 1,684  
Lease income (47) (39)  
Net lease cost 13,655 11,650  
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows 11,674 9,807  
Right-of-use assets obtained in exchange for lease obligations $ 10,865 $ 846  
Weighted average remaining lease term 8 years 1 month 6 days   7 years 8 months 12 days
Weighted average discount rate 4.20%   4.30%
v3.20.1
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Goodwill And Intangible Assets    
Total finite-lived intangible assets, gross $ 793,989 $ 769,878
Accumulated Amortization (265,709) (249,311)
Net Amount 528,280 520,567
Trade names (indefinite-lived) 118,010 118,010
Total intangible assets, gross 911,999 887,888
Total intangible assets, net 646,290 638,577
Customer relationships    
Goodwill And Intangible Assets    
Total finite-lived intangible assets, gross 552,840 559,768
Accumulated Amortization (143,610) (137,728)
Net Amount 409,230 422,040
Trade names (finite-lived)    
Goodwill And Intangible Assets    
Total finite-lived intangible assets, gross 29,875 28,536
Accumulated Amortization (17,318) (16,582)
Net Amount 12,557 11,954
Developed technology and other intangibles    
Goodwill And Intangible Assets    
Total finite-lived intangible assets, gross 74,174 44,474
Accumulated Amortization (38,318) (35,654)
Net Amount 35,856 8,820
Database    
Goodwill And Intangible Assets    
Total finite-lived intangible assets, gross 137,100 137,100
Accumulated Amortization (66,463) (59,347)
Net Amount $ 70,637 $ 77,753
v3.20.1
Segments (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2020
USD ($)
segment
Mar. 31, 2019
USD ($)
Segment Reporting [Abstract]    
Reportable segments | segment 2  
Segment Reporting Information [Line Items]    
Revenue $ 783,708 $ 722,022
Selling, general and administrative expenses 106,957 97,095
Transaction-related costs 609 0
Depreciation and amortization expense 32,278 27,608
(Gain) loss on disposal of fixed assets, net (19) 88
Income from operations 63,180 78,723
Interest expense, net (13,487) (12,369)
Foreign currency gains, net 7,842 6,128
Other expense, net (4) (88)
Income before income taxes 57,531 72,394
Direct costs (exclusive of depreciation and amortization)    
Segment Reporting Information [Line Items]    
Cost of revenues 403,862 377,888
Reimbursable expenses    
Segment Reporting Information [Line Items]    
Cost of revenues 176,841 140,620
Clinical Research    
Segment Reporting Information [Line Items]    
Revenue 726,135 666,631
Data Solutions    
Segment Reporting Information [Line Items]    
Revenue 57,573 55,391
Operating segments    
Segment Reporting Information [Line Items]    
Revenue 783,708 722,022
Segment profit 203,005 203,514
Operating segments | Direct costs (exclusive of depreciation and amortization)    
Segment Reporting Information [Line Items]    
Cost of revenues 403,862 377,888
Operating segments | Reimbursable expenses    
Segment Reporting Information [Line Items]    
Cost of revenues 176,841 140,620
Operating segments | Clinical Research    
Segment Reporting Information [Line Items]    
Revenue 726,135 666,631
Segment profit 190,943 188,496
Operating segments | Clinical Research | Direct costs (exclusive of depreciation and amortization)    
Segment Reporting Information [Line Items]    
Cost of revenues 358,351 337,515
Operating segments | Clinical Research | Reimbursable expenses    
Segment Reporting Information [Line Items]    
Cost of revenues 176,841 140,620
Operating segments | Data Solutions    
Segment Reporting Information [Line Items]    
Revenue 57,573 55,391
Segment profit 12,062 15,018
Operating segments | Data Solutions | Direct costs (exclusive of depreciation and amortization)    
Segment Reporting Information [Line Items]    
Cost of revenues 45,511 40,373
Operating segments | Data Solutions | Reimbursable expenses    
Segment Reporting Information [Line Items]    
Cost of revenues 0 0
Segment Reconciling Items    
Segment Reporting Information [Line Items]    
Selling, general and administrative expenses 106,957 97,095
Transaction-related costs 609 0
Depreciation and amortization expense 32,278 27,608
(Gain) loss on disposal of fixed assets, net (19) 88
Income from operations 63,180 78,723
Interest expense, net (13,487) (12,369)
Foreign currency gains, net 7,842 6,128
Other expense, net $ (4) $ (88)
v3.20.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements 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.
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 amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

Recurring Fair Value Measurements
 
The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of March 31, 2020 (in thousands):
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 
$

 
$

 
$
45,074

 
$
45,074

Interest rate swaps
 

 
6,416

 

 
6,416

Total
 
$

 
$
6,416

 
$
45,074

 
$
51,490


 
The Company values contingent consideration using models that include significant unobservable Level 3 inputs, such as projected market performance over the earnout period along with estimates for market volatility and the discount rate applicable to potential cash payments. Interest rate swaps are measured at fair value using a market approach valuation technique. The valuation is based on an estimate of the net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation.

The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for three months ended March 31, 2020 (in thousands).

 
 
Contingent Consideration
Balance at December 31, 2019
 
$

Initial estimate of Care Innovations contingent consideration
 
44,500

Change in fair value recognized in transaction-related costs
 
574

Balance at March 31, 2020
 
$
45,074



The $45.1 million balance at March 31, 2020, which was valued using a Monte Carlo simulation, relates to the earn-out payments to Care Innovations and is based on the achievement of certain financial targets. The primary assumptions that impact the earn-out valuation are the projected revenues and adjusted earnings before interest, taxes, depreciation and amortization of the acquired business, which are unobservable inputs into the valuation model. The liability is recorded in accrued expenses and other current liabilities in the consolidated condensed balance sheet. Refer to "Note 3 - Business Combinations" for additional information regarding the Care Innovations acquisition.

Non-recurring Fair Value Measurements
 
Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets that are tested for impairment when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets that are tested for impairment annually on October 1 or when a triggering event occurs.
 
As of March 31, 2020, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $2,306.2 million and are identified as Level 3 assets. These assets are comprised of goodwill of $1,659.9 million and identifiable intangible assets, net of $646.3 million.
 
Refer to "Note 9 - Revolving Credit Facilities and Long-Term Debt" for additional information regarding the fair value of long-term debt balances.
v3.20.1
Goodwill and Intangible Assets
3 Months Ended
Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
 
Goodwill
 
The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):
 
 
Clinical Research
 
Data Solutions
 
Consolidated
Balance at December 31, 2019
 
$
1,025,897

 
$
476,859

 
$
1,502,756

Acquisition of Care Innovations, Inc.
 
174,334

 

 
174,334

Currency translation
 
(17,199
)
 

 
(17,199
)
Balance at March 31, 2020
 
$
1,183,032

 
$
476,859

 
$
1,659,891


 
There are no accumulated impairment charges as of March 31, 2020 and December 31, 2019.

Goodwill recorded in connection with the acquisition of Care Innovations was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of Care Innovations and expected synergies with the Company’s existing operations.


Intangible Assets
 
Intangible assets consist of the following (in thousands):
 
March 31, 2020
 
December 31, 2019
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
Customer relationships
$
552,840

 
$
(143,610
)
 
$
409,230

 
$
559,768

 
$
(137,728
)
 
$
422,040

Trade names (finite-lived)
29,875

 
(17,318
)
 
12,557

 
28,536

 
(16,582
)
 
11,954

Developed technology and other intangibles
74,174

 
(38,318
)
 
35,856

 
44,474

 
(35,654
)
 
8,820

Database
137,100

 
(66,463
)

70,637

 
137,100

 
(59,347
)
 
77,753

Total finite-lived intangible assets
793,989

 
(265,709
)
 
528,280

 
769,878

 
(249,311
)
 
520,567

Trade names (indefinite-lived)
118,010

 

 
118,010

 
118,010

 

 
118,010

Total intangible assets
$
911,999

 
$
(265,709
)
 
$
646,290

 
$
887,888

 
$
(249,311
)
 
$
638,577


 
Amortization expense was $19.1 million and $17.2 million for the three months ended March 31, 2020 and 2019, respectively.
 
