IQVIA Holdings 10-Q 2021-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

_________________________________________________________

(Mark One)

For the quarterly period ended September 30, 2021

or

For the transition period from to .

Commission File Number: 001-35907

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IQVIA HOLDINGS INC.

(Exact name of registrant as specified in its charter)

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4820 Emperor Blvd., Durham, North Carolina 27703

(Address of principal executive office and Zip Code)

(919) 998-2000

(Registrant’s telephone number, including area code)

_________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Securities registered pursuant to Section 12(b) of the Act:

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

IQVIA HOLDINGS INC.

FORM 10-Q

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

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Cautionary Statement for Forward-Looking Information

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (our “2020 Form 10-K”).

In addition to historical condensed consolidated financial information, the following discussion contains or incorporates by reference forward-looking statements within the meaning of the federal securities laws that are not historical facts but reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such. Without limiting the foregoing, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. We assume no obligation to update any such forward-looking information to reflect actual results or changes in our outlook or the factors affecting such forward-looking information.

We caution you that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation, business disruptions caused by natural disasters, pandemics such as the COVID-19 (coronavirus) outbreak or international conflict or other disruptions outside of our control; our ability to accurately model or forecast the impact of the spread and/or containment of COVID-19, among other sources of business interruption, on our operations and financial results; most of our contracts may be terminated on short notice, and we may lose or experience delays with large client contracts or be unable to enter into new contracts; the market for our services may not grow as we expect; we may be unable to successfully develop and market new services or enter new markets; imposition of restrictions on our use of data by data suppliers or their refusal to license data to us; any failure by us to comply with contractual, regulatory or ethical requirements under our contracts, including current or changes to data protection and privacy laws; breaches or misuse of our or our outsourcing partners’ security or communications systems; failure to meet our productivity or business transformation objectives; failure to successfully invest in growth opportunities; our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; the expiration or inability to acquire third party licenses for technology or intellectual property; any failure by us to accurately and timely price and formulate cost estimates for contracts, or to document change orders; hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements; the rate at which our backlog converts to revenue; our ability to acquire, develop and implement technology necessary for our business; consolidation in the industries in which our clients operate; risks related to client or therapeutic concentration; government regulators or our customers may limit the scope of prescription or withdraw products from the market, and government regulators may impose new regulatory requirements or may adopt new regulations affecting the biopharmaceutical industry; the risks associated with operating on a global basis, including currency or exchange rate fluctuations and legal compliance, including anti-corruption laws; risks related to changes in accounting standards; general economic conditions in the markets in which we operate, including financial market conditions and risks related to sales to government entities; the impact of changes in tax laws and regulations; and our ability to successfully integrate, and achieve expected benefits from, our acquired businesses. For a further discussion of the risks relating to our business, see Part I—Item 1A—“Risk Factors” in our 2020 Form 10-K, as updated in this Quarterly Report on Form 10-Q.

Overview

IQVIA is a leading global provider of advanced analytics, technology solutions, and clinical research services to the life sciences industry. IQVIA creates intelligent connections across all aspects of healthcare through its analytics, transformative technology, big data resources and extensive domain expertise. IQVIA Connected Intelligence™ delivers powerful insights with speed and agility — enabling customers to accelerate the clinical development and commercialization of innovative medical treatments that improve healthcare outcomes for patients. With approximately 77,000 employees, we conduct operations in more than 100 countries.

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

We are managed through three reportable segments, Technology & Analytics Solutions, Research & Development Solutions and Contract Sales & Medical Solutions. Technology & Analytics Solutions provides critical information, technology solutions and real world insights and services to our life science clients. Research & Development Solutions, which primarily serves biopharmaceutical clients, is engaged in research and development and provides clinical research and clinical trial services. Contract Sales & Medical Solutions provides contract sales to both biopharmaceutical clients and the broader healthcare market.

