SEC Info - IQVIA Holdings Inc. - ‘10-Q’ for 3/31/23

IQVIA HOLDINGS INC.

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Statements of Income for the three months ended March 31, 2023 and 2022	3

	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022	4

	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30


PART II—OTHER INFORMATION		31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 6.	Exhibits	33

SIGNATURES		34

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

Three Months Ended March 31,

(in millions, except per share data)

2023

2022

Revenues

i 3,652

i 3,568

Cost of revenues, exclusive of depreciation and amortization

i 2,398

i 2,323

Selling, general and administrative expenses

i 513

i 488

Depreciation and amortization

i 253

i 255

Restructuring costs

i 17

i 7

Income from operations

i 471

i 495

Interest income

( i 6)

( i 1)

Interest expense

i 141

i 86

Other (income) expense, net

( i 26)

i 10

Income before income taxes and equity in losses of unconsolidated affiliates

i 362

i 400

Income tax expense

i 71

Income before equity in losses of unconsolidated affiliates

i 291

i 329

Equity in losses of unconsolidated affiliates

( i 2)

( i 4)

Net income

i 289

i 325

Earnings per share attributable to common stockholders:

Basic

i 1.56

i 1.71

Diluted

i 1.53

i 1.68

Weighted average common shares outstanding:

Basic

i 185.8

i 190.0

Diluted

i 188.6

i 193.4

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

Three Months Ended March 31,

(in millions)

2023

2022

Net income

i 289

i 325

Comprehensive income adjustments:

Unrealized gains on derivative instruments, net of income tax expense of $ i 3, $ i 9

i 10

i 30

Defined benefit plan adjustments, net of income tax expense of $ i —, $ i —

i 1

( i 2)

Foreign currency translation, net of income tax (benefit) expense of $( i 29), $ i 27

i 10

( i 40)

Reclassification adjustments:

Reclassifications on derivative instruments included in net income, net of income tax (expense) benefit of $( i 8), $ i —

( i 25)

( i 1)

Comprehensive income

i 285

i 312

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share data)

ASSETS

Current assets:

Cash and cash equivalents

i 1,494

i 1,216

Trade accounts receivable and unbilled services, net

i 3,063

i 2,917

Prepaid expenses

i 165

i 151

Income taxes receivable

i 42

i 43

Investments in debt, equity and other securities

i 104

i 93

Other current assets and receivables

i 460

i 561

Total current assets

i 5,328

i 4,981

Property and equipment, net

i 520

i 532

Operating lease right-of-use assets

i 325

i 331

Investments in debt, equity and other securities

i 102

i 68

Investments in unconsolidated affiliates

i 99

i 94

Goodwill

i 14,015

i 13,921

Other identifiable intangibles, net

i 4,757

i 4,820

Deferred income taxes

i 125

i 118

Deposits and other assets, net

i 468

i 472

Total assets

i 25,739

i 25,337

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses

i 3,143

i 3,316

Unearned income

i 1,827

i 1,797

Income taxes payable

i 187

i 161

Current portion of long-term debt

i 1,343

i 152

Other current liabilities

i 157

i 152

Total current liabilities

i 6,657

i 5,578

Long-term debt, less current portion

i 11,833

i 12,595

Deferred income taxes

i 421

i 464

Operating lease liabilities

i 255

i 264

Other liabilities

i 641

i 671

Total liabilities

i 19,807

i 19,572

Commitments and contingencies (Note 8)

Stockholders’ equity:

Common stock and additional paid-in capital, i i 400.0 / shares authorized as of March 31, 2023 and December 31, 2022, $ i i 0.01 / par value, i 256.9 shares issued and i 185.5 shares outstanding as of March 31, 2023; i 256.4 shares issued and i 185.7 shares outstanding as of December 31, 2022

i 10,909

i 10,898

Retained earnings

i 3,623

i 3,334

Treasury stock, at cost, i 71.4 and i 70.7 shares as of March 31, 2023 and December 31, 2022, respectively

( i 7,869)

( i 7,740)

Accumulated other comprehensive loss

( i 731)

( i 727)

Total stockholders’ equity

i 5,932

i 5,765

Total liabilities and stockholders’ equity

i 25,739

i 25,337

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three Months Ended March 31,

(in millions)

2023

2022

Operating activities:

Net income

i 289

i 325

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization

i 253

i 255

Amortization of debt issuance costs and discount

i 4

Stock-based compensation

i 75

i 30

Losses from unconsolidated affiliates

i 2

i 4

(Gain) loss on investments, net

( i 4)

i 11

Benefit from deferred income taxes

( i 27)

( i 10)

Changes in operating assets and liabilities:

Change in accounts receivable, unbilled services and unearned income

( i 107)

i 54

Change in other operating assets and liabilities

( i 68)

( i 165)

Net cash provided by operating activities

i 417

i 508

Investing activities:

Acquisition of property, equipment and software

( i 164)

( i 177)

Acquisition of businesses, net of cash acquired

( i 18)

( i 430)

Purchases of marketable securities, net

( i 4)

( i 3)

Investments in unconsolidated affiliates, net of payments received

( i 7)

( i 6)

Investments in debt and equity securities

( i 36)

i —

Other

i 7

i 3

Net cash used in investing activities

( i 222)

( i 613)

Financing activities:

Repayment of debt and principal payments on finance leases

( i 39)

( i 24)

Proceeds from revolving credit facility

i 475

i 950

Repayment of revolving credit facility

( i 100)

( i 300)

Payments related to employee stock option plans

( i 58)

( i 67)

Repurchase of common stock

( i 129)

( i 403)

Contingent consideration and deferred purchase price payments

( i 62)

( i 12)

Net cash provided by financing activities

i 87

i 144

Effect of foreign currency exchange rate changes on cash

( i 4)

( i 18)

Increase in cash and cash equivalents

i 278

i 21

Cash and cash equivalents at beginning of period

i 1,216

i 1,366

Cash and cash equivalents at end of period

i 1,494

i 1,387

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in millions)

Common
Stock
Shares

Treasury
Stock
Shares

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
(Loss) Income

Total

Balance, December 31, 2022

i 256.4

( i 70.7)

i 3

i 10,895

i 3,334

( i 7,740)

( i 727)

i 5,765

Issuance of common stock

i 0.5

—

( i 58)

—

( i 58)

Repurchase of common stock

—

( i 0.7)

—

( i 129)

—

( i 129)

Stock-based compensation

—

i 69

—

i 69

Net income

—

i 289

—

i 289

Unrealized gains on derivative instruments, net of tax

—

i 10

Defined benefit plan adjustments, net of tax

—

i 1

Foreign currency translation, net of tax

—

i 10

Reclassification adjustments, net of tax

—

( i 25)

Balance, March 31, 2023

i 256.9

( i 71.4)

i 3

i 10,906

i 3,623

( i 7,869)

( i 731)

i 5,932

(in millions)

Common
Stock
Shares

Treasury
Stock
Shares

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
(Loss) Income

Total

Balance, December 31, 2021

i 255.8

( i 65.2)

i 3

i 10,774

i 2,243

( i 6,572)

( i 406)

i 6,042

Issuance of common stock

i 0.4

—

( i 67)

—

( i 67)

Repurchase of common stock

—

( i 1.7)

—

( i 403)

—

( i 403)

Stock-based compensation

—

i 35

—

i 35

Net income

—

i 325

—

i 325

Unrealized gains on derivative instruments, net of tax

—

i 30

Defined benefit plan adjustments, net of tax

—

( i 2)

Foreign currency translation, net of tax

—

( i 40)

Reclassification adjustments, net of tax

—

( i 1)

Balance, March 31, 2022

i 256.2

( i 66.9)

i 3

i 10,742

i 2,568

( i 6,975)

( i 419)

i 5,919

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. i Summary of Significant Accounting Policies

The Company

IQVIA Holdings Inc. (together with its subsidiaries, the “Company” or “IQVIA”) is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry. With approximately i 87,000 employees, the Company conducts business in more than i 100 countries.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the Company’s financial condition and results of operations have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements of the Company, but does not include all the disclosures required by GAAP.

