Item 1. Financial Statements

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

						Three Months Ended March 31,
(in millions, except per share data)						2022						2021
Revenues						$	3,568					$	3,409
Costs of revenue, exclusive of depreciation and amortization						2,323						2,293
Selling, general and administrative expenses						488						442
Depreciation and amortization						255						323
Restructuring costs						7						9
Income from operations						495						342
Interest income						(1)						(1)
Interest expense						86						99
Loss on extinguishment of debt						—						24
Other expense (income), net						10						(37)
Income before income taxes and equity in (losses) earnings of unconsolidated affiliates						400						257
Income tax expense						71						44
Income before equity in (losses) earnings of unconsolidated affiliates						329						213
Equity in (losses) earnings of unconsolidated affiliates						(4)						4
Net income						325						217
Net income attributable to non-controlling interests						—						(5)
Net income attributable to IQVIA Holdings Inc.						$	325					$	212
Earnings per share attributable to common stockholders:
Basic						$	1.71					$	1.11
Diluted						$	1.68					$	1.09
Weighted average common shares outstanding:
Basic						190.0						191.5
Diluted						193.4						194.9

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

						Three Months Ended March 31,
(in millions)						2022						2021
Net income						$	325					$	217
Comprehensive income adjustments:
Unrealized gains on derivative instruments, net of income tax expense of $9, $1						30						6
Defined benefit plan adjustments, net of income tax expense of $—, $—						(2)						—
Foreign currency translation, net of income tax expense of $27, $62						(40)						(178)
Reclassification adjustments:
Reclassifications on derivative instruments included in net income, net of income tax benefit of $—, $1						(1)						1
Comprehensive income						312						46
Comprehensive income attributable to non-controlling interests						—						(5)
Comprehensive income attributable to IQVIA Holdings Inc.						$	312					$	41

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share data)						March 31, 2022						December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents						$	1,387					$	1,366
Trade accounts receivable and unbilled services, net						2,619						2,551
Prepaid expenses						162						156
Income taxes receivable						43						58
Investments in debt, equity and other securities						106						111
Other current assets and receivables						455						521
Total current assets						4,772						4,763
Property and equipment, net						531						497
Operating lease right-of-use assets						407						406
Investments in debt, equity and other securities						72						76
Investments in unconsolidated affiliates						90						88
Goodwill						13,532						13,301
Other identifiable intangibles, net						4,917						4,943
Deferred income taxes						120						124
Deposits and other assets						528						491
Total assets						$	24,969					$	24,689
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses						$	2,816					$	2,981
Unearned income						1,927						1,825
Income taxes payable						135						137
Current portion of long-term debt						90						91
Other current liabilities						189						207
Total current liabilities						5,157						5,241
Long-term debt, less current portion						12,547						12,034
Deferred income taxes						455						410
Operating lease liabilities						310						313
Other liabilities						581						649
Total liabilities						19,050						18,647
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock and additional paid-in capital, 400.0 shares authorized as of March 31, 2022 and December 31, 2021, $0.01 par value, 256.2 shares issued and 189.3 shares outstanding as of March 31, 2022; 255.8 shares issued and 190.6 shares outstanding as of December 31, 2021						10,745						10,777
Retained earnings						2,568						2,243
Treasury stock, at cost, 66.9 and 65.2 shares as of March 31, 2022 and December 31, 2021, respectively						(6,975)						(6,572)
Accumulated other comprehensive loss						(419)						(406)
Total stockholders’ equity						5,919						6,042
Total liabilities and stockholders’ equity						$	24,969					$	24,689

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

						Three Months Ended March 31,
(in millions)						2022						2021
Operating activities:
Net income						$	325					$	217
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization						255						323
Amortization of debt issuance costs and discount						4						5
Stock-based compensation						30						32
Losses (earnings) from unconsolidated affiliates						4						(4)
Loss on investments, net						11						3
Benefit from deferred income taxes						(10)						(39)
Changes in operating assets and liabilities:
Change in accounts receivable, unbilled services and unearned income						54						342
Change in other operating assets and liabilities						(165)						(12)
Net cash provided by operating activities						508						867
Investing activities:
Acquisition of property, equipment and software						(177)						(149)
Acquisition of businesses, net of cash acquired						(430)						(19)
Purchases of marketable securities, net						(3)						(7)
Investments in unconsolidated affiliates, net of payments received						(6)						(1)
Investments in equity securities						—						(1)
Other						3						1
Net cash used in investing activities						(613)						(176)
Financing activities:
Proceeds from issuance of debt						—						1,751
Payment of debt issuance costs						—						(32)
Repayment of debt and principal payments on finance leases						(24)						(1,758)
Proceeds from revolving credit facility						950						—
Repayment of revolving credit facility						(300)						—
Payments related to employee stock option plans						(67)						(56)
Repurchase of common stock						(403)						(62)
Contingent consideration and deferred purchase price payments						(12)						(11)
Net cash provided by (used in) financing activities						144						(168)
Effect of foreign currency exchange rate changes on cash						(18)						(32)
Increase in cash and cash equivalents						21						491
Cash and cash equivalents at beginning of period						1,366						1,814
Cash and cash equivalents at end of period						$	1,387					$	2,305

