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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 June 30, 2021
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _______
Commission File No. 001-38911
CLARIVATE PLC
(Exact name of registrant as specified in its charter)
Jersey, Channel Islands
Not applicable
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Friars House, 160 Blackfriars Road
London SE1 8EZ
United Kingdom
(Address of principal executive offices)
Not applicable
(Zip Code)
Registrant's telephone number, including area code: +44 207 4334000
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Ordinary Shares, no par valueCLVTNew York Stock Exchange
5.25% Series A Mandatory Convertible Preferred Shares, no par valueCLVT PR ANew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Exchange Act: None
 
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 and post such files).    Yes      No  



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
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 Securities Exchange Act of 1934).    Yes     No 
The number of ordinary shares of the Company outstanding as of July 26, 2021 was 641,455,231.
DOCUMENTS INCORPORATED BY REFERENCE
None

















TABLE OF CONTENTS     
Page
2


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements,” within the meaning of the "safe harbor provisions" of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this quarterly report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the ProQuest acquisition, anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which we operate. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting us. Factors that may impact such forward-looking statements include:
our ability to make, consummate and integrate acquisitions, including the ProQuest acquisition, and realize any
expected benefits or effects of any acquisitions or the timing, final purchase price, costs associated with achieving
synergies or integration or consummation of any acquisitions, including the ProQuest acquisition;

any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks;

our ability to maintain revenues if our products and services do not achieve and maintain broad market acceptance, or if we are unable to keep pace with or adapt to rapidly changing technology, evolving industry standards, macroeconomic market conditions and changing regulatory requirements;

our loss of, or inability to attract and retain, key personnel;

our ability to comply with applicable data protection and privacy laws;

the effectiveness of our business continuity plans;

our dependence on third parties, including public sources, for data, information and other services, and our relationships with such third parties;

increased accessibility to free or relatively inexpensive information sources;

our ability to derive fully the anticipated benefits from organic growth, existing or future acquisitions, joint ventures, investments or dispositions;

our ability to compete in the highly competitive industry in which we operate, and potential adverse effects of this competition;

our ability to maintain high annual revenue renewal rates;

the strength of our brand and reputation;

our exposure to risk from the international scope of our operations, and our exposure to potentially adverse tax consequences from the international scope of our operations and our corporate and financing structure;

our substantial indebtedness, which could adversely affect our business, financial condition, and results of operations

volatility in our earnings due to changes in the fair value of our outstanding warrants each period; and

other factors beyond our control.
3



The forward-looking statements contained in this quarterly report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks and uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Item 1A. Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Note on Defined Terms and Presentation
We employ a number of defined terms in this quarterly report for clarity and ease of reference, which we have capitalized so that you may recognize them as such. As used throughout this quarterly report, unless otherwise indicated or the context otherwise requires, the terms “Clarivate,” the “Company,” “our,” “us” and “we” refer to Clarivate Plc and its consolidated subsidiaries; “Baring” refers to the affiliated funds of Baring Private Equity Asia Pte Ltd that from time to time hold our ordinary shares; “LGP” refers to affiliated funds of Leonard Green & Partners, L.P. that from time to time hold our ordinary shares; and “Onex” refers to the affiliates of Onex Partners Advisor LP that from time to time hold our ordinary shares.
Unless otherwise indicated, dollar amounts throughout this quarterly report are presented in thousands of dollars, except for share and per share amounts.
Website and Social Media Disclosure
We use our website (www.clarivate.com) and corporate Twitter account (@Clarivate) as routine channels of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, investors should monitor our website and our corporate Twitter account in addition to following press releases, SEC filings, and public conference calls and webcasts. Additionally, we provide notifications of news or announcements as part of our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.
None of the information provided on our website, in our press releases, public conference calls, and webcasts, or through social media channels is incorporated into, or deemed to be a part of, this quarterly report or in any other report or document we file with the SEC, and any references to our website or our social media channels are intended to be inactive textual references only.