Recently Issued Accounting Standards

Accounting pronouncements adopted

In September 2022, the Financial Accounting Standards Board ("FASB") issued new accounting guidance, Accounting Standards Update ("ASU") 2022-04, Liabilities - Supplier Finance Programs, to enhance the transparency of supplier finance programs. The amendments in this ASU address investor and other financial statement user requests for additional information about the use of supplier finance programs by the buyer party to understand the effect of those programs on an entity's working capital, liquidity, and cash flows. The Company adopted this new accounting guidance effective January 1, 2023. The adoption of this new accounting guidance did not have a material effect on the Company's disclosures within the consolidated financial statements.

2. i Revenues by Geography, Concentration of Credit Risk and Remaining Performance Obligations

The following tables represent revenues by geographic region and reportable segment for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31, 2023

(in millions)

Technology &
Analytics Solutions

Research &
Development Solutions

Contract Sales &
Medical Solutions

Total

Revenues:

Americas

i 735

i 986

i 80

i 1,801

Europe and Africa

i 556

i 491

i 47

i 1,094

Asia-Pacific

i 153

i 549

i 55

i 757

Total revenues

i 1,444

i 2,026

i 182

i 3,652

Three Months Ended March 31, 2022

(in millions)

Technology &
Analytics Solutions

Research &
Development Solutions

Contract Sales &
Medical Solutions

Total

Revenues:

Americas

i 681

i 946

i 91

i 1,718

Europe and Africa

i 596

i 507

i 46

i 1,149

Asia-Pacific

i 162

i 481

i 58

i 701

Total revenues

i 1,439

i 1,934

i 195

i 3,568

i i i i No / / / individual customer represented 10% or more of consolidated revenues for the three months ended March 31, 2023 or 2022.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2023, approximately $ i 31.4 billion of revenues are expected to be recognized in the future from remaining performance obligations. The Company expects to recognize revenues on approximately i 30% of these remaining performance obligations over the next i twelve months, on approximately 80% over the next five years, with the balance recognized thereafter. Most of the Company's remaining performance obligations where revenues are expected to be recognized beyond the next twelve months are for service contracts for clinical research in the Company's Research & Development Solutions segment. The customer contract transaction price allocated to the remaining performance obligations differs from backlog in that it does not include wholly unperformed contracts under which the customer has a unilateral right to cancel the arrangement.

3. i Trade Accounts Receivable, Unbilled Services and Unearned Income

i Trade accounts receivables and unbilled services consist of the following:

(in millions)

Trade accounts receivable

i 1,351

i 1,329

Unbilled services

i 1,745

i 1,624

Trade accounts receivable and unbilled services

i 3,096

i 2,953

Allowance for doubtful accounts

( i 33)

( i 36)

Trade accounts receivable and unbilled services, net

i 3,063

i 2,917

i Unbilled services and unearned income were as follows:

(in millions)

Change

Unbilled services

i 1,745

i 1,624

i 121

Unearned income

( i 1,827)

( i 1,797)

( i 30)

Net balance

( i 82)

( i 173)

i 91

Unbilled services, which is comprised of approximately i 66% and i 61% of unbilled receivables and i 34% and i 39% of contract assets as of March 31, 2023 and December 31, 2022, respectively, increased by $ i 121 million as compared to December 31, 2022. Contract assets are unbilled services for which invoicing is based on the timing of certain milestones related to service contracts for clinical research whereas unbilled receivables are billable upon the passage of time. Unearned income increased by $ i 30 million over the same period resulting in an increase of $ i 91 million in the net balance of unbilled services and unearned income between March 31, 2023 and December 31, 2022. The change in the net balance is driven by the difference in timing of revenue recognition in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, primarily related to the Company’s Research & Development Solutions contracts (which is based on the percentage of costs incurred) versus the timing of invoicing, which is based on certain milestones.

The majority of the unearned income balance as of the beginning of the year is expected to be recognized in revenues during the year ended December 31, 2023.

Bad debt expense recognized on the Company’s trade accounts receivable was immaterial for the three months ended March 31, 2023 and 2022.

Accounts Receivable Factoring Arrangements

The Company has accounts receivable factoring agreements to sell certain eligible unsecured trade accounts receivable, either based on automatic arrangements or at its option, without recourse, to unrelated third-party financial institutions for cash. For the three months ended March 31, 2023, through its accounts receivable factoring arrangements that the Company utilizes most frequently, the Company factored approximately $ i 181 million of trade accounts receivable on a non-recourse basis and received approximately $ i 174 million in cash proceeds from the sales. The fees associated with these transactions were immaterial. The Company has other accounts receivable arrangements for which the activity associated with them is immaterial.

4. i Goodwill

The following is a summary of goodwill by reportable segment for the three months ended March 31, 2023:

(in millions)

Technology & Analytics Solutions

Research & Development Solutions

Contract Sales & Medical Solutions

Consolidated

Balance as of December 31, 2022

i 11,520

i 2,247

i 154

i 13,921

Business combinations

i 18

i —

i 18

Impact of foreign currency fluctuations and other

i 73

i 4

( i 1)

i 76

Balance as of March 31, 2023

i 11,611

i 2,251

i 153

i 14,015

5. i Derivatives

The fair values of the Company’s derivative instruments and the line items on the accompanying condensed consolidated balance sheets to which they were recorded are summarized in the following table:

(in millions)

Balance Sheet Classification

Assets

Liabilities

Notional

Assets

Liabilities

Notional

Derivatives designated as hedging instruments:

Interest rate swaps

Other current assets, other assets and other current liabilities

i 26

i 7

i 1,800

i 42

i —

i 1,800

Foreign exchange forward contracts

Other current assets and other current liabilities

i 3

i —

i 133

i 2

i 122

Total derivatives

i 29

i 7

i 44

i 2

/ i

The pre-tax effect of the Company’s cash flow hedging instruments on other comprehensive income is summarized in the following table:

Three Months Ended March 31,

(in millions)

2023

2022

Interest rate swaps

( i 23)

i 40

Foreign exchange forward contracts

i 3

( i 2)

Total

( i 20)

i 38

The Company expects $ i 35 million of pre-tax unrealized gains related to its foreign exchange contracts and interest rate derivatives included in accumulated other comprehensive (loss) income (“AOCI”) as of March 31, 2023 to be reclassified into earnings within the next twelve months. As of March 31, 2023, the Company's foreign currency denominated debt balance (net of original issue discount) designated as a hedge of its net investment in certain foreign subsidiaries totaled € i 5,207 million ($ i 5,664 million). The amount of foreign exchange (losses) gains related to the net investment hedge included in the cumulative translation adjustment component of AOCI for the three months ended March 31, 2023 and 2022 was $( i 89) million and $ i 119 million, respectively.

