IQVIA Holdings (IQV) 10-K risk factor changes: FY2015 vs FY2014

[removed: RISK FACTORS][added: RISK FACTORS]

[removed: _We] [added: We] operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control.

The occurrence of any of the following risks may materially and adversely affect our business, financial condition, results of operations and future [removed: prospects._][added: prospects.]

[removed: Risks] [added: Risks] Relating to Our [removed: Business][added: Business]

[removed: _The] [added: The] potential loss or delay of our large contracts or of multiple contracts could adversely affect our [removed: results._][added: results.]

| | [removed: • |] [added: ·] | decisions to forego or terminate a particular [added: clinical] trial; |

| | [removed: • |] [added: ·] | lack of available financing, budgetary limits or changing priorities; |

| | [removed: • |] [added: ·] | actions by regulatory authorities; |

| | [removed: • |] [added: ·] | production problems resulting in shortages of the drug being tested; |

| | [removed: • |] [added: ·] | failure of products being tested to satisfy safety requirements or efficacy criteria; |

| | [removed: • |] [added: ·] | unexpected or undesired clinical results for products; |

| | [removed: • |] [added: ·] | insufficient patient enrollment in a [added: clinical] trial; |

| | [removed: • |] [added: ·] | insufficient investigator recruitment; |

| | [removed: • |] [added: ·] | shift of business to a competitor or internal resources; |

| | [removed: • |] [added: ·] | product withdrawal following market launch; or |

| | [removed: • |] [added: ·] | shut down of manufacturing facilities. |

[removed: _Our] [added: Our] financial results may be adversely affected if we underprice our contracts, overrun our cost estimates or fail to receive approval for or experience delays in documenting change [removed: orders._][added: orders.]

Change orders typically occur when the scope of work we perform needs to be modified from that originally contemplated by [added: our contract with the customer.]

Modifications can occur, for example, when there is a change in a key [added: clinical] trial assumption or parameter or a significant change in timing.

[removed: _The] [added: The] relationship of backlog to revenues varies over [removed: time._][added: time.]

| | [removed: • |] [added: ·] | the size, complexity and duration of the projects; |

| | [removed: • |] [added: ·] | the cancellation or delay of projects; and |

| | [removed: • |] [added: ·] | change in the scope of work during the course of a project. |

Our backlog at December 31, [removed: 2014] [added: 2015] was [removed: $11,244] [added: $12,038] million compared to backlog of [removed: $9,855] [added: $11,244] million at December 31, [removed: 2013.][added: 2014.]

Our [removed: $11,244] [added: $12,038] million of backlog at December 31, [removed: 2014] [added: 2015] included approximately [removed: $7,593] [added: $8,188] million of backlog that we do not expect to generate revenue in [removed: 2015] [added: 2016] as compared to our [removed: $9,855] [added: $11,244] million of backlog at December 31, [removed: 2013,] [added: 2014,] which included approximately [removed: $6,342] [added: $7,593] million of backlog that we did not expect to generate revenue in [removed: 2014.][added: 2015.]

Additionally, the increased complexity of [added: clinical] trials and the need to enroll precise patient populations could extend the length of [added: clinical] trials causing revenue to be recognized over a longer period of time.

[removed: _Our] [added: Our] business depends on the continued effectiveness and availability of our information systems, including the information systems we use to provide our services to our customers, and failures of these systems may materially limit our [removed: operations._][added: operations.]

We also provide access to similar information systems to certain of our customers in connection with the services [added: we provide them.]

| | [removed: • |] [added: ·] | disruption, impairment or failure of data centers, telecommunications facilities or other key infrastructure platforms; |

| | [removed: • |] [added: ·] | security breaches of, cyber attacks on and other failures or malfunctions in our critical application systems or their associated hardware; and |

| | [removed: • |] [added: ·] | excessive costs, excessive delays or other deficiencies in systems development and deployment. |

Corruption or loss of data may result in the need to repeat a [added: clinical] trial at no cost to the customer, but at significant cost to us, the termination of a contract or damage to our reputation.

[removed: _We] [added: We] may be adversely affected by customer or therapeutic [removed: concentration._][added: concentration.]

Although we did not have any customer that represented 10% or more of our service revenues in [added: 2015,] 2014, [removed: 2013,] or [removed: 2012,] [added: 2013,] we derive the majority of our revenues from a number of large customers.

Additionally, conducting multiple clinical trials for different customers in a single therapeutic class involving drugs with the same or similar chemical action has in the past and may in the future adversely affect our business if some or all of the [added: clinical] trials are canceled because of new scientific information or regulatory judgments that affect the drugs as a class or if industry consolidation results in the rationalization of drug development pipelines.

[removed: _Our] [added: Our] business is subject to international economic, political and other risks that could negatively affect our results of operations and financial [removed: condition._][added: condition.]

| | [removed: • |] [added: ·] | conducting a single [added: clinical] trial across multiple countries is complex, and issues in one country, such as a failure to comply with local regulations or restrictions, may affect the progress of the [added: clinical] trial in the other countries, for example, by limiting the amount of data necessary for a [added: clinical] trial to proceed, resulting in delays or potential cancellation of contracts, which in turn may result in loss of revenue; |

| | [removed: • |] [added: ·] | the United States or foreign countries could enact legislation or impose regulations or other restrictions, including unfavorable labor regulations, tax policies or economic sanctions, which could have an adverse effect on our ability to conduct business in or expatriate profits from the countries in which we operate; |

| | [removed: • |] [added: ·] | foreign countries are expanding or may expand their regulatory framework with respect to patient informed consent, protection and compensation in clinical trials, which could delay or inhibit our ability to conduct [added: clinical] trials in such jurisdictions; |

| | [removed: • |] [added: ·] | the regulatory or judicial authorities of foreign countries may not enforce legal rights and recognize business procedures in a manner in which we are accustomed or would reasonably expect; |

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Improper performance of our services.

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Investigation of customers.

Insufficient customer funding to complete a clinical trial.

Competition for qualified personnel in certain geographic regions, such as North America and Asia, is putting additional pressure on our business.

Foreign Currency Translation Risk.

Foreign Currency Transaction Risk.

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our contract with the customer.

we provide them.

However, irrespective of these safeguards, or as a result of monitoring compliance with such safeguards, it is possible that we or certain

If we fail to perform our services in accordance with

individuals alleging personal injury due to their participation in clinical trials and seeking damages from us under a variety of legal theories.

employees or other third parties, and we might not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, our intellectual property rights.

For example, in 2014, our Board approved restructuring plans of up to $13 million which resulted in a reduction of approximately 250 positions.

In February 2013, our Board approved a restructuring plan of up to $15 million which resulted in a reduction of approximately 400 positions.

Restructuring presents significant potential risks of events occurring that could adversely affect us, including a decrease in employee morale, the failure to achieve targeted cost savings and the failure to meet operational targets and customer requirements due to the loss of employees and any work stoppages that might occur.

teaching hospitals.

As of December 31, 2014, we had $3.306 billion in total assets, $4.010 billion in total liabilities and a shareholders’ deficit of $704 million.

our receivables financing facility can increase.

We have $400.0 million available for borrowing under our senior secured revolving credit facility and $25.0 million of additional available borrowings under our receivables financing facility.

As of December 31, 2014, we had approximately $2.0 billion of total indebtedness with variable interest at the greater of the three month LIBOR or 1.25%, plus 2.50%, or 3.75% at December 31, 2014, of which $910.0 million, or 44.8%, was hedged at a fixed rate of 2.57%, leaving approximately $1.1 billion of unhedged variable rate debt.

As of December 31, 2014, we also had $275.0 million of total indebtedness under our receivables financing facility with variable interest at LIBOR plus 1.05%, or 1.22% at December 31, 2014.

portion of our variable rate debt which is not hedged.

_Although we are no longer a “controlled company” within the meaning of the NYSE rules, we are relying on exemptions from certain corporate governance requirements during a one year transition period._

We are no longer a “controlled company” within the meaning of the corporate governance standards contained in Section 303A of the NYSE Listed Company Manual.

Consequently, as of November 10, 2014 the NYSE rules require that we:

| | • | | appoint at least a majority of independent directors to our compensation and nominating and governance committees within 90 days; |

| | • | | appoint a majority of independent directors to our Board within one year; and |

| | • | | appoint compensation and nominating and governance committees composed entirely of independent directors within one year. |

We intend to utilize the transition periods described above to achieve full compliance with these NYSE requirements.

As a result, at this time, we do not have a majority of independent directors, and our compensation and nominating and governance committees do not consist entirely of independent directors.

Accordingly, you do not, and during these transition periods you will not, have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE.

In addition, if we are unable to comply with the heightened corporate governance requirements prior to the prescribed NYSE deadlines, we may incur penalties or our shares could be delisted.

[removed: _You] [added: You] should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.

You should read the “Risk Factors” section of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and [removed: analysis._][added: analysis.]

[removed: Overview][added: Overview]

For the year ended December 31, [removed: 2014,] [added: 2015,] our service revenues increased [removed: $357.5] [added: $160.6] million, or [removed: 9.4%,] [added: 3.9%,] to [removed: $4.2] [added: $4.3] billion at actual foreign exchange rates compared to [removed: 2013.][added: 2014.]

Our growth in service revenues excluding the impact of foreign currency fluctuations (“constant currency”) was [removed: $383.2] [added: $372.9] million, or [removed: 10.1%,] [added: 9.0%,] with [removed: $183.2] [added: $223.5] million, or [removed: 6.3%,] [added: 7.2%,] growth in the Product Development segment and [removed: $200.0] [added: $149.4] million, or [removed: 22.5%,] [added: 14.0%,] growth in the Integrated Healthcare Services segment.