The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):
2020 (remaining)
$
56,957

2021
70,376

2022
55,763

2023
43,561

2024
34,375

2025 and thereafter
267,248

Total
$
528,280


v3.20.1
Stock-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Summary of stock option activity
Aggregated information regarding the Company’s option plans is summarized below:
 
 
Options
 
Wtd. Average Exercise Price
 
Wtd. Average Remaining Contractual Life (in years)
 
Intrinsic Value (millions)
Outstanding at December 31, 2019
 
4,861,606

 
$
72.45

 
7.5
 
$
188.3

Granted
 
23,300

 
99.69

 
 
 
 
Exercised
 
(74,940
)
 
38.80

 
 
 
 
Expired or forfeited
 
(83,775
)
 
92.92

 
 
 
 
Outstanding at March 31, 2020
 
4,726,191

 
$
72.75

 
7.3
 
$
85.1

Exercisable at March 31, 2020
 
1,892,291

 
$
45.52

 
5.6
 
$
77.2


Schedule of RSA/RSU activity
The Company’s RSAs/RSUs activity in 2020 is as follows:
 
 
Awards
 
Wtd. Average Grant-Date Fair Value
 
Intrinsic Value (millions)
Unvested December 31, 2019
 
632,436

 
$
91.07

 
$
70.3

Granted
 
53,702

 
109.04

 
 

Forfeited
 
(5,700
)
 
95.94

 
 

Vested
 
(86,000
)
 
58.95

 
 
Unvested March 31, 2020
 
594,438

 
$
97.30

 
$
49.4


Schedule of stock-based compensation expense
Stock-based compensation expense related to employee stock plans are summarized below (in thousands):
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Direct costs
 
$
3,853

 
$
2,928

Selling, general and administrative
 
11,572

 
6,319

Total stock-based compensation expense
 
$
15,425

 
$
9,247


v3.20.1
Accounts Receivable, Unbilled Services and Advanced Billings (Tables)
3 Months Ended
Mar. 31, 2020
Receivables [Abstract]  
Schedule of accounts receivable and unbilled services

Accounts receivable and unbilled services were as follows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Accounts receivable
 
$
515,429

 
$
512,061

Unbilled services
 
179,425

 
149,194

Total accounts receivable and unbilled services
 
694,854

 
661,255

Less allowance for credit losses
 
(2,603
)
 
(2,738
)
Total accounts receivable and unbilled services, net
 
$
692,251

 
$
658,517



Schedule of advanced billings
Advanced billings were as follows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Advanced billings
 
$
534,233

 
$
505,714


v3.20.1
Segments (Tables)
3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Schedule of segment reporting information
The Company’s reportable segment information is presented below (in thousands):
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Clinical Research
 
Data Solutions
 
Total
 
Clinical Research
 
Data Solutions
 
Total
Revenue
 
$
726,135

 
$
57,573

 
$
783,708

 
$
666,631

 
$
55,391

 
$
722,022

 
 
 
 
 
 
 
 
 
 
 
 
 
Direct costs (exclusive of depreciation and amortization)
 
358,351

 
45,511

 
403,862

 
337,515

 
40,373

 
377,888

Reimbursable expenses
 
176,841

 

 
176,841

 
140,620

 

 
140,620

Segment profit
 
190,943

 
12,062

 
203,005

 
188,496

 
15,018

 
203,514

Less expenses not allocated to segments:
 
 
 
 
 

 
 
 
 
 

Selling, general and administrative expenses
 
 
 
 
 
106,957

 
 
 
 
 
97,095

Transaction-related costs
 
 
 
 
 
609

 
 
 
 
 

Depreciation and amortization expense
 
 
 
 
 
32,278

 
 
 
 
 
27,608

(Gain) loss on disposal of fixed assets, net
 
 
 
 
 
(19
)
 
 
 
 
 
88

Income from operations
 
 
 
 
 
63,180

 
 
 
 
 
78,723

Interest expense, net
 
 
 
 
 
(13,487
)
 
 
 
 
 
(12,369
)
Foreign currency gains, net
 
 
 
 
 
7,842

 
 
 
 
 
6,128

Other expense, net
 
 
 
 
 
(4
)
 
 
 
 
 
(88
)
Income before income taxes
 
 
 
 
 
$
57,531

 
 
 
 
 
$
72,394



Schedule of segment revenue by geographic location
Revenue by geographic location for each segment is as follows (in thousands):
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Clinical Research
 
Data Solutions
 
Total
 
Clinical Research
 
Data Solutions
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Americas:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
466,863

 
$
57,573

 
$
524,436

 
$
442,969

 
$
55,391

 
$
498,360

Other
 
10,007

 

 
10,007

 
12,573

 

 
12,573

Total Americas
 
476,870

 
57,573

 
534,443

 
455,542

 
55,391

 
510,933

Europe, Africa, and Asia-Pacific
 


 


 


 


 


 


United Kingdom
 
199,764

 

 
199,764

 
171,238

 

 
171,238

Netherlands
 
28,067

 

 
28,067

 
24,367

 

 
24,367

Other
 
21,434

 

 
21,434

 
15,484

 

 
15,484

Total Europe, Africa, and Asia-Pacific
 
249,265

 

 
249,265

 
211,089

 

 
211,089

Total revenue
 
$
726,135

 
$
57,573

 
$
783,708

 
$
666,631

 
$
55,391

 
$
722,022




v3.20.1
Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Reconciliation of cash, cash equivalents, and restricted cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
 
$
150,804

 
$
177,142

 
$
236,232

 
$
144,221

Restricted cash
 
36

 
457

 
38

 
488

Total cash, cash equivalents, and restricted cash
 
$
150,840

 
$
177,599

 
$
236,270

 
$
144,709


Reconciliation of cash, cash equivalents, and restricted cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
 
$
150,804

 
$
177,142

 
$
236,232

 
$
144,221

Restricted cash
 
36

 
457

 
38

 
488

Total cash, cash equivalents, and restricted cash
 
$
150,840

 
$
177,599

 
$
236,270

 
$
144,709


v3.20.1
Income Taxes
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
 
The Company’s effective income tax rate was 29.3% and 38.9% for the three months ended March 31, 2020 and 2019, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 21% for the three months ended March 31, 2020 is primarily due to (i) geographic distribution of global pre-tax income (ii) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, and (iii) state income taxes. The effective tax rate for the three months ended March 31, 2019 included the effect of base erosion anti-abuse tax, or BEAT. No provision for BEAT is included in the effective rate for the three months ended March 31, 2020.

Significant judgment is required related to the application of the recent U.S. tax reform, or the Act, particularly with respect to GILTI and BEAT provisions. If changes occur in the Company’s tax structure, the structure of its arrangements, interpretations, or regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision.

GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities. During the three months ended March 31, 2020, there was no significant change in uncertain tax positions.
v3.20.1
Net Income Per Share
3 Months Ended
Mar. 31, 2020
Earnings Per Share [Abstract]  
Net Income Per Share Net Income Per Share
 
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicable period. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plans.

The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Basic weighted average common shares outstanding
 
62,933

 
65,192

Effect of dilutive stock options and other awards under share-based compensation programs
 
1,406

 
1,655

Diluted weighted average common shares outstanding
 
64,339

 
66,847

 
 
 
 