Sources of Revenue

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

Costs and Expenses

Our costs and expenses are comprised primarily of our costs of revenue, which include reimbursed expenses, and selling, general and administrative expenses. Costs of revenue include compensation and benefits for billable employees and personnel involved in production, data management and delivery, and the costs of acquiring and processing data for our information offerings; costs of staff directly involved with delivering technology-related services offerings and engagements, related accommodations and the costs of data purchased specifically for technology services engagements; costs related to facilities; costs related to training and expenses for information technology (“IT”), reimbursed expenses that are comprised principally of payments to investigators who oversee clinical trials and travel expenses for our clinical monitors and sales representatives; and other expenses directly related to service contracts such as courier fees, laboratory supplies, professional services and travel expenses. Selling, general and administrative expenses include costs related to sales, marketing, and administrative functions (including human resources, legal, finance and general management) for compensation and benefits, travel, professional services, facilities and training and expenses for IT.

Foreign Currency Translation

In the first nine months of 2021, approximately 35% of our revenues were denominated in currencies other than the United States dollar, which represents approximately 60 currencies. Because a large portion of our revenues and expenses are denominated in foreign currencies and our financial statements are reported in United States dollars, changes in foreign currency exchange rates can significantly affect our results of operations. The revenues and expenses of our foreign operations are generally denominated in local currencies and translated into United States dollars for financial reporting purposes. Accordingly, exchange rate fluctuations will affect the translation of foreign results into United States dollars for purposes of reporting our condensed consolidated results. As a result, we believe that reporting results of operations that exclude the effects of foreign currency rate fluctuations on certain financial results can facilitate analysis of period-to-period comparisons. This constant currency information assumes the same foreign currency exchange rates that were in effect for the comparable prior-year period were used in translation of the current period results.

Consolidated Results of Operations

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

Revenues

For the third quarter of 2021, our revenues increased $605 million, or 21.7%, as compared to the same period in 2020. This increase was comprised of constant currency revenue growth of approximately $589 million, or 21.1%, reflecting an $120 million increase in Technology & Analytics Solutions, a $446 million increase in Research & Development Solutions, and a $23 million increase in Contract Sales & Medical Solutions.

For the first nine months of 2021, our revenues increased $2,177 million, or 27.0%, as compared to the same period in 2020. This increase was comprised of constant currency revenue growth of approximately $2,015 million, or 25.0%. The constant currency revenue growth was comprised of a $510 million increase in Technology & Analytics Solutions, an $1,477 million increase in Research & Development Solutions, and a $28 million increase in Contract Sales & Medical Solutions.

Costs of Revenue, exclusive of Depreciation and Amortization

The $453 million increase in costs of revenue, exclusive of depreciation and amortization, for the three months ended September 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $436 million, or 24.2%, reflecting a $56 million increase in Technology & Analytics Solutions, a $359 million increase in Research & Development Solutions, and a $21 million increase in Contract Sales & Medical Solutions.

The $1,541 million increase in costs of revenue, exclusive of depreciation and amortization, for the nine months ended September 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $1,382 million, or 25.9%, reflecting a $294 million increase in Technology & Analytics Solutions, a $1,076 million increase in Research & Development Solutions, and a $12 million increase in Contract Sales & Medical Solutions.

Selling, General and Administrative Expenses

The $38 million increase in selling, general and administrative expenses for the three months ended September 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $33 million, or 7.2%, reflecting a $9 million increase in Technology & Analytics Solutions, a $12 million increase in Research & Development Solutions, and a $12 million increase in general corporate and unallocated expenses, while Contract Sales & Medical Solutions remained consistent.

The $124 million increase in selling, general and administrative expenses for the nine months ended September 30, 2021 as compared to the same period in 2020 included a constant currency growth of approximately $94 million, or 7.2%, reflecting a $15 million increase in Technology & Analytics Solutions, a $23 million increase in Research & Development Solutions, and a $60 million increase in general corporate and unallocated expenses, offset by a $(4) million decrease in Contract Sales & Medical Solutions.

Depreciation and Amortization

The $17 million and $59 million increases in depreciation and amortization in the three and nine months ended September 30, 2021 as compared to the same periods in 2020 were primarily due to higher intangible asset balances as a result of acquisitions occurring in 2020 and 2021, increased amortization due to higher capitalized software balances, and accelerated amortization related to intangibles impacted by the Company's acquisition of Quest's non-controlling interest in Q2 Solutions.

Restructuring Costs

The restructuring costs incurred during 2021 and 2020 were due to ongoing efforts to streamline our global operations. The remaining actions under these plans are expected to occur throughout 2021 and into 2022 and are expected to consist of consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements.