4


PART I. Financial Information
Item 1. Financial Statements and Supplementary Data
CLARIVATE PLC
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
June 30, 2021

December 31, 2020
Assets
Current assets:
Cash and cash equivalents$2,559,596 $257,730 
Restricted cash2,010,917 11,278 
Accounts receivable, net of allowance of $7,918 and $8,745 at June 30, 2021 and December 31, 2020, respectively
628,134 737,733 
Prepaid expenses66,011 58,273 
Other current assets221,905 262,494 
Total current assets5,486,563 1,327,508 
Property and equipment, net27,805 36,267 
Other intangible assets, net7,197,319 7,370,350 
Goodwill6,315,550 6,252,636 
Other non-current assets42,145 47,944 
Deferred income taxes27,523 29,786 
Operating lease right-of-use assets54,965 132,356 
Total Assets$19,151,870 $15,196,847 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$86,970 $82,038 
Accrued expenses and other current liabilities611,263 716,356 
Current portion of deferred revenues664,901 707,318 
Current portion of operating lease liability 29,143 35,455 
Current portion of long-term debt2,028,600 28,600 
Total current liabilities3,420,877 1,569,767 
Long-term debt3,443,927 3,457,900 
Warrant liabilities278,965 312,751 
Non-current portion of deferred revenues48,142 41,399 
Other non-current liabilities62,149 67,722 
Deferred income taxes338,659 362,261 
Operating lease liabilities69,072 104,324 
Total liabilities7,661,791 5,916,124 
Commitments and contingencies
Shareholders’ equity:
Preferred Shares, no par value; 14,375,000 shares authorized; 5.25% Mandatory Convertible Preferred Shares, Series A, 14,375,000 and 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
1,393,222  
Ordinary Shares, no par value; unlimited shares authorized at June 30, 2021 and December 31, 2020; 641,419,578 and 606,329,598 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
10,843,549 9,989,284 
Accumulated other comprehensive income571,554 503,521 
Accumulated deficit(1,318,246)(1,212,082)
Total shareholders’ equity11,490,079 9,280,723 
Total Liabilities and Shareholders’ Equity$19,151,870 $15,196,847 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
5

CLARIVATE PLC
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)

Three Months Ended June 30,
20212020
(As Restated)
Revenues, net$445,645 $273,500 
Operating expenses:
Cost of revenues(136,607)(92,379)
Selling, general and administrative costs(149,814)(103,665)
Depreciation(3,253)(2,904)
Amortization(126,923)(53,241)
Restructuring and impairment(41,700)(15,846)
Other operating income, net900 8,781 
Total operating expenses(457,397)(259,254)
(Loss) income from operations(11,752)14,246 
Mark to market adjustment on financial instruments(21,021)(23,790)
Loss before interest expense and income tax(32,773)(9,544)
Interest expense and amortization of debt discount, net(38,569)(21,122)
Loss before income tax(71,342)(30,666)
(Provision) benefit for income taxes(10,868)5,385 
Net loss$(82,210)$(25,281)
Per share:
Basic and diluted$(0.13)$(0.07)
Weighted average shares used to compute earnings per share:
Basic and diluted617,419,742 375,877,260 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
6

CLARIVATE PLC
Condensed Consolidated Statement of Operations (Unaudited)
(In thousands, except share and per share data)

Six Months Ended June 30,
20212020
(As Restated)
Revenues, net$874,075 $514,092 
Operating expenses:
Cost of revenues(275,348)(175,060)
Selling, general and administrative costs(261,159)(236,721)
Depreciation(6,586)(5,233)
Amortization(255,244)(102,353)
Restructuring and impairment(106,367)(23,600)
Other operating (expense) income, net(15,330)14,813 
Total operating expenses(920,034)(528,154)
Loss from operations(45,959)(14,062)
Mark to market adjustment on financial instruments30,194 (79,422)
Loss before interest expense and income tax(15,765)(93,484)
Interest expense and amortization of debt discount, net(75,962)(52,062)
Loss before income tax(91,727)(145,546)
Provision for income taxes(14,437)(9,368)
Net loss$(106,164)$(154,914)
Per share:
Basic and diluted$(0.17)$(0.43)
Weighted average shares used to compute earnings per share:
Basic and diluted613,121,593 359,503,556 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