 
Anti-dilutive shares
 
2,399

 
1,523


 
The dilutive and anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, and unrecognized compensation expense for outstanding awards.
v3.20.1
Concentration of Credit Risk and Expected Credit Losses (Details) - Customer Concentration Risk
3 Months Ended 12 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Accounts receivable and unbilled receivables | Customer A    
Concentration risk    
Concentration risk percentage 11.00% 11.20%
Accounts receivable and unbilled receivables | Customer B    
Concentration risk    
Concentration risk percentage 10.30% 15.60%
Revenue | Customer C    
Concentration risk    
Concentration risk percentage 10.60%  
v3.20.1
Business Combinations (Details) - USD ($)
$ in Thousands
1 Months Ended
Jan. 31, 2020
Mar. 31, 2020
Dec. 31, 2019
Business Combination      
Goodwill   $ 1,659,891 $ 1,502,756
Care Innovations      
Business Combination      
Purchase price $ 208,600    
Purchase price, cash paid 161,500    
Purchase price, restricted stock 2,600    
Contingent consideration 44,500    
Potential earn-out payment, up to 50,000    
Definite-lived intangible assets $ 33,500    
Weighted average useful life 5 years    
Goodwill $ 174,300    
Other net assets $ 800    
v3.20.1
Leases - Additional Information (Details)
$ in Millions
3 Months Ended
Mar. 31, 2020
USD ($)
Lessee, Lease, Description [Line Items]  
Operating lease not yet commenced $ 0.4
Operating lease not yet commenced, term of contract 5 years
Minimum  
Lessee, Lease, Description [Line Items]  
Operating lease, initial term of contract 3 years
Operating lease, remaining term of contract 1 year
Maximum  
Lessee, Lease, Description [Line Items]  
Operating lease, initial term of contract 20 years
Operating lease, remaining term of contract 20 years
v3.20.1
Stock-Based Compensation - Schedule of Stock Option Summary (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Options    
Outstanding at beginning of period (in shares) 4,861,606  
Granted (in shares) 23,300  
Exercised (in shares) (74,940)  
Expired or forfeited (in shares) (83,775)  
Outstanding at end of period (in shares) 4,726,191 4,861,606
Exercisable (in shares) 1,892,291  
Wtd. Average Exercise Price    
Outstanding at beginning of period (in dollars per share) $ 72.45  
Granted (in dollars per share) 99.69  
Exercised (in dollars per share) 38.80  
Expired or forfeited (in dollars per share) 92.92  
Outstanding at end of period (in dollars per share) 72.75 $ 72.45
Exercisable (in dollars per share) $ 45.52  
Wtd. Average Remaining Contractual Life (in years)    
Outstanding 7 years 3 months 18 days 7 years 6 months
Exercisable at end of period 5 years 7 months 6 days  
Intrinsic Value (millions)    
Outstanding $ 85.1 $ 188.3
Exercisable at end of period $ 77.2  
v3.20.1
Income Taxes (Details)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Income Tax Disclosure [Abstract]    
Effective income tax rate 29.30% 38.90%
U.S. statutory rate 21.00%  
v3.20.1
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Cash flows from operating activities:    
Net income $ 40,660 $ 44,256
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 32,278 27,608
Amortization of debt issuance costs 421 448
Amortization of terminated interest rate swaps 1,565 1,631
Stock-based compensation expense 15,425 9,247
Change in fair value of acquisition-related contingent consideration 574 0
Unrealized foreign currency gains, net (4,788) (7,967)
Deferred income tax benefit (18,524) (10,521)
Other reconciling items 135 (78)
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:    
Accounts receivable, unbilled services and advanced billings (7,600) (36,848)
Other operating assets and liabilities 436 13,250
Net cash provided by operating activities 60,582 41,026
Cash flows from investing activities:    
Purchase of fixed assets (21,460) (19,895)
Proceeds from the sale of fixed assets 26 0
(Cash paid) proceeds received for interest on interest rate swap, net (780) 416
Distributions from unconsolidated joint ventures 0 418
Acquisition of Care Innovations, Inc., net of cash acquired (159,078) 0
Net cash used in investing activities (181,292) (19,061)
Cash flows from financing activities:    
Borrowings on line of credit 100,000 0
Repayments of line of credit (55,000) 0
Repayments of long-term debt (6,250) 0
Proceeds from stock issued under employee stock purchase plan and stock option exercises 2,908 10,419
Payments for debt issuance costs (470) 0
Net cash provided by financing activities 41,188 10,419
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash (5,908) 506
Change in cash, cash equivalents, and restricted cash (85,430) 32,890
Cash, cash equivalents, and restricted cash, beginning of period 236,270 144,709
Cash, cash equivalents, and restricted cash, end of period $ 150,840 $ 177,599
v3.20.1
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Income Statement [Abstract]    
Revenue $ 783,708 $ 722,022
Selling, general and administrative expenses 106,957 97,095
Transaction-related costs 609 0
Depreciation and amortization expense 32,278 27,608
(Gain) loss on disposal of fixed assets, net (19) 88
Income from operations 63,180 78,723
Interest expense, net (13,487) (12,369)
Foreign currency gains, net 7,842 6,128
Other expense, net (4) (88)
Income before income taxes 57,531 72,394
Provision for income taxes 16,871 28,138
Net income 40,660 44,256
Net income attributable to noncontrolling interest 0 (172)
Net income attributable to PRA Health Sciences, Inc. $ 40,660 $ 44,084
Net income per share attributable to common stockholders:    
Basic (in dollars per share) $ 0.65 $ 0.68
Diluted (in dollars per share) $ 0.63 $ 0.66
Weighted average common shares outstanding:    
Basic (in shares) 62,933 65,192
Diluted (in shares) 64,339 66,847
Direct costs (exclusive of depreciation and amortization)    
Cost of revenues $ 403,862 $ 377,888
Reimbursable expenses    
Cost of revenues $ 176,841 $ 140,620
v3.20.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
 
Legal Proceedings
 
The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company.
v3.20.1
Segments
3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Segments Segments

The Company is managed through two reportable segments: (i) the Clinical Research segment and (ii) the Data Solutions segment. In accordance with the provisions of ASC 280, "Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company.

Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services.

Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily to the Company’s life science customers.

The Company's chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. 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 (in thousands):
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Clinical Research
 
Data Solutions
 
Total
 
Clinical Research
 
Data Solutions
 
Total
Revenue
 
$
726,135

 
$
57,573

 
$
783,708

 
$
666,631

 
$
55,391

 
$
722,022

 
 
 
 
 
 
 
 
 
 
 
 
 
Direct costs (exclusive of depreciation and amortization)
 
358,351

 
45,511

 
403,862

 
337,515

 
40,373

 
377,888

Reimbursable expenses
 
176,841

 

 
176,841

 
140,620

 

 
140,620

Segment profit
 
190,943

 
12,062

 
203,005

 
188,496

 
15,018

 
203,514

Less expenses not allocated to segments:
 
 
 
 
 

 
 
 
 
 

Selling, general and administrative expenses
 
 
 
 
 
106,957

 
 
 
 
 
97,095

Transaction-related costs
 
 
 
 
 
609

 
 
 
 
 

Depreciation and amortization expense
 
 
 
 
 
32,278

 
 
 
 
 
27,608

(Gain) loss on disposal of fixed assets, net
 
 
 
 
 
(19
)
 
 
 
 
 
88

Income from operations
 
 
 
 
 
63,180

 
 
 
 
 
78,723

Interest expense, net
 
 
 
 
 
(13,487
)
 
 
 
 
 
(12,369
)
Foreign currency gains, net
 
 
 
 
 
7,842

 
 
 
 
 
6,128

Other expense, net
 
 
 
 
 
(4
)
 
 
 
 
 
(88
)
Income before income taxes
 
 
 
 
 
$
57,531

 
 
 
 
 
$
72,394



Revenue by geographic location for each segment is as follows (in thousands):
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
 
 
Clinical Research
 
Data Solutions
 
Total
 
Clinical Research
 
Data Solutions
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Americas:
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
$
466,863

 
$
57,573

 
$
524,436

 
$
442,969

 
$
55,391

 
$
498,360

Other
 
10,007

 

 
10,007

 
12,573

 

 
12,573

Total Americas
 
476,870

 
57,573

 
534,443

 
455,542

 
55,391

 
510,933

Europe, Africa, and Asia-Pacific
 


 


 


 


 


 


United Kingdom
 
199,764

 

 
199,764

 
171,238

 

 
171,238

Netherlands
 
28,067

 

 
28,067

 
24,367

 

 
24,367

Other
 
21,434

 

 
21,434

 
15,484

 

 
15,484

Total Europe, Africa, and Asia-Pacific
 
249,265

 

 
249,265

 
211,089

 

 
211,089

Total revenue
 
$
726,135

 
$
57,573

 
$
783,708

 
$
666,631

 
$
55,391

 
$
722,022


v3.20.1
Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Summary of the fair value of financial assets and liabilities measured on a recurring basis
The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of March 31, 2020 (in thousands):
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
 
 
Contingent consideration
 
$

 
$

 
$
45,074

 
$
45,074

Interest rate swaps
 

 
6,416

 

 
6,416

Total
 
$

 
$
6,416

 
$
45,074

 
$
51,490


Summary of changes in Level 3 financial liabilities
The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for three months ended March 31, 2020 (in thousands).

 
 