[removed: For the year ended December 31, 2014, income from operations was $590.4 million;] [added: Our] net income attributable to Quintiles Transnational Holdings Inc. was [removed: $356.4 million; and] [added: $387.2 million with] diluted earnings per share [removed: was $2.72.][added: of $3.08 for the year ended December 31, 2015.]

Net new business was [removed: $5,602] [added: $5,319] million for the year ended December 31, [removed: 2014.][added: 2015.]

This net new business contributed to an ending backlog of [removed: $11,244] [added: $12,038] million at December 31, [removed: 2014.][added: 2015.]

[removed: _Product Development_][added: Product Development]

Product Development provides services and expertise that allow biopharmaceutical companies to outsource the clinical development process from first-in-man [added: clinical] trials to post-launch monitoring.

Product Development is comprised of clinical solutions and services and [removed: consulting.][added: advisory services (formerly consulting services).]

These services include project management and clinical monitoring functions for conducting multi-site [added: clinical] trials (generally Phase II-IV) (collectively “core clinical”).

These also include clinical trial support services that improve clinical trial decision-making, such as global [added: clinical trial] laboratories, data management, biostatistical, safety and pharmacovigilance, early clinical development trials (generally Phase I), and strategic planning and design services, which help improve decisions and performance.

[removed: Consulting] [added: Advisory services] provides strategy and management [removed: consulting] [added: advisory] services based on life science expertise and advanced analytics, as well as regulatory and compliance [removed: consulting] [added: advisory] services.

[removed: _Integrated] [added: Integrated] Healthcare [removed: Services_][added: Services]

Service offerings include commercial services (sales representatives, strategy, marketing communications and other areas related to [added: market access and] commercialization), real-world and late phase research (drug therapy analysis, real-world research and [added: evidence-based medicine, including research studies to prove a drug’s value), other healthcare services (comparative and cost-effectiveness research capabilities, decision support services, communication services and health engagement, medication adherence and health outcome optimization services, and web-based systems for measuring quality improvement), and EHR implementation and advisory services.]

[removed: On] [added: In] July [removed: 1,] 2014, we completed the acquisition of Encore for approximately $91.5 million in cash (net of approximately $2.2 million of acquired [removed: cash).][added: cash) to enhance our EHR expertise within our Integrated Healthcare Services segment.]

[removed: Industry Outlook][added: Industry Outlook]

The potential of the CRO market served by Product Development is primarily a function of two variables: biopharmaceutical [removed: R&D] [added: research and development] spending and the proportion of this spending that is outsourced (outsourcing penetration).

We [added: estimate that overall outsourcing penetration of the addressable market in 2015 was 41%, and] believe that our customers will continue to outsource a greater part of their activities to transform their value chain away from a vertically integrated model and focus on their core competencies to lower risk and improve return, with a focus on selecting outsourcing partners that are able to demonstrate the ability to provide flexible and efficient delivery models that leverage patient data to help biopharmaceutical companies deliver more effective patient outcomes.

However, based on our knowledge of these markets we believe that, while the rate of outsourcing penetration varies by market within Integrated Healthcare Services, the overall outsourcing penetration of the estimated [removed: $98] [added: $101] billion [removed: addressable] market is approximately 23%.

As business models continue to evolve in the healthcare sector, we [removed: believe] [added: believe, based on industry data, analysis, and our own estimates,] that the growth rate for outsourcing across the Integrated Healthcare Services markets [removed: to] [added: should] increase 6%-8% annually from [removed: 2014] [added: 2015] to [removed: 2017.][added: 2018.]

We completed a number of [removed: acquisitions] [added: business combinations] in [removed: 2012, 2013 and] [added: 2013,] 2014 [added: and 2015] to enhance our capabilities and offerings in certain areas.

In September 2013, we acquired Novella Clinical Inc., or Novella, for approximately $146.6 million (net of approximately $26.2 million of acquired cash) (with contingent consideration of up to $21.0 million) to complement our [removed: clinical] [added: Product Development segment] service offerings through its focus on emerging companies and by adding expertise in oncology and medical devices.

See Note 14 to our audited consolidated financial statements [removed: found] [added: included] elsewhere in this Annual Report on Form 10-K for additional information with respect to these [removed: acquisitions.][added: business combinations.]

[removed: Sources] [added: Sources] of [removed: Revenue][added: Revenue]

Service revenues primarily include the revenue we earn from providing product development and commercialization services to our customers, with Product Development services representing [removed: 74.4%] [added: 73.8%] of our [removed: 2014] [added: 2015] service revenues and [added: Integrated Healthcare Services representing 26.2% of our 2015 service revenues.]

As reimbursed expenses are pass-through costs to our customers with little to no profit and we believe that the fluctuations from [removed: period to period] [added: period-to-period] are not meaningful to our underlying performance, we do not provide analysis of the fluctuations in these items or their impact on our financial results.

[removed: Costs] [added: Costs] and [removed: Expenses][added: Expenses]

Service costs include compensation and benefits for billable employees, depreciation of assets used in generating revenue and other expenses directly related to service contracts such as courier fees, laboratory supplies, professional [removed: services, travel expenses] [added: services] and [removed: the cost of products sold under distribution agreements.][added: travel expenses.]

[removed: _Foreign] [added: Foreign] Currency [removed: Fluctuations_][added: Translation]

[removed: We] [added: As a result, we] believe that providing the impact of fluctuations in foreign currency rates on certain financial results can facilitate analysis of period-to-period comparisons of business performance.

[removed: Results] [added: Consolidated Results] of [removed: Operations][added: Operations]

[removed: _Year] [added: Year] ended December 31, [removed: 2014] [added: 2015] compared to the year ended December 31, [removed: 2013] [added: 2014] and the year ended December 31, [removed: 2013] [added: 2014] compared to the year ended December 31, [removed: 2012_][added: 2013]

[removed: _Backlog] [added: Backlog] and Net New [removed: Business_][added: Business]

[removed: We began] [added: Backlog at December 31,] 2014 [removed: with backlog of $9,855] [added: was $11,244] million, which was [removed: 13%] [added: 14%] higher than [removed: at the beginning of] 2013.

Product Development’s net new business increased 16% [removed: to $4,374 million] in 2014 [removed: as compared] to [added: $4,374 million from] $3,772 million in 2013, led by higher growth in net new business for functional resourcing services, which included [removed: the renewal] [added: renewals] of two five-year [removed: contracts for clinical services and data management services,] [added: contracts,] growth in net new business for core clinical services in Asia, as well as net new business generated from the Novella acquisition and clinical trial support services, including early clinical development and lifecycle safety.

Integrated Healthcare Services’ net new business increased 9% [removed: to $1,228 million] in 2014 [removed: as compared] to [added: $1,228 million from] $1,127 million in 2013, related primarily to growth in commercial services in North America, an increase in new business from real-world and late phase research services, and net new business from the Encore acquisition.

Net new business [removed: grew 9%] [added: decreased 5.1% (including a negative impact from foreign currency)] in [removed: 2013] [added: 2015] to [removed: $4,899] [added: $5,319] million from [removed: $4,501] [added: $5,602] million in [removed: 2012,] [added: 2014,] driven by [removed: growth] [added: decreases] in both Product Development and Integrated Healthcare Services.

Our backlog at December 31, [removed: 2014] [added: 2015] was [removed: $11,244] [added: $12,038] million compared to backlog of [removed: $9,855] [added: $11,244] million at December 31, [removed: 2013.][added: 2014.]

For the year ended December 31, 2015, our income from operations was $646.6 million, an increase of $56.2 million (which included a positive impact of approximately $30.6 million from the effects of foreign currency fluctuations).

We expect outsourced clinical development to CROs to increase 6%-8% annually from 2015 to 2018, and believe this annual growth will be driven largely by increased outsourcing penetration, with up to 2% of this growth coming from increased research and development expenditures over 2015 to 2018.

In estimating these growth rates, we monitor the ability of biopharmaceutical companies, including biotechnology companies, to raise capital, as well as the potential impact from merger and acquisition activity between biopharmaceutical companies.

In July 2015, we combined our global clinical trials laboratory operations in our Product Development segment with the clinical trials laboratory operations of Quest with the resulting combined business referred to as Q2 Solutions.

We own 60% of Q2 Solutions and Quest owns the remaining 40%.

In 2015, approximately 32% of our service revenues were denominated in currencies other than the United States dollar.

Because a large portion of our service revenues and expenses are denominated in currencies other than the United States dollar and our financial statements are reported in United States dollars, changes in foreign currency exchange rates can significantly affect our results of operations.

The revenue 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 consolidated results.

In 2015, foreign exchange rates in certain currencies in which we do business have fluctuated significantly as compared to the prior year, particularly the Euro, the Japanese Yen and the British Pound.

For additional information regarding results of operations for Product Development and Integrated Healthcare Services, refer to “Segment Results of Operations” later in this section.

2015 compared to 2014

Backlog at December 31, 2015 was $12,038 million, which was 7% higher than 2014, including the incremental impact from the businesses that Quest contributed to Q2 Solutions.

Product Development’s net new business decreased 5.8% in 2015 to $4,121 million from $4,374 million in 2014.

Product Development had growth in net new business in 2015 from core clinical services and global clinical trial laboratory services including the incremental impact from the businesses that Quest contributed to Q2 Solutions.

These increases were more than offset by lower net new business for functional resourcing services primarily because 2014 included renewals for two five-year contracts.

Integrated Healthcare Services’ net new business decreased 2.5% in 2015 to $1,198 million from $1,228 million in 2014, related primarily to cancellations in North America as well as lower signings for commercial services in Europe, partially offset by net new business growth from the Encore acquisition which closed in July 2014 and from real-world and late phase research services.

| % change from prior year | | | 3.9 | % | | | 9.4 | % | | | | |

2015 compared to 2014

The constant currency service revenue growth was comprised of a $223.5 million increase in Product Development, which includes the incremental impact from the businesses that Quest contributed to Q2 Solutions, and a $149.4 million increase in Integrated Healthcare Services, which includes the impact from the Encore acquisition which closed in July 2014.