7

CLARIVATE PLC
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)

Three Months Ended June 30,
20212020
(As Restated)
Net loss$(82,210)$(25,281)
Other comprehensive income (loss), net of tax:
Interest rate swaps 211 (254)
Defined benefit pension plans
(4)25 
Foreign currency translation adjustment47,988 (2,051)
Total other comprehensive income (loss), net of tax48,195 (2,280)
Comprehensive loss$(34,015)$(27,561)

Six Months Ended June 30,
20212020
(As Restated)
Net loss$(106,164)$(154,914)
Other comprehensive income (loss), net of tax:
Interest rate swaps 1,551 (3,144)
Defined benefit pension plans
(8)(42)
Foreign currency translation adjustment66,490 (7,564)
Total other comprehensive income (loss), net of tax68,033 (10,750)
Comprehensive loss$(38,131)$(165,664)
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


8

CLARIVATE PLC
Condensed Consolidated Statements of Changes in Equity (Unaudited)
(In thousands, except share data)

Ordinary SharesPreferred SharesAccumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Shareholders’
 Equity
SharesAmountSharesAmount
Balance at December 31, 2020606,329,598 $9,989,284 $— $503,521 $(1,212,082)$9,280,723 
Exercise of Private Placement Warrants212,174 3,592 — — — 3,592 
Exercise of stock options835,917 5,074 — — — 5,074 
Vesting of restricted stock units15,958 — — — — — 
Shares returned to the Company for net share settlements(434,059)(4,489)— — — (4,489)
Issuance of ordinary shares, net4,395,638 105,509 — — — 105,509 
Share-based award activity— 10,479 — — — 10,479 
Net loss— — — — (23,954)(23,954)
Other comprehensive income— — — 19,838  19,838 
Balance at March 31, 2021611,355,226 10,109,449 — — 523,359 (1,236,036)9,396,772 
Exercise of Private Placement Warrants  — — —  
Exercise of stock options1,581,518 9,761 — — — 9,761 
Vesting of restricted stock units446,324 — — — — — 
Shares returned to the Company for net share settlements(809,644)(17,245)— — — (17,245)
Issuance of ordinary shares, net206,052,933 5,780,933 — — — 5,780,933 
Share-based award activity— 12,816 — — — 12,816 
Purchase & Retirement of Treasury Stock (177,206,779)(5,052,165)— — — (5,052,165)
Issuance of preferred shares, net — — 14,375,0001,393,222 — — 1,393,222 
Net loss— — — — (82,210)(82,210)
Other comprehensive income— — — 48,195  48,195 
Balance at June 30, 2021641,419,57810,843,54914,375,0001,393,222571,554(1,318,246)11,490,079
Balance at December 31, 2019306,874,115 $2,144,372 $— $(4,879)$(890,894)1,248,599 
Adjustment to opening Accumulated deficit related to adoption of ASC Topic 326— — — — (9,319)(9,319)
Exercise of public warrants28,880,098 277,526 — — — 277,526 
Exercise of stock options3,715,455 1,182 — — — 1,182 
Vesting of restricted stock units169,842 — — — — — 
Shares returned to the Company for net share settlements(2,301,458)(10,302)— — — (10,302)
Issuance of ordinary shares, net27,600,000 539,714 — — — 539,714 
Share-based award activity— 16,384 — — — 16,384 
Net loss (As Restated)— — — — (129,633)(129,633)
Other comprehensive loss— — — (8,470) (8,470)
Balance at March 31, 2020364,938,052 2,968,876 — — (13,349)(1,029,846)1,925,681 
Exercise of stock options3,723,332 — — — — — 
Vesting of restricted stock units2,528 — — — — — 
Shares returned to the Company for net share settlements(2,311,293)(15,118)— — — (15,118)
Issuance of ordinary shares, net20,982,500 304,030 — — — 304,030 
Share-based award activity— 4,322 — — — 4,322 
Net loss (As Restated)— — — — (25,281)(25,281)
Other comprehensive loss— — — (2,280) (2,280)
Balance at June 30, 2020 (As Restated)387,335,119 3,262,110 — — (15,629)(1,055,127)2,191,354 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