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in millions)						Common Stock Shares						Treasury Stock Shares						Common Stock						Additional Paid-In Capital						Retained Earnings						Treasury Stock						Accumulated Other Comprehensive (Loss) Income						Non- controlling Interests						Total
Balance, December 31, 2021						255.8						(65.2)						$	3					$	10,774					$	2,243					$	(6,572)					$	(406)					$	—					$	6,042
Issuance of common stock						0.4						—						—						(67)						—						—						—						—						(67)
Repurchase of common stock						—						(1.7)						—						—						—						(403)						—						—						(403)
Stock-based compensation						—						—						—						35						—						—						—						—						35
Net income						—						—						—						—						325						—						—						—						325
Unrealized gains on derivative instruments, net of tax						—						—						—						—						—						—						30						—						30
Defined benefit plan adjustments, net of tax						—						—						—						—						—						—						(2)						—						(2)
Foreign currency translation, net of tax						—						—						—						—						—						—						(40)						—						(40)
Reclassification adjustments, net of tax						—						—						—						—						—						—						(1)						—						(1)
Balance, March 31, 2022						256.2						(66.9)						$	3					$	10,742					$	2,568					$	(6,975)					$	(419)					$	—					$	5,919

(in millions)						Common Stock Shares						Treasury Stock Shares						Common Stock						Additional Paid-In Capital						Retained Earnings						Treasury Stock						Accumulated Other Comprehensive (Loss) Income						Non- controlling Interests						Total
Balance, December 31, 2020						254.7						(63.5)						$	3					$	11,092					$	1,277					$	(6,166)					$	(205)					$	279					$	6,280
Issuance of common stock						0.7						—						—						(57)						—						—						—						—						(57)
Repurchase of common stock						—						(0.3)						—						—						—						(62)						—						—						(62)
Stock-based compensation						—						—						—						30						—						—						—						—						30
Net income						—						—						—						—						212						—						—						5						217
Unrealized gains on derivative instruments, net of tax						—						—						—						—						—						—						6						—						6
Foreign currency translation, net of tax						—						—						—						—						—						—						(178)						—						(178)
Reclassification adjustments, net of tax						—						—						—						—						—						—						1						—						1
Balance, March 31, 2021						255.4						(63.8)						$	3					$	11,065					$	1,489					$	(6,228)					$	(376)					$	284					$	6,237

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

IQVIA HOLDINGS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Summary of Significant Accounting Policies

The Company

IQVIA Holdings Inc. (together with its subsidiaries, the “Company” or “IQVIA”) is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry. With approximately 82,000 employees, IQVIA conducts business in more than 100 countries.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the Company’s financial condition and results of operations have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The balance sheet as of December 31, 2021 has been derived from the audited consolidated financial statements of the Company, but does not include all the disclosures required by GAAP.

Recently Issued Accounting Standards

Accounting pronouncements adopted

In October 2021, the Financial Accounting Standards Board issued new accounting guidance that requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for in accordance with ASC 606, at fair value on the acquisition date. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The Company adopted this new accounting guidance effective January 1, 2022. The adoption of this new accounting guidance did not have a material impact on the Company's consolidated financial statements for the three months ended March 31, 2022. The impact of this guidance on the Company's consolidated financial statements for the remainder of the year will depend on the size and nature of future acquisitions, if any.