Contingent Consideration
Balance at December 31, 2019
 
$

Initial estimate of Care Innovations contingent consideration
 
44,500

Change in fair value recognized in transaction-related costs
 
574

Balance at March 31, 2020
 
$
45,074


v3.20.1
Accounts Receivable, Unbilled Services and Advanced Billings - Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
$ in Billions
Mar. 31, 2020
USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Remaining performance obligation, amount $ 5.1
Minimum  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Remaining performance obligation, expected timing of satisfaction, period 1 year
Maximum  
Accounts, Notes, Loans and Financing Receivable [Line Items]  
Remaining performance obligation, expected timing of satisfaction, period 5 years
v3.20.1
Fair Value Measurements - Non-recurring Fair Value Measurements (Details) - Nonrecurring - Level 3
$ in Millions
Mar. 31, 2020
USD ($)
Assets fair value measurements  
Assets fair value $ 2,306.2
Goodwill 1,659.9
Identifiable intangible assets $ 646.3
v3.20.1
Significant Accounting Policies (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Mar. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]        
Cash and cash equivalents $ 150,804 $ 236,232 $ 177,142 $ 144,221
Restricted cash 36 38 457 488
Total cash, cash equivalents, and restricted cash $ 150,840 $ 236,270 $ 177,599 $ 144,709
v3.20.1
Cover Page - shares
3 Months Ended
Mar. 31, 2020
Apr. 24, 2020
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2020  
Document Transition Report false  
Entity File Number 001-36732  
Entity Registrant Name PRA Health Sciences, Inc.  
Entity Central Index Key 0001613859  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 46-3640387  
Entity Address, Address Line One 4130 ParkLake Avenue  
Entity Address, Address Line Two Suite 400  
Entity Address, City or Town Raleigh  
Entity Address, State or Province NC  
Entity Address, Postal Zip Code 27612  
City Area Code 919  
Local Phone Number 786-8200  
Title of 12(b) Security Common Stock $0.01 par value  
Security Exchange Name NASDAQ  
Trading Symbol PRAH  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   63,723,442
v3.20.1
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Comprehensive Income [Abstract]    
Net income $ 40,660 $ 44,256
Other comprehensive loss:    
Foreign currency translation adjustments, net of income tax of $4,041 and $0 (42,756) 143
Unrealized losses on derivative instruments, net of income tax of $(1,157) and $(514) (3,377) (1,433)
Reclassification adjustments:    
Losses on derivatives included in net income, net of income taxes of $679 and $308 1,981 861
Comprehensive (loss) income (3,492) 43,827
Comprehensive income attributable to noncontrolling interest 0 (127)
Comprehensive (loss) income attributable to PRA Health Sciences, Inc. $ (3,492) $ 43,700
v3.20.1
Stock-Based Compensation - Restricted Stock Awards and Units (Details) - RSAs and RSUs - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Awards    
Outstanding at beginning of period (in shares) 632,436  
Granted (in shares) 53,702  
Forfeited (in shares) (5,700)  
Vested (in shares) (86,000)  
Outstanding at end of period (in shares) 594,438  
Wtd. Average Grant-Date Fair Value    
Outstanding at beginning of period (in dollars per share) $ 91.07  
Granted (in dollars per share) 109.04  
Forfeited (in dollars per share) 95.94  
Vested (in dollars per share) 58.95  
Outstanding at end of period (in dollars per share) $ 97.30  
Intrinsic Value    
Outstanding $ 49.4 $ 70.3
v3.20.1
Derivatives - Hedging Instruments (Details) - Interest rate swap - Designated as hedging instruments - Level 2 - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Notional and Fair Value of Derivatives    
Notional amount $ 625,000 $ 625,000
Asset/(Liability) (6,416) (2,976)
Accrued expenses and other current liabilities    
Notional and Fair Value of Derivatives    
Notional amount 625,000 625,000
Asset/(Liability) $ (6,416) $ (2,976)
v3.20.1
Basis of Presentation
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation
 
The Company
 
PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of product development and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting.
 
Unaudited Interim Financial Information
 
The interim consolidated condensed financial statements include the accounts of the Company and variable interest entities where the Company is the primary beneficiary. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
 
The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Recently Implemented Accounting Pronouncements
 
In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2020 and the application of ASU 2016-13 did not have a material impact on the Company's consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this standard effective January 1, 2020 and the application of ASU 2017-04 did not have a material impact on the Company's consolidated condensed financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The Company adopted this standard effective January 1, 2020 and the application of ASU 2018-15 did not have a material impact on the Company's consolidated condensed financial statements.
 
Recently Issued Accounting Pronouncements
 
In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes". The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the
methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for the reporting period beginning after December 15, 2020, and the interim periods therein. The Company is currently assessing the potential impact of ASU 2019-12 on the Company's consolidated financial statements.
v3.20.1
Leases - Schedule of maturities of lease liabilities (Details)
$ in Thousands
Mar. 31, 2020
USD ($)
Leases [Abstract]  
2020 (remaining) $ 32,779
2021 43,898
2022 35,756
2023 28,109
2024 19,512
Thereafter 86,220
Total lease payments 246,274
Less imputed interest (37,650)
Operating lease liability $ 208,624
v3.20.1
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Finite-lived Intangible Assets (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]    
2020 (remaining) $ 56,957  
2021 70,376  
2022 55,763  
2023 43,561  
2024 34,375  
2025 and thereafter 267,248  
Net Amount $ 528,280 $ 520,567
v3.20.1
Revolving Credit Facilities and Long-Term Debt - Accounts Receivable Financing Agreement and Fair Value of Debt (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Fair Value of Debt    
Estimated fair value of long-term debt $ 1,292.6 $ 1,255.8
Accounts receivable financing agreement | Secured debt    
Long-term debt    
Notice period for prepayment of loans 1 day  
Notice period required for termination of agreement 15 days  
Remaining borrowing capacity $ 13.2 $ 30.0
Available capacity, accounts receivable balance exclusion limitation 2.50%  
Accounts receivable financing agreement | Secured debt | LIBOR    
Long-term debt    
Applicable margin on variable rate basis 1.25%  
v3.20.1
Net Income Per Share (Details) - shares
shares in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Reconciliation of basic to diluted weighted average shares outstanding    
Basic weighted average common shares outstanding 62,933 65,192
Effect of dilutive stock options and other awards under share-based compensation programs (in shares) 1,406 1,655
Diluted weighted average common shares outstanding 64,339 66,847
Anti-dilutive shares 2,399 1,523
v3.20.1
Concentration of Credit Risk and Expected Credit Losses
3 Months Ended
Mar. 31, 2020
Risks and Uncertainties [Abstract]  
Concentration of Credit Risk and Expected Credit Losses Concentration of Credit Risk and Expected Credit Losses
 
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, unbilled services, and derivatives. As of March 31, 2020, substantially all of the Company’s cash and cash equivalents and derivatives were held in or invested with large financial institutions.

Accounts receivable primarily include amounts due from pharmaceutical and biotechnology companies under credit terms that generally do not extend beyond 90 days. The Company maintains an allowance for expected credit losses resulting from the inability of its customers to make required payments. The Company performs credit reviews of each customer, monitors collections and payments from customers, and determines the allowance based upon historical experience and specific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debt expense.

Accounts receivable and unbilled services from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled services at the respective dates were as follows:
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Customer A
 
11.0
%
 
11.2
%
Customer B
 
10.3
%
 
15.6
%
 

Revenue from individual customers greater than 10% of consolidated revenue in the respective periods was as follows:
 
 
Three Months Ended March 31,
 
 
2020

2019
Customer C
 
10.6
%
 
*

* Less than 10%
v3.20.1
Revolving Credit Facilities and Long-Term Debt
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Revolving Credit Facilities and Long-Term Debt Revolving Credit Facilities and Long-Term Debt
 
The Company had the following debt outstanding as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
 
Principal amount
 
 
 
Interest rate as of
 
March 31,
 
December 31,
 
 
 
March 31, 2020
 
2020
 
2019
 
Maturity Date
Senior Secured Credit Facility:
 
 
 
 
 
 
 
First Lien Term Loan
2.52
%
 
$
993,750

 
$
1,000,000

 
October 2024
Revolver
2.52
%
 
133,800

 
88,800

 
October 2024
Accounts receivable financing agreement
3.07
%
 
170,000

 
170,000

 
May 2021
Total debt
 
 
1,297,550

 
1,258,800

 
 
Less current portion of Revolver(1)
 
 

 
(88,800
)
 
 
Less current portion of long-term debt
 
 
(25,000
)
 
(25,000
)
 
 
Total long-term debt
 
 
1,272,550

 
1,145,000

 
 
Less debt issuance costs
 
 
(4,577
)
 
(4,822
)
 
 
Total long-term debt, net
 
 
$
1,267,973

 
$
1,140,178

 
 


(1) The Company assesses its ability and intent to repay the outstanding borrowings on the Revolver at the end of each reporting period in order to determine the proper balance sheet classification. Outstanding borrowings on the Revolver that the Company intends to repay in less than 12 months are classified as current. 



As of March 31, 2020, the contractual maturities of the Company's debt obligations were as follows (in thousands):
Current maturities of long-term debt:
 
2020 (remaining)
$
18,750

2021
195,000

2022
25,000

2023
25,000

2024 and thereafter
1,033,800

Total
$
1,297,550


 
The Company's primary financing arrangements are its senior secured credit facility (the "Senior Secured Credit Facility"), which consists of a first lien term loan ("First Lien Term Loan") and a revolving credit facility (the "Revolver"), and its Accounts Receivable Financing Agreement.

Senior Secured Credit Facility
 
The overall capacity of the Senior Secured Credit Facility is $1.75 billion (consisting of a $1.0 billion First Lien Term Loan and a $750.0 million Revolver). As collateral for borrowings under the Senior Secured Credit Facility, the Company granted a pledge on primarily all of its assets, the interests of wholly-owned U.S. restricted subsidiaries, and a portion of the interests of wholly-owned non-U.S. restricted subsidiaries. The Company is subject to certain financial covenants, which require the Company to maintain certain debt-to-EBITDA and interest expense-to-EBITDA ratios. The Senior Secured Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to create any liens, make investments and acquisitions, incur or guarantee additional indebtedness,  enter into mergers or consolidations and other fundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinated debt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensome agreements with negative pledge clauses, and make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under the Senior Secured Credit Facilities, subject to compliance with applicable law, as of March 31, 2020 and December 31, 2019, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Senior Secured Credit Facility also contains customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.0% to 2.0%, in the case of LIBOR loans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of one-, two-, three- or six-month base interest rates. The credit agreement governing the Senior Secured Credit Facility includes provisions that allow the agreement to be amended to replace the LIBOR rate with a comparable or successor floating rate.