Interest Income and Interest Expense

Interest income includes interest received primarily from bank balances and investments.

Interest expense during the three and nine months ended September 30, 2021 was lower than the same periods in 2020 due to lower interest rates attributed to lower LIBOR rates, the refinancing of our existing term A loans and the redemption of the €1,425 million of 3.250% senior notes due 2025. See “Liquidity and Capital Resources” for more information on this transaction.

Loss on Extinguishment of Debt

During the three months ended September 30, 2021, we recognized a loss on extinguishment of debt for fees and expenses incurred related to the refinancing of our Prior Credit Agreement.

During the nine months ended September 30, 2021, we recognized a loss on extinguishment of debt for fees and expenses incurred related to the refinancing of our 3.250% senior notes due 2025 and Prior Credit Agreement..

Other Income, Net

Other income, net for the three and nine months ended September 30, 2021 increased as compared to the same periods in the prior year, primarily due to foreign currency gain.

Income Tax Expense (Benefit)

Our effective income tax rate was 4.4% and (2.9)% in the third quarter of 2021 and 2020, respectively, and 13.8% and 5.0% in the first nine months of 2021 and 2020. In the third quarter of 2021, we recorded a benefit related to a 2020 U.S. Federal tax return position associated with Foreign Derived Intangible Income (“FDII”) and Global Intangible Low-Taxed Income (“GILTI”) tax credits of $29 million. In the third quarter of 2020, the U.S. Treasury Department issued final regulations regarding FDII and GILTI and we had determined we would elect the GILTI high tax exception as allowed by the final regulations. As a result, we amended our 2018 U.S. Federal consolidated income tax return and plan to amend our 2019 U.S. Federal consolidated income tax return. This resulted in a favorable impact of $24 million, which we recorded in the third quarter of 2020. Additionally, our effective income tax rate in the third quarter and in the first nine months of 2021 and 2020 was favorably impacted as a result of excess tax benefits recognized upon settlement of share-based compensation awards. For the third quarter of 2021 and 2020, this impact was $3 million and $9 million, respectively, and for the first nine months of 2021 and 2020, this impact was $26 million and $35 million, respectively. Also, our effective income tax rate in the first nine months of 2020 was unfavorably impacted by a $10 million discrete tax expense related to change in the measurement of U.S. tax on undistributed foreign earnings.

Equity in Earnings of Unconsolidated Affiliates

Equity in earnings of unconsolidated affiliates for the three months ended September 30, 2021 decreased as compared to the same period in the prior year primarily due to losses from our investments in the NovaQuest Pharma Opportunities Funds.

Equity in earnings of unconsolidated affiliates for the nine months ended September 30, 2021 decreased as compared to the same period in the prior year primarily due to losses from investments in some of our unconsolidated affiliates.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests included Quest’s interest in Q2 Solutions. On April 1, 2021 the Company acquired the 40% non-controlling interest in Q2 Solutions from Quest which resulted in a decrease in the net income attributable to non-controlling interests for the three and nine months ended September 30, 2021 as compared to prior periods. See Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding this transaction.

Segment Results of Operations

The Company’s revenues and profit by segment are as follows:

Certain costs are not allocated to our segments and are reported as general corporate and unallocated expenses. These costs primarily consist of stock-based compensation and expenses related to integration activities and acquisitions. We also do not allocate depreciation and amortization or impairment charges to our segments.

Technology & Analytics Solutions

Revenues

Technology & Analytics Solutions’ revenues were $1,337 million for the third quarter of 2021, an increase of $130 million, or 10.8%, over the same period in 2020. This increase was comprised of constant currency revenue growth of approximately $120 million, or 9.9%, reflecting revenue growth across all regions.

Technology & Analytics Solutions’ revenues were $4,038 million for the first nine months of 2021, an increase of $605 million, or 17.6%, over the same period in 2020. This increase was comprised of constant currency revenue growth of approximately $510 million, or 14.9%, reflecting revenue growth across all regions.

The revenue growth for the three and nine months ended September 30, 2021 was driven by higher technology, real-world and analytical services and COVID-19 related work.

Costs of Revenue, exclusive of Depreciation and Amortization

Technology & Analytics Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $68 million, or 9.4%, in the third quarter of 2021 over the same period in 2020. This increase included a constant currency increase of approximately $56 million, or 7.7%.

