IQVIA Holdings (IQV) 10-K risk factor changes: FY2016 vs FY2015

[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._]

Most of our [removed: customers] [added: Research & Development Solutions clients] can terminate our contracts upon 30 to 90 days notice.

Our [removed: customers] [added: clients] may delay, terminate or reduce the scope of our contracts for a variety of reasons beyond our control, including but not limited to:

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

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

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

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

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

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

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

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

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

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

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

As a result, contract terminations, delays and alterations are a regular part of our [added: Research & Development Solutions] business.

In addition, we may not realize the full benefits of our backlog of contractually committed services if our [removed: customers] [added: clients] cancel, delay or reduce their commitments under our contracts with them, which may occur if, among other things, a [removed: customer] [added: client] decides to shift its business to a competitor or revoke our status as a preferred provider.

Thus, the loss or delay of a large contract or the loss or delay of multiple contracts could adversely affect our [removed: service] revenues and profitability.

[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._]

Most of our [added: Research & Development Solutions] contracts are either fee for service contracts or fixed-fee contracts.

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

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

Projects may be terminated or delayed by the [removed: customer] [added: client] or delayed by regulatory authorities for reasons beyond our control.

In the event that a [removed: customer] [added: client] cancels a contract, we typically would be entitled to receive payment for all services performed up to the cancellation date and subsequent [removed: customer-authorized] [added: client-authorized] services related to terminating the canceled project.

Our backlog may not be indicative of our future [removed: revenues,] [added: revenues from our Research & Development Solutions business,] and we may not realize all the anticipated future revenue reflected in our backlog.

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

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

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

[removed: The revenue recognition on larger, more global projects could be slower than on smaller, less global projects for a variety of] reasons, including but not limited to an extended period of negotiation between the time the project is awarded to us and the actual execution of the contract, as well as an increased timeframe for obtaining the necessary regulatory approvals.

Further, delayed projects will remain in backlog, unless otherwise canceled by the [removed: customer,] [added: client,] and will not generate revenue at the rate originally expected.

[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 [removed: customers,] [added: clients,] 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 [removed: customers] [added: clients] in connection with the services we provide them.

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

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

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

Despite any precautions we take, damage from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, break-ins and similar events at our various computer facilities could result in interruptions in the flow of data to our servers and from our servers to our [removed: customers.][added: clients.]

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

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Our suppliers or providers might restrict our use of or refuse to license data or provide services, which could lead to our inability to access certain data or provide certain services and, as a result, materially and adversely affect our operating results and financial condition._

Each of our Commercial Solutions information services is derived from data we collect from third parties.

These data suppliers are numerous and diverse, reflecting the broad scope of information that we collect and use in our business.

Although we typically enter into long-term contractual arrangements with many of these suppliers of data, at the time of entry into a new contract or renewal of an existing contract, suppliers may increase restrictions on our use of such data, increase the price they charge us for data or refuse altogether to license the data to us.

In addition, during the term of any data supply contract, suppliers may fail to adhere to our data quality control standards or fail to deliver data.

Further, although no single individual data supplier is material to our business, if a number of suppliers collectively representing a significant amount of data that we use for one or more of our services were to impose additional contractual restrictions on our use of or access to data, fail to adhere to our quality-control standards, repeatedly fail to deliver data or refuse to provide data, now or in the future, our ability to provide those services to our clients could be materially adversely impacted, which may harm our operating results and financial condition.

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or obviate the usefulness of the clinical trial or cause the results of the clinical trial to be reported improperly.

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_Security breaches and unauthorized use of our IT systems and information, or the IT systems or information in the possession of our vendors, could expose us, our clients, our data suppliers or others to risk of loss._

We rely upon the security of our computer and communications systems infrastructure to protect us from cyberattacks and unauthorized access.

Cyberattacks can include malware, computer viruses, hacking or other significant disruption of our computer, communications and related systems.

Although we take steps to manage and avoid these risks and to prevent their recurrence, our preventive and remedial actions may not be successful.

Such attacks, whether successful or unsuccessful, could result in our incurring costs related to, for example, rebuilding internal systems, defending against litigation, responding to regulatory inquiries or actions, paying damages or fines, or taking other remedial steps with respect to third parties.

Publicity about vulnerabilities and attempted or successful incursions could damage our reputation with clients and data suppliers and reduce demand for our services.

We also store proprietary and sensitive information in connection with our business, which could be compromised by a cyberattack.

To the extent that any disruption or security breach results in a loss or damage to our data, an inappropriate disclosure of proprietary or sensitive information, an inability to access data sources, or an inability to process data or provide our offerings to our clients, it could cause significant damage to our

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reputation, affect our relationships with our data suppliers and clients (including loss of suppliers and clients), lead to claims against us and ultimately harm our business.

We may be required to incur significant costs to alleviate, remedy or protect against damage caused by these disruptions or security breaches in the future.

We may also face inquiry or increased scrutiny from government agencies as a result of any such disruption or breach.

While we have insurance coverage for certain instances of a cyber security breach, our coverage may not be sufficient if we suffer a significant attack or multiple attacks.

Any such breach or disruption could have a material adverse effect on our operating results and our reputation as a provider of mission-critical services.

Some of our vendors have significant responsibility for the security of certain of our data centers and computer-based platforms.

Also, our data suppliers have responsibility for security of their own computer and communications environments.

These third parties face risks relating to cyber security similar to ours, which could disrupt their businesses and therefore materially impact ours.

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Backlog represents future service revenues from work not yet completed or performed under signed contracts, letters of intent and, in some cases, written pre-contract commitments.

Our backlog at December 31, 2015 was $12,038 million compared to backlog of $11,244 million at December 31, 2014.

Our $12,038 million of backlog at December 31, 2015 included approximately $8,188 million of backlog that we do not expect to generate revenue in 2016 as compared to our $11,244 million of backlog at December 31, 2014, which included approximately $7,593 million of backlog that we did not expect to generate revenue in 2015.

Unauthorized disclosure of sensitive or confidential data, whether through systems failure or employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose customers.

Similarly, we have been and expect that we will continue to be subject to attempts to gain unauthorized access to or through our information systems or those we develop for our customers, whether by our employees or third parties, including a cyber attack by computer programmers and hackers who may develop and deploy viruses, worms or other malicious software programs.

To date these attacks have not had a material impact on our operations or financial results.

Nonetheless, successful attacks in the future could result in negative publicity, significant remediation costs, legal liability and damage to our reputation and could have a material adverse effect on our results of operations.

In addition, our liability insurance might not be sufficient in type or amount to cover us against claims related to security breaches, cyber attacks and other related breaches.

Upgrading the information systems that support our operating processes and evolving the technology platform for our services pose risks to our business.

Continued efficient operation of our business requires that we implement standardized global business processes and evolve our information systems to enable this implementation.

Improper performance of our services.

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.

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

Foreign Currency Translation Risk.

Accordingly, exchange rate fluctuations will affect the translation of foreign results into United States dollars for purposes of reporting our consolidated results.

Foreign Currency Transaction Risk.

We earn revenue from our service contracts over a period of several months and, in some cases, over several years.

Accordingly, exchange rate fluctuations during this period may affect our profitability with respect to such contracts.

We have only a limited ability to protect our intellectual property rights, and these rights are important to our success.

Enforcing our rights might also require considerable time, money and oversight, and we may not be successful in enforcing our rights.

As of December 31, 2015, we had approximately $51.1 million of such arrangements, and we were also committed to invest an additional $32.7 million in private equity funds that seeks to enter into similar risk-based arrangements.

As of December 31, 2015, we had goodwill and net intangible assets of $1,087.8 million, which constituted approximately 27.7% of our total assets at the end of this period.

For example, during 2015 and 2014 we recognized $30.8 million and $9.0 million, respectively, of restructuring charges, net of reversals for changes in estimates, related to restructuring plans.

Such regulations specify standards for deidentifications and for limited data sets.

In the next few years, the European data protection framework may be revised as a generally applicable data regulation.

The text has not yet been finalized, but it contains new provisions specifically directed at the processing of health information, sanctions of up to 4% of worldwide gross revenue and extra-territoriality measures intended to bring non-EU companies under the proposed regulation.

The biopharmaceutical industry has a history of patent and other intellectual property litigation, and we might be involved in costly intellectual property lawsuits.

The biopharmaceutical industry has a history of intellectual property litigation, and these lawsuits will likely continue in the future.

Accordingly, we may face patent infringement suits by companies that have patents for similar business processes or other suits alleging infringement of their intellectual property rights.

Legal proceedings relating to intellectual property could be expensive, take significant time and divert management’s attention from other business concerns, regardless of the outcome of the litigation.

If we do not prevail in an infringement lawsuit brought against us, we might have to pay substantial damages, and we could be required to stop the infringing activity or obtain a license to use technology on unfavorable terms.

Our substantial debt could adversely affect our financial condition.

As of December 31, 2015, we had $2.5 billion of total indebtedness, excluding $534.0 million of additional available borrowings under our revolving credit facilities.

Our substantial indebtedness could adversely affect our financial condition and thus make it more difficult for us to satisfy our obligations with respect to our indebtedness.

If our cash flow is not sufficient to service our debt and adequately fund our business, we may be required to seek further additional financing or refinancing or dispose of assets.

We may not be able to implement any of these alternatives on satisfactory terms or at all.

Our substantial indebtedness could also:

[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]

Net new business [removed: was $5,319 million] [added: totaled $4.3 billion] for [added: both] the [removed: year] [added: 12 months] ended December 31, [added: 2016 and] 2015.

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

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

[removed: Business Combinations][added: Business Combinations]

We [added: have] completed [removed: a number of] [added: and will continue to consider strategic] business combinations [removed: in 2013, 2014 and 2015] to enhance our capabilities and offerings in certain areas.