The First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installments beginning March 31, 2020 through September 30, 2024, with the remaining balance due at maturity. There are no voluntary prepayment penalties and prepayment is required upon the issuance of certain debt or asset sales or other events.

The Revolver requires the Company to pay to the lenders a commitment fee for unused commitments of 0.15% to 0.35% based on the Company’s debt-to-EBITDA ratio. Principal amounts are due and payable in full at maturity. In addition, at March 31, 2020 and December 31, 2019, the Company had $5.2 million and $5.4 million, respectively, in letters of credit outstanding, which are secured by the Revolver.
 
Accounts Receivable Financing Agreement
 
Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Company may prepay loans upon one business day's prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice.
 
The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions that provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.
 
As of December 31, 2019, there was $30.0 million of remaining capacity available under the accounts receivable financing agreement. However, as of March 31, 2020, borrowing capacity was limited to $13.2 million due to an increase in the Company's non-U.S. dollar receivables, which are excluded from the calculation of the borrowing base to the extent they exceed 2.5% of the eligible accounts receivable balance.
 
Fair Value of Debt
 
The estimated fair value of the Company’s debt and outstanding borrowings under its revolving credit facilities was $1,292.6 million and $1,255.8 million at March 31, 2020 and December 31, 2019, respectively. The fair values of the term loans, borrowings under credit facilities, and accounts receivable financing agreement were determined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.
v3.20.1
Net Income Per Share (Tables)
3 Months Ended
Mar. 31, 2020
Earnings Per Share [Abstract]  
Schedule of weighted average basic and diluted common shares
The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Basic weighted average common shares outstanding
 
62,933

 
65,192

Effect of dilutive stock options and other awards under share-based compensation programs
 
1,406

 
1,655

Diluted weighted average common shares outstanding
 
64,339

 
66,847

 
 
 
 
 
Anti-dilutive shares
 
2,399

 
1,523


v3.20.1
Revolving Credit Facilities and Long-Term Debt (Tables)
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Schedule of long-term debt
The Company had the following debt outstanding as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
 
Principal amount
 
 
 
Interest rate as of
 
March 31,
 
December 31,
 
 
 
March 31, 2020
 
2020
 
2019
 
Maturity Date
Senior Secured Credit Facility:
 
 
 
 
 
 
 
First Lien Term Loan
2.52
%
 
$
993,750

 
$
1,000,000

 
October 2024
Revolver
2.52
%
 
133,800

 
88,800

 
October 2024
Accounts receivable financing agreement
3.07
%
 
170,000

 
170,000

 
May 2021
Total debt
 
 
1,297,550

 
1,258,800

 
 
Less current portion of Revolver(1)
 
 

 
(88,800
)
 
 
Less current portion of long-term debt
 
 
(25,000
)
 
(25,000
)
 
 
Total long-term debt
 
 
1,272,550

 
1,145,000

 
 
Less debt issuance costs
 
 
(4,577
)
 
(4,822
)
 
 
Total long-term debt, net
 
 
$
1,267,973

 
$
1,140,178

 
 


(1) The Company assesses its ability and intent to repay the outstanding borrowings on the Revolver at the end of each reporting period in order to determine the proper balance sheet classification. Outstanding borrowings on the Revolver that the Company intends to repay in less than 12 months are classified as current. 



Schedule of principal payments on long-term debt due
As of March 31, 2020, the contractual maturities of the Company's debt obligations were as follows (in thousands):
Current maturities of long-term debt:
 
2020 (remaining)
$
18,750

2021
195,000

2022
25,000

2023
25,000

2024 and thereafter
1,033,800

Total
$
1,297,550


v3.20.1
Concentration of Credit Risk and Expected Credit Losses (Tables)
3 Months Ended
Mar. 31, 2020
Risks and Uncertainties [Abstract]  
Schedule of concentration of risk by risk factor
Accounts receivable and unbilled services from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled services at the respective dates were as follows:
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Customer A
 
11.0
%
 
11.2
%
Customer B
 
10.3
%
 
15.6
%
 

Revenue from individual customers greater than 10% of consolidated revenue in the respective periods was as follows:
 
 
Three Months Ended March 31,
 
 
2020

2019
Customer C
 
10.6
%
 
*

* Less than 10%
v3.20.1
Accumulated Other Comprehensive Loss
3 Months Ended
Mar. 31, 2020
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss
 
Below is a summary of the components of accumulated other comprehensive loss (in thousands):
 
 
Foreign
Currency
Translation, Net of Tax
 
Derivative
Instruments, Net of Tax
 
Total
Balance at December 31, 2019
 
$
(149,342
)
 
$
(10,766
)
 
$
(160,108
)
Other comprehensive loss before reclassifications
 
(42,756
)
 
(3,377
)
 
(46,133
)
Reclassification adjustments
 

 
1,981

 
1,981

Balance at March 31, 2020
 
$
(192,098
)
 
$
(12,162
)
 
$
(204,260
)

 
Foreign Currency Translation

The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound (GBP), Euro (EUR), Canadian dollar (CAD) and Russian ruble (RUB) exchange rates against the U.S. dollar. The U.S. dollar strengthened by 6.2%, 1.9%, 8.2%, and 21.2% versus the GBP, EUR, CAD, and RUB, respectively, between December 31, 2019 and March 31, 2020. The movement in the GBP, EUR, CAD and RUB contributed to a $17.1 million, $6.6 million, $3.8 million, and $6.9 million increase in other comprehensive loss, respectively, during the three months ended March 31, 2020.

Derivative Instruments

See "Note 14 - Derivatives" for further information on changes to accumulated other comprehensive loss related to the derivative instruments.
v3.20.1
Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Recently Implemented and Recently Issued Accounting Pronouncements
Recently Implemented Accounting Pronouncements
 
In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2020 and the application of ASU 2016-13 did not have a material impact on the Company's consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this standard effective January 1, 2020 and the application of ASU 2017-04 did not have a material impact on the Company's consolidated condensed financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The Company adopted this standard effective January 1, 2020 and the application of ASU 2018-15 did not have a material impact on the Company's consolidated condensed financial statements.
 
Recently Issued Accounting Pronouncements
 
In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes". The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the
methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for the reporting period beginning after December 15, 2020, and the interim periods therein. The Company is currently assessing the potential impact of ASU 2019-12 on the Company's consolidated financial statements.