6. i 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 values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of March 31, 2023 and December 31, 2022 due to their short-term nature. As of March 31, 2023 and December 31, 2022, the fair value of total debt was $ i 12,793 million and $ i 12,281 million, respectively, as determined under Level 2 measurements for these financial instruments.

Recurring Fair Value Measurements

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of March 31, 2023:

(in millions)

Level 1

Level 2

Level 3

Total

Assets:

Marketable securities

i 131

i —

i 131

Derivatives

i —

i 29

i —

i 29

Total

i 131

i 29

i —

i 160

Liabilities:

Derivatives

i —

i 7

i —

i 7

Contingent consideration

i —

i 110

Total

i —

i 7

i 110

i 117

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured and reported at fair value on a recurring basis as of December 31, 2022:

(in millions)

Level 1

Level 2

Level 3

Total

Assets:

Marketable securities

i 122

i —

i 122

Derivatives

i —

i 44

i —

i 44

Total

i 122

i 44

i —

i 166

Liabilities:

Derivatives

i —

i 2

i —

i 2

Contingent consideration

i —

i 173

Total

i —

i 2

i 173

i 175

Below is a summary of the valuation techniques used in determining fair value:

Marketable securities — The Company values trading and available-for-sale securities using the quoted market value of the securities held.

Derivatives — Derivatives consist of foreign exchange contracts and interest rate swaps. The fair value of foreign exchange contracts is based on observable market inputs of spot and forward rates or using other observable inputs. The fair value of the interest rate swaps is the estimated amount that the Company would receive or pay to terminate such agreements, taking into account market interest rates and the remaining time to maturities or using market inputs with mid-market pricing as a practical expedient for bid-ask spread.

Contingent consideration — The Company values contingent consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows. Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and operating forecasts) and the probability of achieving the specific targets. Based on the assessments of the probability of achieving specific targets, as of March 31, 2023, the Company has accrued approximately i 76% of the maximum contingent consideration payments that could potentially become payable.

The following table summarizes the changes in Level 3 financial assets and liabilities measured on a recurring basis for the three months ended March 31, 2023:


(in millions)	Contingent Consideration
Balance as of December 31, 2022	$	i 173
Business combinations	i 3
Contingent consideration paid	( i 61)
Revaluations included in earnings and foreign currency translation adjustments	( i 5)
Balance as of March 31, 2023	$	i 110

The current portion of contingent consideration is included within accrued expenses and the long-term portion is included within other liabilities on the accompanying condensed consolidated balance sheets. Revaluations of contingent consideration are recognized in other (income) expense, net on the accompanying condensed consolidated statements of income. A change in significant unobservable inputs could result in a higher or lower fair value measurement of contingent consideration.

Non-recurring Fair Value Measurements

As of March 31, 2023, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled $ i 18,946 million and were identified as Level 3. These assets are comprised of debt investments and cost and equity method investments of $ i 174 million, goodwill of $ i 14,015 million and other identifiable intangibles, net of $ i 4,757 million.

7. i Credit Arrangements

i The following is a summary of the Company’s revolving credit facilities as of March 31, 2023:


Facility						Interest Rates
$ i 1,500 million (revolving credit facility)						i LIBOR in the relevant currency borrowed plus a margin of i 1.25% as of March 31, 2023 /
$ i 110 million (receivables financing facility)						i LIBOR Market Index Rate ( i 4.86% as of March 31, 2023) plus i 0.90% /

i The following table summarizes the Company’s debt at the dates indicated:

(dollars in millions)

Revolving Credit Facility due 2026:

U.S. Dollar denominated borrowings—U.S. Dollar LIBOR at average floating rates of i 6.08%

i 800

i 425

Senior Secured Credit Facilities:

Term A Loan due 2026—U.S. Dollar LIBOR at average floating rates of i 6.09%

i 1,324

i 1,343

Term A Loan due 2026—Euribor at average floating rates of i 4.27%

i 315

i 314

Term A Loan due 2027—U.S. Dollar SOFR at average floating rates of i 6.16%

i 1,203

i 1,219

Term B Loan due 2024—Euribor at average floating rates of i 5.02%

i 1,191

i 1,172

Term B Loan due 2025—U.S. Dollar LIBOR at average floating rates of i 6.59%

i 670

Term B Loan due 2025—U.S. Dollar LIBOR at average floating rates of i 6.59%

i 861

i 860

Term B Loan due 2025—Euribor at average floating rates of i 5.02%

i 568

i 559

i 5.0% Senior Notes due 2027—U.S. Dollar denominated

i 1,100

i 5.0% Senior Notes due 2026—U.S. Dollar denominated

i 1,050

i 2.875% Senior Notes due 2025—Euro denominated

i 457

i 450

i 2.25% Senior Notes due 2028—Euro denominated

i 783

i 771

i 2.875% Senior Notes due 2028—Euro denominated

i 773

i 761

i 1.750% Senior Notes due 2026—Euro denominated

i 598

i 589

i 2.250% Senior Notes due 2029—Euro denominated

i 979

i 964

Receivables financing facility due 2024—U.S. Dollar LIBOR at average floating rates of i 5.74%:

Revolving Loan Commitment

i 110

Term Loan

i 440

Principal amount of debt

i 13,222

i 12,797

Less: unamortized discount and debt issuance costs

( i 46)

( i 50)

Less: current portion

( i 1,343)

( i 152)

Long-term debt

i 11,833

i 12,595

i Contractual maturities of long-term debt as of March 31, 2023 are as follows:


(in millions)
Remainder of 2023	$	i 114
2024	i 1,893
2025	i 2,708
2026	i 3,903
2027	i 2,069
Thereafter	i 2,535
	$	i 13,222

Senior Secured Credit Facilities

As of March 31, 2023, the Company’s Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities of up to $ i 7,632 million, which consisted of $ i 6,932 million principal amounts of debt outstanding (as detailed in the table above), and $ i 695 million of available borrowing capacity on the $ i 1,500 million revolving credit facility and standby letters of credit. The revolving credit facility is comprised of a $ i 675 million senior secured revolving facility available in U.S. dollars, a $ i 600 million senior secured revolving facility available in U.S. dollars, Euros, Swiss Francs and other foreign currencies, and a $ i 225 million senior secured revolving facility available in U.S. dollars and Yen.

On April 17, 2023, the Company increased the capacity of its senior secured revolving credit facility by $ i 500 million U.S. dollars, bringing the total capacity of the revolving credit facility to $ i 2,000 million. At the same time, the Company also amended the benchmark rate of the U.S. dollar revolving credit facility and the U.S. dollar Term A Loans from U.S. dollar LIBOR to U.S. dollar SOFR plus a 10 basis point Credit Spread Adjustment.