2015 compared to 2014

The constant currency growth was comprised of a $140.0 million increase in Product Development, which included the incremental impact from the businesses that Quest contributed to Q2 Solutions, and a $99.5 million increase in Integrated Healthcare Services, which included the impact from the Encore acquisition which closed in July 2014.

The decrease in service costs as a percent of service revenues for 2015 was primarily as a result of an improvement in constant currency profit margin in both the Product Development and Integrated Healthcare Services segments (as more fully described in the segment discussion later in this section).

For 2015, this constant currency profit margin expansion was partially offset by the effect from a higher proportion of consolidated service revenues being contributed by our lower margin Integrated Healthcare Services segment when compared to 2014 as well as a negative impact from foreign currency fluctuations.

The constant currency growth was comprised of a $94.0 million increase in Product Development, and a $159.5 million increase in Integrated Healthcare Services, which included the impact from the Encore acquisition which closed in July 2014.

| | | Year Ended December 31, | | | | | | | | | | |

2015 compared to 2014

The constant currency growth was comprised of a $47.2 million increase in Product Development, which included the incremental impact from the businesses that Quest contributed to Q2 Solutions, a $20.7 million increase in Integrated Healthcare Services, which included the impact from the Encore acquisition which closed in July 2014, and a $12.9 million increase in general corporate and unallocated expenses.

The constant currency increase in 2015 for general corporate and unallocated expenses was primarily due to an increase in share-based compensation and costs associated with the Q2 Solutions transaction.

The constant currency growth was partially offset by a $17.3 million decrease in general corporate and unallocated expenses.

These decreases in general corporate and unallocated expenses were partially offset by an increase in share-based compensation and increases in compensation and related expenses resulting primarily from annual merit increases and an increase in headcount.

| | | Year Ended December 31, | | | | | | | | | | |

| | | 2015 | | | | 2014 | | | | 2013 | | |

During 2015, we recognized $30.8 million of restructuring charges, net of reversals for changes in estimates, associated with both the February 2015 restructuring plan and the Q2 Solutions restructuring plan.

The remaining actions under these plans are expected to occur throughout 2016 and 2017, and are expected to consist of severance, facility closure and other exit-related costs.

Impairment Charges

| | | Year Ended December 31, | | | | | | | | | | |

| | | 2015 | | | | 2014 | | | | 2013 | | |

| Impairment charges | | $ | 2.5 | | | $ | — | | | $ | — | |

During the fourth quarter of 2015, we exited a training facility in Japan that is being actively marketed for sale, resulting in a $2.5 million impairment of the land and building.

evidence-based medicine, including research studies to prove a drug’s value), other healthcare services (comparative and cost-effectiveness research capabilities, decision support services, medication adherence and health outcome optimization services, and web-based systems for measuring quality improvement), and EHR implementation and advisory services.

We expect outsourced clinical development to CROs to increase 6%-8% annually from 2014 to 2017.

Of this annual growth, we believe that up to 2% will be derived from increased R&D expenditures, with the remainder coming from increased outsourcing penetration.

We estimate that overall outsourcing penetration in 2014 was 39%.

Acquisitions

In August 2012, we acquired Expression Analysis, Inc. for $39.7 million to enhance our genetic sequencing and advanced bioinformatics expertise.

In July 2014, we completed the acquisition of Encore for approximately $91.5 million in cash (net of approximately $2.2 million of acquired cash) to enhance our EHR expertise.

Integrated Healthcare Services representing 25.6% of our 2014 service revenues.

Backlog at December 31, 2014 was $11,244 million.

Product Development’s net new business increased 9% to $3,772 million in 2013 as compared to $3,474 million in 2012, led by increases in core clinical in North America and Europe (including projects awarded under two sole provider arrangements signed in 2013) and data management services (which benefited from functional resourcing and the sole provider arrangements signed during 2013).

Integrated Healthcare Services’ net new business grew 10% in 2013 to $1,127 million from $1,027 million in 2012 due to an increase in North America and Europe.

As we increasingly compete for and enter into large contracts that are more global in nature, we expect the rate at which our backlog and net new business convert into revenue to increase, or lengthen.

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These increases in compensation and related expenses were partially offset by a $10.6 million increase in the benefit from research and development grants primarily from France and Austria as well as efficiencies gained from restructuring activities taken in prior years.

The constant currency service costs growth was due to annual merit increases in compensation and related expenses, partially offset by cost efficiencies gained from restructuring actions taken in prior years, as well as incremental costs resulting from the business combinations completed in 2012 and 2013.

These increases were partially offset by a decline in other expenses directly related to our service contracts, as well as by a reduction of an accrual for statutory profit sharing of approximately $5.4 million in 2013 as a result of guidance handed down by an administrative court in France.

$25.0 million fee paid in connection with the termination of our management agreement with affiliates of certain of our shareholders, and a $1.5 million fee paid in connection with the modification of an agreement for the business usage of an airplane owned by GFM, (2) severance accruals of approximately $10.0 million related to overhead cost reduction programs to be carried out in 2014, (3) executive separation costs of approximately $5.3 million, (4) the impact from the business combinations completed in 2012 and 2013, (5) increases in compensation and related expenses resulting primarily from annual merit increases, and (6) growth related increases in facilities costs and depreciation and amortization.

These increases were partially offset by lower travel costs, lower share-based compensation and the fact that 2012 included expenses related to a bonus paid to certain option holders in connection with dividends paid to our shareholders (totaling $11.3 million), which did not recur in 2013.

The lower share-based compensation was as a result of the fact that expense from recent stock option grants was more than offset by a $13.6 million decline in expense related to the repricing of certain stock options in 2012 that did not recur in 2013.

We believe that this plan has resulted in annual cost savings of approximately $15.0 to $20.0 million.

During 2012, we recognized $18.7 million of restructuring charges, net of reversals for changes in estimates which was primarily related to our May 2012 restructuring plan to reduce staffing overcapacity and to rationalize non-billable support roles, which resulted in a reduction of approximately 280 positions, primarily in Europe.

We believe that this plan has resulted in annual cost savings of approximately $15.0 to $25.0 million.

Inc. obtained in February 2012 and paid in full in May 2013, the pay down of $50.0 million of outstanding indebtedness under our senior secured credit facilities in May 2013, the mandatory prepayment of $33.8 million of outstanding indebtedness under our senior secured credit facilities in the first quarter of 2013, and the $25.0 million prepayment of outstanding indebtedness under our senior secured credit facilities in December 2014.

Interest expense for 2013 was lower than 2012 primarily due to a decrease in the average debt outstanding in 2013 compared to 2012 resulting from the repayment of the $300.0 million term loan, which Quintiles Transnational Holdings Inc. obtained in February 2012 and paid in full in May 2013, the pay down of $50.0 million of outstanding indebtedness under our senior secured credit facilities in May 2013, and the mandatory prepayment of $33.8 million of outstanding indebtedness under our senior secured credit facilities in the first quarter of 2013, offset by the increase that resulted from the $175.0 million Term Loan B-1, which our wholly-owned subsidiary, Quintiles Transnational, obtained under the credit agreement governing our senior secured credit facilities in October 2012.

In addition, the average rate of interest in 2013 on the term loans under our senior secured credit facilities was lower than it was in 2012 due to (1) a 50 basis point decrease in the interest rate on the Term Loan B-2 beginning in August 2013, pursuant to the terms and conditions in the credit agreement, and (2) the reductions in the interest rate that resulted from the refinancing transactions in the fourth quarters of 2012 and 2013.

In 2012, we recognized a $1.3 million loss on extinguishment of debt on a portion of the debt retired related to our 2012 refinancing.

Other (income) expense, net for 2012 included income of approximately $4.6 million due to changes in the estimated fair value of contingent consideration for two of our acquisitions completed in 2011.

In addition, 2012 included approximately $1.1 million of foreign currency net losses.

Accordingly, 2012 was negatively impacted by income taxes provided on most of the earnings of the foreign subsidiaries, as a deferred income tax liability was recorded for the anticipated income tax costs of repatriating those earnings in the future.

_Segments_

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Our clinical solutions and services growth for 2013 was concentrated in Europe and the Americas.

This growth was due largely to growth in the overall market as well as a consistent history of year-over-year growth in net new business, including strong inflow of net new business in 2013.

This growth was tempered by a decrease in service revenues from consulting services resulting primarily from the winding down of a project assisting a customer on a regulatory compliance matter, and from a large clinical solutions project on which we were executing in 2012 and 2013, but that was winding down in 2013.

The constant currency service costs growth was due to increases in compensation and related expenses resulting from an increase in billable headcount needed to support our higher volume of revenue as well as annual merit increases in compensation, partially offset by cost efficiencies gained from restructuring actions taken in prior years and incremental costs resulting from the business combinations completed in 2012 and 2013.

The increase in compensation and related expenses was partially offset by a reduction of an accrual for statutory profit sharing of approximately $5.4 million in 2013 as a result of guidance handed down by an administrative court in France and lower third party and travel costs.

This increase was primarily caused by increases in compensation and related expenses resulting from annual merit increases, facilities costs, depreciation and amortization, incremental costs for severance accruals of approximately $8.4 million related to overhead cost reduction programs, and the impact from the business combinations completed in 2012 and 2013.

These increases were partially offset by a positive foreign currency impact of approximately $11.2 million.

In the ordinary course of business, we are exposed to various market risks, including changes in foreign currency exchange [removed: rates, interest] rates and [removed: equity price changes,] [added: interest rates,] and we regularly evaluate our exposure to such changes.