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.
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 amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.
v3.20.1
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Allowance for credit losses $ 2,603 $ 2,738
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 100,000,000 100,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 63,625,742 63,491,550
Common stock, shares outstanding 63,625,742 63,491,550
v3.20.1
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Loss (Note 15)
Retained Earnings
Non-controlling Interest
Adjustment
Accumulated Other Comprehensive Loss (Note 15)
Adjustment
Retained Earnings
Adjusted Balance
Accumulated Other Comprehensive Loss (Note 15)
Adjusted Balance
Retained Earnings
Balance at beginning of period (in shares) at Dec. 31, 2018   65,395,000                
Balance at beginning of period at Dec. 31, 2018 $ 1,051,420 $ 654 $ 960,535 $ (170,659) $ 254,500 $ 6,390     $ (169,240) $ 253,081
Balance at beginning of period (ASU 2018-02) at Dec. 31, 2018             $ 1,419 $ (1,419)    
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exercise of common stock options and stock award distribution (in shares)   219,000                
Exercise of common stock options and stock award distribution 10,670 $ 2 10,668              
Stock award distribution net of shares for tax withholding (in shares)   33,000                
Stock-based compensation 9,247   9,247              
Net income 44,256       44,084 172        
Other comprehensive loss, net of tax (429)     (384)   (45)        
Balance at end of period (in shares) at Mar. 31, 2019   65,647,000                
Balance at end of period at Mar. 31, 2019 1,115,164 $ 656 980,450 (169,624) 297,165 6,517        
Balance at beginning of period (in shares) at Dec. 31, 2019   63,492,000                
Balance at beginning of period at Dec. 31, 2019 $ 1,089,991 $ 635 1,006,182 (160,108) 243,282 0        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Exercise of common stock options and stock award distribution (in shares) 74,940 90,000                
Exercise of common stock options and stock award distribution $ 2,908 $ 1 2,907              
Stock-based compensation 15,425   15,425              
Net income 40,660       40,660          
Issuance of restricted stock for acquisition (in shares)   44,000                
Issuance of restricted stock for acquisition 2,585   2,585              
Other comprehensive loss, net of tax (44,152)     (44,152)            
Balance at end of period (in shares) at Mar. 31, 2020   63,626,000                
Balance at end of period at Mar. 31, 2020 $ 1,107,417 $ 636 $ 1,027,099 $ (204,260) $ 283,942 $ 0        
v3.20.1
Derivatives - Narrative (Details)
$ in Millions
3 Months Ended
Mar. 31, 2020
USD ($)
Interest rate swap | Cash flow hedging  
Derivative [Line Items]  
Unrealized losses expected to be reclassified out of accumulated other comprehensive loss into interest expense over the next 12 months $ 9.4
v3.20.1
Stock-Based Compensation - Stock Option and RSA/RSU Activity (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Stock issuance authorized (in shares)   2,000,000
Options granted (in shares) 23,300  
Restricted Stock Awards (RSAs)    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Restricted stock awards granted in period (in shares) 53,702  
Total grant date fair value of awards granted $ 5.9  
Employee stock options    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total grant date fair value of awards granted $ 0.8  
v3.20.1
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Stock-based compensation    
Total stock-based compensation expense $ 15,425 $ 9,247
Direct costs    
Stock-based compensation    
Total stock-based compensation expense 3,853 2,928
Selling, general and administrative    
Stock-based compensation    
Total stock-based compensation expense $ 11,572 $ 6,319
v3.20.1
Accounts Receivable, Unbilled Services and Advanced Billings - Schedules (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Receivables [Abstract]    
Accounts receivable $ 515,429 $ 512,061
Unbilled services 179,425 149,194
Total accounts receivable and unbilled services 694,854 661,255
Less allowance for credit losses (2,603) (2,738)
Total accounts receivable and unbilled services, net 692,251 658,517
Advanced billings $ 534,233 $ 505,714
v3.20.1
Fair Value Measurements - Summary of the fair value of financial assets and liabilities measured on a recurring basis (Details) - Recurring
$ in Thousands
Mar. 31, 2020
USD ($)
Liabilities:  
Contingent consideration $ 45,074
Interest rate swaps 6,416
Total 51,490
Level 1  
Liabilities:  
Contingent consideration 0
Interest rate swaps 0
Total 0
Level 2  
Liabilities:  
Contingent consideration 0
Interest rate swaps 6,416
Total 6,416
Level 3  
Liabilities:  
Contingent consideration 45,074
Interest rate swaps 0
Total $ 45,074
v3.20.1
Segments - Segment Revenue by Geographic Location (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue $ 783,708 $ 722,022
Total Americas    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 534,443 510,933
United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 524,436 498,360
Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 10,007 12,573
Europe, Africa, and Asia-Pacific    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 249,265 211,089
United Kingdom    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 199,764 171,238
Netherlands    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 28,067 24,367
Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 21,434 15,484
Clinical Research    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 726,135 666,631
Clinical Research | Total Americas    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 476,870 455,542
Clinical Research | United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 466,863 442,969
Clinical Research | Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 10,007 12,573
Clinical Research | Europe, Africa, and Asia-Pacific    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 249,265 211,089
Clinical Research | United Kingdom    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 199,764 171,238
Clinical Research | Netherlands    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 28,067 24,367
Clinical Research | Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 21,434 15,484
Data Solutions    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 57,573 55,391
Data Solutions | Total Americas    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 57,573 55,391
Data Solutions | United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 57,573 55,391
Data Solutions | Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 0 0
Data Solutions | Europe, Africa, and Asia-Pacific    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 0 0
Data Solutions | United Kingdom    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 0 0
Data Solutions | Netherlands    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue 0 0
Data Solutions | Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Revenue $ 0 $ 0
v3.20.1
Accumulated Other Comprehensive Loss - Components (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2020
USD ($)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]  
Balance at beginning of period $ 1,089,991
Other comprehensive loss before reclassifications (46,133)
Reclassification adjustments 1,981
Balance at end of period 1,107,417
Total  
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]  
Balance at beginning of period (160,108)
Balance at end of period (204,260)
Foreign Currency Translation, Net of Tax  
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]  
Balance at beginning of period (149,342)
Other comprehensive loss before reclassifications (42,756)
Reclassification adjustments 0
Balance at end of period (192,098)
Derivative Instruments, Net of Tax  
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]  
Balance at beginning of period (10,766)
Other comprehensive loss before reclassifications (3,377)
Reclassification adjustments 1,981
Balance at end of period $ (12,162)
v3.20.1
Goodwill and Intangible Assets - Narrative (Details) - USD ($)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]      
Accumulated impairment charges $ 0   $ 0
Amortization expense $ 19,100,000 $ 17,200,000  
v3.20.1
Revolving Credit Facilities and Long-Term Debt - Schedule of Future Principal Payments (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Current maturities of long-term debt:    
2020 (remaining) $ 18,750  
2021 195,000  
2022 25,000  
2023 25,000  
2024 and thereafter 1,033,800  
Total debt $ 1,297,550 $ 1,258,800
v3.20.1
Derivatives (Tables)
3 Months Ended
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of notional amounts and fair values (determined using level 2 inputs) of derivatives
The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
March 31, 2020
 
December 31, 2019
Balance Sheet Classification
 
Notional
amount
 
Asset/(Liability)
 
Notional
amount
 
Asset/(Liability)
Accrued expenses and other current liabilities
 
$
625,000

 
$
(6,416
)
 
$
625,000

 
$
(2,976
)
 
 
$
625,000

 
$
(6,416
)
 
$
625,000

 
$
(2,976
)

Schedule of the effect of derivatives on the condensed consolidated statements of operations and comprehensive (loss) income
The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three months ended March 31, 2020 and 2019, respectively, is as follows (in thousands):
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Interest expense, net
 
$
(13,487
)
 
$
(12,369
)
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
 
 
 
 
Loss reclassified from accumulated other comprehensive loss into interest expense, net
 
(2,660
)
 
(1,169
)

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive (loss) income for the three months ended March 31, 2020 and 2019 (in thousands):
 
 
Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)
 
2020
 
2019
Amount of pre-tax loss recognized in other comprehensive (loss) income
 
$
(4,534
)
 
$
(1,947
)
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net
 
(2,660
)
 
(1,169
)

v3.20.1
Leases (Tables)
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Components of lease cost
The components of lease cost were as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Lease cost:
 
 
 
   Operating lease cost
$
11,164

 
$
9,469

   Short-term lease cost
570

 
536

   Variable lease cost
1,968

 
1,684

   Lease income
(47
)
 
(39
)
   Net lease cost
$
13,655

 
$
11,650

    
Supplemental cash flow information related to leases was as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows
$
11,674

 
$
9,807

Right-of-use assets obtained in exchange for lease obligations
10,865

 
846


Supplemental balance sheet information related to leases was as follows:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
Weighted average remaining lease term
 
8.1 years
 
7.7 years
Weighted average discount rate
 
4.2%
 
4.3%

Schedule of maturities of lease liabilities

Maturities of operating lease liabilities were as follows as of March 31, 2020 (in thousands):
2020 (remaining)
 
$
32,779

2021
 
43,898

2022
 
35,756

2023
 
28,109

2024
 
19,512

Thereafter
 
86,220

Total lease payments
 
246,274

Less imputed interest
 
(37,650
)
Total
 
$
208,624



v3.20.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
 
Stock Option and RSA/RSU Activity

The 2018 Stock Incentive Plan, or the 2018 Plan, was approved by stockholders at the annual meeting on May 31, 2018. The 2018 Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws. The 2018 Plan authorized the issuance of 2,000,000 shares of common stock plus all shares that remained available under the prior plan on May 31, 2018.

The Company granted 23,300 service-based options and 53,702 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $0.8 million and $5.9 million, respectively, during the three months ended March 31, 2020.
 
Aggregated information regarding the Company’s option plans is summarized below:
 
 
Options
 
Wtd. Average Exercise Price
 
Wtd. Average Remaining Contractual Life (in years)
 
Intrinsic Value (millions)
Outstanding at December 31, 2019
 
4,861,606

 
$
72.45

 
7.5
 
$
188.3

Granted
 
23,300

 
99.69

 
 
 
 
Exercised
 
(74,940
)
 
38.80

 
 
 
 
Expired or forfeited
 
(83,775
)
 
92.92

 
 
 
 
Outstanding at March 31, 2020
 
4,726,191

 
$
72.75

 
7.3
 
$
85.1

Exercisable at March 31, 2020
 
1,892,291

 
$
45.52

 
5.6
 
$
77.2


 
The Company’s RSAs/RSUs activity in 2020 is as follows:
 
 
Awards
 
Wtd. Average Grant-Date Fair Value
 
Intrinsic Value (millions)
Unvested December 31, 2019
 
632,436

 
$
91.07

 
$
70.3

Granted
 
53,702

 
109.04

 
 

Forfeited
 
(5,700
)
 
95.94

 
 

Vested
 
(86,000
)
 
58.95

 
 
Unvested March 31, 2020
 
594,438

 
$
97.30

 
$
49.4


 
Employee Stock Purchase Plan
 
In April 2017, the Board approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of any offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ESPP will generally be in six month increments, with the administrator of the ESPP having the right to establish different offering periods. The Company recognized stock-based compensation expense of $1.1 million associated with the ESPP during the three months ended March 31, 2020 and 2019. As of March 31, 2020, there have been 301,975 shares issued and 2,698,025 shares reserved for future issuance under the ESPP.