Restrictive Covenants

The Company’s debt agreements provide for certain covenants and events of default customary for similar instruments, including a covenant not to exceed a specified ratio of consolidated senior secured net indebtedness to Consolidated EBITDA, as defined in the senior secured credit facility agreement and a covenant to maintain a specified minimum interest coverage ratio. If an event of default occurs under any of the Company’s or the Company’s subsidiaries’ financing arrangements, the creditors under such financing arrangements will be entitled to take various actions, including the acceleration of amounts due under such arrangements, and in the case of the lenders under the revolving credit facility and term loans, other actions permitted to be taken by a secured creditor. The Company’s long-term debt arrangements contain other usual and customary restrictive covenants that, among other things, place limitations on the Company’s ability to declare dividends. As of March 31, 2023, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements.

8. i Contingencies

The Company and its subsidiaries are involved in legal and tax proceedings, claims and litigation arising in the ordinary course of business. Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. For those matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss can be reasonably estimated, the Company has recorded an accrual in the consolidated financial statements based on its best estimates of such loss. In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any.

However, even in many instances where the Company has recorded an estimated liability, the Company is unable to predict with certainty the final outcome of the matter or whether resolution of the matter will materially affect the Company’s results of operations, financial position or cash flows. As additional information becomes available, the Company adjusts its assessments and estimates of such liabilities accordingly.

The Company routinely enters into agreements with third parties, including its clients and suppliers, all in the normal course of business. In these agreements, the Company sometimes agrees to indemnify and hold harmless the other party for any damages such other party may suffer as a result of potential intellectual property infringement and other claims. The Company has not accrued a liability with respect to these matters generally, as the exposure is considered remote.

Based on its review of the latest information available, management does not expect the impact of pending legal and tax proceedings, claims and litigation, either individually or in the aggregate, to have a material adverse effect on the Company’s results of operations, cash flows or financial position. However, one or more unfavorable outcomes in any claim or litigation against the Company could have a material adverse effect for the period in which it is resolved. The following is a summary of certain legal matters involving the Company.

On February 13, 2014, a group of approximately i 1,200 medical doctors and i 900 private individuals filed a civil lawsuit with the Seoul Central District Court against IMS Korea and i two other defendants, the Korean Pharmaceutical Association (“KPA”) and the Korean Pharmaceutical Information Center (“KPIC”). The civil lawsuit alleges KPA and KPIC collected their personal information in violation of applicable privacy laws without the necessary consent through a software system installed on pharmacy computer systems in Korea, and that personal information was transferred to IMS Korea and sold to pharmaceutical companies. On September 11, 2017, the District Court issued a final decision that the encryption in use by the defendants since June 2014 was adequate to meet the requirements of the Korean Personal Information Privacy Act (“PIPA”) and the sharing of non-identified information for market research purposes was allowed under PIPA. The District Court also found an earlier version of encryption was insufficient to meet PIPA requirements, but no personal data had been leaked or re-identified. The District Court did not award any damages to plaintiffs. Approximately i 280 medical doctors and i 200 private individuals appealed the District Court decision. On May 3, 2019, the Appellate Court issued a final decision in which it concluded all of the non-identified information transferred by KPIC to IMS Korea for market research purposes violated PIPA, but did not award any damages to plaintiffs (affirming the District Court’s decision on this latter point). On May 24, 2019, approximately i 247 plaintiffs appealed the Appellate Court’s decision to the Supreme Court. The Company believes the appeal is without merit and is vigorously defending its position.

On July 23, 2015, indictments were issued by the Seoul Central District Prosecutors’ Office in South Korea against i 24 individuals and companies alleging improper handling of sensitive health information in violation of, among others, South Korea’s Personal Information Protection Act. IMS Korea and i two of its employees were among the individuals and organizations indicted. Although there is no assertion that IMS Korea used patient identified health information in any of its offerings, prosecutors allege that certain of IMS Korea’s data suppliers should have obtained patient consent when they converted sensitive patient information into non-identified data and that IMS Korea had not taken adequate precautions to reduce the risk of re-identification. On February 14, 2020, the Seoul Central District Court acquitted IMS Korea and its i two employees of the charges of improper handling of sensitive health information, and the Prosecutor's Office appealed. On December 23, 2021, the appellate court affirmed the judgment of the Seoul Central District Court. The Prosecutor's Office has appealed to the Supreme Court. The Company intends to vigorously defend its position on appeal.

On January 10, 2017, Quintiles IMS Health Incorporated and IMS Software Services Ltd. (collectively “IQVIA Parties”), filed a lawsuit in the U.S. District Court for the District of New Jersey against Veeva Systems, Inc. (“Veeva”) alleging Veeva unlawfully used IQVIA Parties intellectual property to improve Veeva data offerings, to promote and market Veeva data offerings and to improve Veeva technology offerings. IQVIA Parties seek injunctive relief, appointment of a monitor, the award of compensatory and punitive damages and reimbursement of all litigation expenses, including reasonable attorneys’ fees and costs. On March 13, 2017, Veeva filed counterclaims alleging anticompetitive business practices in violation of the Sherman Act and state laws. Veeva claims damages in excess of $ i 200 million, and is seeking punitive damages and litigation costs, including attorneys’ fees. We believe the counterclaims are without merit, reject all counterclaims raised by Veeva and intend to vigorously defend IQVIA Parties’ position and pursue our claims against Veeva. Since the initial filings, the parties have filed additional litigations against each other, primarily concerning the use of IQVIA data with various other Veeva products. The parties are engaged in the discovery process in connection with these lawsuits.

On May 7, 2021, the Court issued an order and opinion (the “Order”) in which it found significant evidence that Veeva had (1) misappropriated IQVIA data and unlawfully used it to improve Veeva data offerings, (2) engaged in a cover-up by deleting significant evidence of its theft of IQVIA’s trade secrets, and (3) improperly withheld certain evidence in furtherance of a crime and/or fraud against IQVIA. The Court imposed five sanctions against Veeva, including ordering three separate adverse inference instructions be issued to the jury and that IQVIA be permitted to present evidence to the jury of Veeva’s destruction efforts. Veeva is currently appealing the Order.

9. i Stockholders’ Equity

Preferred Stock

The Company is authorized to issue i 1.0 million shares of preferred stock, $ i 0.01 per share par value. i i i i No / / / shares of preferred stock were issued or outstanding as of March 31, 2023 or December 31, 2022.

Equity Repurchase Program

As of March 31, 2023, the total stock repurchase authorization under the Company's equity repurchase program (the “Repurchase Program”) was $ i 9,725 million. The Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it may be modified, extended, suspended or discontinued at any time. During the three months ended March 31, 2023, the Company repurchased i 0.7 million shares of its common stock for $ i 129 million under the Repurchase Program. As of March 31, 2023, the Company has remaining authorization to repurchase up to $ i 1,226 million of its common stock under the Repurchase Program. In addition, from time to time, the Company has repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

10. i Restructuring

The Company has continued to take restructuring actions in 2023 to align its resources and reduce overcapacity to adapt to changing market conditions and integrate acquisitions. These actions include consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements. These restructuring actions are expected to continue into 2024.

i The following amounts were recorded for the restructuring plans:

(in millions)

Severance and
Related Costs

Balance as of December 31, 2022

i 26

Expense, net of reversals

i 17

Payments

( i 14)

Balance as of March 31, 2023

i 29

The reversals were due to changes in estimates primarily resulting from the redeployment of staff and higher than expected voluntary terminations. Restructuring costs are not allocated to the Company’s reportable segments as they are not part of the segment performance measures regularly reviewed by management. The Company expects that the majority of the restructuring accruals as of March 31, 2023 will be paid in 2023 and 2024.