The following analyses present the sensitivity of our financial instruments to hypothetical changes in [removed: interest] rates [removed: and equity prices] that are reasonably possible over a one-year period.

[removed: _Foreign] [added: Foreign] Currency Exchange [removed: Rates_][added: Rates]

Approximately [added: 32% and] 38% of our service revenues for [removed: both] [added: the] years ended December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014, respectively,] were denominated in currencies other than the United States dollar.

[added: Our financial statements are reported in United] States dollars and, accordingly, fluctuations in exchange rates will affect the translation of our revenues and expenses denominated in foreign currencies into United States dollars for purposes of reporting our consolidated financial results.

In [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] the most significant currency exchange rate exposures were the Euro, British pound, Singapore [removed: dollar and] [added: dollar,] Indian [removed: rupee.][added: rupee and Japanese Yen.]

Excluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to United States dollars would have impacted income before income taxes for [removed: 2014] [added: 2015] by approximately [removed: $40.5] [added: $45.4] million.

Accumulated currency translation adjustments recorded as a separate component of shareholders’ deficit were [removed: ($55.7)] [added: ($116.8)] million and [removed: ($5.8)] [added: ($55.7)] million at December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively.

At December 31, [removed: 2013,] [added: 2015,] we had [removed: 12] [added: 15] open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through September [removed: 2014] [added: 2016] with a notional value totaling approximately [removed: $60.8] [added: $117.5] million.

[removed: _Interest Rates_][added: Interest Rates]

We have entered into interest rate swaps with financial institutions that have reset dates and critical terms that match those of our [added: senior secured] term loan credit facility.

[removed: Each] [added: Once the interest rate swaps are effective, each] quarter-point increase or decrease in the variable interest rate would result in our interest expense changing by approximately [removed: $3.5] [added: $3.1] million per year under our unhedged variable rate debt.

As of December 31, 2015, we had approximately $1.7 billion of variable rate indebtedness.

In June 2015, we entered into seven forward starting interest rate swaps with a notional value of $440.0 million which will be effective June 30, 2016 at which time we will have approximately $1.2 billion of variable rate indebtedness.

The interest rate swaps expire between March 31, 2017 and March 31, 2020.

Our financial statements are reported in United

As of December 31, 2014, we had approximately $2.0 billion of total indebtedness with variable interest at the greater of the three month LIBOR or 1.25%, plus 2.50%, or 3.75% at December 31, 2014, of which $910.0 million, or 44.8%, was hedged at a fixed rate of 2.57%, leaving approximately $1.1 billion of unhedged variable rate debt.

As of December 31, 2014, we also had $275.0 million of total indebtedness under our receivables financing facility with variable interest at LIBOR plus 1.05%, or 1.22% at December 31, 2014.

_Equity Prices_

At December 31, 2014 and 2013, we held investments in marketable equity securities.

These investments are classified as available-for-sale and are recorded at fair value in the financial statements.

These securities are subject to equity price risk.

As of December 31, 2014 and 2013, the fair value of these investments was $831,000 and $7.7 million, respectively, based on quoted equity prices.

The potential loss in fair value resulting from a hypothetical decrease of 10% in quoted equity price was approximately $83,000 and $767,000 at December 31, 2014 and 2013, respectively.

[removed: Overview][added: Company Overview]

We are positioned at the intersection of business services and healthcare and generated [removed: $4.2] [added: $4.3] billion of service revenues in [removed: 2014,] [added: 2015,] conduct business in approximately 100 countries and have approximately [removed: 32,600] [added: 36,100] employees.

[removed: Since our founding in 1982, we have grown to become] [added: We are] a leader in the development and commercialization of new pharmaceutical therapies.

Our Integrated Healthcare Services segment includes one of the leading global commercial pharmaceutical sales and service [removed: organizations.][added: organizations, in addition to healthcare business services for the broader healthcare sector, such as real world and late phase research, market access and consulting, health information analytics and technology consulting, and other healthcare solutions.]

Product Development contributed approximately 74% and Integrated Healthcare Services contributed approximately 26% to our [removed: 2014] [added: 2015] service revenues.

During each of the last [removed: 12] [added: 13] years, we have worked with the 20 largest biopharmaceutical companies ranked by [removed: 2013] [added: 2014] reported revenues.

We have provided services in connection with the development or commercialization of [added: 98 of] the top 100 best-selling biopharmaceutical products and the top 50 best-selling biologic products, from [removed: 2013] [added: 2014] as measured by reported sales.

In [removed: 2014,] [added: 2015,] our service revenues were [removed: $4.2] [added: $4.3] billion and our net income attributable to our shareholders was [removed: $356.4] [added: $387.2] million.

In addition, our [removed: 2014] [added: 2015] net new business was [removed: $5.6] [added: $5.3] billion, and we ended the year with [removed: $11.2] [added: $12.0] billion in backlog.

Our backlog [removed: is] [added: at December 31, 2015 was] diversified with [removed: 37%] [added: 28%] from top 10 biopharmaceutical companies, [removed: 22% representing contracts] [added: 23%] with biopharmaceutical companies ranked as 11-20, [removed: 19% representing contracts] [added: 24%] with biopharmaceutical companies ranked as 21-50, and [removed: 22% representing contracts] [added: 25%] with biopharmaceutical companies outside the top 50, in each case, as ranked by [removed: 2013] [added: 2014] sales.

During each of the last [removed: seven] [added: eight] years, we have had at least eight customers from whom we earned more than $100 million in service revenues.

No single customer represented more than 10% of our [removed: 2014] [added: 2015] revenues.

[removed: Our Markets][added: Our Markets]

We estimate that total research and [removed: development, or R&D,] [added: development] spending was approximately [removed: $140] [added: $143] billion in [removed: 2014] [added: 2015] of which biopharmaceutical spending on drug development was approximately [removed: $95] [added: $97] billion, and we estimate that our addressable market (clinical development spending excluding preclinical spending) was approximately [removed: $52] [added: $54] billion.

The portion of this [removed: $52] [added: $54] billion that was outsourced in [removed: 2014,] [added: 2015,] based on our estimates, was approximately [removed: $21] [added: $22] billion.

We [removed: estimate] [added: estimate, based on industry data, analysis, and our own estimates,] that the potential market for Product Development’s services [removed: will] [added: should] experience a compound annual growth rate, or CAGR, of 6%-8% from [removed: 2014] [added: 2015] through [removed: 2017] [added: 2018] as a result of [added: the] increased [removed: R&D] [added: outsourcing of research and development] spending by biopharmaceutical companies [removed: and the increased outsourcing of] [added: in addition to increases over time in] this [added: overall] spending as compared to [removed: 2013.][added: 2014.]

We estimate that total spending related to approved drugs, including biopharmaceutical spending on commercialization of these drugs and expenditures by participants in the broader healthcare market on real-world research, healthcare technology implementation analytics, and evidence-based medicine, exceeded [removed: $98] [added: $101] billion in [removed: 2014.][added: 2015.]

This segment’s services include commercial services such as recruiting, training, deploying and managing a global sales force, channel management, patient engagement services, market access consulting, brand communication, [removed: consulting,] [added: advisory services,] and health information analytics and technology consulting.

[removed: _Trends in R&D Spending._] We estimate that [removed: R&D] [added: research and development] spending was approximately [removed: $140] [added: $143] billion in [removed: 2014] [added: 2015] and will grow to approximately [removed: $150] [added: $155] billion in [removed: 2017,] [added: 2018,] with drug development accounting for approximately 68% of total expenditures.

[removed: R&D] [added: Research and development] spending trends are impacted as a result of several factors, including major biopharmaceutical companies’ efforts to replenish revenues lost from the so-called “patent cliff” of recent years, increased access to capital by the small and midcap biotechnology industry, and recent increases in pharmaceutical approvals by regulatory authorities.

In [removed: 2014,] [added: 2015,] there were approximately [removed: 4,620] [added: 5,084] drugs in the Phase I-III development pipeline, an increase of [removed: 35%] [added: 36%] since [removed: 2008,] [added: 2010,] and there were [removed: 41 NME] [added: 45 new molecular entities] approvals by the [removed: FDA in 2014] [added: United States Food and Drug Administration, or FDA,] which was the highest number of approvals in any of the past [removed: 18] [added: 19] years.

We believe that further [removed: R&D] [added: research and development] spending, combined with the continued need for cost efficiency across the healthcare landscape, will continue to create opportunities for biopharmaceutical services companies, particularly those with a global reach and broad service offerings, to help biopharmaceutical companies with their pre- and post-launch product development and commercialization needs.

[removed: _Growth in Outsourcing._] We estimate that clinical development spending outsourced to CROs in Phases I-IV in [removed: 2014] [added: 2015] was approximately [removed: $21] [added: $22] billion and will grow to approximately [removed: $26] [added: $28] billion by [removed: 2017.][added: 2018.]

We estimate that overall outsourcing penetration [added: of the addressable market] in [removed: 2014] [added: 2015] was [removed: 39%.][added: 41%.]