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

See Note [removed: 14] [added: 15] to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information with respect to these business combinations.

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

[removed: Reimbursed] [added: As noted above, reimbursed] expenses are comprised principally of payments to [removed: physicians (investigators)] [added: investigators] who oversee clinical trials and travel expenses for our clinical monitors and sales representatives.

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

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

Our costs and expenses are comprised primarily of our costs of [removed: revenues] [added: revenue, reimbursed expenses] and selling, general and administrative expenses.

[removed: Service costs] [added: Costs of revenue] include compensation and benefits for billable [removed: employees, depreciation of assets used] [added: employees and personnel involved] in [removed: generating revenue] [added: production, data management] and [added: delivery, and the costs of acquiring and processing data for our information offerings; costs of staff directly involved with delivering technology-related services offerings and engagements, related accommodations and the costs of data purchased specifically for technology services engagements; and] other expenses directly related to service contracts such as courier fees, laboratory supplies, professional services and travel expenses.

[removed: As noted above, reimbursed] [added: Reimbursed] expenses are comprised [removed: principally] [added: primarily] of payments to physicians (investigators) who oversee clinical trials and travel expenses for our clinical monitors [added: principally within our Research & Development Solutions segment] and [added: travel expenses for our] sales [removed: representatives.][added: representatives within our Integrated Engagement Services segment.]

Selling, general and administrative expenses include costs related to [added: sales, marketing, and] administrative functions [removed: including] [added: (including human resources, legal, finance and general management) for] compensation and benefits, travel, professional services, training and expenses for [removed: advertising, IT,] [added: information technology (“IT”),] facilities and depreciation and amortization.

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

In [removed: 2015,] [added: 2016,] approximately [removed: 32%] [added: 36%] of our [removed: service] revenues were denominated in currencies other than the United States dollar.

Because a large portion of our [removed: 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.

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

The [removed: impact from foreign currency fluctuations and] constant currency information assumes [removed: constant] [added: the same] foreign currency exchange rates [removed: based on the rates] [added: that were] in effect for the comparable prior-year period were used in [removed: translation.][added: translation of the current period results.]

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

For [removed: additional] information regarding [added: our] results of operations for [removed: Product] [added: Commercial Solutions, Research &] Development [added: Solutions] and Integrated [removed: Healthcare] [added: Engagement] Services, refer to “Segment Results of Operations” later in this section.

[removed: Year] [added: _Year] ended December 31, [removed: 2015] [added: 2016] compared to the year ended December 31, [removed: 2014] [added: 2015] and the year ended December 31, [removed: 2014] [added: 2015] compared to the year ended December 31, [removed: 2013][added: 2014_]

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

[removed: 2015] [added: _2015] compared to [removed: 2014][added: 2014_]

[removed: Integrated Healthcare Services’ net new business decreased 2.5% in 2015 to $1,198 million from $1,228 million] [added: The increase] in [removed: 2014, related primarily] [added: constant currency revenues was due] to [removed: cancellations in North America as well as lower signings for commercial services in Europe, partially offset by net new business growth] [added: the impact] from the Encore acquisition which closed in July [removed: 2014 and from] [added: 2014, as well as growth in] real-world and late phase research [added: services, partially offset by lower revenue from advisory] services.

[removed: 2014] [added: _2015] compared to [removed: 2013][added: 2014_]

[removed: Service Revenues][added: _Revenues_]

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

[removed: | | | 2015 | | | | 2014 | | | | 2013 | | |][added: _2015 compared to 2014_]

| [added: (dollars in millions)] | | [removed: (dollars in millions)] [added: 2016] | | | | [added: 2015] | | | | [added: 2014] | | | [added: | $ | | | | % | | | | $ | | | | % | | |]

In 2015, our [removed: service] revenues increased [removed: $160.6] [added: $161] million, or 3.9%, as compared to 2014.

This increase was comprised of constant currency [removed: service] revenue growth of approximately [removed: $372.9] [added: $1,044] million, or [removed: 9.0%,] [added: 24.1%,] and a negative impact of approximately [removed: $212.3] [added: $6] million from the effects of foreign currency fluctuations.

The constant currency [removed: service] revenue growth was comprised of a [removed: $223.5] [added: $98] million increase in [removed: Product Development,] [added: Commercial Solutions,] which includes the [added: impact from the Encore acquisition which closed in July 2014, a $239 million increase in Research & Development Solutions, which includes the] incremental impact from the businesses that Quest contributed to Q2 Solutions, and a [removed: $149.4] [added: $35] million increase in Integrated [removed: Healthcare Services, which includes the impact from the Encore acquisition which closed in July 2014.][added: Engagement Services.]

This increase [removed: is] [added: was] comprised of constant currency revenue growth of [removed: approximately $383.2] [added: $335] million, or [removed: 10.1%,] [added: 10.6%, partially] offset by a negative impact of approximately [removed: $25.7] [added: $22] million from the effects of foreign currency fluctuations.

When compared to 2014, [removed: service] costs [added: of revenue] in 2015 increased [removed: $41.5] [added: $41] million.

This increase included a constant currency increase in expenses of approximately [removed: $239.5] [added: $238] million, or 8.9%, partially offset by a positive impact of approximately [removed: $198.0] [added: $197] million from the effects of foreign currency fluctuations.

Quintiles IMS Holdings, Inc. (“QuintilesIMS”, the “Company”, “we”, “our” and/or “us”) is a leading worldwide integrated information and technology-enabled healthcare service provider, dedicated to helping its clients improve their clinical, scientific and commercial results.

Formed through the merger (the “Merger”) of Quintiles Transnational Holdings Inc. (“Quintiles”) and IMS Health Holdings, Inc. (“IMS Health”) on October 3, 2016, QuintilesIMS’s more than 50,000 employees conduct operations in over 100 countries.

Companies seeking to improve real-world patient outcomes through treatment innovations, care provision and access can utilize our broad range of healthcare information, technology and service solutions to drive new insights and approaches.

Our solutions span clinical to commercial, bringing our clients an opportunity to realize the full potential of innovations and advanced healthcare outcomes.

Following the merger with IMS Health, we manage our business through three reportable segments, Commercial Solutions (substantially IMS Health’s legacy businesses plus Quintiles’ legacy Real-World Late Phase, Payer/Provider and Advisory businesses), Research & Development Solutions (substantially Quintiles’ legacy Product Development segment) and Integrated Engagement Services (substantially Quintiles’ legacy Integrated Healthcare Services segment).

Historical segment reporting has been revised to reflect these changes to the Company’s segment structure.

For a description of our service offerings within our segments, refer to “Business” within Part I, Item 1, of this Annual Report of Form 10-K.

For information about the industry outlook and markets that we operate in, refer to “Our Market Outlook” within Part I, Item I of this Annual Report on Form 10-K.

In October 2016, we completed the merger with IMS Health to better serve our clients across their entire product lifecycle by (i) improving clinical trial design, recruitment, and execution; (ii) creating real-world information solutions based on the use of medicines by actual patients in normal situations; and (iii) increasing the efficiency of healthcare companies’ commercial organizations through enhanced analytics and outsourcing services.

These transactions were accounted for as business combinations and the acquired results of operations are included in our consolidated financial information since the acquisition date with a non-controlling interest for

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the portion which we do not own.

Total revenues are comprised of revenues from the provision of our services and revenues from reimbursed expenses that are incurred while providing our services.

We do not have any material product revenues.

Our segment revenues expressed as a percent of 2016 revenues (excluding reimbursed expense revenue) are as follows:

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| Commercial Solutions | | | 20.4 | % |

| Research & Development Solutions | | | 64.7 | % |

| Integrated Engagement Services | | | 14.9 | % |

We have collection risk on contractually reimbursable expenses, and, from time to time, are unable to obtain reimbursement from the client for costs incurred.

When such an expense is not reimbursed, it is classified as costs of revenue on the consolidated statements of income.

As a result, we believe that providing the

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_Summary Results of Operations_

The following tables present a summary of our results of operations:

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| | | Year Ended December 31, 2015 | | | | Change | | | | | | | | Year Ended December 31, 2016 | | |

| (in millions) | | | Currency Impact | | | | Constant Currency | | | | | | | | | |

| Revenues | | $ | 4,326 | | | $ | (6 | ) | | $ | 1,044 | | | $ | 5,364 | |

| Costs of revenue | | | 2,705 | | | | (35 | ) | | | 566 | | | | 3,236 | |

| Selling, general and administrative expenses | | | 815 | | | | (19 | ) | | | 215 | | | | 1,011 | |

| Depreciation and amortization | | | 128 | | | | (3 | ) | | | 164 | | | | 289 | |

| Merger related costs | | | — | | | | (1 | ) | | | 88 | | | | 87 | |

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| Income from operations | | $ | 646 | | | $ | 51 | | | $ | (55 | ) | | $ | 642 | |

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Our business is currently organized in two reportable segments, Product Development and Integrated Healthcare Services.

For the year ended December 31, 2015, our service revenues increased $160.6 million, or 3.9%, to $4.3 billion at actual foreign exchange rates compared to 2014.

Our growth in service revenues excluding the impact of foreign currency fluctuations (“constant currency”) was $372.9 million, or 9.0%, with $223.5 million, or 7.2%, growth in the Product Development segment and $149.4 million, or 14.0%, growth in the Integrated Healthcare Services segment.

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).

Our net income attributable to Quintiles Transnational Holdings Inc. was $387.2 million with diluted earnings per share of $3.08 for the year ended December 31, 2015.

This net new business contributed to an ending backlog of $12,038 million at December 31, 2015.