CLARIVATE PLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)


Six Months Ended June 30,
20212020
(As Restated)
Cash Flows From Operating Activities
Net loss$(106,164)$(154,914)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization261,830 107,586 
Bad debt expense5,405 787 
Deferred income tax benefit(589)(6,641)
Share-based compensation23,295 20,824 
Restructuring and impairment70,043 4,771 
Gain on foreign currency forward contracts(1,912)— 
Mark to market adjustment on contingent and phantom shares(26,796)5,763 
Mark to market adjustment on financial instruments(30,194)79,422 
Deferred finance charges4,716 2,072 
Other operating activities3,565 (8,963)
Changes in operating assets and liabilities:
Accounts receivable108,677 93,036 
Prepaid expenses(7,946)(6,693)
Other assets51,875 58,218 
Accounts payable5,930 (5,851)
Accrued expenses and other current liabilities(30,491)(21,142)
Deferred revenues(38,263)(6,073)
Operating lease right of use assets11,821 4,698 
Operating lease liabilities(40,259)(5,439)
Other liabilities(2,877)(53,899)
Net cash provided by operating activities261,666 107,562 
Cash Flows From Investing Activities
Capital expenditures(62,021)(52,651)
Acquisitions, net of cash acquired433 (885,323)
Acquisition of intangible assets (5,982)
Proceeds from sale of product line, net of restricted cash 3,751 
Net cash used in investing activities(61,588)(940,205)
Cash Flows From Financing Activities
Principal payments on term loan(14,300)(6,300)
Repayments of revolving credit facility (65,000)
Payment of debt issuance costs(4,389)(5,267)
Contingent purchase price payment (4,115)
Proceeds from issuance of debt2,000,000 360,000 
Proceeds from issuance of ordinary shares728,768 843,766 
Proceeds from issuance of preferred shares 1,393,222 — 
Proceeds from warrant exercises 277,526 
Proceeds from stock options exercised14,835 1,182 
Payments related to tax withholding for stock-based compensation(21,734)(25,538)
Net cash provided by financing activities4,096,402 1,376,254 
Effects of exchange rates5,025 (9,218)
Net increase in cash and cash equivalents, and restricted cash$4,301,505 $534,393 
10

CLARIVATE PLC
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

Six Months Ended June 30,
20212020
(As Restated)
Beginning of period:
Cash and cash equivalents$257,730 $76,130 
Restricted cash11,278 9 
Total cash and cash equivalents, and restricted cash, beginning of period269,008 76,139 
Cash and cash equivalents, and restricted cash, end of period4,570,513 610,532 
End of period:
Cash and cash equivalents2,559,596 608,522 
Restricted cash2,010,917 2,010 
Total cash and cash equivalents, and restricted cash, end of period$4,570,513 $610,532 
Supplemental Cash Flow Information:
Cash paid for interest$69,697 $42,187 
Cash paid for income tax$12,553 $8,028 
Capital expenditures included in accounts payable$3,848 $1,819 
Non-Cash Financing Activities:
Shares issued to Capri Acquisition Topco Limited$5,052,165 $— 
Purchase & Retirement of Treasury Stock (5,052,165)— 
Shares issued as contingent stock consideration associated with the DRG acquisition
61,619 — 
Shares issued as contingent stock consideration associated with the CPA Global acquisition
43,890 — 
Total Non-Cash Financing Activities$105,509 $— 