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

The following tables represent revenues by geographic region and reportable segment for the three months ended March 31, 2022 and 2021:

			Three Months Ended March 31, 2022
(in millions)						Technology & Analytics Solutions						Research & Development Solutions						Contract Sales & Medical Solutions						Total
Revenues:
Americas						$	681					$	946					$	91					$	1,718
Europe and Africa						596						507						46						1,149
Asia-Pacific						162						481						58						701
Total revenues						$	1,439					$	1,934					$	195					$	3,568

			Three Months Ended March 31, 2021
(in millions)						Technology & Analytics Solutions						Research & Development Solutions						Contract Sales & Medical Solutions						Total
Revenues:
Americas						$	600					$	1,034					$	78					$	1,712
Europe and Africa						590						443						49						1,082
Asia-Pacific						158						391						66						615
Total revenues						$	1,348					$	1,868					$	193					$	3,409

No individual customer represented 10% or more of consolidated revenues for the three months ended March 31, 2022 or 2021.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2022, approximately $28.1 billion of revenue is expected to be recognized in the future from remaining performance obligations. The Company expects to recognize revenue on approximately 35% of these remaining performance obligations over the next twelve months, with the balance recognized thereafter. The customer contract transaction price allocated to the remaining performance obligations differs from backlog in that it does not include wholly unperformed contracts under which the customer has a unilateral right to cancel the arrangement.

3. Trade Accounts Receivable, Unbilled Services and Unearned Income

Trade accounts receivables and unbilled services consist of the following:

(in millions)						March 31, 2022						December 31, 2021
Billed						$	1,227					$	1,275
Unbilled services						1,422						1,309
Trade accounts receivable and unbilled services						2,649						2,584
Allowance for doubtful accounts						(30)						(33)
Trade accounts receivable and unbilled services, net						$	2,619					$	2,551

Unbilled services and unearned income were as follows:

(in millions)						March 31, 2022						December 31, 2021						Change
Unbilled services						$	1,422					$	1,309					$	113
Unearned income						(1,927)						(1,825)						(102)
Net balance						$	(505)					$	(516)					$	11

Unbilled services, which is comprised of approximately 62% of unbilled receivables and 38% of contract assets as of March 31, 2022 and December 31, 2021, increased by $113 million as compared to December 31, 2021. Contract assets are unbilled services for which invoicing is based on the timing of certain milestones related to service contracts for clinical research whereas unbilled receivables are billable upon the passage of time. Unearned income increased by $102 million over the same period resulting in an increase of $11 million in the net balance of unbilled services and unearned income between December 31, 2021 and March 31, 2022. The change in the net balance is driven by the difference in timing of revenue recognition in accordance with ASC 606, Revenue from Contracts with Customers, related to the Company’s Research & Development Solutions contracts (which is based on the percentage of costs incurred) versus the timing of invoicing, which is based on certain milestones.

Bad debt expense recognized on the Company’s receivables and unbilled services was de minimis for the three months ended March 31, 2022 and 2021.

4. Goodwill

The following is a summary of goodwill by reportable segment for the three months ended March 31, 2022:

(in millions)						Technology & Analytics Solutions						Research & Development Solutions						Contract Sales & Medical Solutions						Consolidated
Balance as of December 31, 2021						$	11,337					$	1,802					$	162					$	13,301
Business combinations						86						253						—						339
Impact of foreign currency fluctuations and other						(102)						(4)						(2)						(108)
Balance as of March 31, 2022						$	11,321					$	2,051					$	160					$	13,532

5. Derivatives

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

(in millions)						Balance Sheet Classification						March 31, 2022																		December 31, 2021
						Assets						Liabilities						Notional						Assets						Liabilities						Notional
Derivatives designated as hedging instruments:
Foreign exchange forward contracts						Other current assets and liabilities						$	—					$	5					$	124					$	—					$	3					$	110
Interest rate swaps						Other assets and liabilities						25						5						1,800						4						24						1,800
Total derivatives												$	25					$	10											$	4					$	27

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

						Three Months Ended March 31,
(in millions)						2022						2021
Foreign exchange forward contracts						$	(2)					$	(2)
Interest rate swaps						40						11
Total						$	38					$	9

The amount of foreign exchange gains related to the net investment hedge included in the cumulative translation adjustment component of accumulated other comprehensive (loss) income (“AOCI”) for the three months ended March 31, 2022 and 2021 was $119 million and $285 million, respectively.

6. Fair Value Measurements

The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying values of cash, cash equivalents, accounts receivable and accounts payable approximated their fair values as of March 31, 2022 and December 31, 2021 due to their short-term nature. As of March 31, 2022 and December 31, 2021, the fair value of total debt approximated $12,508 million and $12,255 million, respectively, as determined under Level 1 and Level 2 measurements for these financial instruments.