However, based on our knowledge of these markets we believe that, while the rate of outsourcing penetration varies by market within Integrated Healthcare Services, the current outsourcing penetration of the estimated [removed: $98] [added: $101] billion [removed: addressable] market is approximately 23%.

| | [removed: • |] [added: ·] | Maximizing Productivity and Lowering Costs. Declining [removed: R&D] [added: research and development] productivity, increased development costs and diminished returns on marketing and sales have negatively impacted biopharmaceutical companies. We believe that the need for biopharmaceutical companies to maximize productivity and [added: lower costs in their product development and commercial operations will cause them to look to partners as they enter into outsourcing arrangements to improve efficiency, increase sales force utilization and effectiveness, improve clinical success rates and turn fixed costs into variable costs across their research and development and commercial operations.] |

| | [removed: • |] [added: ·] | Managing Complexity. Biopharmaceutical companies face environments in which it has become increasingly difficult to operate. Improved standards of care in many therapeutic areas and the emergence of new types of therapies, such as biologics, genetically targeted therapies, gene and stem cell therapies, and other treatment modalities have led to more complex development and regulatory pathways, such as recently released guidelines in the United States and Europe for the development of “biosimilar” products. We believe that our global clinical development capabilities, including our expertise in biomarkers and genomics and our global laboratory network, position us well to help biopharmaceutical companies manage the complexities inherent in an environment where this type of expertise is important. |

| | [removed: • |] [added: ·] | Providing Enhanced Value for Patients. As healthcare costs rise globally, governments and third-party payers have looked for ways both to control healthcare expenditures and increase the quality, safety and effectiveness of drug therapies. Governments and regulatory bodies have adopted, and may continue to adopt, healthcare legislation and regulations that may significantly impact the healthcare industry by demanding more value for money spent and financial accountability for patient outcomes. Such legislation and regulations may tie reimbursement to the demonstrated clinical efficacy of a therapy, require payers and providers to demonstrate efficacy in the delivery of healthcare services and require more evidence-based decisions, all of which we believe will increase the demand for innovative and cost-effective commercialization strategies and outcome research and data analytics services. |

| | [removed: • |] [added: ·] | Increased Importance of Product Development in Local Markets. Increasingly, regulators require [added: clinical] trials involving local populations as part of the process for approving new pharmaceutical products, especially in certain Asian and emerging markets. Understanding the epidemiological and physiological differences in different ethnic populations and being able to conduct [added: clinical] trials locally in certain geographies will be important to pharmaceutical product growth strategies, both for multinational and local/regional biopharmaceutical companies. We believe that our global clinical development capabilities and unmatched presence in Asia and other emerging markets make us a strong partner for biopharmaceutical companies managing the complexities of international drug development. |

| | [removed: • |] [added: ·] | Increasing Number of Phase II-IV Clinical Trials. Based on the current and expected composition of the global drug development pipeline, we believe that spending on Phase II-IV clinical trials will continue to increase. As the complexity and cost of Phase II-IV [added: clinical] trials grow, [added: clinical] trial sponsors will continue to seek to recruit patients on a global basis. We believe that this increased spending and the demand for global patient recruitment will favor the limited number of biopharmaceutical services companies that have both the capabilities to administer large, complex global clinical trials and relationships with thought-leading investigators and [added: clinical] trial sites. In addition, as these drugs come to market, we believe that biopharmaceutical companies will also seek to outsource an increasing amount of the commercial and other integrated healthcare services necessary to effectively launch and market these drugs. |

| | [removed: • |] [added: ·] | Increase in Strategic Collaborations. Larger CROs are able to provide a greater variety of services and therapeutic expertise to the biopharmaceutical community. Biopharmaceutical companies continue to enter into long-term strategic collaborations with global service providers. We believe that biopharmaceutical companies have historically preferred, and will continue to prefer, financially sound, global service providers with broad therapeutic and functional expertise such as our company when selecting strategic providers. |

[removed: Our Strategy][added: Our Strategy]

[removed: _Global Scale and Leadership._] We offer global capabilities in the biopharmaceutical services industry, with a presence in all of the major biopharmaceutical markets, including the United States, Japan, and Europe in addition to Brazil, Russia, India and China, or the BRIC countries.

In addition, as of December 31, [removed: 2014,] [added: 2015,] we had approximately [removed: 32,600] [added: 36,100] employees with the majority located outside the United States, including significant numbers in Japan and Europe.

[removed: _Broad, Deep and Diverse Relationships._] We believe that the breadth and depth of our service offerings allow us to establish and develop relationships with key decision makers throughout our customers’ organizations.

During each of the last [removed: 12] [added: 13] years, we have worked with the 20 largest biopharmaceutical companies, as measured by their respective [removed: 2013] [added: 2014] reported revenues.

In [removed: 2014,] [added: 2015,] we had [removed: 14] [added: 13] customers from whom we earned at least $100 million in service revenues.

[removed: _Therapeutic and Scientific Expertise._] We believe our deep scientific, therapeutic and domain expertise enables us to help customers solve the complex challenges inherent in drug development and commercialization.

We have a strong therapeutic focus on oncology, cardiovascular, central nervous system, diabetes and internal medicine as these five therapeutic areas represent more than 70% of the total biopharmaceutical product pipeline in [removed: 2014] [added: 2015] and are generally highly complex and require significant scientific expertise and global scale.

Our employees have substantial scientific, quantitative, analytical and applied technology skills and substantial expertise in numerous therapeutic areas, with over [removed: 2,750] [added: 3,000] Ph.D.s, medical doctors, statisticians and statistical programmers on our staff worldwide.

Trends in Research and Development Spending.

Growth in Outsourcing.

We expect outsourced clinical development to CROs to grow 6%-8% annually during this period, and believe this annual growth will be driven largely by increased outsourcing penetration, with up to 2% of this growth coming from increased research and development expenditures over 2015 to 2018.

In estimating these growth rates, we monitor the ability of biopharmaceutical companies, including biotechnology companies, to raise capital, as well as the potential impact from merger and acquisition activity between biopharmaceutical companies.

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

Global Scale and Leadership.

Broad, Deep and Diverse Relationships.

Therapeutic and Scientific Expertise.

Integrated Services to Enable Better Decision-making in the Broader Healthcare Market.

Experienced, Highly Trained Management and Staff.

Technology Solutions and Process/Data Capabilities.

| Product Development Services | | | | Integrated Healthcare Services |

| --- | --- | --- | --- | --- |

| | | | | |

| Project Management & Clinical Monitoring: | | Q2 Solutions: | | Commercial Services: |

| • Study Design & Operational Planning | | • Clinical Trial Laboratories | | • Contract Sales |

| • Investigator/Site Recruitment | | • Genomic Laboratories | | • Market Entry / Market Exit |

| • Site & Regulatory Start Up | | • Bioanalytical Laboratories | | • Integrated Channel Management |

| • Patient Recruitment | | | | • Patient Engagement Services |

| • Clinical Monitoring | | Strategic Planning & Design: | | • Market Access & Commercialization Consulting |

| • Project Management | | • Biomarkers, Genomics & Personalized Medicine | | • Brand & Scientific Communications |

| • Late Phase Interventional | | • Model Based Drug Development | | |

| | | • Planning & Design | | Real-World and Late Phase Research: |

| Clinical Trial Support Services: | | • Regulatory Affairs Services | | • Observational Studies |

| • Clinical Data Management | | | | • Product and Disease Registries |

| • Biostatistical Services | | Advisory Services: | | • Comparative Effectiveness Studies |

| • Cardiac Safety & ECG Laboratory Services | | • Product Development Strategy Consulting | | |

| • Safety & Pharmacovigilance Operations | | • Regulatory & Compliance Consulting | | Communication and Health |

| • Phase I Clinical Pharmacology Units | | • Process & IT Implementation Consulting | | Engagement Services: |

| | | | | • Digital Patient Services |

| | | | | • Brand and Scientific Communications |

| | | | | |

| | | | | • Payer & Provider Solutions |

| | | | | • Advisory Services |

Q2 Solutions

Integrated Healthcare Services provides a broad array of services, including commercial services, such as contract pharmaceutical sales forces, and healthcare business services for the broader healthcare sector, such as real-world and late phase research, market access and consulting, health information analytics and technology consulting, and other healthcare solutions.

Of the new molecular entities, or NMEs, and new biological license applications, or BLAs, approved by the United States Food and Drug Administration, or FDA, from 2004 through 2013, we helped develop or commercialize 100% of the central nervous system drugs, 92% of the oncology drugs and 87% of the cardiovascular drugs.

We expect outsourced clinical development to CROs to grow 6%-8% annually during this period.

Of this annual growth, we believe that up to 2% will be derived from increased R&D expenditures, with the remainder coming from increased outsourcing penetration.

| --- | --- | --- | --- |

| | lower costs in their product development and commercial operations will cause them to look to partners as they enter into outsourcing arrangements to improve efficiency, increase sales force utilization and effectiveness, improve clinical success rates and turn fixed costs into variable costs across their R&D and commercial operations. |

| --- | --- |

Based on the most recent publicly available information, our service revenues were nearly 1.6 times the size of our closest public CRO competitor.

These customers accounted for approximately 36% of our net new business in 2014.

flexible solutions tailored for our customers’ needs in an increasingly complex environment.

Our History


quality of the investigators who perform the trials.

Central Laboratories.

Utilizing our global Phase I network, we can provide our customers with a rapid turnaround of bioanalytical/PK data to support the efficient completion of Phase I trials.

By combining our global central laboratories and our Phase I networks, we believe that we can help biopharmaceutical companies make better decisions faster.

Our global Phase I network includes 190 beds with operations in Overland Park, Kansas (United States) and London, United Kingdom.

_Consulting Services_

demonstrate effectiveness, gain market access and expand labeling and approved indications.

To provide and coordinate service offerings to our customers, we have business development efforts across our service offerings and within many individual service offerings, and we also maintain an integrated business development group.

In addition, we continue to evolve our relationships with our small, mid-size and other biopharmaceutical customers outside the 20 largest biopharmaceutical companies based on 2013 reported revenues.

2012.

| | | | | | | | | | | | | |

| | | | | | | | | |

If a customer cancels an order, we may be reimbursed for the costs we have incurred.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: (Mark One)][added: (Mark One)]

| x | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year ended December 31, [removed: 2014][added: 2015]

| [removed: ¨] [added: o] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from to [removed: .][added: .]