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
11

CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Note 1: Background and Nature of Operations
Clarivate Plc (“Clarivate,” “us,” “we,” “our,” or the “Company”), is a public limited company organized under the laws of Jersey, Channel Islands. We were initially registered on January 7, 2019, and at our 2020 annual general meeting, our shareholders approved a change of our corporate name from “Clarivate Analytics Plc” to “Clarivate Plc”. Pursuant to the definitive agreement entered into to effect a merger between Camelot Holdings (Jersey) Limited ("Jersey") and Churchill Capital Corp, a Delaware corporation, ("Churchill") (the “2019 Transaction”), the Company was formed for the purposes of completing the 2019 Transaction and related transitions and carrying on the business of Jersey and its subsidiaries.
The Company is a provider of proprietary and comprehensive content, analytics, professional services and workflow solutions that enables users across government and academic institutions, life science companies and research and development (“R&D”) intensive corporations to discover, protect and commercialize their innovations. Clarivate has two reportable segments: Science and Intellectual Property ("IP"). Our segment structure is organized to address customer needs by product line. Our Science segment consists of our Academic and Life Sciences Product Lines. Both provide curated, high-value, structured information that is delivered and embedded into the workflows of our customers, which include research intensive corporations, life science organizations and universities world-wide. Our IP segment consists of our Patent, Trademark, Domain and IP Management Product Lines. These Product Lines helps manage customer's end-to-end portfolios of intellectual property from patents to trademarks to corporate website domains. See Note 21 - Segment Information, for additional information on the Company's reportable segments.
In January 2019, we entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated February 26, 2019, and Amendment No. 2 to the Agreement and Plan of Merger, dated March 29, 2019, collectively, the “Merger Agreement”) by and among Churchill, Jersey, CCC Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Clarivate (“Delaware Merger Sub”), Camelot Merger Sub (Jersey) Limited, a private limited company organized under the laws of Jersey, Channel Islands and wholly owned subsidiary of Clarivate (“Jersey Merger Sub”), and the Company, which, among other things, provided for (i) Jersey Merger Sub to be merged with and into Jersey with Jersey being the surviving company in the merger (the “Jersey Merger”) and (ii) Delaware Merger Sub to be merged with and into Churchill with Churchill being the surviving corporation in the merger (the “Delaware Merger”), and together with the Jersey Merger, the “Mergers”.
On May 13, 2019, the 2019 Transaction was consummated, and Clarivate became the sole managing member of Jersey, operating and controlling all of the business and affairs of Jersey, through Jersey and its subsidiaries. Following the consummation of the 2019 Transaction on May 13, 2019, the Company’s ordinary shares and warrants began trading on the New York Stock Exchange. All of the Company’s public warrants have subsequently been redeemed. See Note 16 - Shareholders’ Equity for further information regarding the redemption of the Company’s public warrants.
The 2019 Transaction was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Under this method of accounting, Churchill was treated as the "acquired" company for financial reporting purposes. This determination was primarily based on post 2019 Transaction relative voting rights, composition of the governing board, size of the two entities pre-merger, and intent of the 2019 Transaction. Accordingly, for accounting purposes, the 2019 Transaction was treated as the equivalent of the Company issuing stock for the net assets of Churchill. The net assets of Churchill were stated at historical cost, with no goodwill or other intangible assets resulting from the 2019 Transaction. Reported amounts from operations included herein prior to the 2019 Transaction are those of Jersey.
In February 2020, the Company consummated a public offering of 27,600,000 ordinary shares at $20.25 per share. In June 2020, the Company consummated a public offering of 50,400,000 of our ordinary shares at a share price of $22.50 per share. Of the 50,400,000 ordinary shares, 14,000,000 were ordinary shares offered by Clarivate and 36,400,000 were ordinary shares offered by selling shareholders. The Company received approximately $304,030 in net proceeds from the sale of its ordinary shares, after deducting underwriting discounts and estimated offering expenses payable. We used the net proceeds, in conjunction with the new $1,600,000 incremental term loan facility available to Clarivate on October 1, 2020, and cash on the balance sheet to fund the repayment of CPA Global's parent company outstanding debt of $2,055,822. The Company did not receive any proceeds from the sale of ordinary shares by the selling shareholders. Additionally, in connection with the acquisition of CPA Global, on October 1, 2020, the Company issued 216,683,778 shares to Redtop Holdings Limited, a portfolio company of Leonard Green & Partners, L.P. representing approximately 35% ownership of Clarivate. After giving
12

CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
effect to the Company's acquisition of CPA Global, Onex Corporation and Baring owned approximately 9.5% and 3.7%, respectively, of the Company's ordinary shares.