“Net new business” and “backlog” are defined under “Net New Business Reporting and Backlog” in Part I, Item 1, “Business” of this Annual Report on Form 10-K.

Product Development

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

Our comprehensive service offerings provide the support and functional expertise necessary at each stage of development, as well as the systems and analytical capabilities to help our customers improve product development efficiency and effectiveness.

Product Development is comprised of clinical solutions and services and advisory services (formerly consulting services).

Clinical solutions and services provides services necessary to develop biopharmaceutical products.

These services include project management and clinical monitoring functions for conducting multi-site 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 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.

We also provide functional resourcing services that cover a range of areas.

Advisory services provides strategy and management advisory services based on life science expertise and advanced analytics, as well as regulatory and compliance advisory services.

Integrated Healthcare Services provides a broad array of services including commercial services, such as providing contract pharmaceutical sales forces in key geographic markets, as well as a growing number of healthcare business services for the broader healthcare sector.

Our customized commercialization services are designed to accelerate the commercial success of biopharmaceutical and other health-related products.

Service offerings include commercial services (sales representatives, strategy, marketing communications and other areas related to market access and commercialization), real-world and late phase research (drug therapy analysis, real-world research and 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.

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

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.

We 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.

We believe that increased demand will create new opportunities for biopharmaceutical services companies, particularly those with a global reach.

Integrated Healthcare Services historically has focused on biopharmaceutical companies seeking to commercialize their products.

The total market served by Integrated Healthcare Services is diverse, which makes it difficult to estimate the current amount of outsourced integrated healthcare services and the expected growth in such services.

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 $101 billion market is approximately 23%.

We believe that the market for real-world and late phase research and other healthcare services will evolve and expand, and as a result, there will be opportunities to grow our revenues and expand our service offerings.

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

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 Product Development segment service offerings through its focus on emerging companies and by adding expertise in oncology and medical devices.

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 within our Integrated Healthcare Services segment.

The results of operations of acquired businesses have been included since the date of acquisition and were not significant to our consolidated results of operations.

Total revenues are comprised of service revenues and revenues from reimbursed expenses.

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

For instance, these pass-through costs tend to be higher during the early phases of clinical trials as a result of patient recruitment efforts.

Our costs of revenues consist of service costs and reimbursed expenses.

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.

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.

Net new business decreased 5.1% (including a negative impact from foreign currency) in 2015 to $5,319 million from $5,602 million in 2014, driven by decreases in both Product Development and Integrated Healthcare Services.

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

Market risk is the potential loss arising from adverse changes in market rates and [removed: prices, such as foreign currency exchange rates, interest rates and other relevant market rate or price changes.][added: prices.]

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

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

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

Excluding the impacts from any outstanding or future hedging transactions, a hypothetical [removed: change of] 10% [added: change] in average exchange rates used to translate all foreign currencies to [added: the] United States [removed: dollars] [added: Dollar] would have impacted income before income taxes for [removed: 2015] [added: 2016] by approximately [removed: $45.4] [added: $65] million.

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

We attempt to minimize interest rate risk and lower our overall borrowing costs through the utilization of derivative financial instruments, primarily interest rate [added: caps and] swaps.

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

Accordingly, any change in market value associated with the interest rate [added: caps and] swaps is offset by the opposite market impact on the related debt.

[removed: Once the interest rate swaps are effective, each] [added: Each] quarter-point increase or decrease in the variable interest rate would result in our interest expense changing by approximately [removed: $3.1] [added: $6] million per year under our unhedged variable rate debt.

We transact business in more than 100 countries and are subject to risks associated with fluctuating foreign currency exchange rates.

Our objective is to reduce earnings and cash flow volatility associated with foreign currency exchange rate movements.

Accordingly, we enter into foreign currency forward contracts to minimize the impact of foreign exchange movements on non–functional currency assets and liabilities.

We also enter into foreign currency forward contracts to hedge certain forecasted foreign currency cash flows related to service contracts and to hedge non-United States Dollar anticipated intercompany royalties.

It is our policy to enter into foreign currency transactions only to the extent necessary to meet its objectives as stated above.

We do not enter into foreign currency transactions for investment or speculative purposes.

The principal currencies hedged are the Euro, the British Pound, the Japanese Yen, the Swiss Franc and the Canadian Dollar.

The contractual value of our foreign exchange derivative instruments, all of which were foreign exchange forward contracts, was approximately $489 million at December 31, 2016.

The fair value of these contracts is subject to change as a result of potential changes in foreign exchange rates.

We assess our market risk based on changes in foreign exchange rates utilizing a sensitivity analysis.

The sensitivity analysis measures the potential loss in fair values based on a hypothetical 10% change in foreign currency exchange rates.

The potential loss in fair value for foreign exchange forward contracts based on a hypothetical 10% decrease in the value of the United States Dollar or, in the case of non-dollar-related contracts, the currency being purchased, was $39 million at December 31, 2016.

However, the change in the fair value of the foreign exchange forward contracts would likely be offset by a change in the fair value of the future service contract revenue, royalty or balance sheet exposure being hedged.

The estimated fair values of the foreign exchange forward contracts were determined based on quoted market prices.

Exchange rate fluctuations affect the United States Dollar value of foreign currency revenue and expenses and may have a significant effect on our results.

The actual impact of exchange rate movements in the future could differ materially from this hypothetical analysis, based on the mix of foreign currencies and the timing and magnitude of individual exchange rate movements.

Additionally commencing in 2016, we designated a portion of our foreign currency denominated debt as a hedge of our net investment in foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in the Euro exchange rate with respect to the United States Dollar.

As of December 31, 2016, these borrowings (net of original issue discount) were €2,025 million ($2,131 million).

A hypothetical 10% decrease in the value of the United States Dollar would lead to a potential loss in fair value of $213 million.

However, this change in fair value would be offset by the change in fair value of the hedged portion of our net investment in foreign subsidiaries.

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As of December 31, 2016, we had approximately $4.4 billion of variable rate indebtedness and interest rate caps and swaps with a notional value of $1.9 billion.

_Marketable Securities_

At December 31, 2016, we held investments in marketable equity securities.

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

These securities are subject to price risk.

As of December 31, 2016, the fair value of these investments was $40 million based on the quoted market value of the securities.

The potential loss in fair value resulting from a hypothetical decrease of 10% in quoted market values was approximately $4 million at December 31, 2016.

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From time to time, we have utilized forward exchange contracts to manage our foreign currency exchange rate risk.

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

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 2015 and 2014, the most significant currency exchange rate exposures were the Euro, British pound, Singapore dollar, Indian rupee and Japanese Yen.

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

We do not have significant operations in countries in which the economy is considered to be highly-inflationary.

We are subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cash settlement of a transaction.

We earn revenue from our service contracts over a period of several months and, in some cases, over a period of several years.

Accordingly, exchange rate fluctuations during this period may affect our profitability with respect to such contracts.

We limit our foreign currency transaction risk through exchange rate fluctuation provisions stated in our contracts with customers, or we may hedge our transaction risk with foreign currency exchange contracts.

At December 31, 2015, we had 15 open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through September 2016 with a notional value totaling approximately $117.5 million.

At December 31, 2014, we had 13 open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through September 2015 with a notional value totaling approximately $76.0 million.

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.

[removed: We are] [added: Our Research & Development Solutions segment is] the world’s largest provider of biopharmaceutical development [removed: services and commercial outsourcing] services.

We use the breadth and depth of our service offerings, our global footprint and our therapeutic, scientific and analytics expertise to help [removed: our] biopharmaceutical [removed: customers,] [added: companies,] as well as other healthcare [removed: customers,] [added: clients] to be more successful in an increasingly complex healthcare environment.

[removed: Additional] [added: For financial] information regarding our [removed: segments is presented in] [added: segments, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations-Segment Results of Operations and] Note [removed: 20] [added: 22] to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

See Part [removed: I,] [added: II,] Item [removed: 1, “Business—Net] [added: 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Backlog and Net] New Business [removed: Reporting and Backlog”] [added: Reporting”] for more detail.

[removed: We estimate that total] [added: | | • | | _Outsourced] research and [removed: development spending was approximately $143 billion in 2015 of which biopharmaceutical] [added: development__:_ Biopharmaceutical] spending on drug development [removed: was] [added: totaled] approximately [removed: $97 billion, and] [added: $100 billion in 2016. Of that amount,] we estimate that our addressable market (clinical development spending excluding preclinical spending) was approximately [removed: $54] [added: $56] billion. [added: The portion of this addressable market that was outsourced in 2016, based on our estimates, was approximately $24 billion; |]

[removed: This segment’s] [added: | | • | | _Technology enabled commercial operations:_ Total addressable market of approximately $50 billion based on 2016 sales that includes information, data warehousing, IT outsourcing, software applications and other] services [removed: include] [added: in the broader market for IT services. This addressable market also includes] commercial services such as recruiting, training, deploying and managing [removed: a] global sales [removed: force,] [added: forces,] channel management, patient engagement services, market access consulting, brand communication, advisory services, and health information analytics and technology consulting. [added: |]

[added: _Growth in] Research and [removed: development spending] [added: Development__._ Spending] trends [added: in research and development] 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.

We believe that further 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 [removed: product] [added: solutions] development and commercialization needs.

[removed: | | · | Increased Importance of Product Development in Local Markets. Increasingly, regulators require 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 clinical trials locally in certain geographies will be important to pharmaceutical product growth strategies, both for multinational and local/regional biopharmaceutical companies. [removed: 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: Our Strategy][added: Our Growth Strategy]

[removed: For more information regarding the geographic scope of our business, see] [added: Please refer to] Note [removed: 19] [added: 21] to our audited consolidated financial statements included elsewhere in this Annual Report on Form [removed: 10-K.][added: 10-K for further details regarding our foreign and domestic operations in 2016, 2015 and 2014.]

