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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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46‑3640387
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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Nasdaq Global Select Market
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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Class
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Number of Shares Outstanding
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Common Stock $0.01 par value
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65,531,659 shares outstanding as of February 22, 2019
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Item
Number
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Page No.
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•
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Maximizing Productivity and Reducing Cost—Productivity within the biopharmaceutical industry has declined over the past several years and the cost of developing a new drug has significantly increased. The combined impact of declining R&D productivity and increased development costs has translated into significant pressure on margins and short‑term earnings for biopharmaceutical companies. We believe that the need for these companies to maximize
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•
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Increasing Clinical Trial Complexity—Over the last decade, the burden of clinical trial complexity has been increasingly difficult to manage due to requirements from regulatory authorities worldwide for greater amounts of clinical trial and safety data to support the approval of new drugs, and requirements for adherence to increasingly complex and diverse regulations and guidelines. In an effort to minimize potential risks, these regulatory agencies also typically require a greater amount of post‑approval information and monitoring of drugs on the market. To balance the conflicting demands of a growing market with the need to control R&D expenses, biopharmaceutical companies partner with CROs that can provide services designed to generate high-quality and timely data in support of regulatory approvals of new drugs or the reformulations of existing drugs, as well as support of post‑approval regulatory requirements.
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•
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Simultaneous Multi‑Country Registration—Given their desire to maximize efficiency and global market penetration to achieve higher potential returns on their R&D expenditures, biopharmaceutical companies are increasingly pursuing simultaneous, rather than sequential, regulatory new drug submissions and approvals in multiple countries. However, most biotechnology and small‑ to mid‑sized pharmaceutical companies do not possess the capability or capacity to simultaneously conduct large‑scale clinical trials in more than one country. In addition, establishing and maintaining internal global infrastructure to pursue multiple regulatory approvals in different therapeutic categories and jurisdictions can be costly.
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•
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Product Registration, which includes Phase IIb through III product registration trials and Phase IV trials, inclusive of post‑marketing commitments and registries;
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•
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Strategic Solutions, which provides Embedded Solutions and functional outsourcing services, in which our teams are fully integrated within the client’s internal clinical development operations and responsible for managing functions across the entire breadth of the client’s drug development pipeline; and
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•
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Early Development Services, which includes Phase I through Phase IIa clinical trials and bioanalytical laboratory services.
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•
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clinical program development, review and consultation and lifecycle management planning;
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•
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design of the clinical protocol and electronic case report forms, or CRFs;
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•
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feasibility studies for investigator interest and patient access and availability;
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•
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patient recruitment and retention services;
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•
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project management;
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•
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investigator and site analysis for selection and qualification;
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•
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investigator handbook and meetings;
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•
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investigational site support and clinical monitoring;
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•
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data management;
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•
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patient medical and safety management;
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•
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analysis and reporting;
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•
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medical and scientific publications; and
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•
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preparation of regulatory filings.
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•
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the cost and experience necessary to develop broad therapeutic expertise;
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•
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the ability to manage large, complex international clinical programs;
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•
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the ability to deliver high‑quality services consistently for large drug development projects;
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•
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the experience to prepare regulatory submissions on a global basis; and
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•
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the infrastructure and knowledge to respond to the global needs of clients.
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•
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comply with specific requirements governing the selection of qualified investigators;
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•
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obtain specific written commitments from the investigators;
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•
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obtain IRB review and approval of the clinical trial;
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•
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verify that appropriate patient informed consent is obtained before the patient participates in a clinical trial;
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•
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ensure adverse drug reactions resulting from the administration of a drug or biologic during a clinical trial are medically evaluated and reported in a timely manner;
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•
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monitor the validity and accuracy of data;
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•
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verify drug or biologic accountability;
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•
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instruct investigators and study staff to maintain records and reports; and
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•
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permit appropriate governmental authorities access to data for review.
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•
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decisions to forgo or terminate a particular clinical trial;
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•
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lack of available financing, budgetary limits or changing priorities;
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•
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actions by regulatory authorities;
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•
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production problems resulting in shortages of the drug being tested;
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•
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failure of the drug being tested to satisfy safety requirements or efficacy criteria;
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•
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unexpected or undesired clinical results;
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•
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insufficient patient enrollment in a trial;
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•
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insufficient investigator recruitment;
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•
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decisions to downsize product development portfolios;
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•
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dissatisfaction with our performance, including the quality of data provided and our ability to meet agreed upon schedules;
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•
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shift of business to another CRO or internal resources;
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product withdrawal following market launch; or
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•
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shut down of our clients’ manufacturing facilities.
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•
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the size, complexity and duration of the projects;
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•
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the cancellation or delay of projects; and
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•
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change in the scope of work during the course of a project.
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•
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the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no income tax benefit can be recognized;
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actual and projected full year pre‑tax income, including differences between actual and anticipated income before taxes in various jurisdictions;
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changes in tax laws, or in the interpretation or application of tax laws, in various taxing jurisdictions, including the U.S. Tax Cuts and Jobs Act;
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audits or other challenges by taxing authorities; and
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the establishment of valuation allowances against a portion or all of certain deferred income tax assets if we determined that it is more likely than not that future income tax benefits will not be realized.