Technology & Analytics Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $367 million, or 17.9%, in the first nine months of 2021 over the same period in 2020. This increase included a constant currency increase of approximately $294 million, or 14.4%.

The constant currency increase for the three and nine months ended September 30, 2021 was primarily related to an increase in compensation and related expenses to support revenue growth.

Selling, General and Administrative Expenses

Technology & Analytics Solutions’ selling, general and administrative expenses increased $11 million, or 5.9%, in the third quarter of 2021 as compared to the same period in 2020, which included a constant currency increase of approximately $9 million, or 4.8%.

Technology & Analytics Solutions’ selling, general and administrative expenses increased $30 million, or 5.5%, in the first nine months of 2021 as compared to the same period in 2020, which included a constant currency increase of approximately $15 million, or 2.7%.

The constant currency increase for the three and nine months ended September 30, 2021 was primarily related to an increase in compensation and related expenses.

Research & Development Solutions

Backlog

Research & Development Solutions’ contracted backlog increased from $22.6 billion as of December 31, 2020 to $24.4 billion as of September 30, 2021 and we expect approximately $6.9 billion of this backlog to convert to revenue in the next twelve months.

Revenues

Research & Development Solutions’ revenues were $1,853 million in the third quarter of 2021, an increase of $453 million, or 32.4%, over the same period in 2020. This increase was comprised of constant currency revenue increase of approximately $446 million, or 31.9%, reflecting revenue growth across all regions.

Research & Development Solutions’ revenues were $5,612 million in the first nine months of 2021, an increase of $1,536 million, or 37.7%, over the same period in 2020. This increase was comprised of constant currency revenue increase of approximately $1,477 million, or 36.2%, reflecting revenue growth across all regions.

The revenue growth for the three and nine months ended September 30, 2021 was primarily the result of volume-related increases in clinical services and lab testing, including incremental revenue from large COVID-19 vaccine clinical trials.

Costs of Revenue, exclusive of Depreciation and Amortization

Research & Development Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $366 million, or 39.6%, in the third quarter of 2021 over the same period in 2020. This increase included a constant currency increase of approximately $359 million, or 38.8%.

Research & Development Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $1,156 million, or 41.1%, in the first nine months of 2021 over the same period in 2020. This increase included a constant currency increase of approximately $1,076 million, or 38.3%.

The constant currency increase for the three and nine months ended September 30, 2021 was primarily related to an increase in compensation and related expenses as a result of volume-related increases in clinical services and lab testing.

Selling, General and Administrative Expenses

Research & Development Solutions’ selling, general and administrative expenses increased $14 million, or 7.6%, in the third quarter of 2021 as compared to the same period in 2020, and included a constant currency increase of approximately $12 million, or 6.5%.

Research & Development Solutions’ selling, general and administrative expenses increased $32 million, or 5.9%, in the first nine months of 2021 as compared to the same period in 2020, and included a constant currency increase of approximately $23 million, or 4.2%.

The constant currency increase for the three and nine months ended September 30, 2021 was primarily related to an increase in compensation and related expenses.

Contract Sales & Medical Solutions

Revenues

Contract Sales & Medical Solutions’ revenues were $201 million in the third quarter of 2021, an increase of $22 million, or 12.3%, over the same period in 2020. This increase included a constant currency revenue increase of approximately $23 million, or 12.8%.

Contract Sales & Medical Solutions’ revenues were $588 million in the first nine months of 2021, an increase of $36 million, or 6.5%, over the same period in 2020. This increase included a constant currency revenue increase of approximately $28 million, or 5.1%.

The revenue growth for the three and nine months ended September 30, 2021 was largely due to a volume increase in the Americas and Asia-Pacific regions.

Costs of Revenue, exclusive of Depreciation and Amortization

Contract Sales & Medical Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $19 million, or 12.8%, in the third quarter of 2021 as compared to the same period in 2020. This increase included a constant currency increase of approximately $21 million, or 14.2%.

Contract Sales & Medical Solutions’ costs of revenue, exclusive of depreciation and amortization, increased $18 million, or 3.8%, in the first nine months of 2021 as compared to the same period in 2020. This increase included a constant currency increase of approximately $12 million, or 2.6%.