[added: _Project Management and Clinical Monitoring._] Drawing upon our years of experience, our site databases, our site relationships and our highly trained staff, Clinical Solutions & Services enables the efficient conduct and coordination of multi-site clinical trials (generally Phase II-IV).

Clinical Solutions & Services’ service offerings include protocol design, feasibility and operational planning, site start [removed: up, patient recruitment, project management and monitoring of the investigator sites] [added: up] and [removed: data from] patient [removed: visits.][added: recruitment.]

[added: | •] Clinical [removed: Trial Support Services][added: trial support services | | • Commercial planning | | • Commercial readiness | | • Sales force alignment |]

[added: _Clinical Trial Support Services._] Each clinical trial requires a number of concurrent services and data streams.

We offer a broad range of functional services and consultation to support clinical trials through specialized expertise that help [removed: customers] [added: clients] efficiently collect, analyze and report the quality data and evidence they need to gain regulatory approval.

[added: Q2 _Solutions._] We provide our [removed: customers] [added: clients] globally scaled end-to-end clinical trial laboratory and research services through our majority-owned joint venture with Quest Diagnostics [removed: Incorporated, or Quest,] [added: Incorporated (“Quest”)] which was formed on July 1, 2015.

[removed: The following] [added: We offer] clinical trial, genomic, and bioanalytical laboratory service offerings [removed: operate] within the joint [removed: venture] [added: venture,] which is referred to as Q2 [removed: Solutions:][added: Solutions.]

[added: _Strategic Planning and Design._] Through our strategic planning and design services, we offer consultation services to improve decisions and performance including portfolio, program and protocol planning and design, biomarker consultation, benefit-risk management, regulatory affairs, biostatistics, modeling and simulation, and personalized medicine.

For a discussion of risks attendant to our foreign operations, see “Risk [removed: Factors—Our] [added: Factors — Our] business is subject to international economic, political and other risks that could negatively affect our results of operations and financial condition.”

No single [removed: customer] [added: client] accounted for 10% or more of our [removed: consolidated service] [added: combined company] revenues in [removed: 2015, 2014] [added: 2016, 2015] or [removed: 2013.][added: 2014.]

[removed: Our Competition][added: Our Competition]

The [removed: market] [added: markets] for [removed: our product development services is] [added: Research & Development Solutions offerings are] highly competitive, and we compete against traditional [removed: CROs,] [added: contract research organizations (“CROs”),] the in-house research and development departments of biopharmaceutical companies, universities and teaching hospitals.

[removed: Product Development’s] [added: Our] primary competitors include Pharmaceutical Product Development, Inc., PAREXEL International Corporation, ICON plc, inVentiv Health, Inc., [removed: or inVentiv,] INC Research, PRA International, and Covance Inc., the drug development business of Laboratory Corporation of America Holdings, [removed: or LabCorp,] among others.

[added: The market for our] Integrated [removed: Healthcare] [added: Engagement] Services competes in the post-approval [removed: and commercialization arenas.][added: arena.]

[removed: Our commercial solutions] [added: We] compete against the in-house sales and marketing departments of biopharmaceutical companies, other contract pharmaceutical sales and service organizations and consulting firms.

Outside of the United States, Integrated [removed: Healthcare] [added: Engagement] Services [removed: commercial teams] typically [removed: compete] [added: competes] against single country or more regionally focused [removed: commercial] service providers, such as United Drug plc, inVentiv, EPS Corporation and CMIC HOLDINGS Co., Ltd in Japan.

The primary competitive factors affecting Integrated [removed: Healthcare] [added: Engagement] Services are breadth of service offering and ability to deploy in an integrated manner, quality and track record, i.e. the proven ability to quickly assemble, train and manage large qualified [removed: commercial] teams on a global footprint and price.

[removed: Government Regulation][added: Government Regulation]

See “Part [removed: I — Item 1A — Risk] [added: I—Item 1A—Risk] Factors” for additional detail.

[removed: Good] [added: _Good] Clinical [removed: Practice][added: Practice_]

[removed: GCP] [added: Good Clinical Practice (“GCP”)] regulations and guidelines contain the industry standards for the conduct of clinical trials with respect to the integrity of the data and safety of the research subjects.

The [removed: FDA,] [added: United States Food and Drug Administration (“FDA”),] the European Medicines [removed: Agency, or EMA,] [added: Agency (“EMA”),] Japan’s Ministry of Health, Labour and Welfare and many other regulatory authorities require that study results and data submitted to such authorities be based on clinical trials conducted in accordance with GCP provisions.

[removed: Regulation] [added: _Regulation] of Drugs, Biologics and Medical [removed: Devices][added: Devices_]

The Federal Food, Drug, and Cosmetic [removed: Act, or the FDC Act,] [added: Act (“FDC Act”),] the Public Health Service [removed: Act, or the PHS Act,] [added: Act (“PHS Act”),] and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical, [removed: biological and medical device products.]

Failure to comply with applicable United States requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve a pending [removed: NDA] [added: new drug application (“NDA”)] for a new drug, a [removed: BLA] [added: biologics license application (“BLA”)] for a new biological [removed: product, or PMA] [added: product pre-market approval (“PMA”)] or clearance for a new medical device, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

[removed: Regulation] [added: _Regulation] of Patient [removed: Information][added: Information_]

[removed: Regulation] [added: _Regulation] of Promotion, Marketing and Distribution of Pharmaceutical Products and Medical [removed: Devices][added: Devices_]

Our [removed: integrated healthcare] services are subject to detailed and comprehensive regulation in each geographic market in which we operate.

In the United States, our [removed: integrated healthcare] services are subject to numerous federal and state laws pertaining to promotional activities involving pharmaceutical products and medical devices, such as the FDA’s regulations against “off-label promotion,” which require sales representatives to restrict promotion of the approved product they are detailing to the approved labeling for the product, and the Prescription Drug Marketing Act which imposes licensing, personnel record keeping, packaging, labeling, product handling and facility storage and security requirements.

Our Company

We are a leading worldwide integrated information and technology-enabled healthcare service provider, dedicated to helping our clients improve their clinical, scientific and commercial results.

Formed through the merger of Quintiles and IMS Health, QuintilesIMS’s over 50,000 employees conduct operations in more than 100 countries.

Our broad range of healthcare information, technology and service solutions span the entire product lifecycle, from clinical to commercial operations, bringing clients an opportunity to realize the full potential of innovations and advanced healthcare outcomes.

Following the Merger, we have one of the largest and most comprehensive collections of healthcare information in the world, which includes more than 530 million comprehensive, longitudinal, anonymous patient records spanning sales, prescription and promotional data, medical claims, electronic medical records and social media.

Our scaled and growing data set contains over 20 petabytes of proprietary data sourced from more than 100,000 data suppliers and covering over 800,000 data feeds globally.

Based on this data, we deliver information and insights on over 85% of the world’s pharmaceuticals, as measured by 2015 sales.

We standardize, organize, structure and integrate this data by applying our sophisticated analytics and leveraging our global technology infrastructure.

This helps our clients run their organizations more efficiently and make better decisions to improve their clinical, commercial and financial performance.

The breadth of the intelligent, actionable information we provide is not comprehensively available from any other source and our scope of information would be difficult and costly for another party to replicate.

We leverage our proprietary information assets to develop clinical and commercial capabilities with a talented healthcare-focused workforce that enables us to grow our relationships with healthcare stakeholders throughout the life science’s value chain.

This set of capabilities includes:

| | • | | _A leading healthcare-specific global IT infrastructure,_ representing what we believe is one of the largest and most sophisticated information technology infrastructures in healthcare. By processing over 65 billion healthcare transactions annually, our infrastructure connects complex healthcare data while applying a wide range of privacy, security, operational, legal and contractual protections for data in response to local law, supplier requirements and industry leading practices; |

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

| | • | | _Data-enriched clinical development,_ which improves clinical trial design, site identification and patient recruitment by empowering therapeutic, scientific, and domain experts with expansive levels of information, including product level tracking in 90 markets, and information about treatments and outcomes on more than 530 million anonymous patients; |

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

| | • | | _Robust real-world insights ecosystem,_ with sophisticated retrospective database analytics, prospective real-world data collection technology platforms and scientific expertise, which enables us to address critical healthcare issues of cost, value and patient outcomes; |

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

| | • | | _A growing set of proprietary commercial applications,_ which support our clients’ sales operations, sales management, multi-channel marketing and performance management; and |

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

| | • | | _A staff of more than 50,000 employees_ across the globe, including approximately 16,000 Commercial Services employees, approximately 27,000 Research & Development Solutions employees and approximately 7,000 Integrated Engagement Services employees. |

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

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Our mission-critical relationships with our life science clients consist of four important decision-making processes related to their product portfolios: Research and Development, Pre-Launch, Launch and In-Market.

We continue to develop software and services applications to further deepen our level of client integration by enabling our clients to enhance and/or automate many components of these key decision-making processes.


| | | | | | | |

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

| • Market opportunity assessment | | • Drug pricing optimization | | • Market access | | • Commercial operations |

| | | | | | | |

| • Project management and clinical monitoring | | • Launch readiness | | • Health technology assessment | | • Sales force effectiveness |

| | | | | | | |

| | | | | | | |

| • Patient recruitment | | • Brand positioning | | • Forecasting | | • Multi-channel marketing |

| | | | | | | |

| • Clinical trial laboratory services | | • Message testing | | • Resource allocation | | • Client relationship management |

| | | | | | | |

| • Strategic clinical trial planning and design | | • Influence networks | | • Contract sales force | | • Lifecycle management |

| | | | | | | |

| | | • Territory design | | • Observational studies | | |

Company Overview

We are positioned at the intersection of business services and healthcare and generated $4.3 billion of service revenues in 2015, conduct business in approximately 100 countries and have approximately 36,100 employees.