[removed: Commission] [added: Commission] File Number: [removed: 001-35907][added: 001-35907]

[removed: QUINTILES] [added: QUINTILES] TRANSNATIONAL HOLDINGS [removed: INC.][added: INC.]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: North Carolina] [added: North Carolina] | | [removed: 27-1341991] [added: 27-1341991] |

| [removed: (State] [added: (State] or other jurisdiction [removed: of incorporation] [added: of incorporation] or [removed: organization)] [added: organization)] | | [removed: (I.R.S. Employer Identification Number)] [added: (I.R.S. Employer Identification Number)] |

[removed: 4820] [added: 4820] Emperor Blvd., Durham, North Carolina [removed: 27703][added: 27703]

[removed: (Address] [added: (Address] of principal executive offices and Zip [removed: Code)][added: Code)]

[removed: (919) 998-2000][added: (919) 998-2000]

[removed: (Registrant’s] [added: (Registrant’s] telephone number, including area [removed: code)][added: code)]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class:] [added: Class:] | | [removed: Name] [added: Name] of Each Exchange on which [removed: Registered] [added: Registered] |

| [removed: Common] [added: Common] Stock, par value $0.01 per [removed: share] [added: share] | | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes x No [removed: ¨][added: o]

Yes [removed: ¨] [added: o] No x

| Large accelerated filer | | x | | Accelerated filer | | [removed: ¨] [added: o] |

| Non-accelerated filer | | [removed: ¨] [added: o] (Do not check if a smaller reporting company) | | Smaller reporting company | | [removed: ¨] [added: o] |

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, based upon the closing sale price as reported on the New York Stock Exchange on June 30, [removed: 2014,] [added: 2015,] the last business day of the registrant’s most recently completed second quarter, was approximately [removed: $3,275,274,595.][added: $5,835,192,138.]

| [removed: Class] [added: Class] | | [removed: Number] [added: Number] of Shares [removed: Outstanding] [added: Outstanding] |

| Common Stock $0.01 par value | | [removed: 124,315,113] [added: 119,384,993] shares outstanding as of February [removed: 5, 2015] [added: 4, 2016] |

Portions of the registrant’s Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.

Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, [removed: 2014.][added: 2015.]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| Item | | | | [removed: Page] | [removed: |] [added: Page] |

| | | [removed: PART I |] [added: PART I] | | | |

| 1A. | | [Risk [removed: Factors](#tx831296_2) |] [added: Factors](#ITEM_1A_RISK_FACTORS)] | | [removed: 21] | [added: 18] |

| 1B. | | [Unresolved Staff [removed: Comments](#tx831296_3) |] [added: Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS)] | | [removed: 38] | [added: 34] |

| 3. | | [Legal [removed: Proceedings](#tx831296_5) |] [added: Proceedings](#ITEM_3_LEGAL_PROCEEDINGS)] | | [removed: 39] | [added: 34] |

| 4. | | [Mine Safety [removed: Disclosures](#tx831296_6) |] [added: Disclosures](#ITEM_4_MINE_SAFETY_DISCLOSURES)] | | [removed: 39] | [added: 34] |

| | | [removed: PART II |] [added: PART II] | | | |

| 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx831296_7) |] [added: Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU)] | | [removed: 40] | [added: 35] |

10-K 1 q-10k_20151231.htm 10-K

or

Yes x No o

Yes x No o

Yes o No x

QUINTILES TRANSNATIONAL HOLDINGS INC.

FORM 10-K

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| 1. | | [Business](#ITEM_1_BUSINESS) | | | 4 |

| 2. | | [Properties](#ITEM_2_PROPERTIES) | | | 34 |

| | | | | | |

| | | | | | |

| | | | | | |

| | | [Signatures](#SIGNATURES) | | | 106 |

In this document, unless otherwise stated or the context otherwise requires, references to “Quintiles,” “we,” “us,” “our,” or similar references mean Quintiles Transnational Holdings Inc. and its subsidiaries on a consolidated basis.

References to “Quintiles Holdings” refer to Quintiles Transnational Holdings Inc. on an unconsolidated basis.

References to “Quintiles Transnational” refer to Quintiles Transnational Corp., Quintiles Holdings’ wholly-owned subsidiary through which we conduct our operations.

10-K 1 d831296d10k.htm 10-K

or

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| --- | --- | --- | --- | --- | --- | --- |

| 1. | | [Business](#tx831296_1) | | | 4 | |

| 2. | | [Properties](#tx831296_4) | | | 38 | |

| | | [Signatures](#tx831296_21) | | | 117 | |

As of December 31, [removed: 2014,] [added: 2015,] we had approximately 120 offices located in approximately 60 countries.

We also maintain substantial offices serving Integrated Healthcare Services in Parsippany, New [added: Jersey; Mannheim, Germany; Reading, England; and Tokyo, Japan.]

We own facilities in Gotemba City, Japan [added: (currently unused] and [added: held for sale) and] Barcelona, Spain that serve Product Development and Integrated Healthcare Services.

Jersey; Mannheim, Germany; Reading, England; and Tokyo, Japan.

[removed: PART II][added: PART II]

[removed: Market] [added: Market] Information for Common [removed: Stock][added: Stock]

[added: Our common stock trades on the NYSE under the symbol “Q.”] The following table sets forth the high and low sales prices per share of our common stock as reported by the NYSE for the periods indicated.

| | | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | |

| Fiscal Year [removed: 2013] [added: 2015] | | | | | | | | |

[removed: Holders] [added: Holders] of [removed: Record][added: Record]

[removed: Dividend Policy][added: Dividend Policy]

We do not currently intend to pay dividends on our common stock, and no dividends were declared or paid in [removed: 2014] [added: 2015] or [removed: 2013.][added: 2014.]

[removed: Recent] [added: Recent] Sales of Unregistered [removed: Securities][added: Securities]

We did not sell any unregistered equity securities in [removed: 2014.][added: 2015.]

[removed: Purchases] [added: Purchases] of Equity Securities by the [removed: Issuer][added: Issuer]

The following table summarizes the equity repurchase program activity for the three months ended December 31, [removed: 2014] [added: 2015] and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase [removed: Program (as defined below):][added: Program:]

| [removed: Period] [added: Period] | | [removed: Total] [added: Total] Number of Shares [removed: Purchased] [added: Purchased] | | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs] [added: Programs] | | | | [removed: Approximate] [added: Approximate] Dollar Value of Shares That May Yet Be Purchased Under the Plans or [removed: Programs(1)] [added: Programs] | | |

| | | [removed: (in] [added: (in] thousands, except share and per share [removed: data)] [added: data)] | | | | | | | | | | | | | | |

| October 1, [removed: 2014] [added: 2015] – October 31, [removed: 2014] [added: 2015] | | | — | | | $ | — | | | | — | | | $ | [removed: 59,486] [added: 109,486] | |

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

The following graph shows a comparison from May 9, 2013 (the date our common stock commenced trading on the NYSE) through December 31, [removed: 2014] [added: 2015] of the cumulative total return for our common stock, the Standard & [removed: Poor’s 500 Stock] [added: Poor's Healthcare Sector] Index, or S&P 500 [removed: Index,] [added: Healthcare,] and the Standard & Poor’s [removed: Healthcare Sector] [added: 500 Stock] Index, or S&P 500 [removed: Healthcare.][added: Index.]

[removed: ][added: ]

| | | High | | | | Low | | |

| First Quarter | | $ | 69.97 | | | $ | 56.46 | |

| Second Quarter | | $ | 73.82 | | | $ | 63.63 | |

| Third Quarter | | $ | 80.45 | | | $ | 67.47 | |

| Fourth Quarter | | $ | 72.68 | | | $ | 63.62 | |

On February 4, 2016, we had 40 shareholders of record as reported by our transfer agent.

Holders of record are defined as those shareholders whose shares are registered in their names in our stock records and do not include beneficial owners of common stock whose shares are held in the names of brokers, dealers or clearing agencies.

On October 31, 2013, we announced that on October 30, 2013 our Board approved an equity repurchase program, or 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.

During 2015, our Board increased the share repurchase authorization under the Repurchase Program by $600.0 million, which increased the total amount that has been authorized under the Repurchase Program to $725.0 million.

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 could be modified, 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.

We may also repurchase shares of our common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act, which would permit shares of our common stock to be repurchased when we might otherwise be precluded from doing so by law.

Repurchases of vested in-the-money employee stock options were made through transactions between us and our employees (other than our executive officers, who were not eligible to participate in the program), and this aspect of the Repurchase Program expired in November 2013.

The Repurchase Program for common stock does not have an end date.

In 2015, we repurchased 7,855,796 shares of common stock for an aggregate purchase price of $515.0 million under the Repurchase Program.

From inception through December 31, 2015, we have repurchased a total of $580.5 million of our securities under the Repurchase Program, consisting of $59.1 million of stock options and $521.4 million of common stock.

As of December 31, 2015, we have remaining authorization to repurchase up to $144.5 million of our common stock under the Repurchase Program.

In addition, from time to time, we have and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

For additional information regarding our equity repurchases, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 12 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

| November 1, 2015 – November 30, 2015 (1) | | | 3,952,746 | | | $ | 66.24 | | | | 3,952,746 | | | $ | 147,658 | |

| December 1, 2015 – December 31, 2015 | | | 48,000 | | | $ | 66.30 | | | | 48,000 | | | $ | 144,475 | |

| | | | 4,000,746 | | | | | | | | 4,000,746 | | | | | |

| | (1) | On November 12, 2015, we completed the repurchase of 3,000,000 shares of our common stock for $66.25 per share from Temasek Life Sciences Private Limited in a private transaction for an aggregate purchase price of approximately $198.8 million. The repurchase price per share of common stock was equal to 98.5% of the closing market price of our common stock on the NYSE on November 10, 2015 (which was $67.26). We funded this private repurchase transaction with cash on hand. The private repurchase transaction was entered into pursuant to the Repurchase Program. |

| --- | --- | --- |

These indices are included for comparative purposes only.