11. i Income Taxes

The Company's effective income tax rate was i 19.6% and i 17.8% in the first quarter of 2023 and 2022, respectively. The effective income tax rate in the first quarter of 2023 and 2022 was favorably impacted by $ i 8 million and $ i 13 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

12. i Accumulated Other Comprehensive (Loss) Income

i Below is a summary of the components of AOCI:

(in millions)

Foreign
Currency
Translation

Derivative
Instruments

Defined
Benefit
Plans

Income
Taxes

Total

Balance as of December 31, 2022

( i 825)

i 44

( i 8)

i 62

( i 727)

Other comprehensive (loss) income before reclassifications

( i 19)

i 13

i 1

i 26

i 21

Reclassification adjustments

i —

( i 33)

i —

i 8

( i 25)

Balance as of March 31, 2023

( i 844)

i 24

( i 7)

i 96

( i 731)

i Below is a summary of the adjustments for amounts reclassified from AOCI into the condensed consolidated statements of income and the affected financial statement line item:

(in millions)

Affected Financial Statement
Line Item

Three Months Ended March 31,

2023

2022

Derivative instruments:

Interest rate swaps

Interest expense

i 16

i —

Foreign exchange forward contracts

Revenues

i 17

i 1

Total before income taxes

i 33

i 1

Income taxes

i 8

i —

Total net of income taxes

i 25

i 1

13. i Segments

The following table presents the Company’s operations by reportable segment. The Company is managed through i three reportable segments, Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions. Technology & Analytics Solutions provides mission critical information, technology solutions and real world insights and services to the Company's life science clients. Research & Development Solutions, which primarily serves biopharmaceutical customers, provides outsourced clinical research and clinical trial related services. Contract Sales & Medical Solutions provides health care provider (including contract sales) and patient engagement services to both biopharmaceutical clients and the broader healthcare market.

Certain costs are not allocated to our segments and are reported as general corporate and unallocated expenses. These costs primarily consist of stock-based compensation and expenses related to integration activities and acquisitions. The Company also does not allocate depreciation and amortization or impairment charges to its segments. i Asset information by segment is not presented, as this measure is not used by the chief operating decision maker to assess the Company’s performance. The Company’s reportable segment information is presented below:

Three Months Ended March 31,

(in millions)

2023

2022

Revenues

Technology & Analytics Solutions

i 1,444

i 1,439

Research & Development Solutions

i 2,026

i 1,934

Contract Sales & Medical Solutions

i 182

i 195

Total revenues

i 3,652

i 3,568

Cost of revenues, exclusive of depreciation and amortization

Technology & Analytics Solutions

i 858

i 834

Research & Development Solutions

i 1,386

i 1,322

Contract Sales & Medical Solutions

i 154

i 167

Total cost of revenues, exclusive of depreciation and amortization

i 2,398

i 2,323

Selling, general and administrative expenses

Technology & Analytics Solutions

i 225

i 219

Research & Development Solutions

i 212

i 211

Contract Sales & Medical Solutions

i 15

i 16

General corporate and unallocated

i 61

i 42

Total selling, general and administrative expenses

i 513

i 488

Segment profit

Technology & Analytics Solutions

i 361

i 386

Research & Development Solutions

i 428

i 401

Contract Sales & Medical Solutions

i 13

i 12

Total segment profit

i 802

i 799

General corporate and unallocated

( i 61)

( i 42)

Depreciation and amortization

( i 253)

( i 255)

Restructuring costs

( i 17)

( i 7)

Total income from operations

i 471

i 495

14. i Earnings Per Share

The following table reconciles the basic to diluted weighted average shares outstanding:

Three Months Ended March 31,

(in millions, except per share data)

2023

2022

Numerator:

Net income

i 289

i 325

Denominator:

Basic weighted average common shares outstanding

i 185.8

i 190.0

Effect of dilutive stock options and share awards

i 2.8

i 3.4

Diluted weighted average common shares outstanding

i 188.6

i 193.4

Earnings per share attributable to common stockholders:

Basic

i 1.56

i 1.71

Diluted

i 1.53

i 1.68

Stock-based awards will have a dilutive effect under the treasury method when the respective period's average market value of the Company's common stock exceeds the exercise proceeds. Performance awards are included in diluted earnings per share based on if the performance targets have been met at the end of the reporting period.

For the three months ended March 31, 2023 and 2022, the weighted average number of outstanding stock-based awards not included in the computation of diluted earnings per share because they are subject to performance conditions that have not been met at the end of the reporting period or the effect of including such stock-based awards in the computation would be anti-dilutive was i 1.0 and i 0.3 million, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement for Forward-Looking Information

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and 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, 2022 (our “2022 Form 10-K”).

In addition to historical condensed consolidated financial information, the following discussion contains or incorporates by reference forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts but reflect, among other things, our current expectations, our forecasts and our 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. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such. Without limiting the foregoing, the words “assumes,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” "forecasts," “plans,” “projects,” “should,” “seeks,” “sees,” “targets,” “will,” “would” and similar words and expressions, and variations and negatives of these words are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We assume no obligation to update any such forward-looking information to reflect actual results or changes in our outlook or the factors affecting such forward-looking information.

We caution you that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation, business disruptions caused by natural disasters, pandemics such as the COVID-19 (coronavirus) outbreak, including any variants, and the public health policy responses to the outbreak, and international conflicts or other disruptions outside of our control such as the current situation in Ukraine and Russia; our ability to accurately model or forecast the impact of the spread and/or containment of COVID-19, including any variants, among other sources of business interruption, on our operations and financial results; most of our contracts may be terminated on short notice, and we may lose or experience delays with large client contracts or be unable to enter into new contracts; the market for our services may not grow as we expect; we may be unable to successfully develop and market new services or enter new markets; imposition of restrictions on our use of data by data suppliers or their refusal to license data to us; any failure by us to comply with contractual, regulatory or ethical requirements under our contracts, including current or future changes to data protection and privacy laws; breaches or misuse of our or our outsourcing partners’ security or communications systems; failure to meet our productivity or business transformation objectives; failure to successfully invest in growth opportunities; our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; the expiration or inability to acquire third party licenses for technology or intellectual property; any failure by us to accurately and timely price and formulate cost estimates for contracts, or to document change orders; hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements; the rate at which our backlog converts to revenues; our ability to acquire, develop and implement technology necessary for our business; consolidation in the industries in which our clients operate; risks related to client or therapeutic concentration; government regulators or our customers may limit the number or scope of indications for medicines and treatments or withdraw products from the market, and government regulators may impose new regulatory requirements or may adopt new regulations affecting the biopharmaceutical industry; the risks associated with operating on a global basis, including currency or exchange rate fluctuations and legal compliance, including anti-corruption laws; risks related to changes in accounting standards; general economic conditions in the markets in which we operate, including financial market conditions, inflation and risks related to sales to government entities; the impact of changes in tax laws and regulations; and our ability to successfully integrate, and achieve expected benefits from, our acquired businesses. For a further discussion of the risks relating to our business, see Part I—Item 1A—“Risk Factors” in our 2022 Form 10-K, as updated in our subsequently filed Quarterly Reports on Form 10-Q.