We were founded in 1982 by Dennis B.

Gillings, CBE, Ph.D., who was a biostatistics professor at the University of North Carolina at Chapel Hill.

Dr. Gillings and his cofounder pioneered the use of sophisticated statistical algorithms to improve the quality of data used to determine the efficacy of various drug therapies.

We expanded internationally into Europe in 1987 and into Asia in 1993.

In 1994, we completed an initial public offering, or IPO, and in 2003 we exited the public markets through a going private transaction.

In May 2013, we returned to the public markets by completing an IPO on the New York Stock Exchange, or NYSE.

We are a leader in the development and commercialization of new pharmaceutical therapies.

Our Product Development segment is the world’s largest contract research organization, or CRO, based upon the most recently available public information of reported service revenues, and is focused primarily on Phase II-IV clinical trials and associated laboratory and analytical activities.

Our Integrated Healthcare Services segment includes one of the leading global commercial pharmaceutical sales and service 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 2015 service revenues.

Our global scale and capabilities enable us to work with the leading companies in the biopharmaceutical sector.

During each of the last 13 years, we have worked with the 20 largest biopharmaceutical companies ranked by 2014 reported revenues.

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

In 2015, our service revenues were $4.3 billion and our net income attributable to our shareholders was $387.2 million.

In addition, our 2015 net new business was $5.3 billion, and we ended the year with $12.0 billion in backlog.

Our backlog at December 31, 2015 was diversified with 28% from top 10 biopharmaceutical companies, 23% with biopharmaceutical companies ranked as 11-20, 24% with biopharmaceutical companies ranked as 21-50, and 25% with biopharmaceutical companies outside the top 50, in each case, as ranked by 2014 sales.

During each of the last 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 2015 revenues.

Our Markets

The market served by Product Development consists primarily of biopharmaceutical companies, including medical device and diagnostics companies, that outsource services associated with the development of pharmaceutical products, such as clinical trials.

The portion of this $54 billion that was outsourced in 2015, based on our estimates, was approximately $22 billion.

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

Integrated Healthcare Services primarily addresses markets related to the use of approved biopharmaceutical products.

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 $101 billion in 2015.

Integrated Healthcare Services links product development to healthcare delivery.

In addition, Integrated Healthcare Services offers real-world late phase services such as observational studies, comparative effectiveness studies and product and disease registry services, which are intended to help increase the quality and cost-effectiveness of healthcare and payer provider solutions.

We believe that a combination of cost pressure in healthcare systems around the world and the increasing focus on the value and efficacy of pharmaceutical therapy provide us many opportunities to grow our revenues and expand our service offerings by improving the cost-effectiveness of drug therapies.

We believe that we are well-positioned to benefit from current trends in the biopharmaceutical and healthcare industries that affect our markets, including:

Trends in Research and Development Spending.

We estimate that research and development spending was approximately $143 billion in 2015 and will grow to approximately $155 billion in 2018, with drug development accounting for approximately 68% of total expenditures.

In 2015, there were approximately 5,084 drugs in the Phase I-III development pipeline, an increase of 36% since 2010, and there were 45 new molecular entities approvals by the United States Food and Drug Administration, or FDA, which was the highest number of approvals in any of the past 19 years.

Growth in Outsourcing.

We estimate that clinical development spending outsourced to CROs in Phases I-IV in 2015 was approximately $22 billion and will grow to approximately $28 billion by 2018.

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.

We estimate that overall outsourcing penetration of the addressable market in 2015 was 41%.

The market served by Integrated Healthcare Services is diverse, which makes it difficult to estimate the current amount of outsourced integrated healthcare services and the expected growth in such services.

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 $101 billion market is approximately 23%.

We are involved in a variety of legal and tax proceedings, claims and litigation that arise from time to time in the ordinary course of business.

These actions may be commenced by various parties, including competitors, clients, current or former employees, government agencies or others.

We record a provision with respect to a proceeding, claim or litigation when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

However, even in instances where we have recorded an estimated liability, we are unable to predict with certainty the final outcome of the matter or whether resolution of the matter will materially affect our operating results, financial position or cash flows.

As additional information becomes available, we adjust our assessment and estimates of such liabilities accordingly.

Further, we routinely enter into agreements with our suppliers to acquire data and with our clients to sell data, all in the normal course of business.

In these agreements, we sometimes agree to indemnify and hold harmless the other party for any damages such other party may suffer as a result of potential intellectual property infringement and other claims related to the use of the data.

We have not accrued liability with respect to these matters, as the exposure is considered remote.

Based on our review of the latest information available, management does not expect the impact of pending legal and tax proceedings, claims and litigation, either individually or in the aggregate, to have a material adverse effect on our operating results, financial position or cash flows.

However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which it is resolved.

The following is a summary of the more significant legal matters involving the company.

Our wholly-owned subsidiary, IMS Government Solutions Inc., is primarily engaged in providing services under contracts with the United States government.

United States government contracts are subject to extensive legal and regulatory requirements and, from time to time, agencies of the United States government have the ability to investigate whether contractors’ operations are being conducted in accordance with such requirements.

IMS Government Solutions discovered potential noncompliance with various contract clauses and requirements under its General Services Administration Contract (the “GSA Contract”) which was awarded in 2002 to its predecessor company, Synchronous Knowledge Inc. (Synchronous Knowledge Inc. was acquired by IMS Health in May 2005).

The potential noncompliance arose from two primary areas: first, at the direction of the government, work performed under one task order was invoiced under another task order without the appropriate modifications to the orders being made; and second, personnel who did not meet strict compliance with the labor categories component of the qualification requirements of the GSA Contract were assigned to contracts.

Upon discovery of the potential noncompliance, we began remediation efforts, promptly disclosed the potential noncompliance to the United States government, and were accepted into the Department of Defense Voluntary Disclosure Program.

We filed a Voluntary Disclosure Program Report on August 29, 2008.

We are currently unable to determine the outcome of all of these matters pending the resolution of the Voluntary Disclosure Program process and the ultimate liability arising from these matters could exceed our current reserves.

On February 13, 2014, a group of approximately 1,200 medical doctors and 900 private individuals filed a civil lawsuit with the Seoul Central District Court against IMS Korea and two other defendants, KPA and the Korean Pharmaceutical Information Center (“KPIC”).

The civil lawsuit alleges KPA and KPIC collected their personal information in violation of applicable privacy laws without the necessary consent through a software system installed on pharmacy computer systems in Korea, and that personal information was transferred to IMS Korea and sold to pharmaceutical companies.

The plaintiffs are claiming damages in the aggregate amount of approximately $6 million plus interest.

We believe the lawsuit is without merit, reject plaintiffs’ claims and intend to vigorously defend our position.

##### [Table of Contents](#toc)

On July 23, 2015, indictments were issued by the Seoul Central District Prosecutors’ Office in South Korea against 24 individuals and companies alleging improper handling of sensitive health information in violation of, among others, South Korea’s Personal Information Protection Act.

IMS Korea and two of its employees were among the individuals and organizations indicted.

Although there is no assertion that IMS Korea used patient identified health information in any of its offerings, prosecutors allege that certain of IMS Korea’s data suppliers should have obtained patient consent when they converted sensitive patient information into non-identified data and that IMS Korea had not taken adequate precautions to reduce the risk of re-identification.

We believe the indictment is without merit, that we acted in compliance with all applicable laws at all times and intend to vigorously defend our position.

For additional information, see Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K and “Risk factors—Risks Related to our Business—Litigation or regulatory proceedings could have a material adverse effect on our operating results and financial condition.”

We are party to legal proceedings incidental to our business.

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

[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)]

| [removed: x] [added: ☒] | [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: 2015][added: 2016]

| [removed: o] [added: ☐] | [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 TRANSNATIONAL HOLDINGS INC.][added: QUINTILES IMS HOLDINGS, INC.]

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

| [removed: (State] [added: Delaware (State] or other jurisdiction of incorporation or [removed: organization)] [added: organization)] | | [removed: (I.R.S.] [added:  | | 27-1341991 (I.R.S.] Employer Identification [removed: Number)] [added: 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)] [added: (919)] 998-2000 [added: and (203) 448-4600]

[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 [removed: x] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: x][added: ☒]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: x]

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

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

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: 2015,] [added: 2016,] the last business day of the registrant’s most recently completed second quarter, was approximately [removed: $5,835,192,138.][added: $5,770,018,162, (which does not give effect to the business combination of Quintiles Transnational Holdings Inc. and IMS Health Holdings, Inc. completed on October 3, 2016).]

| Common Stock $0.01 par value | | [removed: 119,384,993] [added: 235,719,111] shares outstanding as of February [removed: 4, 2016] [added: 9, 2017] |

Portions of the registrant’s Proxy Statement for the [removed: 2016] [added: 2017] Annual Meeting of [removed: Shareholders] [added: Stockholders] 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: 2015.][added: 2016.]