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global intangible low-taxed income;
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limitations on the U.S. deductions for net business interest;
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base erosion anti-abuse provisions; and
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•
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performance-based compensation subject to $1 million limit.
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disruption, impairment or failure of data centers, telecommunications facilities or other key infrastructure platforms;
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security breaches of, cyberattacks on and other failures or malfunctions in our critical application systems or their associated hardware; and
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•
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excessive costs, excessive delays or other deficiencies in systems development and deployment.
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•
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conducting a single trial across multiple countries is complex, and issues in one country, such as a failure to comply with local regulations or restrictions, may affect the progress of the trial in the other countries, for example, by limiting the amount of data necessary for a trial to proceed, resulting in delays or potential cancellation of contracts, which in turn may result in loss of revenue;
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•
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non‑U.S. countries could enact legislation or impose regulations or other restrictions, including unfavorable labor regulations or tax policies, which could have an adverse effect on our ability to conduct business in or expatriate profits from those countries;
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•
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tax rates in certain non‑U.S. countries may exceed those in the United States and non‑U.S. earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation;
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•
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certain non‑U.S. countries are expanding or may expand their regulatory framework with respect to patient informed consent, protection and compensation in clinical trials, which could delay or inhibit our ability to conduct trials in such jurisdictions or which could materially increase the risks associated with performing trials in such jurisdictions;
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•
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the regulatory or judicial authorities of non‑U.S. countries may not enforce legal rights and recognize business procedures in a manner to which we are accustomed or would reasonably expect;
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we may have difficulty complying with a variety of laws and regulations in non‑U.S. countries, some of which may conflict with laws in the United States;
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•
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changes in political and economic conditions may lead to changes in the business environment in which we operate, as well as changes in non‑U.S. currency exchange rates;
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a prolonged shutdown of the U.S. federal government may hinder the growth of the U.S. economy, thus negatively affecting our business;
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the adoption and expansion of trade restrictions, the occurrence or escalation of a “trade war,” or other governmental action related to tariffs or trade agreements or policies among the governments of the United States and other countries, such as Mexico or China, could adversely impact demand for our services, our costs, our clients, and the U.S. economy;
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•
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regulatory changes and economic conditions leading up to and following “Brexit” (the United Kingdom’s exit from the European Union), including uncertainties as to its timing and its effect on trade laws, tariffs and taxes, could create instability and volatility in the global financial and currency markets, conflicting or redundant regulatory regimes in Europe (such as the European Medicines Agency ("EMA") relocation from the United Kingdom to the Netherlands) and political instability;
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•
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clients in non‑U.S. jurisdictions may have longer payment cycles, and it may be more difficult to collect receivables in non‑U.S. jurisdictions; and
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•
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natural disasters, pandemics or international conflict, including terrorist acts, could interrupt our services, endanger our personnel or cause project delays or loss of trial materials or results.
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•
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non‑compliance generally could result in the termination of ongoing clinical trials or the disqualification of data for submission to regulatory authorities;
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•
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compromise of data from a particular trial, such as failure to verify that adequate informed consent was obtained from patients, could require us to repeat the trial under the terms of our contract at no further cost to our client, but at a potentially substantial cost to us; and
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•
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breach of a contractual term could result in liability for damages or termination of the contract.
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continue to improve our operating, administrative and information systems;
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•
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accurately predict our future personnel, resource and facility needs to meet our commitments;
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track the progress of ongoing projects; and
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attract and retain qualified management, sales, professional, scientific and technical operating personnel.
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assimilate differences in non‑U.S. business practices and regulations;
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•
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properly integrate systems and operating procedures;
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•
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hire and retain qualified personnel; and
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•
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overcome language and cultural barriers.
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•
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making it more difficult for us to satisfy our obligations with respect to our debt;
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•
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limiting our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions or other general corporate requirements;
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•
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requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flow available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes;
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•
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increasing our vulnerability to adverse changes in general economic, industry and competitive conditions;
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•
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exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the 2016 Credit Facilities and accounts receivable financing agreement, are at variable rates of interest;
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•
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limiting our flexibility in planning for and reacting to changes in the industry in which we compete;
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•
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placing us at a disadvantage compared to other, less leveraged competitors; and
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•
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increasing our cost of borrowing.
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•
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our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control; and
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•
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the future availability of borrowings under our 2016 Credit Facilities, which depends on, among other things, our compliance with the covenants in those facilities.
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•
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the election and removal of directors and the size of our board of directors;
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•
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any amendment of our certificate of incorporation or bylaws; or
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•
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the approval of mergers and other significant corporate transactions, including a sale of substantially all of our assets.