The constant currency increase for the three and nine months ended September 30, 2021 was primarily related to an increase in compensation and related expenses.

Selling, General and Administrative Expenses

Contract Sales & Medical Solutions’ selling, general and administrative expenses remained consistent in the third quarter of 2021 as compared to the same period in 2020.

Contract Sales & Medical Solutions’ selling, general and administrative expenses decreased $(3) million, or (6.8)%, in the first nine months of 2021 as compared to the same period in 2020. This decrease included a constant currency decrease of approximately $(4) million, or (9.1)%.

The constant currency decrease for the nine months ended September 30, 2021 was primarily related to a decrease in compensation and related expenses.

Liquidity and Capital Resources

Overview

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal source of liquidity is operating cash flows. In addition to operating cash flows, other significant factors that affect our overall management of liquidity include: capital expenditures, acquisitions, investments, debt service requirements, dividends, equity repurchases, adequacy of our revolving and other credit facilities and access to the capital markets.

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

We had a cash balance of $1,470 million as of September 30, 2021 ($600 million of which was in the United States), a decrease from $1,814 million as of December 31, 2020.

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

Equity Repurchase Program

During the nine months ended September 30, 2021, we repurchased 973,313 shares of our common stock for $221 million under the Repurchase Program. See Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding the Repurchase Program.

As of September 30, 2021, we have remaining authorization to repurchase up to approximately $0.7 billion of our common stock under the Repurchase Program. In addition, from time to time, we have repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

Debt

Senior Secured Credit Facilities

On August 25, 2021, we entered into Amendment No. 9 (the “Amendment”) to the Company’s Fourth Amended and Restated Credit Agreement (the “Prior Credit Agreement,” and together with the Amendment, the "Fifth Amended and Restated Credit Agreement") to (i) extend the maturity of our revolving credit facility to 2026, (ii) refinance our existing term A loans with a new class of term A loans that mature in 2026 and (iii) add IQVIA RDS Inc. as a borrower under the senior secured credit facilities. In connection with this Amendment, we recognized a $1 million loss on extinguishment of debt, which includes fees and related expenses.

As of September 30, 2021, the Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities (collectively, the “senior secured credit facilities”) of up to approximately $7.2 billion, which consisted of $5.7 billion principal amounts of debt outstanding (as detailed in the table above), and $1.5 billion of available borrowing capacity on the revolving credit facility and standby letters of credit.

On September 14, 2021, we repaid $250 million of our term B loans under the senior secured credit facilities using the proceeds from the increased loans under our receivables financing facility.

Receivables Financing Facility

On August 13, 2021, the Company amended its receivables financing facility (the “Receivables Amendment”) to extend the term of the facility to October 1, 2024 and to increase the size of the facility to $550 million from $300 million. Under the receivables financing facility, certain of our accounts receivable are sold on a non-recourse basis by certain of our consolidated subsidiaries (each, an “Originator”) to another of our consolidated subsidiaries, a bankruptcy-remote special purpose entity (the “SPE”). The SPE obtained a term loan and revolving loan commitment from a third-party lender, secured by liens on the assets of the SPE, to finance the purchase of the accounts receivable, which includes a $440 million term loan and a $110 million revolving loan commitment. Pursuant to the Receivables Amendment, we also added three additional subsidiaries as Originators. As of September 30, 2021, no additional amounts of revolving loans were available under the receivables financing facility.

Senior Notes

On March 3, 2021, we completed the issuance and sale of €1,450,000,000 in gross proceeds of the Issuer's (i) €550,000,000 aggregate principal amount of its 1.750% Senior Notes due 2026 (the “2026 Notes”) and (ii) €900,000,000 aggregate principal amount of its 2.250% Senior Notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes”). The proceeds from the Notes offering were used to redeem all of the Issuer’s outstanding 3.250% senior notes due 2025 (the “3.250% Notes”), including the payment of premiums in respect thereof and to pay fees and expenses related to the Notes offering. See Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding our credit arrangements.

As of September 30, 2021, we had $12.2 billion of total indebtedness, excluding $1.5 billion of additional available borrowings under our revolving credit facility.