Recurring Fair Value Measurements

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

(in millions)						Level 1						Level 2						Level 3						Total
Assets:
Marketable securities						$	136					$	—					$	—					$	136
Derivatives						—						25						—						25
Total						$	136					$	25					$	—					$	161
Liabilities:
Derivatives						$	—					$	10					$	—					$	10
Contingent consideration						—						—						87						87
Total						$	—					$	10					$	87					$	97

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

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

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

Contingent consideration — The Company values contingent consideration related to business combinations using a weighted probability calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows. Assumptions used to estimate the fair value of contingent consideration include various financial metrics (revenue performance targets and operating forecasts) and the probability of achieving the specific targets. Based on the assessments of the probability of achieving specific targets, as of March 31, 2022 the Company has accrued approximately 74% of the maximum contingent consideration payments that could potentially become payable.

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

						Contingent Consideration
(in millions)						2022						2021
Balance as of January 1						$	76					$	119
Business combinations						23						5
Contingent consideration paid						(11)						(9)
Revaluations included in earnings and foreign currency translation adjustments						(1)						(6)
Balance as of March 31						$	87					$	109

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

Non-recurring Fair Value Measurements

As of March 31, 2022, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $18,581 million and were identified as Level 3. These assets are comprised of cost and equity method investments of $132 million, goodwill of $13,532 million and other identifiable intangibles, net of $4,917 million.

7. Credit Arrangements

The following is a summary of the Company’s revolving credit facilities as of March 31, 2022:

Facility						Interest Rates
$1,500 million (revolving credit facility)						LIBOR in the relevant currency borrowed plus a margin of 1.25% as of March 31, 2022
$110 million (receivables financing facility)						LIBOR Market Index Rate (0.45% as of March 31, 2022) plus 0.90%

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

(dollars in millions)						March 31, 2022						December 31, 2021
Revolving Credit Facility due 2026:
U.S. Dollar denominated borrowings—U.S. Dollar LIBOR at average floating rates of 1.47%						$	750					$	100
Senior Secured Credit Facilities:
Term A Loan due 2026—U.S. Dollar LIBOR at average floating rates of 1.47%						1,397						1,415
Term A Loan due 2026—Euribor at average floating rates of 1.25%						339						351
Term B Loan due 2024—U.S. Dollar LIBOR at average floating rates of 1.85%						510						510
Term B Loan due 2024—Euribor at average floating rates of 2.00%						1,217						1,242
Term B Loan due 2025—U.S. Dollar LIBOR at average floating rates of 1.85%						670						670
Term B Loan due 2025—U.S. Dollar LIBOR at average floating rates of 1.97%						861						860
Term B Loan due 2025—Euribor at average floating rates of 2.00%						581						592
5.0% Senior Notes due 2027—U.S. Dollar denominated						1,100						1,100
5.0% Senior Notes due 2026—U.S. Dollar denominated						1,050						1,050
2.875% Senior Notes due 2025—Euro denominated						467						476
2.25% Senior Notes due 2028—Euro denominated						800						817
2.875% Senior Notes due 2028—Euro denominated						790						807
1.750% Senior Notes due 2026—Euro denominated						611						624
2.250% Senior Notes due 2029—Euro denominated						1,000						1,021
Receivables financing facility due 2024—U.S. Dollar LIBOR at average floating rates of 1.00%:
Revolving Loan Commitment						110						110
Term Loan						440						440
Principal amount of debt						12,693						12,185
Less: unamortized discount and debt issuance costs						(56)						(60)
Less: current portion						(90)						(91)
Long-term debt						$	12,547					$	12,034

Contractual maturities of long-term debt are as follows as of March 31, 2022:

(in millions)
Remainder of 2022						$	68
2023						90
2024						2,366
2025						2,668
2026						3,809
Thereafter						3,692
						$	12,693

Senior Secured Credit Facilities

As of March 31, 2022, the Company’s Fifth Amended and Restated Credit Agreement provided financing through several senior secured credit facilities of up to approximately $7,075 million, which consisted of $6,325 million principal amounts of debt outstanding (as detailed in the table above), and $750 million of available borrowing capacity on the $1,500 million revolving credit facility and standby letters of credit. The revolving credit facility is comprised of a $675 million senior secured revolving facility available in U.S. dollars, a $600 million senior secured revolving facility available in U.S. dollars, Euros, Swiss Francs and other foreign currencies, and a $225 million senior secured revolving facility available in U.S. dollars and Yen.