In June 2021, we completed an underwritten public offering of 44,230,768 of our ordinary shares at a share price of $26.00, of which 28,846,154 ordinary shares were issued and sold by Clarivate and 15,384,614 were sold by selling shareholders (which included 5,769,230 ordinary shares that the underwriters purchased pursuant to their option to purchase additional shares). The ordinary shares sold by selling shareholders included 10,562,882 ordinary shares from Onex, 4,107,787 ordinary shares from Baring and 713,945 ordinary shares from Directors, Executive Officers and other shareholders. The Company received approximately $728,768 in net proceeds from the sale of ordinary shares offered by the Company, after deducting underwriting discounts and estimated offering expenses payable. The Company did not receive any proceeds from the secondary ordinary shares sold by the selling shareholders. We intend to use the net proceeds received to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. See Note 26 - Subsequent Events for additional information regarding the ProQuest acquisition. If the ProQuest acquisition is not consummated, we intend to use the net proceeds received for general corporate purposes.

In June 2021, concurrently with the June 2021 Ordinary Share Offering, we completed an underwritten public offering of 14,375,000 of our 5.25% Series A Mandatory Convertible Preferred Shares ("MCPS") which included 1,875,000 of our mandatory convertible preferred shares that the underwriters purchased pursuant to their option to purchase additional shares. The Company received approximately $1,393,222 in net proceeds from the mandatory convertible preferred share offering, after deducting underwriting discounts and estimated offering expenses payable. We intend to use the net proceeds received to finance a portion of the purchase price for the ProQuest acquisition, which we announced on May 17, 2021. See Note 26 - Subsequent Events for additional information regarding the ProQuest acquisition. If the ProQuest acquisition is not consummated, we intend to use the net proceeds received for general corporate purposes.

Risks and Uncertainties

In March 2020, the World Health Organization characterized COVID-19 as a pandemic. The rapid spread of COVID-19 and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. In view of the rapidly changing business environment, market volatility and heightened degree of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business. However, we continue to assess the potential effect on our financial position, results of operations, and cash flows. If the global pandemic continues to evolve into a prolonged crisis, the effects could have an adverse impact on the Company's results of operations, financial condition and cash flows.

Note 2: Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements were prepared in conformity with U.S. GAAP. The Condensed Consolidated Financial Statements do not include all of the information or notes necessary for a complete presentation in accordance with U.S. GAAP. Accordingly, these Condensed Consolidated Financial Statements should be read in conjunction with the Company’s annual financial statements as of and for the year ended December 31, 2020. The results of operations for the three and six months ended June 30, 2021 and 2020 are not necessarily indicative of the operating results for the full year.

In the opinion of management, the quarterly financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the quarterly periods presented. The Condensed Consolidated Financial Statements of the Company include the accounts of all of its subsidiaries. Subsidiaries are entities over which the Company has control, where control is defined as the power to govern financial and operating policies. Generally, the Company has a shareholding of more than 50% of the voting rights in its subsidiaries. The effect of potential voting rights that are currently exercisable is considered when assessing whether control exists. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from the date control ceases. Intercompany accounts and transactions have been eliminated in consolidation.