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

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

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

| 1A. | | [Risk [removed: Factors](#ITEM_1A_RISK_FACTORS)] [added: Factors](#tx321341_3)] | | | [removed: 18] [added: 17] | [added: |]

| 1B. | | [Unresolved Staff [removed: Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS)] [added: Comments](#tx321341_4)] | | | [removed: 34] [added: 44] | [added: |]

| 3. | | [Legal [removed: Proceedings](#ITEM_3_LEGAL_PROCEEDINGS)] [added: Proceedings](#tx321341_6)] | | | [removed: 34] [added: 45] | [added: |]

| 4. | | [Mine Safety [removed: Disclosures](#ITEM_4_MINE_SAFETY_DISCLOSURES)] [added: Disclosures](#tx321341_7)] | | | [removed: 34] [added: 46] | [added: |]

| [added: [PART I](#tx321341_1)] | | [removed: PART II] | | | | [added: |]

| 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ITEM_5_MARKET_FOR_REGISTRANTS_COMMON_EQU)] [added: Securities](#tx321341_9)] | | | [removed: 35] [added: 47] | [added: |]

| 6. | | [Selected Financial [removed: Data](#ITEM_6_SELECTED_FINANCIAL_DATA)] [added: Data](#tx321341_10)] | | | [removed: 38] [added: 49] | [added: |]

10-K 1 d321341d10k.htm FORM 10-K

##### [Table of Contents](#toc)

or

| | | | | |

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

and

83 Wooster Heights Road, Danbury, Connecticut 06810

Yes ☒ No ☐

Yes ☒ No ☐

| | | | | | | | | |

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

| | | | | | | | | |

Yes ☐ No ☒

| | | |

##### [Table of Contents](#toc)

QUINTILES IMS HOLDINGS, INC.

| 1. | | [Business](#tx321341_2) | | | 5 | |

| 2. | | [Properties](#tx321341_5) | | | 44 | |

| | | | | | | |

| | | | | | | |

| | | | | | | |

| 16. | | [Form 10-K Summary](#tx321341_25) | | | 145 | |

| [Signatures](#tx321341_26) | | | | | 146 | |

##### [Table of Contents](#toc)

GENERAL

When we use the terms “QuintilesIMS,” the “Company,” “we,” “us” or “our” in this Annual Report on Form 10-K, we mean Quintiles IMS Holdings, Inc. and its subsidiaries on a consolidated basis, unless we state or the context implies otherwise.

On October 3, 2016, Quintiles Transnational Holdings Inc. (“Quintiles”) completed its previously announced merger of equals transaction (the “Merger”) with IMS Health Holdings, Inc. (“IMS Health”).

Pursuant to the terms of the merger agreement dated as of May 3, 2016 between Quintiles and IMS Health (the “Merger Agreement”), IMS Health was merged with and into Quintiles, and the separate corporate existence of IMS Health ceased, with Quintiles continuing as the surviving corporation.

Immediately prior to the completion of the Merger, Quintiles reincorporated as a Delaware corporation.

Quintiles changed its name to Quintiles IMS Holdings, Inc. At the effective time of the Merger, each issued and outstanding share of IMS Health common stock was automatically converted into 0.3840 of a share of the Company’s common stock.

INDUSTRY AND MARKET DATA

This annual report on Form 10-K includes market data and forecasts with respect to the healthcare industry.

In some cases, we rely on and refer to market data and certain industry forecasts that were obtained from third party surveys, market research, consultant surveys, publicly available information and industry publications and surveys that we believe to be reliable.

However, we have not independently verified data from industry analyses and cannot guarantee their accuracy or completeness.

We believe that data regarding the industry, market size and its market position and market share within such industry provide general guidance but are inherently imprecise.

Other industry and market data included in this annual report are from QuintilesIMS analyses and have been identified accordingly, including, for example, QuintilesIMS Market Prognosis, which is a subscription-based service that provides five-year pharmaceutical market forecasts at the national, regional and global levels.

We are a leading global information provider for the healthcare industry and we maintain databases, produce market analyses and deliver information to clients in the ordinary course of our business.

Our information is widely referenced in the industry and used by governments, payers, academia, the life sciences industry, the financial community and others.

Most of this information is available on a subscription basis.

Other reports and information are available publicly through our QuintilesIMS Institute for Healthcare Informatics (the “QuintilesIMS Institute”).

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

or

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

| North Carolina | | 27-1341991 |

| | | | | | |

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

| 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.

As of December 31, [removed: 2015,] [added: 2016,] we had approximately [removed: 120] [added: 273] offices located in approximately [removed: 60] [added: 82] countries.

Our executive headquarters [removed: is] [added: are] located adjacent to Research Triangle Park, North [removed: Carolina.][added: Carolina, and in Danbury, Connecticut.]

We own facilities in Barcelona, Spain; Buenos Aires, Argentina; Caracas, Venezuela; Los Ruices, Venezuela; Lisbon, Portugal and Bangalore, India.

Our properties are

##### [Table of Contents](#toc)

geographically distributed to meet our worldwide operating requirements, and none of our properties are individually material to our business operations.

We maintain substantial offices serving Product Development in Durham, North Carolina; Marietta, Georgia; Overland Park, Kansas; Reading, England; West Lothian, Scotland; Centurion, South Africa; Tokyo, Japan; Bangalore, India; and Singapore.

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

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

None of our leases is individually material to our business operations.

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

##### [Table of Contents](#toc)

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

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

| [removed: Fiscal] [added: Fiscal] Year [removed: 2014] [added: 2015] | | | | | | | | |

| [removed: Fiscal] [added: Fiscal] Year [removed: 2015] [added: 2016] | | | | | | | | |

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

On February [removed: 4, 2016,] [added: 9, 2017,] we had [removed: 40 shareholders] [added: approximately 60 stockholders] of record as reported by our transfer agent.

Holders of record are defined as those [removed: shareholders] [added: stockholders] 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.

[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: 2015] [added: 2016] or [removed: 2014.][added: 2015.]

The declaration, amount and payment of any future dividends on shares of our common stock will be at the sole discretion of our Board, which may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, the implications of the payment of dividends by us to our [removed: shareholders] [added: stockholders] or by our subsidiaries to us, and any other factors that our Board may deem relevant.

For additional information regarding these restrictive covenants, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note [removed: 10] [added: 11] to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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

We did not sell any unregistered equity securities in [removed: 2015.][added: 2016.]

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

On October [removed: 31, 2013, we announced that on October] 30, [removed: 2013] [added: 2013,] our Board approved an equity repurchase [removed: program, or the Repurchase Program,] [added: program (“Repurchase Program”)] authorizing the repurchase of up to [removed: $125.0] [added: $125] 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 [removed: $600.0] [added: $600] million, which increased the total amount that has been authorized under the Repurchase Program to [removed: $725.0] [added: $725] 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, [added: extended,] suspended or discontinued at any time.

[removed: In 2015,] [added: During the year ended December 31, 2016,] we repurchased [removed: 7,855,796] [added: 14.3 million] shares of [added: our] common stock [added: at an average market price per share of $76.57] for an aggregate purchase price of [removed: $515.0] [added: $1,098] million under the Repurchase Program.

From inception through December 31, [removed: 2015,] [added: 2016,] we have repurchased a total of [removed: $580.5] [added: $1,678] million of our securities under the Repurchase Program, consisting of [removed: $59.1] [added: $59] million of stock options and [removed: $521.4] [added: $1,619] million of common stock.

As of December 31, [removed: 2015,] [added: 2016,] we have remaining authorization to repurchase up to [removed: $144.5] [added: $547] million of our common stock under the Repurchase Program.

In addition, from time to time, we have [added: repurchased] 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 [removed: 12] [added: 14] to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The following table summarizes the equity repurchase program activity for the three months ended December 31, [removed: 2015] [added: 2016] and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program:

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

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

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

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Quintiles [removed: Transnational Holdings] [added: IMS Holdings,] Inc. under the Exchange Act or under the Securities Act, except as shall be expressly set forth by specific reference in such filing.

The following graph shows a comparison from May 9, 2013 (the date our common stock commenced trading on the NYSE) through December 31, [removed: 2015] [added: 2016] of the cumulative total return for our common stock, the Standard & [removed: Poor's Healthcare Sector Index, or S&P 500 Healthcare, and the Standard &] Poor’s 500 Stock [removed: Index, or S&P 500 Index.][added: Index (“S&P 500”) and a select peer group.]

The graph assumes that $100 was invested [removed: at the market close on May 9, 2013] in [removed: the common stock of Quintiles Transnational Holdings Inc.,] [added: QuintilesIMS,] the S&P 500 [removed: Index] and the [removed: S&P 500 Healthcare, and] [added: peer group as of the close of market on May 9, 2013,] assumes [added: the] reinvestments of dividends, if any.

[removed: These indices] [added: The S&P 500 and our peer group] are included for comparative purposes only.

They do not necessarily reflect management’s opinion that [removed: such indices] [added: the S&P 500 and our peer group] 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.

[removed: ][added: ]

| | | [removed: 5/9/2013] [added: 5/9/2013] | | | | [removed: 12/31/2013] [added: 12/31/2013] | | | | [removed: 12/31/2014] [added: 12/31/2014] | | | | [removed: 12/31/2015] [added: 12/31/2015] | | | [added: | 12/31/2016 | | |]

| Q | | $ | 100 | | | $ | 110 | | | $ | 140 | | | $ | 163 | | [added: | $ | 181 | |]

| [removed: S&P 500 Healthcare] [added: Peer Group] | | $ | 100 | | | $ | 116 | | | $ | 143 | | | $ | 151 | | [added: | $ | 143 | |]

| S&P 500 | | $ | 100 | | | $ | 114 | | | $ | 127 | | | $ | 126 | | [added: | $ | 138 | |]

| | | | | | | | | |

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

| First Quarter | | $ | 67.92 | | | $ | 55.01 | |

| Second Quarter | | $ | 71.44 | | | $ | 61.21 | |

| Third Quarter | | $ | 81.26 | | | $ | 65.01 | |

| Fourth Quarter | | $ | 81.45 | | | $ | 70.10 | |

##### [Table of Contents](#toc)

On November 1, 2016, our Board increased the stock repurchase authorization under the Repurchase Program by $1.5 billion, which increased the total amount that has been authorized under the Repurchase Program to $2.225 billion.