Restrictive Covenants

The Company’s debt agreements provide for certain covenants and events of default customary for similar instruments, including a covenant not to exceed a specified ratio of consolidated senior secured net indebtedness to Consolidated EBITDA, as defined in the senior secured credit facility agreement and a covenant to maintain a specified minimum interest coverage ratio. If an event of default occurs under any of the Company’s or the Company’s subsidiaries’ financing arrangements, the creditors under such financing arrangements will be entitled to take various actions, including the acceleration of amounts due under such arrangements, and in the case of the lenders under the revolving credit facility and term loans, other actions permitted to be taken by a secured creditor. The Company’s long-term debt arrangements contain other usual and customary restrictive covenants that, among other things, place limitations on the Company’s ability to declare dividends. As of March 31, 2022, the Company was in compliance in all material respects with the financial covenants under the Company’s financing arrangements.

8. Contingencies

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

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

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

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

On February 13, 2014, a group of approximately 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. On September 11, 2017, the District Court issued a final decision that the encryption in use by the defendants since June 2014 was adequate to meet the requirements of the Korean Personal Information Privacy Act (“PIPA”) and the sharing of non-identified information for market research purposes was allowed under PIPA. The District Court also found an earlier version of encryption was insufficient to meet PIPA requirements, but no personal data had been leaked or re-identified. The District Court did not award any damages to plaintiffs. Approximately 280 medical doctors and 200 private individuals appealed the District Court decision. On May 3, 2019, the Appellate Court issued a final decision in which it concluded all of the non-identified information transferred by KPIC to IMS Korea for market research purposes violated PIPA, but did not award any damages to plaintiffs (affirming the District Court’s decision on this latter point). On May 24, 2019, approximately 247 plaintiffs appealed the Appellate Court’s decision to the Supreme Court. The Company believes the appeal is without merit and is vigorously defending its position.

On July 23, 2015, indictments were issued by the Seoul Central District Prosecutors’ Office in South Korea against 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. On February 14, 2020, the Seoul Central District Court acquitted IMS Korea and its two employees of the charges of improper handling of sensitive health information, and the Prosecutor's Office appealed. On December 23, 2021, the appellate court affirmed the judgment of the Seoul Central District Court. The Prosecutor's Office has appealed to the Supreme Court. The Company intends to vigorously defend its position on appeal.

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

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

9. Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 1.0 million shares of preferred stock, $0.01 per share par value. No shares of preferred stock were issued or outstanding as of March 31, 2022 or December 31, 2021.

Equity Repurchase Program

On February 10, 2022, the Board increased the stock repurchase authorization under the Company's equity repurchase program (the "Repurchase Program") with respect to the repurchase of the Company’s common stock by an additional $2.0 billion, which increased the total amount that has been authorized under the Repurchase Program to $9.725 billion since the plan’s inception in October 2013. The Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it may be modified, extended, suspended or discontinued at any time.

During the three months ended March 31, 2022, the Company repurchased 1.7 million shares of its common stock for $403 million under the Repurchase Program. As of March 31, 2022, the Company has remaining authorization to repurchase up to approximately $2.1 billion of its common stock under the Repurchase Program. In addition, from time to time, the Company has repurchased and may continue to repurchase common stock through private or other transactions outside of the Repurchase Program.

10. Business Combinations

The Company completed several individually immaterial acquisitions during the three months ended March 31, 2022. The Company’s assessment of fair value, including the valuation of certain identified intangibles, and the purchase price allocation related to these acquisitions is preliminary and subject to change upon completion. Further adjustments may be necessary as additional information related to the fair values of assets acquired and liabilities assumed is assessed during the measurement period (up to one year from the acquisition date). The Company recorded goodwill from these acquisitions, primarily attributable to assembled workforce and expected synergies. The condensed consolidated financial statements include the results of the acquisitions subsequent to their respective closing dates. Pro forma information is not presented as pro forma results of operations would not be materially different to the actual results of operations of the Company.

The following table provides certain preliminary financial information for these acquisitions:

(in millions)						March 31, 2022
Assets acquired:
Cash and cash equivalents						$	6
Other assets						68
Goodwill						339
Other identifiable intangibles						137
Liabilities assumed:
Other liabilities						(46)
Deferred income taxes, long-term						(42)
Net assets acquired (1)						$	462

(1) Total cash paid for acquisitions, net of cash acquired, in the accompanying condensed consolidated statement of cash flows, includes contingent consideration and deferred purchase price of $26 million for the three months ended March 31, 2022.