Overview

IQVIA is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry. IQVIA creates intelligent connections across all aspects of healthcare through its analytics, transformative technology, big data resources and extensive domain expertise. IQVIA Connected Intelligence™ delivers powerful insights with speed and agility — enabling customers to accelerate the clinical development and commercialization of innovative medical treatments that improve healthcare outcomes for patients. With approximately 87,000 employees, we conduct operations in more than 100 countries.

We are a global leader in protecting individual patient privacy. We use a wide variety of privacy-enhancing technologies and safeguards to protect individual privacy while generating and analyzing information on a scale that helps healthcare stakeholders identify disease patterns and correlate with the precise treatment path and therapy needed for better outcomes. Our insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures.

We are managed through three reportable segments: Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions. Technology & Analytics Solutions provides mission critical information, technology solutions and real world insights and services to our life science clients. Research & Development Solutions, which primarily serves biopharmaceutical customers, provides outsourced clinical research and clinical trial related services. Contract Sales & Medical Solutions provides health care provider (including contract sales) and patient engagement services to both biopharmaceutical clients and the broader healthcare market.

Sources of Revenue

Total revenues are comprised of revenues from the provision of our services. We do not have any material product revenues.

Costs and Expenses

Our costs and expenses are comprised primarily of our cost of revenues including reimbursed expenses and selling, general and administrative expenses. Cost of revenues includes compensation and benefits for billable employees and personnel involved in production, trial monitoring, data management and delivery, and the costs of acquiring and processing data for our information offerings; costs of staff directly involved with delivering technology-related services offerings and engagements, related accommodations and the costs of data purchased specifically for technology services engagements; and other expenses directly related to service contracts such as courier fees, laboratory supplies, professional services and travel expenses. Reimbursed expenses, which are included in cost of revenues, are comprised principally of payments to investigators who oversee clinical trials and travel expenses for our clinical monitors and sales representatives. Selling, general and administrative expenses include costs related to sales, marketing and administrative functions (including human resources, legal, finance, quality assurance, compliance and general management) for compensation and benefits, travel, professional services, training and expenses for information technology and facilities. We also incur costs and expenses associated with depreciation and amortization.

Foreign Currency Translation

In the first three months of 2023, approximately 30% of our revenues were denominated in currencies other than the United States dollar, which represents approximately 60 currencies. Because a large portion of our revenues and expenses are denominated in foreign currencies and our financial statements are reported in United States dollars, changes in foreign currency exchange rates can significantly affect our results of operations. The revenues and expenses of our foreign operations are generally denominated in local currencies and translated into United States dollars for financial reporting purposes. Accordingly, exchange rate fluctuations will affect the translation of foreign results into United States dollars for purposes of reporting our condensed consolidated results. As a result, we believe that reporting results of operations that exclude the effects of foreign currency rate fluctuations on certain financial results can facilitate analysis of period to period comparisons. This constant currency information assumes the same foreign currency exchange rates that were in effect for the comparable prior-year period were used in translation of the current period results. As such, the differences noted below between reported results of operations and constant currency information is wholly attributable to the effects of foreign currency rate fluctuations.

Consolidated Results of Operations

For information regarding our results of operations for Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions, refer to “Segment Results of Operations” later in this section.

Revenues


	Three Months Ended March 31,				Change
(in millions)	2023		2022		$		%
Revenues	$	3,652	$	3,568	$	84	2.4	%

For the first quarter of 2023, our revenues increased $84 million, or 2.4%, as compared to the same period in 2022. This increase was comprised of constant currency revenue growth of approximately $166 million, or 4.7%, reflecting a $42 million increase in Technology & Analytics Solutions, a $126 million increase in Research & Development Solutions, and a $2 million decrease in Contract Sales & Medical Solutions.

Cost of Revenues, exclusive of Depreciation and Amortization


	Three Months Ended March 31,
(in millions)	2023			2022
Cost of revenues, exclusive of depreciation and amortization	$	2,398		$	2,323
% of revenues	65.7		%	65.1		%

The $75 million increase in cost of revenues, exclusive of depreciation and amortization, for the three months ended March 31, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $185 million, or 8.0%, reflecting a $52 million increase in Technology & Analytics Solutions, a $136 million increase in Research & Development Solutions, and a $3 million decrease in Contract Sales & Medical Solutions.

Selling, General and Administrative Expenses


	Three Months Ended March 31,
(in millions)	2023			2022
Selling, general and administrative expenses	$	513		$	488
% of revenues	14.0		%	13.7		%

The $25 million increase in selling, general and administrative expenses for the three months ended March 31, 2023 as compared to the same period in 2022 included a constant currency increase of approximately $48 million, or 9.8%, reflecting a $19 million increase in Technology & Analytics Solutions, a $7 million increase in Research & Development Solutions, a $1 million decrease in Contract Sales & Medical Solutions, and a $23 million increase in general corporate and unallocated expenses.

Depreciation and Amortization


	Three Months Ended March 31,
(in millions)	2023			2022
Depreciation and amortization	$	253		$	255
% of revenues	6.9		%	7.1		%

Depreciation and amortization was relatively consistent for the three months ended March 31, 2023 compared to the same period in 2022.

Restructuring Costs


	Three Months Ended March 31,
(in millions)	2023		2022
Restructuring costs	$	17	$	7

The restructuring costs incurred during 2023 and 2022 were due to ongoing efforts to streamline our global operations and reduce overcapacity to adapt to changing market conditions and integrate acquisitions. The remaining actions under these plans are expected to occur throughout 2023 and into 2024 and are expected to consist of consolidating functional activities, eliminating redundant positions and aligning resources with customer requirements.

Interest Income and Interest Expense


	Three Months Ended March 31,
(in millions)	2023		2022
Interest income	$	(6)	$	(1)
Interest expense	$	141	$	86

Interest income includes interest received primarily from bank balances and investments. The increase for the three months ended March 31, 2023 as compared to the same period in 2022 is primarily a result of higher deposit rates.

Interest expense during the three months ended March 31, 2023 was higher than the same period in 2022 due primarily to higher base rate interest costs across the floating rate debt portfolio as well as from an increase in our net debt.

Other (Income) Expense, Net


	Three Months Ended March 31,
(in millions)	2023		2022
Other (income) expense, net	$	(26)	$	10

Other (income) expense, net for the three months ended March 31, 2023 increased as compared to the same period in 2022 primarily due to foreign currency gain and gains on investments.