During the fourth quarter of 2020, the Company realigned its reporting structure and changed the manner in which performance is assessed. The two operating segments created include the Science Group and the Intellectual Property Group. The segment reporting changes were retrospectively applied to all periods presented. Certain reclassifications of prior year's data have been made to conform to the current year's presentation of reportable segment information as disclosed in Note 21 - Segment Information and financial statement line items within the Condensed Consolidated Statements of Operations.
13

CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Note 3: Summary of Significant Accounting Policies
Our significant accounting policies are those that we believe are important to the portrayal of our financial condition and results of operations, as well as those that involve significant judgments or estimates about matters that are inherently uncertain. There have been no material changes to the significant accounting policies discussed in Item 8. – Financial Statements and Supplementary Data – Notes to the Consolidated Financial Statements – Note 3 of our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, which was filed with the SEC on May 10, 2021 (the "Amended Form 10-K").
Newly Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board ("FASB") issued new guidance, ASU 2016-13, related to measurement of credit losses on financial instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The Company has determined that the impact of this new accounting guidance primarily affects our accounts receivable. The Company prospectively adopted the standard on January 1, 2020. The adoption of this standard had an impact of $10,097 on the beginning Accumulated deficit balance in the Condensed Consolidated Balance Sheets as of January 1, 2020. In April 2019 and November 2019, the FASB issued ASU 2019-05 and ASU 2019-11, respectively, effective for the same period as ASU 2016-03. These updates offered options to entities intended to bring transition relief and offered clarification on the previously issued standard, respectively. The Company's accounting for credit losses did not change as a result of these two updates.
In August 2018, the FASB issued guidance, ASU 2018-14, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance is effective for all entities for fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In August 2018, the FASB issued guidance, ASU 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company prospectively adopted the standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements. All future capitalized implementation costs incurred related to these hosting arrangements will be recorded as a prepaid asset and as a charge to operating expenses over the expected life of the contract.
In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, which provides targeted improvements or clarification and correction to the ASU 2016-01 Financial Instruments Overall, ASU 2016-13 Financial Instruments Credit Losses, and ASU 2017-12 Derivatives and Hedging, accounting standards updates that were previously issued. The guidance is effective upon adoption of the related standards. The Company prospectively adopted the standard on January 1, 2020. This standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In November 2019, the FASB issued ASU 2019-10, Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), which provides improvements or clarification and correction to the ASU 2016-02 Leases, ASU 2016-13 Financial Instruments Credit Losses, and ASU 2017-12 Derivatives and Hedging, accounting standards updates. The guidance is effective upon adoption of the three ASUs, all of which the Company had already adopted. This standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The guidance is effective for all entities for fiscal years beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company's Condensed Consolidated Financial Statements.
14

CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The guidance is effective for all entities from the period March 12, 2020 through December 31, 2022. The Company has adopted this standard and elected the optional expedients for its interest rate swap agreements and debt agreements with reference to LIBOR. Upon meeting the specified criteria in the guidance, the Company will continue to account for its interest rate swaps in accordance with hedge accounting and will not apply modification accounting to its debt agreements. In January 2021, the FASB issued ASU 2021-01, which made clarifications relating to the previously issued Reference Rate Reform guidance effective for the same period as ASU 2020-04. This clarification did not have an effect on how the Company accounts for its interest rate swaps and debt agreements.
Recently Issued Accounting Standards
In June 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity as a result of complexity associated with GAAP for certain financial instruments with characteristics of liabilities and equity. This guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods. The Company will adopt ASU 2020-06 effective January 1, 2022, and it is expected that the adoption will not have a material impact to the Company's Condensed Consolidated Financial Statements.

In April 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance regarding the accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. This guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company will adopt ASU 2021-04 effective January 1, 2022, and it is expected that the adoption will not have a material impact to the Company's Condensed Consolidated Financial Statements.

There were no other new accounting standards or updates issued or effective as of June 30, 2021, that have, or are expected to have, a material impact on the Company's Condensed Consolidated Financial Statements.

Note 4: Business Combinations
Acquisition of Decision Resources Group
On February 28, 2020, we acquired 100% of the assets, liabilities and equity interests of Decision Resources Group ("DRG"), a premier provider of high-value data, analytics and insights products and services to the healthcare industry, from Piramal Enterprises Limited ("PEL"), which is a part of global business conglomerate Piramal Group. The acquisition helps us expand our core businesses and provides us with the potential to grow in the Life Sciences Product Line.
 