They do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative performance of the stock involved, and they are not intended to forecast or be indicative of possible future performance of our common stock.

| | | 5/9/2013 | | | | 12/31/2013 | | | | 12/31/2014 | | | | 12/31/2015 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Q | | $ | 100 | | | $ | 110 | | | $ | 140 | | | $ | 163 | |

| S&P 500 Healthcare | | $ | 100 | | | $ | 116 | | | $ | 143 | | | $ | 151 | |

| S&P 500 | | $ | 100 | | | $ | 114 | | | $ | 127 | | | $ | 126 | |

On May 9, 2013, our common stock began trading on the NYSE under the symbol “Q.” Prior to that time, there was no public market for our common stock.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Fourth Quarter | | $ | 46.75 | | | $ | 40.10 | |

| Third Quarter | | $ | 47.50 | | | $ | 42.25 | |

| Second Quarter (from May 9, 2013) | | $ | 46.50 | | | $ | 41.50 | |

On February 5, 2015, we had approximately 45 shareholders of record.

This number does not include beneficial owners for whom shares are held by nominees in street name.

| | | | | | | | | | | | | | | | | |

| November 1, 2014 – November 30, 2014 (2) | | | 4,303,666 | | | $ | 58.09 | | | | — | | | $ | 59,486 | |

| December 1, 2014 – December 31, 2014 | | | — | | | $ | — | | | | — | | | $ | 59,486 | |

| | | | 4,303,666 | | | | | | | | — | | | | | |

| 1. | On October 31, 2013, we announced that on October 30, 2013 our Board approved an equity repurchase program, or 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. We have used and intend to continue to use cash on hand to fund the Repurchase Program. 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 could be modified, 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. We may also repurchase shares of our common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act, which would permit shares of our common stock to be repurchased when we might otherwise be precluded from doing so by law. Repurchases of vested in-the-money employee stock options were made through transactions between us and our employees (other than our executive officers, who were not eligible to participate in the program), and this aspect of the Repurchase Program expired in November 2013. The Repurchase Program for common stock does not have an end date. |

| --- | --- |

| 2. | On November 10, 2014, we completed the repurchase of 4,303,666 shares of our common stock for $58.09 per share for an aggregate purchase price of approximately $250.0 million in connection with a secondary offering by certain of our shareholders. We funded this repurchase transaction with a combination of cash on hand and a $150.0 million draw on our revolving credit facility. This repurchase transaction was separate from and in addition to the Repurchase Program. |

The stock price performance of the following graph is not necessarily indicative of future stock price performance.

We have derived the following consolidated statement of income data for [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012] [added: 2013] and consolidated balance sheet data as of December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We have derived the following consolidated statement of income data for [removed: 2011] [added: 2012] and [removed: 2010] [added: 2011] and consolidated balance sheet data as of December 31, [removed: 2012, 2011] [added: 2013, 2012] and [removed: 2010] [added: 2011] from our audited consolidated financial statements not included in this Annual Report on Form 10-K.

| | | [removed: Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | |

| | | [removed: (in] [added: (in] thousands, except per share [removed: data)] [added: data)] | | | | | | | | | | | | | | | | | | |

| [removed: Statement] [added: Statement] of Income [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Service revenues | | $ | [removed: 4,165,822] [added: 4,326,419] | | | $ | [removed: 3,808,340] [added: 4,165,822] | | | $ | [removed: 3,692,298] [added: 3,808,340] | | | $ | [removed: 3,294,966] [added: 3,692,298] | | | $ | [removed: 3,060,950] [added: 3,294,966] | |

| Reimbursed expenses | | | [removed: 1,294,176] [added: 1,411,200] | | | | [removed: 1,291,205] [added: 1,294,176] | | | | [removed: 1,173,215] [added: 1,291,205] | | | | [removed: 1,032,782] [added: 1,173,215] | | | | [removed: 863,070] [added: 1,032,782] | |

| Total revenues | | | [removed: 5,459,998] [added: 5,737,619] | | | | [removed: 5,099,545] [added: 5,459,998] | | | | [removed: 4,865,513] [added: 5,099,545] | | | | [removed: 4,327,748] [added: 4,865,513] | | | | [removed: 3,924,020] [added: 4,327,748] | |

| Costs of revenue, service costs | | | [removed: 2,684,106] [added: 2,725,586] | | | | [removed: 2,471,426] [added: 2,684,106] | | | | [removed: 2,459,367] [added: 2,471,426] | | | | [removed: 2,153,005] [added: 2,459,367] | | | | [removed: 1,941,767] [added: 2,153,005] | |

| Costs of revenue, reimbursed expenses | | | [removed: 1,294,176] [added: 1,411,200] | | | | [removed: 1,291,205] [added: 1,294,176] | | | | [removed: 1,173,215] [added: 1,291,205] | | | | [removed: 1,032,782] [added: 1,173,215] | | | | [removed: 863,070] [added: 1,032,782] | |

| Selling, general and administrative | | | [removed: 882,338] [added: 920,985] | | | | [removed: 860,510] [added: 882,338] | | | | [removed: 817,755] [added: 860,510] | | | | [removed: 762,299] [added: 817,755] | | | | [removed: 698,406] [added: 762,299] | |

| Restructuring costs | | | [removed: 8,988] [added: 30,752] | | | | [removed: 14,071] [added: 8,988] | | | | [removed: 18,741] [added: 14,071] | | | | [removed: 22,116] [added: 18,741] | | | | [removed: 22,928] [added: 22,116] | |

| Impairment charges (1) | | | [removed: —] [added: 2,484] | | | | — | | | | — | | | | [removed: 12,295] [added: —] | | | | [removed: 2,844] [added: 12,295] | |

| Income from operations | | | [removed: 590,390] [added: 646,612] | | | | [removed: 462,333] [added: 590,390] | | | | [removed: 396,435] [added: 462,333] | | | | [removed: 345,251] [added: 396,435] | | | | [removed: 395,005] [added: 345,251] | |

| Interest expense, net | | | [removed: 97,179] [added: 97,475] | | | | [removed: 119,571] [added: 97,179] | | | | [removed: 131,304] [added: 119,571] | | | | [removed: 105,126] [added: 131,304] | | | | [removed: 137,631] [added: 105,126] | |

| Loss on extinguishment of debt | | | [removed: —] [added: 7,780] | | | | [removed: 19,831] [added: —] | | | | [removed: 1,275] [added: 19,831] | | | | [removed: 46,377] [added: 1,275] | | | | [removed: —] [added: 46,377] | |

| Other [removed: (income) expense,] [added: expense (income),] net | | | [added: 2,362 | | | |] (8,978 | ) | | | (185 | ) | | | (3,572 | ) | | | 9,073 | | [removed: | | 15,647 | |]

| Income before income taxes and equity in earnings (losses) of unconsolidated affiliates | | | [removed: 502,189] [added: 538,995] | | | | [removed: 323,116] [added: 502,189] | | | | [removed: 267,428] [added: 323,116] | | | | [removed: 184,675] [added: 267,428] | | | | [removed: 241,727] [added: 184,675] | |

| Income tax expense | | | [removed: 150,056] [added: 158,989] | | | | [removed: 95,965] [added: 150,056] | | | | [removed: 93,364] [added: 95,965] | | | | [removed: 15,105] [added: 93,364] | | | | [removed: 77,582] [added: 15,105] | |

| Income before equity in earnings (losses) of unconsolidated affiliates | | | [removed: 352,133] [added: 380,006] | | | | [removed: 227,151] [added: 352,133] | | | | [removed: 174,064] [added: 227,151] | | | | [removed: 169,570] [added: 174,064] | | | | [removed: 164,145] [added: 169,570] | |

| Equity in earnings (losses) of unconsolidated affiliates (2) | | | [added: 8,298 | | | |] 4,368 | | | | (1,124 | ) | | | 2,567 | | | | 70,757 | | [removed: | | 1,110 | |]

| Net income | | | [removed: 356,501] [added: 388,304] | | | | [removed: 226,027] [added: 356,501] | | | | [removed: 176,631] [added: 226,027] | | | | [removed: 240,327] [added: 176,631] | | | | [removed: 165,255] [added: 240,327] | |

| Net (income) loss attributable to noncontrolling interests | | | [removed: (118] [added: (1,099] | ) | | | [removed: 564] [added: (118] | [added: )] | | | [removed: 915] [added: 564] | | | | [removed: 1,445] [added: 915] | | | | [removed: (4,659] [added: 1,445] | [removed: )] |

| Net income attributable to Quintiles Transnational Holdings Inc. | | $ | [removed: 356,383] [added: 387,205] | | | $ | [removed: 226,591] [added: 356,383] | | | $ | [removed: 177,546] [added: 226,591] | | | $ | [removed: 241,772] [added: 177,546] | | | $ | [removed: 160,596] [added: 241,772] | |

| Basic | | $ | [removed: 2.78] [added: 3.15] | | | $ | [removed: 1.83] [added: 2.78] | | | $ | [removed: 1.53] [added: 1.83] | | | $ | [removed: 2.08] [added: 1.53] | | | $ | [removed: 1.38] [added: 2.08] | |

| Diluted | | $ | [removed: 2.72] [added: 3.08] | | | $ | [removed: 1.77] [added: 2.72] | | | $ | [removed: 1.51] [added: 1.77] | | | $ | [removed: 2.05] [added: 1.51] | | | $ | [removed: 1.36] [added: 2.05] | |