The portion of goodwill deductible for income tax purposes was preliminarily assessed as $56 million.

The following table provides a summary of the preliminary estimated fair value of certain intangible assets acquired:

(in millions)						Amortization Period															March 31, 2022
Other identifiable intangibles:
Customer relationships						11			-			17			years						$	115
Backlog						1			-			4			years						14
Software and related assets						4			-			5			years						6
Trade names												2			years						2
Total Other identifiable intangibles																					$	137

11. Restructuring

The Company has continued to take restructuring actions in 2022 to align its resources and reduce overcapacity to adapt to changing market conditions and integrate acquisitions. These actions include consolidating functional activities, eliminating redundant positions, and aligning resources with customer requirements. These restructuring actions are expected to continue into 2023.

The following amounts were recorded for the restructuring plans:

(in millions)						Severance and Related Costs
Balance as of December 31, 2021						$	30
Expense, net of reversals						7
Payments						(8)
Balance as of March 31, 2022						$	29

The reversals were due to changes in estimates primarily from the redeployment of staff and higher than expected voluntary terminations. Restructuring costs are not allocated to the Company’s reportable segments as they are not part of the segment performance measures regularly reviewed by management. The Company expects that the majority of the restructuring accruals as of March 31, 2022 will be paid in 2022 and 2023.

12. Income Taxes

The effective income tax rate was 17.8% and 17.1% in the first quarter of 2022 and 2021, respectively. The effective income tax rate in the first quarter of 2022 and 2021 was favorably impacted by $13 million and $17 million, respectively, as a result of excess tax benefits recognized upon settlement of share-based compensation awards.

13. Accumulated Other Comprehensive (Loss) Income

Below is a summary of the components of AOCI:

(in millions)						Foreign Currency Translation						Derivative Instruments						Defined Benefit Plans						Income Taxes						Total
Balance as of December 31, 2021						$	(570)					$	(21)					$	5					$	180					$	(406)
Other comprehensive (loss) income before reclassifications						(13)						39						(2)						(36)						(12)
Reclassification adjustments						—						(1)						—						—						(1)
Balance as of March 31, 2022						$	(583)					$	17					$	3					$	144					$	(419)

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

(in millions)						Affected Financial Statement Line Item						Three Months Ended March 31,
						2022						2021
Derivative instruments:
Interest rate swaps						Interest expense						$	—					$	(4)
Foreign exchange forward contracts						Revenues						1						2
Total before income taxes												1						(2)
Income tax benefit												—						(1)
Total net of income taxes												$	1					$	(1)

14. Segments

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

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

						Three Months Ended March 31,
(in millions)						2022						2021
Revenues
Technology & Analytics Solutions						$	1,439					$	1,348
Research & Development Solutions						1,934						1,868
Contract Sales & Medical Solutions						195						193
Total revenues						3,568						3,409
Costs of revenue, exclusive of depreciation and amortization
Technology & Analytics Solutions						834						812
Research & Development Solutions						1,322						1,321
Contract Sales & Medical Solutions						167						160
Total costs of revenue, exclusive of depreciation and amortization						2,323						2,293
Selling, general and administrative expenses
Technology & Analytics Solutions						219						187
Research & Development Solutions						211						185
Contract Sales & Medical Solutions						16						13
General corporate and unallocated						42						57
Total selling, general and administrative expenses						488						442
Segment profit
Technology & Analytics Solutions						386						349
Research & Development Solutions						401						362
Contract Sales & Medical Solutions						12						20
Total segment profit						799						731
General corporate and unallocated						(42)						(57)
Depreciation and amortization						(255)						(323)
Restructuring costs						(7)						(9)
Total income from operations						$	495					$	342

15. Earnings Per Share

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

						Three Months Ended March 31,
(in millions, except per share data)						2022						2021
Numerator:
Net income attributable to IQVIA Holdings Inc.						$	325					$	212
Denominator:
Basic weighted average common shares outstanding						190.0						191.5
Effect of dilutive stock options and share awards						3.4						3.4
Diluted weighted average common shares outstanding						193.4						194.9
Earnings per share attributable to common stockholders:
Basic						$	1.71					$	1.11
Diluted						$	1.68					$	1.09

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

For the three months ended March 31, 2022 and 2021, the weighted average number of outstanding stock-based awards not included in the computation of diluted earnings per share because they are subject to performance conditions or the effect of including such stock-based awards in the computation would be anti-dilutive was 0.3 and 1.0, million, respectively.