The aggregate consideration paid in connection with the closing of the DRG acquisition was $964,997, comprised of $900,000 of base cash plus $6,100 of adjusted closing cash paid on the closing date and 2,895,638 of the Company's ordinary shares issued to PEL on March 5, 2021. The contingent stock consideration was valued at $58,897 on the closing date and was revalued at each period end until the issuance date. For the three and six months ended June 30, 2021, the fair value of the contingent stock consideration decreased by $24,410, which was recorded to selling, general and administrative costs in the Condensed Consolidated Statements of Operations. The corresponding liability was $86,029 as of December 31, 2020 and recorded to Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. As the liability settled on March 5, 2021 with the Company issuing 2,895,638 ordinary shares valued at $61,619, there was no liability captured within the June 30, 2021 Condensed Consolidated Balance Sheet. See Note 22 - Commitments and Contingencies for more information. The DRG acquisition was accounted for using the acquisition method of accounting. The excess of the purchase price over the net tangible and intangible assets is recorded to Goodwill and primarily reflects the assembled workforce and expected synergies. Goodwill is not deductible for tax purposes. Due to the decrease to the fair value of the contingent stock consideration between December 31, 2020 and March 5, 2021, during the three and six months ended June 30, 2021, total transaction costs incurred in connection with the acquisition of DRG were $23 and a net gain of $24,360, respectively. Total transaction costs during the three and six months ended June 30, 2020 were $5,702 and $25,465, respectively.

The amount of Revenues, net and Net loss resulting from the acquisition that are attributable to the Company's stockholders and included in the Condensed Consolidated Statements of Operations and Comprehensive Loss were as follows:
15

CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)

Three Months Ended June 30,
20212020
Revenues, net (1)
$54,965 $46,663 
Net income (loss) attributable to the Company's stockholders$18,238 $(8,911)
(1) Includes $3,271 of a deferred revenue adjustment recognized during the three months ended June 30, 2020.
Six Months Ended June 30,
20212020
Revenues, net (1)
$99,285 $63,707 
Net income (loss) attributable to the Company's stockholders$10,407 $(9,518)
(1) Includes $4,805 of a deferred revenue adjustment recognized during the six months ended June 30, 2020.
The following table summarizes the final purchase price allocation for this acquisition:
Total
Accounts receivable$52,193 
Prepaid expenses4,295 
Other current assets68,001 
Property and equipment, net4,136 
Other intangible assets(1)491,366 
Other non-current assets2,960 
Operating lease right-of-use assets 25,099 
Total assets$648,050 
Accounts payable3,474 
Accrued expenses and other current liabilities88,561 
Current portion of deferred revenue35,126 
Current portion of operating lease liabilities 5,188 
Deferred income taxes47,467 
Non-current portion of deferred revenue936 
Operating lease liabilities 20,341 
Total liabilities201,093 
Fair value of acquired identifiable assets and liabilities$446,957 
Purchase price, net of cash(2)
944,220 
Less: Fair value of acquired identifiable assets and liabilities 446,957 
Goodwill$497,263 
(1) Includes $3,966 of internally developed software in progress acquired.
(2) The Company acquired cash of $20,777.
The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of DRG’s identifiable intangible assets acquired and their remaining amortization period (in years):
16

CLARIVATE PLC
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands, except share and per share data, option prices, ratios or as noted)
Fair Value as of February 28, 2020Remaining
Range of Years
Customer relationships$381,000 
10-21
Database and content50,200 
2-7
Trade names5,200 
4-7
Purchased software23,000 
3-8
Backlog28,000 4
Total identifiable intangible assets$487,400 
During the year ended December 31, 2020, there were additional purchase accounting adjustments of $1,804. These adjustments were related to fixed assets, deferred revenue and legal accrual with a corresponding net decrease to goodwill.
Unaudited pro forma information for the Company for the periods presented as if the acquisition had occurred January 1, 2019 is as follows:
Three Months Ended June 30,
20212020
Pro forma revenues, net$445,645 $276,771 
Pro forma net loss attributable to the Company's stockholders(1)
$(82,210)$(21,865)