Our long-term debt arrangements contain customary restrictive covenants and, as of September 30, 2021, we believe we were in compliance with our restrictive covenants in all material respects.

Nine months ended September 30, 2021 and 2020

Cash Flow from Operating Activities

Cash provided by operating activities increased $1,041 million during the first nine months of 2021 as compared to the same period in 2020. The increase was primarily due to higher cash related net income ($682 million), an increase in cash collections from unearned income ($445 million) and higher cash from other operating assets and liabilities ($24 million), offset by a decrease in cash from accounts receivable and unbilled services ($110 million).

Cash Flow from Investing Activities

Cash used in investing activities increased $896 million during the first nine months of 2021 as compared to the same period in 2020, primarily driven by more cash used for acquisitions of businesses ($876 million), acquisitions for property, equipment, and software ($16 million) and lower net payments received from unconsolidated affiliates ($11 million), offset by net proceeds from sale of equity securities ($7 million).

Cash Flow from Financing Activities

Cash used in financing activities increased $1,078 million during the first nine months of 2021 as compared to the same period in 2020, primarily due to an increase in debt and principal payments ($1,276 million), cash payments for the Company's acquisition of Quest's non-controlling interest in Q2 Solutions ($758 million), an increase in cash payments on contingent consideration and deferred purchase price accruals ($19 million), and an increase in cash payments related to employee stock option plans ($8 million), offset by a decrease in cash used in repayments of revolving credit facilities, net of proceeds ($470 million), a decrease in cash used to repurchase common stock ($144 million), an increase in cash provided by proceeds from debt issuances, net of repayments and debt issuance costs ($353 million), and a decrease in cash distributions to non-controlling interests ($16 million).

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Contractual Obligations and Commitments

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

With the exception of the financing transactions disclosed in Note 7 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our 2020 Form 10-K.

Application of Critical Accounting Policies

There have been no material changes to our critical accounting policies as previously disclosed in our 2020 Form 10-K.

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our 2020 Form 10-K.

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

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

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

For a discussion of the risks relating to our business, see Part I—Item 1A—“Risk Factors” of our 2020 Form 10-K. There have been no material changes from the risk factors previously disclosed in our 2020 Form 10-K.

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

Recent Sales of Unregistered Securities

Not applicable.

Use of Proceeds from Registered Securities

Not applicable.

Purchases of Equity Securities by the Issuer

On October 30, 2013, our Board of Directors (the “Board”) approved an equity repurchase program (the “Repurchase Program”) authorizing the repurchase of up to $125.0 million of either our common stock or vested in-the-money employee stock options, or a combination thereof. Our Board increased the stock repurchase authorization under the Repurchase Program with respect to the repurchase of our common stock by $600 million, $1.5 billion, $2 billion, $1.5 billion, and $2 billion in 2015, 2016, 2017, 2018, and 2019, respectively, which increased the total amount that has been authorized under the Repurchase Program to $7.725 billion. The Repurchase Program does not obligate us to repurchase any particular amount of common stock or vested in-the-money employee stock options, and it may be modified, extended, suspended or discontinued at any time. The timing and amount of repurchases are determined by our management based on a variety of factors such as the market price of our common stock, our corporate requirements, and overall market conditions. Purchases of our common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or in privately negotiated transactions. The Repurchase Program for common stock does not have an expiration date. In addition, from time to time, we have repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

From inception of the Repurchase Program through September 30, 2021, we have repurchased a total of $6.6 billion of our securities under the Repurchase Program.

During the nine months ended September 30, 2021, we repurchased 973,313 shares of our common stock for $221 million under the Repurchase Program. See Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding the Repurchase Program.

As of September 30, 2021, we have remaining authorization to repurchase up to approximately $0.7 billion of our common stock under the Repurchase Program.

Since the merger between Quintiles and IMS Health, we have repurchased 66.6 million shares of our common stock at an average market price per share of $99.19 for an aggregate purchase price of $6.6 billion both under and outside of the Repurchase Program. This includes shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Quintiles IMS Holdings, Inc. 2017 Incentive and Stock Award Plan (the “Plan”). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item.

The following table summarizes the monthly equity repurchase program activity for the three months ended September 30, 2021 and the approximate dollar value of shares that may yet be purchased pursuant to the Repurchase Program.

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized on October 22, 2021.