Income Tax Expense


	Three Months Ended March 31,
(in millions)	2023		2022
Income tax expense	$	71	$	71

Our effective income tax rate was 19.6% and 17.8% in the first quarter of 2023 and 2022, respectively. Our effective income tax rate in the first quarter of 2023 and 2022 was favorably impacted by $8 million and $13 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

Segment Results of Operations

Revenues and profit by segment are as follows:


Three Months Ended March 31, 2023 and 2022
	Segment Revenues				Segment Profit
(in millions)	2023		2022		2023		2022
Technology & Analytics Solutions	$	1,444	$	1,439	$	361	$	386
Research & Development Solutions	2,026		1,934		428		401
Contract Sales & Medical Solutions	182		195		13		12
Total	3,652		3,568		802		799
General corporate and unallocated					(61)		(42)
Depreciation and amortization					(253)		(255)
Restructuring costs					(17)		(7)
Consolidated	$	3,652	$	3,568	$	471	$	495

Technology & Analytics Solutions


	Three Months Ended March 31,				Change
(in millions)	2023		2022		$		%
Revenues	$	1,444	$	1,439	$	5	0.3	%
Cost of revenues, exclusive of depreciation and amortization	858		834		24		2.9
Selling, general and administrative expenses	225		219		6		2.7
Segment profit	$	361	$	386	$	(25)	(6.5)	%

Revenues

Technology & Analytics Solutions’ revenues were $1,444 million for the first quarter of 2023, an increase of $5 million, or 0.3%, over the same period in 2022. This increase was comprised of constant currency revenue growth of approximately $42 million, or 2.9%, reflecting revenue growth in the Americas and Asia-Pacific regions.

The constant currency revenue growth for the three months ended March 31, 2023 was driven by an increase in real world services and information and technology services. The constant currency revenue growth was impacted by a decrease in COVID-19 related work.

Cost of Revenues, exclusive of Depreciation and Amortization

Technology & Analytics Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $24 million, or 2.9%, in the first quarter of 2023 over the same period in 2022. This increase included a constant currency increase of approximately $52 million, or 6.2%.

The constant currency increase for the three months ended March 31, 2023 was primarily related to an increase in compensation and related expenses to support revenue growth.

Selling, General and Administrative Expenses

Technology & Analytics Solutions’ selling, general and administrative expenses increased $6 million, or 2.7%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $19 million, or 8.7%.

The constant currency increase for the three months ended March 31, 2023 was primarily related to an increase in compensation and related expenses.

Research & Development Solutions


	Three Months Ended March 31,				Change
(in millions)	2023		2022		$		%
Revenues	$	2,026	$	1,934	$	92	4.8	%
Cost of revenues, exclusive of depreciation and amortization	1,386		1,322		64		4.8
Selling, general and administrative expenses	212		211		1		0.5
Segment profit	$	428	$	401	$	27	6.7	%

Backlog

Research & Development Solutions’ contracted backlog increased from $27.2 billion as of December 31, 2022 to $27.9 billion as of March 31, 2023, and we expect approximately $7.3 billion of this backlog to convert to revenue in the next twelve months.

Revenues

Research & Development Solutions’ revenues were $2,026 million for the first quarter of 2023, an increase of $92 million, or 4.8%, over the same period in 2022. This increase was comprised of constant currency revenue growth of approximately $126 million, or 6.5%, reflecting revenue growth in the Americas and Asia-Pacific regions.

The constant currency revenue growth for the three months ended March 31, 2023 was primarily the result of volume-related increases in clinical services and to a lesser extent from volume-related increases in lab testing. The constant currency revenue growth was impacted by a decrease in COVID-19 related work.

Cost of Revenues, exclusive of Depreciation and Amortization

Research & Development Solutions’ cost of revenues, exclusive of depreciation and amortization, increased $64 million, or 4.8%, in the first quarter of 2023 over the same period in 2022. This increase included a constant currency increase of approximately $136 million, or 10.3%.

The constant currency increase for the three months ended March 31, 2023 was primarily related to an increase in compensation and related expenses as a result of volume-related increases in clinical services and lab testing.

Selling, General and Administrative Expenses

Research & Development Solutions’ selling, general and administrative expenses increased $1 million, or 0.5%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency increase of approximately $7 million, or 3.3%.

The constant currency increase for the three months ended March 31, 2023 was primarily related to an increase in compensation and related expenses.

Contract Sales & Medical Solutions


	Three Months Ended March 31,				Change
(in millions)	2023		2022		$		%
Revenues	$	182	$	195	$	(13)	(6.7)	%
Cost of revenues, exclusive of depreciation and amortization	154		167		(13)		(7.8)
Selling, general and administrative expenses	15		16		(1)		(6.3)
Segment profit	$	13	$	12	$	1	8.3	%

Revenues

Contract Sales & Medical Solutions’ revenues were $182 million for the first quarter of 2023, a decrease of $13 million, or 6.7%, over the same period in 2022, which included a constant currency revenue decrease of approximately $2 million, or 1.0%.

Cost of Revenues, exclusive of Depreciation and Amortization

Contract Sales & Medical Solutions’ cost of revenues, exclusive of depreciation and amortization, decreased $13 million, or 7.8%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $3 million, or 1.8%.

Selling, General and Administrative Expenses

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $1 million, or 6.3%, in the first quarter of 2023 as compared to the same period in 2022, which included a constant currency decrease of approximately $1 million, or 6.3%.

Liquidity and Capital Resources

Overview

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. In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, acquisitions, investments, debt service requirements, equity repurchases, adequacy of our revolving credit and receivables financing facilities, and access to the capital markets.

We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which those funds can be accessed on a cost-effective basis. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences; however, those balances are generally available without legal restrictions to fund ordinary business operations. We have and expect to transfer cash from those subsidiaries to the United States and to other international subsidiaries when it is cost effective to do so.

We had a cash balance of $1,494 million as of March 31, 2023 ($532 million of which was in the United States), an increase from $1,216 million as of December 31, 2022.

Based on our current operating plan, we believe that our available cash and cash equivalents, future cash flows from operations and our ability to access funds under our revolving credit and receivables financing facilities will enable us to fund our operating requirements, capital expenditures, contractual obligations, and meet debt obligations for at least the next 12 months. We regularly evaluate our debt arrangements, as well as market conditions, and from time to time we may explore opportunities to modify our existing debt arrangements or pursue additional financing arrangements that could result in the issuance of new debt securities by us or our affiliates. We may use our existing cash, cash generated from operations or dispositions of assets or businesses and/or proceeds from any new financing arrangements or issuances of debt or equity securities to repay or reduce some of our outstanding obligations, to repurchase shares from our stockholders or for other purposes. As part of our ongoing business strategy, we also continually evaluate new acquisition, expansion and investment possibilities or other strategic growth opportunities, as well as potential dispositions of assets or businesses, as appropriate, including dispositions that may cause us to recognize a loss on certain assets. Should we elect to pursue any such transaction, we may seek to obtain debt or equity financing to facilitate those activities. Our ability to enter into any such potential transactions and our use of cash or proceeds is limited to varying degrees by the terms and restrictions contained in our existing debt arrangements. We cannot provide assurances that we will be able to complete any such financing arrangements or other transactions on favorable terms or at all.