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

| October 1, 2016 – October 31, 2016 | | | — | | | $ | — | | | | — | | | $ | 47 | |

| November 1, 2016 – November 30, 2016 | | | 7.4 | | | $ | 78.13 | | | | 7.4 | | | $ | 967 | |

| December 1, 2016 – December 31, 2016 | | | 5.4 | | | $ | 77.41 | | | | 5.4 | | | $ | 547 | |

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

| | | | 12.8 | | | | | | | | 12.8 | | | | | |

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

##### [Table of Contents](#toc)

The peer group consists of Cerner Corporation, Charles River Laboratories, Inc., Dun & Bradstreet Corporation, Equifax Inc., ICON plc, IHS Markit Ltd., INC Research Holdings, Laboratory Corporation of America Holdings, Nielsen N.V., Parexel International Corporation, Inc., PRA Health Sciences, Inc., Thomson Reuters Corporation and Verisk Analytics, Inc. The companies in our peer group are publicly traded information services, information technology or contract research companies, and thus share similar business model characteristics to QuintilesIMS, or provide services to similar customers as QuintilesIMS.

Many of these companies are also used by our compensation committee for purposes of compensation benchmarking.

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

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

| First Quarter | | $ | 55.00 | | | $ | 45.25 | |

| Second Quarter | | $ | 53.55 | | | $ | 46.27 | |

| Third Quarter | | $ | 58.89 | | | $ | 53.03 | |

| Fourth Quarter | | $ | 60.79 | | | $ | 51.09 | |

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

| October 1, 2015 – October 31, 2015 | | | — | | | $ | — | | | | — | | | $ | 109,486 | |

| 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. |

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

We have derived the following consolidated [removed: statement] [added: statements] of income data for [removed: 2015, 2014 and] 2013 and [added: 2012 and] consolidated balance sheet data as of December 31, [removed: 2015] [added: 2014, 2013] and [removed: 2014] [added: 2012] from our audited consolidated financial statements [added: not] included [removed: elsewhere] in this Annual Report on Form 10-K.

We have derived the following consolidated [removed: statement] [added: statements] of income data for [removed: 2012] [added: 2016, 2015] and [removed: 2011] [added: 2014] and consolidated balance sheet data as of December 31, [removed: 2013, 2012] [added: 2016] and [removed: 2011] [added: 2015] from our audited consolidated financial [removed: statements not included in this Annual Report on Form 10-K.]

You should read the consolidated financial data set forth below in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K and the information under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” [removed: Our historical results are not necessarily indicative of the results] [added: On October 3, 2016,] we [removed: may achieve in any future period.][added: completed a merger of equals transaction with IMS Health.]

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

| [added: (in millions)] | | [removed: 2015] [added: 2016(5)] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

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

| Costs of revenue, reimbursed expenses | | | [removed: 1,411,200] [added: 1,514] | | | | [removed: 1,294,176] [added: 1,411] | | | | [removed: 1,291,205] [added: 1,295] | | | | [removed: 1,173,215] [added: 1,291] | | | | [removed: 1,032,782] [added: 1,173] | |

| Impairment [removed: charges (1)] [added: charges(2)] | | | [removed: 2,484] [added: 28] | | | | [removed: —] [added: 2] | | | | — | | | | — | | | | [removed: 12,295] [added: —] | |

| Income from operations | | | [removed: 646,612] [added: 642] | | | | [removed: 590,390] [added: 646] | | | | [removed: 462,333] [added: 590] | | | | [removed: 396,435] [added: 462] | | | | [removed: 345,251] [added: 396] | |

| Loss on extinguishment of debt | | | [removed: 7,780] [added: 31] | | | | [removed: —] [added: 8] | | | | [removed: 19,831] [added: —] | | | | [removed: 1,275] [added: 20] | | | | [removed: 46,377] [added: 1] | |

| Other [removed: expense (income),] [added: (income) expense,] net | | | [removed: 2,362] [added: (8] | [added: )] | | | [removed: (8,978] [added: 2] | [removed: )] | | | [removed: (185] [added: (8] | ) | | | [removed: (3,572] [added: —] | [removed: )] | | | [removed: 9,073] [added: (4] | [added: )] |

| Income before income taxes and equity in earnings (losses) of unconsolidated affiliates | | | [removed: 538,995] [added: 479] | | | | [removed: 502,189] [added: 539] | | | | [removed: 323,116] [added: 501] | | | | [removed: 267,428] [added: 323] | | | | [removed: 184,675] [added: 267] | |

| Income before equity in earnings (losses) of unconsolidated affiliates | | | [removed: 380,006] [added: 134] | | | | [removed: 352,133] [added: 380] | | | | [removed: 227,151] [added: 352] | | | | [removed: 174,064] [added: 227] | | | | [removed: 169,570] [added: 174] | |

| Equity in earnings (losses) of unconsolidated affiliates [removed: (2)] | | | [removed: 8,298] [added: (4] | [added: )] | | | [removed: 4,368] [added: 8] | | | | [removed: (1,124] [added: 5] | [removed: )] | | | [removed: 2,567] [added: (1] | [added: )] | | | [removed: 70,757] [added: 3] | |

| Earnings per share attributable to common [removed: shareholders:] [added: stockholders:] | | | | | | | | | | | | | | | | | | | | |

| Basic | | [removed: $] [added: $] | [removed: 3.15] [added: 0.77] | | | $ | [removed: 2.78] [added: 3.15] | | | $ | [removed: 1.83] [added: 2.78] | | | $ | [removed: 1.53] [added: 1.83] | | | $ | [removed: 2.08] [added: 1.53] | |

| Diluted | | [removed: $] [added: $] | [removed: 3.08] [added: 0.76] | | | $ | [removed: 2.72] [added: 3.08] | | | $ | [removed: 1.77] [added: 2.72] | | | $ | [removed: 1.51] [added: 1.77] | | | $ | [removed: 2.05] [added: 1.51] | |

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

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

| Investing activities | | | [removed: (66,955] [added: 1,731] | [removed: )] | | | [removed: (173,114] [added: (67] | ) | | | [removed: (236,176] [added: (173] | ) | | | [removed: (132,233] [added: (236] | ) | | | [removed: (224,838] [added: (132] | ) |

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

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

| [removed: Balance] [added: Balance] Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | | |

| Investments in debt, equity and other securities | | | [removed: 32,911] [added: 53] | | | | [removed: 34,503] [added: 33] | | | | [removed: 40,349] [added: 35] | | | | [removed: 35,951] [added: 40] | | | | [removed: 22,106] [added: 36] | |

| Trade accounts receivable and unbilled services, net | | | [removed: 1,165,749] [added: 1,707] | | | | [removed: 975,255] [added: 1,166] | | | | [removed: 924,205] [added: 975] | | | | [removed: 745,373] [added: 924] | | | | [removed: 691,038] [added: 745] | |

| (4) | Excludes [removed: $33.0] [added: $19] million, [removed: $22.3] [added: $33] million, [removed: $27.5] [added: $22] million, [removed: $46.5] [added: $28] million and [removed: $36.8] [added: $47] million of unamortized discounts and debt issuance costs as of December 31, [added: 2016,] 2015, 2014, [removed: 2013, 2012] [added: 2013] and [removed: 2011, respectively.] [added: 2012.] |

##### [Table of Contents](#toc)

statements included elsewhere in this Annual Report on Form 10-K.

Pursuant to the terms of the merger agreement dated as of May 3, 2016 between Quintiles and IMS Health, IMS Health was merged with and into Quintiles, and the separate corporate existence of IMS Health ceased, with Quintiles continuing as the surviving corporation.

We have included the results of operations of acquired businesses, including IMS Health, from the date of acquisition.

As a result, our period to period results of operations vary depending on the dates and sizes of the acquisitions.

Accordingly, this selected financial data is not necessarily comparable or indicative of our future results.

You should read this selected consolidated financial data in conjunction with our audited consolidated financial statements and related footnotes included elsewhere in this Annual Report on Form 10-K.

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

| (in millions, except per share data) | | 2016(5) | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |

| Revenues | | $ | 5,364 | | | $ | 4,326 | | | $ | 4,165 | | | $ | 3,808 | | | $ | 3,692 | |

| Reimbursed expenses | | | 1,514 | | | | 1,411 | | | | 1,295 | | | | 1,291 | | | | 1,173 | |

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

| Total revenues | | | 6,878 | | | | 5,737 | | | | 5,460 | | | | 5,099 | | | | 4,865 | |

| Costs of revenue, exclusive of depreciation and amortization | | | 3,236 | | | | 2,705 | | | | 2,664 | | | | 2,452 | | | | 2,443 | |

| Selling, general and administrative expenses | | | 1,011 | | | | 815 | | | | 781 | | | | 772 | | | | 736 | |

| Depreciation and amortization | | | 289 | | | | 128 | | | | 121 | | | | 108 | | | | 98 | |

| Restructuring costs | | | 71 | | | | 30 | | | | 9 | | | | 14 | | | | 19 | |

| Merger related costs(1) | | | 87 | | | | — | | | | — | | | | — | | | | — | |

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

| Interest expense, net | | | 140 | | | | 97 | | | | 97 | | | | 119 | | | | 132 | |

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

| Income tax expense(3) | | | 345 | | | | 159 | | | | 149 | | | | 96 | | | | 93 | |

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

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

| Net income | | | 130 | | | | 388 | | | | 357 | | | | 226 | | | | 177 | |

| Net (income) loss attributable to non-controlling interests | | | (15 | ) | | | (1 | ) | | | — | | | | 1 | | | | 1 | |