Stock-based Compensation Expense

Stock-based compensation expense related to employee stock plans are summarized below (in thousands):
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Direct costs
 
$
3,853

 
$
2,928

Selling, general and administrative
 
11,572

 
6,319

Total stock-based compensation expense
 
$
15,425

 
$
9,247


v3.20.1
Business Combinations
3 Months Ended
Mar. 31, 2020
Business Combinations [Abstract]  
Business Combinations Business Combinations

Care Innovations, Inc.
    
In January 2020, the Company acquired all of the outstanding equity interests of Care Innovations, Inc., or Care Innovations, an entity that provides digital health services. The purchase price was $208.6 million, which consisted of $161.5 million of cash, $2.6 million of restricted stock and $44.5 million of estimated contingent consideration in the form of a potential earn-out payment. The earn-out payment, which is capped at $50.0 million, is contingent on the achievement of two 2020 financial targets. The fair value of the contingent consideration was based on significant inputs not observed in the market and thus represented a Level 3 fair value measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments. will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to expand its ability to serve customers with technologies that deliver enhancements to the Company’s mobile health platform and provide expanded remote patient monitoring support to expand the Company's ability to deliver virtual and decentralized trials.

The acquisition of Care Innovations was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The consideration paid was allocated as follows: (i) $33.5 million to definite-lived intangible assets primarily consisting of developed technology with a weighted average amortization period of five years, (ii) $174.3 million to goodwill and (iii) $0.8 million to other net assets. The acquisition costs are included in transaction-related costs in the consolidated condensed statement of operations and were immaterial.
 
Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of September 2020, and in any case, no later than one year from the acquisition date in accordance with GAAP.

The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Care Innovations as they did not have a material effect on the Company’s consolidated results.
v3.20.1
Leases
3 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Leases Leases

The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining lease terms of one year to 20 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments to the base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s sublease income is immaterial.

The components of lease cost were as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Lease cost:
 
 
 
   Operating lease cost
$
11,164

 
$
9,469

   Short-term lease cost
570

 
536

   Variable lease cost
1,968

 
1,684

   Lease income
(47
)
 
(39
)
   Net lease cost
$
13,655

 
$
11,650

    
Supplemental cash flow information related to leases was as follows (in thousands):
 
Three Months Ended March 31,
 
2020
 
2019
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows
$
11,674

 
$
9,807

Right-of-use assets obtained in exchange for lease obligations
10,865

 
846


Supplemental balance sheet information related to leases was as follows:
 
 
As of March 31,
 
As of December 31,
 
 
2020
 
2019
Weighted average remaining lease term
 
8.1 years
 
7.7 years
Weighted average discount rate
 
4.2%
 
4.3%


Maturities of operating lease liabilities were as follows as of March 31, 2020 (in thousands):
2020 (remaining)
 
$
32,779

2021
 
43,898

2022
 
35,756

2023
 
28,109

2024
 
19,512

Thereafter
 
86,220

Total lease payments
 
246,274

Less imputed interest
 
(37,650
)
Total
 
$
208,624



As of March 31, 2020, the Company has an additional non-cancelable operating lease that has not yet commenced with future lease payments totaling $0.4 million. This lease will commence in April 2020 with an initial lease term of five years.
v3.20.1
Accumulated Other Comprehensive Loss - Narrative (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2020
USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Increase in other comprehensive loss before reclassifications $ 46,133
Foreign currency translation | GBP  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Change in valuation of U.S. Dollar during the period (6.20%)
Increase in other comprehensive loss before reclassifications $ 17,100
Foreign currency translation | EUR  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Change in valuation of U.S. Dollar during the period (1.90%)
Increase in other comprehensive loss before reclassifications $ 6,600
Foreign currency translation | CAD  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Change in valuation of U.S. Dollar during the period (8.20%)
Increase in other comprehensive loss before reclassifications $ 3,800
Foreign currency translation | RUB  
Accumulated Other Comprehensive Income (Loss) [Line Items]  
Change in valuation of U.S. Dollar during the period (21.20%)
Increase in other comprehensive loss before reclassifications $ 6,900
v3.20.1
Goodwill and Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2020
USD ($)
Changes in carrying amount of goodwill  
Balance at beginning of period $ 1,502,756
Acquisition of Care Innovations, Inc. 174,334
Currency translation (17,199)
Balance at end of period 1,659,891
Clinical Research  
Changes in carrying amount of goodwill  
Balance at beginning of period 1,025,897
Acquisition of Care Innovations, Inc. 174,334
Currency translation (17,199)
Balance at end of period 1,183,032
Data Solutions  
Changes in carrying amount of goodwill  
Balance at beginning of period 476,859
Acquisition of Care Innovations, Inc. 0
Currency translation 0
Balance at end of period $ 476,859
v3.20.1
Revolving Credit Facilities and Long-Term Debt - Schedule of Debt (Details) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Long-term debt    
Total debt $ 1,297,550 $ 1,258,800
Less current portion of Revolver 0 (88,800)
Less current portion of long-term debt (25,000) (25,000)
Total long-term debt 1,272,550 1,145,000
Less debt issuance costs (4,577) (4,822)
Total long-term debt, net $ 1,267,973 1,140,178
First Lien Term Loan | Senior Secured Credit Facility    
Long-term debt    
Interest rate 2.52%  
Total debt $ 993,750 1,000,000
Accounts receivable financing agreement | Secured debt    
Long-term debt    
Interest rate 3.07%  
Total debt $ 170,000 170,000
Revolver | Senior Secured Credit Facility    
Long-term debt    
Interest rate 2.52%  
Total debt $ 133,800 $ 88,800
v3.20.1
Accumulated Other Comprehensive Loss (Tables)
3 Months Ended
Mar. 31, 2020
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Summary of components of accumulated other comprehensive loss
Below is a summary of the components of accumulated other comprehensive loss (in thousands):
 
 
Foreign
Currency
Translation, Net of Tax
 
Derivative
Instruments, Net of Tax
 
Total
Balance at December 31, 2019
 
$
(149,342
)
 
$
(10,766
)
 
$
(160,108
)
Other comprehensive loss before reclassifications
 
(42,756
)
 
(3,377
)
 
(46,133
)
Reclassification adjustments
 

 
1,981

 
1,981

Balance at March 31, 2020
 
$
(192,098
)
 
$
(12,162
)
 
$
(204,260
)

v3.20.1
Goodwill and Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of changes in the carrying amount of goodwill
The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):
 
 
Clinical Research
 
Data Solutions
 
Consolidated
Balance at December 31, 2019
 
$
1,025,897

 
$
476,859

 
$
1,502,756

Acquisition of Care Innovations, Inc.
 
174,334

 

 
174,334

Currency translation
 
(17,199
)
 

 
(17,199
)
Balance at March 31, 2020
 
$
1,183,032

 
$
476,859

 
$
1,659,891


Schedule of intangible assets
Intangible assets consist of the following (in thousands):
 
March 31, 2020
 
December 31, 2019
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
Customer relationships
$
552,840

 
$
(143,610
)
 
$
409,230

 
$
559,768

 
$
(137,728
)
 
$
422,040

Trade names (finite-lived)
29,875

 
(17,318
)
 
12,557

 
28,536

 
(16,582
)
 
11,954

Developed technology and other intangibles
74,174

 
(38,318
)
 
35,856

 
44,474

 
(35,654
)
 
8,820

Database
137,100

 
(66,463
)

70,637

 
137,100

 
(59,347
)
 
77,753

Total finite-lived intangible assets
793,989

 
(265,709
)
 
528,280

 
769,878

 
(249,311
)
 
520,567

Trade names (indefinite-lived)
118,010

 

 
118,010

 
118,010

 

 
118,010

Total intangible assets
$
911,999

 
$
(265,709
)
 
$
646,290

 
$
887,888

 
$
(249,311
)
 
$
638,577


Schedule of estimated future amortization expense
The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):
2020 (remaining)
$
56,957

2021
70,376

2022
55,763

2023
43,561

2024
34,375

2025 and thereafter
267,248

Total
$
528,280


v3.20.1
Significant Accounting Policies
3 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Significant Accounting Policies Significant Accounting Policies
Significant accounting policies are detailed in "Note 3: Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2019.
Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
2019
 
2018
Cash and cash equivalents
 
$
150,804

 
$
177,142

 
$
236,232

 
$
144,221

Restricted cash
 
36

 
457

 
38

 
488

Total cash, cash equivalents, and restricted cash
 
$
150,840

 
$
177,599

 
$
236,270

 
$
144,709


v3.20.1
Accounts Receivable, Unbilled Services and Advanced Billings
3 Months Ended
Mar. 31, 2020
Receivables [Abstract]  
Accounts Receivable, Unbilled Services and Advanced Billings Accounts Receivable, Unbilled Services and Advanced Billings

Accounts receivable and unbilled services were as follows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Accounts receivable
 
$
515,429

 
$
512,061

Unbilled services
 
179,425

 
149,194

Total accounts receivable and unbilled services
 
694,854

 
661,255

Less allowance for credit losses
 
(2,603
)
 
(2,738
)
Total accounts receivable and unbilled services, net
 
$
692,251

 
$
658,517



Unbilled services as of March 31, 2020 and December 31, 2019 includes $78.0 million and $76.0 million, respectively, of contract assets where the Company’s right to bill is conditioned on criteria other than the passage of time. Impairment losses on contract assets were immaterial in the three months ended March 31, 2020 and 2019.