Equity Repurchase Program

As of March 31, 2023, the total stock repurchase authorization under the Company's equity repurchase program (the “Repurchase Program”) was $9,725 million. The Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it may be modified, extended, suspended or discontinued at any time. During the three months ended March 31, 2023, we repurchased 0.7 million shares of our common stock for $129 million under the Repurchase Program. As of March 31, 2023, we have remaining authorization to repurchase up to $1,226 million of our common stock under the Repurchase Program. In addition, from time to time, we have repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

Debt

As of March 31, 2023, we had $13,222 million of total indebtedness, excluding $695 million of additional available borrowings under our revolving credit facility. Our long-term debt arrangements contain customary restrictive covenants and, as of March 31, 2023, we believe we were in compliance with our restrictive covenants in all material respects.

Senior Secured Credit Facilities

As of March 31, 2023, the Company’s Fifth Amended and Restated Credit Agreement provided financing through the senior secured credit facilities of up to $7,632 million, which consisted of $6,932 million principal amounts of debt outstanding, and $695 million of available borrowing capacity on the revolving credit facility and standby letters of credit.

On April 17, 2023, we increased the capacity of the Company's senior secured revolving credit facility by $500 million U.S. dollars, bringing the total capacity of the revolving credit facility to $2,000 million.

Receivables Financing Facility

As of March 31, 2023, no additional amounts of revolving loan commitments were available under the receivables financing facility.

Three months ended March 31, 2023 and 2022

Cash Flow from Operating Activities


	Three Months Ended March 31,
(in millions)	2023		2022
Net cash provided by operating activities	$	417	$	508

Cash provided by operating activities decreased $91 million during the first three months of 2023 as compared to the same period in 2022. The decrease was primarily due to a decrease in cash from unearned income ($95 million) and accounts receivable and unbilled services ($66 million) and from cash-related net income ($27 million), offset by an increase in cash from other operating assets and liabilities ($97 million).

Cash Flow from Investing Activities


	Three Months Ended March 31,
(in millions)	2023		2022
Net cash used in investing activities	$	(222)	$	(613)

Cash used in investing activities decreased $391 million during the first three months of 2023 as compared to the same period in 2022, primarily driven by less cash used for acquisitions of businesses ($412 million) and acquisitions of property, equipment and software ($13 million) and an increase in cash from other investing activities ($4 million), offset by more cash used in investments in debt and equity securities ($36 million), purchases of marketable securities, net ($1 million) and investments in unconsolidated affiliates, net ($1 million).

Cash Flow from Financing Activities


	Three Months Ended March 31,
(in millions)	2023		2022
Net cash provided by financing activities	$	87	$	144

Cash provided by financing activities decreased $57 million during the first three months of 2023 as compared to the same period in 2022, primarily due to a decrease in cash proceeds from revolving credit facilities, net of repayments ($275 million), an increase in cash payments on contingent consideration and deferred purchase price accruals ($50 million) and debt and principal payments on finance leases ($15 million), offset by a decrease in cash used to repurchase common stock ($274 million) and cash payments related to employee stock option plans ($9 million).

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

Contractual Obligations and Commitments

We have various contractual obligations, which are recorded as liabilities in our consolidated financial statements.

There have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our 2022 Form 10-K.

Application of Critical Accounting Policies

There have been no material changes to our critical accounting policies as previously disclosed in our 2022 Form 10-K.

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 2022 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended (“Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are party to legal proceedings incidental to our business. While the outcome of these matters could differ from management’s expectations, we do not believe that the resolution of these matters is reasonably likely to have a material adverse effect to our financial statements.

Information pertaining to legal proceedings can be found in Note 8 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and is incorporated by reference herein.

Item 1A. Risk Factors

For a discussion of the risks relating to our business, see Part I—Item 1A—“Risk Factors” of our 2022 Form 10-K. There have been no material changes from the risk factors previously disclosed in our 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

Not applicable.

Use of Proceeds from Registered Securities

Not applicable.

Purchases of Equity Securities by the Issuer

On October 30, 2013, the Company's Board of Directors (the "Board") approved an equity repurchase program (the “Repurchase Program”) authorizing the repurchase of up to $125.0 million of either our common stock or vested in-the-money employee stock options, or a combination thereof. The Board increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of the Company's common stock by $600 million, $1.5 billion, $2.0 billion, $1.5 billion, and $2.0 billion in 2015, 2016, 2017, 2018, and 2019 respectively. On February 10, 2022, the Board increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of the Company's common stock by an additional $2.0 billion, which increased the total amount that has been authorized under the Repurchase Program to $9.725 billion. The Repurchase Program does not obligate us to repurchase any particular amount of common stock or vested in-the-money employee stock options, and it may be modified, extended, suspended or discontinued at any time. The timing and amount of repurchases are determined by our management based on a variety of factors such as the market price of our common stock, our corporate requirements, and overall market conditions. Purchases of our common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or in privately negotiated transactions. The Repurchase Program for common stock does not have an expiration date. In addition, from time to time, we have repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

From inception of the Repurchase Program through March 31, 2023, we have repurchased a total of $8,499 million of our securities under the Repurchase Program.

During the three months ended March 31, 2023, we repurchased 0.7 million shares of our common stock for $129 million under the Repurchase Program. See Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding the Repurchase Program.

As of March 31, 2023, we have remaining authorization to repurchase up to $1,226 million of our common stock under the Repurchase Program.

Since the merger between Quintiles and IMS Health, we have repurchased 73.8 million shares of our common stock at an average market price per share of $110.15 for an aggregate purchase price of $8,125 million both under and outside of the Repurchase Program. This includes shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Quintiles IMS Holdings, Inc. 2017 Incentive and Stock Award Plan (the “Plan”). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item.

The following table summarizes the monthly equity repurchase program activity for the three months ended March 31, 2023 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program.


(in millions, except per share data)	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
January 1, 2023 — January 31, 2023	—	$	—	—	$	1,355
February 1, 2023 — February 28, 2023	—	$	—	—	$	1,355
March 1, 2023 — March 31, 2023	0.7	$	195.08	0.7	$	1,226
	0.7			0.7

Incorporated by Reference

Item 6. Exhibits

The exhibits below are filed or furnished as a part of this report and are incorporated herein by reference.

Exhibit
Number

Exhibit Description

Filed
Herewith

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of IQVIA Holdings Inc., effective April 18, 2023.

8-K

001-35907

3.1

April 18, 2023

3.2

Amended and Restated Bylaws of IQVIA Holdings Inc., effective April 18, 2023.

8-K

001-35907

3.2

April 18, 2023

10.1

Amendment No. 2 to Fifth Amended and Restated Credit Agreement, dated April 17, 2023, among IQVIA Inc., IQVIA Holdings Inc., IQVIA RDS Inc., IQVIA AG, IQVIA Japan K.K., the other guarantors party thereto, Bank of America, N.A. as administrative agent and as collateral agent, and the Lenders party thereto.

8-K

001-35907

10.1

April 18, 2023

31.1

Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Statements of Income (unaudited), (ii) Condensed Consolidated Statements of Comprehensive Income (unaudited), (iii) Condensed Consolidated Balance Sheets (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited), (v) Condensed Consolidated Statements of Stockholders’ Equity (unaudited) and (vi) Notes to Condensed Consolidated Financial Statements (unaudited). The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104

Cover Page Interactive Data File. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.