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

| Net income attributable to Quintiles IMS Holdings, Inc. | | $ | 115 | | | $ | 387 | | | $ | 357 | | | $ | 227 | | | $ | 178 | |

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

##### [Table of Contents](#toc)

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

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

| (in millions, except per share data) | | 2016(5) | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |

| Basic | | | 149.1 | | | | 123.0 | | | | 128.0 | | | | 124.1 | | | | 115.7 | |

| Diluted | | | 152.0 | | | | 125.6 | | | | 131.1 | | | | 127.9 | | | | 117.8 | |

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

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

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

| Operating activities | | $ | 860 | | | $ | 476 | | | $ | 433 | | | $ | 393 | | | $ | 336 | |

| Financing activities | | | (2,284 | ) | | | (249 | ) | | | (130 | ) | | | 71 | | | | (147 | ) |

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

| | | (in thousands, except per share data) | | | | | | | | | | | | | | | | | | |

| Service revenues | | $ | 4,326,419 | | | $ | 4,165,822 | | | $ | 3,808,340 | | | $ | 3,692,298 | | | $ | 3,294,966 | |

| Reimbursed expenses | | | 1,411,200 | | | | 1,294,176 | | | | 1,291,205 | | | | 1,173,215 | | | | 1,032,782 | |

| Total revenues | | | 5,737,619 | | | | 5,459,998 | | | | 5,099,545 | | | | 4,865,513 | | | | 4,327,748 | |

| Costs of revenue, service costs | | | 2,725,586 | | | | 2,684,106 | | | | 2,471,426 | | | | 2,459,367 | | | | 2,153,005 | |

| Selling, general and administrative | | | 920,985 | | | | 882,338 | | | | 860,510 | | | | 817,755 | | | | 762,299 | |

| Restructuring costs | | | 30,752 | | | | 8,988 | | | | 14,071 | | | | 18,741 | | | | 22,116 | |

| Interest expense, net | | | 97,475 | | | | 97,179 | | | | 119,571 | | | | 131,304 | | | | 105,126 | |

| Income tax expense | | | 158,989 | | | | 150,056 | | | | 95,965 | | | | 93,364 | | | | 15,105 | |

| Net income | | | 388,304 | | | | 356,501 | | | | 226,027 | | | | 176,631 | | | | 240,327 | |

| Net (income) loss attributable to noncontrolling interests | | | (1,099 | ) | | | (118 | ) | | | 564 | | | | 915 | | | | 1,445 | |

| Net income attributable to Quintiles Transnational Holdings Inc. | | $ | 387,205 | | | $ | 356,383 | | | $ | 226,591 | | | $ | 177,546 | | | $ | 241,772 | |

| Basic | | | 123,038 | | | | 127,994 | | | | 124,147 | | | | 115,710 | | | | 116,232 | |

| Diluted | | | 125,630 | | | | 131,083 | | | | 127,862 | | | | 117,796 | | | | 117,936 | |

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

| Operating activities | | $ | 475,691 | | | $ | 431,754 | | | $ | 393,371 | | | $ | 335,701 | | | $ | 160,953 | |

| Financing activities | | | (249,246 | ) | | | (130,344 | ) | | | 70,957 | | | | (146,873 | ) | | | (59,309 | ) |

| Capital expenditures | | $ | (78,391 | ) | | $ | (82,650 | ) | | $ | (88,347 | ) | | $ | (71,336 | ) | | $ | (75,679 | ) |

| Cash dividend paid to common shareholders | | | — | | | | — | | | | — | | | | (567,851 | ) | | | (288,322 | ) |

| Net new business (unaudited) (3) | | | 5,318,800 | | | | 5,602,400 | | | | 4,898,900 | | | | 4,501,200 | | | | 4,044,100 | |

| Cash and cash equivalents | | $ | 977,151 | | | $ | 867,358 | | | $ | 778,143 | | | $ | 567,728 | | | $ | 516,299 | |

| Property and equipment, net | | | 188,393 | | | | 190,297 | | | | 199,578 | | | | 193,999 | | | | 185,772 | |

| 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 | |

| Total debt and capital leases (4) | | | 2,500,781 | | | | 2,305,696 | | | | 2,060,994 | | | | 2,444,886 | | | | 1,990,196 | |

| Total shareholders' deficit | | | (335,681 | ) | | | (704,012 | ) | | | (667,485 | ) | | | (1,359,044 | ) | | | (969,596 | ) |

| Backlog (unaudited) (3) | | $ | 12,038,000 | | | $ | 11,244,400 | | | $ | 9,855,400 | | | $ | 8,704,500 | | | $ | 7,972,900 | |

| (1) | In 2015 and 2011, we wrote down $2.5 million and $12.2 million, respectively, related to long-lived assets, and in 2011 we incurred other than temporary losses of $145,000 related to a non-marketable equity security. |

| (2) | In November 2011, we sold our investment in Invida Pharmaceutical Holdings Pte. Ltd. for approximately $103.6 million of net proceeds resulting in a gain of approximately $74.9 million. |

| (3) | Net new business is the value of services awarded during the period from projects under signed contracts, letters of intent and, in some cases, pre-contract commitments that are supported by written communications, adjusted for contracts that were modified or canceled during the period. Consistent with our methodology for calculating net new business during a particular period, backlog represents, at a particular point in time, future service revenues from work not yet completed or performed under signed contracts, letters of intent and, in some cases, pre-contract commitments that are supported by written communications. Historically, net new business and backlog denominated in foreign currencies were valued each month throughout the year using foreign exchange rates that were in effect at the beginning of each fiscal year. Beginning with the first quarter of 2015, net new business and backlog denominated in foreign currencies are valued each month using the actual average foreign exchange rates in effect during the month. The application of this new approach to value foreign currency denominated net new business and backlog would not have had a significant impact to any prior period’s reported amounts, therefore historical amounts have not been restated to reflect this change in methodology. |

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

The management of Quintiles [removed: Transnational Holdings] [added: IMS Holdings,] Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2015.][added: 2016.]

In making this assessment, management used the framework established in Internal [removed: Control — Integrated] [added: 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: 2015,] [added: 2016,] 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: 2015] [added: 2016] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

| [added: Ari Bousbib _Chairman,] Chief Executive Officer [added: and President_ (Principal Executive Officer_)_] | | [removed: Executive] [added: | | Michael R. McDonnell _Executive] Vice President and Chief Financial [removed: Officer] [added: Officer_ (Principal Financial Officer)] |

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

To the Board of Directors and [removed: Shareholders] [added: Stockholders] of [added: Quintiles IMS Holdings, Inc.:]

[removed: Quintiles Transnational Holdings Inc.:][added: QUINTILES IMS HOLDINGS, INC. AND SUBSIDIARIES]

In our opinion, the [added: accompanying] consolidated [removed: financial statements listed in] [added: balance sheets and] the [removed: index appearing under Item 15(a)(1)] [added: related consolidated statements of income, comprehensive income, cash flows and stockholders’ equity (deficit),] present fairly, in all material respects, the financial position of Quintiles [removed: Transnational Holdings] [added: IMS Holdings,] Inc. and its subsidiaries at December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2015] [added: 2016] 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: 2015,] [added: 2016,] based on criteria established in Internal [removed: Control - Integrated] [added: 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 [removed: audits (which were] integrated [removed: audits in 2015 and 2014).][added: audits.]

[removed: QUINTILES TRANSNATIONAL HOLDINGS] [added: QUINTILES IMS 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: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| [removed: | | (in thousands,] [added: (in millions,] except per share [removed: data) | |] [added: data)] | | [added: 2016] | | | | [added: 2015] | | |

| Costs of revenue, reimbursed expenses | | | [removed: 1,411,200] [added: 1,514] | | | | [removed: 1,294,176] [added: 1,411] | | | | [removed: 1,291,205] [added: 1,295] | |

| Restructuring costs | | | [removed: 30,752] [added: 71] | | | | [removed: 8,988] [added: 30] | | | | [removed: 14,071] [added: 9] | |

| Impairment charges | | | [removed: 2,484] [added: 28] | | | | [removed: —] [added: 2] | | | | — | |

| Income from operations | | | [removed: 646,612] [added: 642] | | | | [removed: 590,390] [added: 646] | | | | [removed: 462,333] [added: 590] | |

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

| Loss on extinguishment of debt | | | [removed: 7,780] [added: 31] | | | | [removed: —] [added: 8] | | | | [removed: 19,831] [added: —] | |

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

| Income before income taxes and equity in [removed: earnings] (losses) [added: earnings] of unconsolidated affiliates | | | [removed: 538,995] [added: 479] | | | | [removed: 502,189] [added: 539] | | | | [removed: 323,116] [added: 501] | |

| Income before equity in [removed: earnings] (losses) [added: earnings] of unconsolidated affiliates | | | [removed: 380,006] [added: 134] | | | | [removed: 352,133] [added: 380] | | | | [removed: 227,151] [added: 352] | |

| Equity in [removed: earnings] (losses) [added: earnings] of unconsolidated affiliates | | | [removed: 8,298] [added: (4] | [added: )] | | | [removed: 4,368] [added: 8] | | | | [removed: (1,124] [added: 5] | [removed: )] |

| Net (income) loss attributable to [removed: noncontrolling] [added: non-controlling] interests | | | [removed: (1,099] [added: (15] | [removed: )] [added: )] | | | [removed: (118] [added: (1] | ) | | | [removed: 564] [added: —] | |

| Net income attributable to Quintiles [removed: Transnational Holdings] [added: IMS Holdings,] Inc. | | [removed: $] [added: $] | [removed: 387,205] [added: 115] | | | $ | [removed: 356,383] [added: 387] | | | $ | [removed: 226,591] [added: 357] | |