Advanced billings were as follows (in thousands):
 
 
March 31,
 
December 31,
 
 
2020
 
2019
Advanced billings
 
$
534,233

 
$
505,714



The $28.5 million increase in advanced billings from December 31, 2019 to March 31, 2020 was primarily due to the timing of customer payments. During the three months ended March 31, 2020 and 2019, the Company recognized revenue of $307.7 million and $261.1 million related to advanced billings recorded as of January 1, 2020 and 2019, respectively.

Performance Obligations
Revenue recognized for the three months ended March 31, 2020 and 2019 from reimbursable expenses and services completed in prior periods was $7.7 million and $26.5 million, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and from contract modifications on long-term fixed price contracts executed in the current period, which results in changes to the transaction price.

The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year. These contracts are short in duration and revenue recognition generally follows the delivery of the promised services. The total transaction price for the undelivered performance obligation on contracts with an original initial contract term greater than one year is $5.1 billion as of March 31, 2020. This amount includes reimbursement revenue. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from one to five years.
v3.20.1
Stockholders' Equity
3 Months Ended
Mar. 31, 2020
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Stockholders’ Equity
 
Authorized Shares
 
The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01.

Share Repurchase Program

On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing the repurchase of up to $500.0 million of the Company's common stock in open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amount of its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31, 2021.

As of March 31, 2020, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program.
v3.20.1
Derivatives
3 Months Ended
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
 
The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk arising from movement in market interest rates. Accordingly, the Company has instituted an interest rate hedging program that uses interest rate swaps designated as cash flow hedges to mitigate interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.
 
The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of March 31, 2020 and December 31, 2019 (in thousands):
 
 
March 31, 2020
 
December 31, 2019
Balance Sheet Classification
 
Notional
amount
 
Asset/(Liability)
 
Notional
amount
 
Asset/(Liability)
Accrued expenses and other current liabilities
 
$
625,000

 
$
(6,416
)
 
$
625,000

 
$
(2,976
)
 
 
$
625,000

 
$
(6,416
)
 
$
625,000

 
$
(2,976
)


The Company records the change in the fair value of derivatives designated as hedging instruments under ASC 815 to accumulated other comprehensive loss in the Company's consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings, including the associated tax impact, when the hedged item affects earnings or is no longer expected to occur. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period.
 
The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive (loss) income for the three months ended March 31, 2020 and 2019 (in thousands):
 
 
Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)
 
2020
 
2019
Amount of pre-tax loss recognized in other comprehensive (loss) income
 
$
(4,534
)
 
$
(1,947
)
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net
 
(2,660
)
 
(1,169
)

 
The Company expects that $9.4 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.

The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three months ended March 31, 2020 and 2019, respectively, is as follows (in thousands):
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Interest expense, net
 
$
(13,487
)
 
$
(12,369
)
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
 
 
 
 
Loss reclassified from accumulated other comprehensive loss into interest expense, net
 
(2,660
)
 
(1,169
)

v3.20.1
Overview of the Impact of the COVID-19 Pandemic
3 Months Ended
Mar. 31, 2020
Subsequent Events [Abstract]  
Overview of the Impact of the COVID-19 Pandemic Overview of the Impact of the COVID-19 Pandemic

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, during the second half of March 2020, the Company experienced disruptions in its global operations as the COVID-19 virus continued to spread and impact countries in which the Company operates. These disruptions are expected to have a more significant adverse impact on the Company's operating results in the second quarter of 2020, and the full extent of the COVID-19 outbreak in 2020 and its impact on its operations is uncertain. A prolonged outbreak could continue to interrupt the operations of the Company and its customers and suppliers.
v3.20.1
Stockholders' Equity (Details) - USD ($)
Mar. 31, 2020
Dec. 31, 2019
Aug. 30, 2019
Stockholders' Equity Note [Abstract]      
Common stock, shares authorized 1,000,000,000 1,000,000,000  
Common stock, par value (in dollars per share) $ 0.01 $ 0.01  
Preferred stock, shares authorized 100,000,000 100,000,000  
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01  
Share Repurchase Program, authorized amount     $ 500,000,000.0
Share Repurchase Program, remaining authorized amount $ 200,000,000.0    
v3.20.1
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Employee Stock Purchase Plan    
Compensation expense $ 15,425 $ 9,247
Employee Stock Purchase Plan    
Employee Stock Purchase Plan    
Offering period increments 6 months  
Compensation expense $ 1,100 $ 1,100
Shares issued 301,975  
Shares reserved 2,698,025  
Employee Stock Purchase Plan | Maximum    
Employee Stock Purchase Plan    
Payroll deduction, as a percentage of base wages, an employee may authorize to be applied toward the purchase of common stock under the ESPP 15.00%  
Percentage of discount on the purchase price of common stock during the offering period under the ESPP 15.00%  
v3.20.1
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($)
$ in Thousands
Mar. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 150,804 $ 236,232
Restricted cash 36 38
Accounts receivable and unbilled services, net of allowance for credit losses of $2,603 at March 31, 2020 692,251 658,517
Other current assets 111,832 90,780
Total current assets 954,923 985,567
Fixed assets, net 184,899 180,716
Operating lease right-of-use assets 185,483 186,343
Goodwill 1,659,891 1,502,756
Intangible assets, net 646,290 638,577
Other assets 49,670 50,471
Total assets 3,681,156 3,544,430
Current liabilities:    
Current portion of borrowings under credit facilities 0 88,800
Current portion of long-term debt 25,000 25,000
Accounts payable 57,728 55,293
Accrued expenses and other current liabilities 372,327 304,799
Current portion of operating lease liabilities 37,347 37,603
Advanced billings 534,233 505,714
Total current liabilities 1,026,635 1,017,209
Long-term debt, net 1,267,973 1,140,178
Long-term portion of operating lease liabilities 171,277 172,370
Deferred tax liabilities 60,994 78,511
Other long-term liabilities 46,860 46,171
Total liabilities 2,573,739 2,454,439
Commitments and contingencies (Note 13)
Stockholders' equity:    
Preferred stock (100,000,000 authorized shares; $0.01 par value) 0 0
Common stock (1,000,000,000 authorized shares; $0.01 par value) 636 635
Additional paid-in capital 1,027,099 1,006,182
Accumulated other comprehensive loss (204,260) (160,108)
Retained earnings 283,942 243,282
Total stockholders' equity 1,107,417 1,089,991
Total liabilities and stockholders' equity $ 3,681,156 $ 3,544,430
v3.20.1
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Comprehensive Income [Abstract]    
Foreign currency translation adjustments, tax $ 4,041  
Unrealized (losses) gains on derivative instruments, tax (benefit) (1,157) $ (514)
Losses on derivatives included in net income, tax $ 679 $ 308
v3.20.1
Derivatives - Cash Flow Hedging Instruments (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss)    
Interest expense, net $ (13,487) $ (12,369)
Cash flow hedging | Interest rate swap    
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss)    
Amount of pre-tax loss recognized in other comprehensive (loss) income (4,534) (1,947)
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net $ (2,660) $ (1,169)
v3.20.1
Accounts Receivable, Unbilled Services and Advanced Billings - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Contract with customer, asset, not past due $ 78,000   $ 76,000
Contract asset impairment losses 0 $ 0  
Advanced billings 534,233   $ 505,714
Revenue related to contract liabilities 307,700 261,100  
Performance obligation satisfied in previous period $ 7,700 $ 26,500  
Performance obligation, description of timing The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year.    
Accounting Standards Update 2014-09 | Reclassification from adoption of ASC 606      
Accounts, Notes, Loans and Financing Receivable [Line Items]      
Advanced billings $ 28,500    
v3.20.1
Fair Value Measurements - Summary of changes in Level 3 financial liabilities (Details) - Level 3 - Recurring
$ in Thousands
3 Months Ended
Mar. 31, 2020
USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]  
December 31, 2019 $ 0
Initial estimate of Care Innovations contingent consideration 44,500
Change in fair value recognized in transaction-related costs 574
March 31, 2020 $ 45,074