| Cash dividends declared per common share | | $ | — | | | $ | — | | | $ | [removed: 4.91] [added: —] | | | $ | [removed: 2.48] [added: 4.91] | | | $ | [removed: 0.58] [added: 2.48] | |

| Basic | | | [removed: 127,994] [added: 123,038] | | | | [removed: 124,147] [added: 127,994] | | | | [removed: 115,710] [added: 124,147] | | | | [removed: 116,232] [added: 115,710] | | | | [removed: 116,418] [added: 116,232] | |

| Diluted | | | [removed: 131,083] [added: 125,630] | | | | [removed: 127,862] [added: 131,083] | | | | [removed: 117,796] [added: 127,862] | | | | [removed: 117,936] [added: 117,796] | | | | [removed: 118,000] [added: 117,936] | |

| | | [removed: (in thousands)] [added: (in thousands)] | | | | | | | | | | | | | | | | | | |

| [removed: Statement] [added: Statement] of Cash Flow [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Operating activities | | $ | [removed: 431,754] [added: 475,691] | | | $ | [removed: 393,371] [added: 431,754] | | | $ | [removed: 335,701] [added: 393,371] | | | $ | [removed: 160,953] [added: 335,701] | | | $ | [removed: 378,160] [added: 160,953] | |

| Investing activities | | | [removed: (173,114] [added: (66,955] | ) | | | [removed: (236,176] [added: (173,114] | ) | | | [removed: (132,233] [added: (236,176] | ) | | | [removed: (224,838] [added: (132,233] | ) | | | [removed: (141,434] [added: (224,838] | ) |

| Financing activities | | | [removed: (130,344] [added: (249,246] | ) | | | [removed: 70,957] [added: (130,344] | [added: )] | | | [removed: (146,873] [added: 70,957] | [removed: )] | | | [removed: (59,309] [added: (146,873] | ) | | | [removed: (153,081] [added: (59,309] | ) |

| [removed: Other] [added: Other] Financial [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Capital expenditures | | $ | [removed: (82,650] [added: (78,391] | ) | | $ | [removed: (88,347] [added: (82,650] | ) | | $ | [removed: (71,336] [added: (88,347] | ) | | $ | [removed: (75,679] [added: (71,336] | ) | | $ | [removed: (80,236] [added: (75,679] | ) |

| Cash [removed: dividends] [added: dividend] paid to common shareholders | | | — | | | | — | | | | [removed: (567,851] [added: —] | [removed: )] | | | [removed: (288,322] [added: (567,851] | ) | | | [removed: (67,493] [added: (288,322] | ) |

| Net new business (unaudited) (3) | | | [removed: 5,602,400] [added: 5,318,800] | | | | [removed: 4,898,900] [added: 5,602,400] | | | | [removed: 4,501,200] [added: 4,898,900] | | | | [removed: 4,044,100] [added: 4,501,200] | | | | [removed: 3,551,500] [added: 4,044,100] | |

| | | [removed: As] [added: As] of December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | |

| | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | |

| | | (in thousands) | | | | | | | | | | | | | | | | | | |

| Total assets | | | 3,926,316 | | | | 3,295,953 | | | | 3,054,223 | | | | 2,475,532 | | | | 2,304,486 | |

| Total long-term liabilities | | | 2,667,821 | | | | 2,528,065 | | | | 2,239,461 | | | | 2,525,579 | | | | 2,091,448 | |

| Other Financial Data: | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | 3,305,832 | | | | 3,066,797 | | | | 2,499,153 | | | | 2,322,917 | | | | 2,064,887 | |

| Total long-term liabilities | | | 2,537,944 | | | | 2,252,035 | | | | 2,549,200 | | | | 2,109,879 | | | | 1,841,537 | |

[removed: MANAGEMENT’S] [added: MANAGEMENT’S] REPORT ON INTERNAL CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2014.][added: 2015.]

In making this assessment, management used the framework established in [removed: _Internal Control—Integrated Framework_] [added: Internal Control — Integrated Framework] (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December 31, [removed: 2014,] [added: 2015,] the Company’s internal control over financial reporting was effective.

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2014] [added: 2015] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

| [removed: _Chief] [added: Chief] Executive [removed: Officer_] [added: Officer] | | [removed: _Executive] [added: Executive] Vice President and Chief Financial [removed: Officer_] [added: Officer] |

| (Principal Executive [removed: Officer_)_] [added: Officer)] | | (Principal Financial Officer) |

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Quintiles Transnational Holdings Inc. and its subsidiaries at December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2014] [added: 2015] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in [removed: _Internal Control—Integrated Framework_] [added: Internal Control - Integrated Framework] (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company’s internal control over financial reporting based on our audits (which [removed: was an] [added: were] integrated [removed: audit] [added: audits] in [added: 2015 and] 2014).

[removed: QUINTILES] [added: QUINTILES] TRANSNATIONAL HOLDINGS INC. AND [removed: SUBSIDIARIES][added: SUBSIDIARIES]

[removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF [removed: INCOME][added: INCOME]

| | | [removed: Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | |

| | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| | | [removed: (in] [added: (in] thousands, except per share [removed: data)] [added: data)] | | | | | | | | | | |

| Service revenues | | $ | [removed: 4,165,822] [added: 4,326,419] | | | $ | [removed: 3,808,340] [added: 4,165,822] | | | $ | [removed: 3,692,298] [added: 3,808,340] | |

| Reimbursed expenses | | | [removed: 1,294,176] [added: 1,411,200] | | | | [removed: 1,291,205] [added: 1,294,176] | | | | [removed: 1,173,215] [added: 1,291,205] | |

| Total revenues | | | [removed: 5,459,998] [added: 5,737,619] | | | | [removed: 5,099,545] [added: 5,459,998] | | | | [removed: 4,865,513] [added: 5,099,545] | |

| Costs of revenue, service costs | | | [removed: 2,684,106] [added: 2,725,586] | | | | [removed: 2,471,426] [added: 2,684,106] | | | | [removed: 2,459,367] [added: 2,471,426] | |

| Costs of revenue, reimbursed expenses | | | [removed: 1,294,176] [added: 1,411,200] | | | | [removed: 1,291,205] [added: 1,294,176] | | | | [removed: 1,173,215] [added: 1,291,205] | |

| Selling, general and administrative | | | [removed: 882,338] [added: 920,985] | | | | [removed: 860,510] [added: 882,338] | | | | [removed: 817,755] [added: 860,510] | |

| Restructuring costs | | | [removed: 8,988] [added: 30,752] | | | | [removed: 14,071] [added: 8,988] | | | | [removed: 18,741] [added: 14,071] | |

| Income from operations | | | [removed: 590,390] [added: 646,612] | | | | [removed: 462,333] [added: 590,390] | | | | [removed: 396,435] [added: 462,333] | |

| Interest income | | | [removed: (3,410] [added: (4,317] | ) | | | [removed: (3,937] [added: (3,410] | ) | | | [removed: (3,067] [added: (3,937] | ) |

| Interest expense | | | [removed: 100,589] [added: 101,792] | | | | [removed: 123,508] [added: 100,589] | | | | [removed: 134,371] [added: 123,508] | |

| Loss on extinguishment of debt | | | [removed: —] [added: 7,780] | | | | [removed: 19,831] [added: —] | | | | [removed: 1,275] [added: 19,831] | |

| Other [removed: (income) expense,] [added: expense (income),] net | | | [removed: (8,978] [added: 2,362] | [removed: )] | | | [removed: (185] [added: (8,978] | ) | | | [removed: (3,572] [added: (185] | ) |

| Income before income taxes and equity in earnings (losses) of unconsolidated affiliates | | | [removed: 502,189] [added: 538,995] | | | | [removed: 323,116] [added: 502,189] | | | | [removed: 267,428] [added: 323,116] | |

| Income tax expense | | | [removed: 150,056] [added: 158,989] | | | | [removed: 95,965] [added: 150,056] | | | | [removed: 93,364] [added: 95,965] | |

| Income before equity in earnings (losses) of unconsolidated affiliates | | | [removed: 352,133] [added: 380,006] | | | | [removed: 227,151] [added: 352,133] | | | | [removed: 174,064] [added: 227,151] | |

| Equity in earnings (losses) of unconsolidated affiliates | | | [removed: 4,368] [added: 8,298] | | | | [removed: (1,124] [added: 4,368] | [removed: )] | | | [removed: 2,567] [added: (1,124] | [added: )] |

| Net income | | | [removed: 356,501] [added: 388,304] | | | | [removed: 226,027] [added: 356,501] | | | | [removed: 176,631] [added: 226,027] | |

| Net (income) loss attributable to noncontrolling interests | | | [removed: (118] [added: (1,099] | ) | | | [removed: 564] [added: (118] | [added: )] | | | [removed: 915] [added: 564] | |

| Net income attributable to Quintiles Transnational Holdings Inc. | | $ | [removed: 356,383] [added: 387,205] | | | $ | [removed: 226,591] [added: 356,383] | | | $ | [removed: 177,546] [added: 226,591] | |

| Basic | | $ | [removed: 2.78] [added: 3.15] | | | $ | [removed: 1.83] [added: 2.78] | | | $ | [removed: 1.53] [added: 1.83] | |

| Diluted | | $ | [removed: 2.72] [added: 3.08] | | | $ | [removed: 1.77] [added: 2.72] | | | $ | [removed: 1.51] [added: 1.77] | |

| Basic | | | [removed: 127,994] [added: 123,038] | | | | [removed: 124,147] [added: 127,994] | | | | [removed: 115,710] [added: 124,147] | |

| Diluted | | | [removed: 131,083] [added: 125,630] | | | | [removed: 127,862] [added: 131,083] | | | | [removed: 117,796] [added: 127,862] | |