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•
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market conditions in the broader stock market;
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•
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actual or anticipated fluctuations in our quarterly financial and operating results;
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•
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introduction of new products or services by us or our competitors;
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•
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the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
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•
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changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industries;
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•
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strategic actions by us, our customers or our competitors, such as acquisitions or restructurings;
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•
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changes in accounting standards, policies, guidance, interpretations or principles;
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•
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issuance of new or changed securities analysts’ reports or recommendations or termination of coverage of our common stock by securities analysts;
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sales, or anticipated sales, of large blocks of our stock;
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•
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the granting or exercise of employee stock options;
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•
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volume of trading in our common stock;
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•
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additions or departures of key personnel;
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•
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regulatory or political developments;
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•
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litigation and governmental investigations;
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•
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changing economic conditions;
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•
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defaults on our indebtedness; and
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•
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exchange rate fluctuations.
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Years Ended December 31,
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||||||||||||||||||
(in thousands, except per share data)
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2014
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2015
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2016
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2017
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2018
|
||||||||||
Consolidated statement of operations data:
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|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenue (1)
|
$
|
1,266,596
|
|
|
$
|
1,375,847
|
|
|
|
|
|
|
|
||||||
Reimbursement revenue (1)
|
192,990
|
|
|
238,036
|
|
|
|
|
|
|
|
||||||||
Total revenue (1)
|
1,459,586
|
|
|
1,613,883
|
|
|
$
|
1,811,711
|
|
|
$
|
2,259,389
|
|
|
$
|
2,871,922
|
|
||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct costs (exclusive of depreciation and amortization)
|
859,218
|
|
|
886,528
|
|
|
1,032,688
|
|
|
1,283,868
|
|
|
1,500,226
|
|
|||||
Reimbursable out-of-pocket costs
|
192,990
|
|
|
238,036
|
|
|
231,688
|
|
|
311,015
|
|
|
308,291
|
|
|||||
Reimbursable investigator fees (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
262,114
|
|
|||||
Selling, general and administrative
|
253,970
|
|
|
246,417
|
|
|
269,893
|
|
|
321,987
|
|
|
371,795
|
|
|||||
Transaction-related costs
|
—
|
|
|
—
|
|
|
44,834
|
|
|
87,709
|
|
|
35,817
|
|
|||||
Depreciation and amortization
|
96,564
|
|
|
77,952
|
|
|
69,506
|
|
|
78,227
|
|
|
112,247
|
|
|||||
Loss on disposal of fixed assets
|
5
|
|
|
652
|
|
|
753
|
|
|
358
|
|
|
120
|
|
|||||
Income from operations
|
56,839
|
|
|
164,298
|
|
|
162,349
|
|
|
176,225
|
|
|
281,312
|
|
|||||
Interest expense, net
|
(81,939
|
)
|
|
(61,747
|
)
|
|
(54,913
|
)
|
|
(46,729
|
)
|
|
(57,399
|
)
|
|||||
Loss on modification or extinguishment of debt
|
(25,036
|
)
|
|
—
|
|
|
(38,178
|
)
|
|
(15,023
|
)
|
|
(952
|
)
|
|||||
Foreign currency gains (losses), net
|
10,538
|
|
|
14,048
|
|
|
24,029
|
|
|
(39,622
|
)
|
|
(1,043
|
)
|
|||||
Other (expense) income, net
|
(2,254
|
)
|
|
(1,434
|
)
|
|
607
|
|
|
(304
|
)
|
|
(371
|
)
|
|||||
(Loss) income before income taxes and equity in (losses) income of unconsolidated joint ventures
|
(41,852
|
)
|
|
115,165
|
|
|
93,894
|
|
|
74,547
|
|
|
221,547
|
|
|||||
(Benefit from) provision for income taxes
|
(8,154
|
)
|
|
30,004
|
|
|
28,494
|
|
|
(12,623
|
)
|
|
67,232
|
|
|||||
(Loss) income before equity in (losses) income of unconsolidated joint ventures
|
(33,698
|
)
|
|
85,161
|
|
|
65,400
|
|
|
87,170
|
|
|
154,315
|
|
|||||
Equity in (losses) income of unconsolidated joint ventures, net of tax
|
(2,044
|
)
|
|
(3,396
|
)
|
|
2,775
|
|
|
123
|
|
|
143
|
|
|||||
Net (loss) income
|
(35,742
|
)
|
|
81,765
|
|
|
68,175
|
|
|
87,293
|
|
|
154,458
|
|
|||||
Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
(366
|
)
|
|
(553
|
)
|
|||||
Net (loss) income attributable to PRA Health Sciences, Inc.
|
$
|
(35,742
|
)
|
|
$
|
81,765
|
|
|
$
|
68,175
|
|
|
$
|
86,927
|
|
|
$
|
153,905
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.83
|
)
|
|
$
|
1.36
|
|
|
$
|
1.12
|
|
|
$
|
1.39
|
|
|
$
|
2.40
|
|
Diluted
|
$
|
(0.83
|
)
|
|
$
|
1.29
|
|
|
$
|
1.06
|
|
|
$
|
1.32
|
|
|
$
|
2.32
|
|
Cash dividends declared per common stockholders
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
42,897
|
|
|
59,965
|
|
|
60,759
|
|
|
62,437
|
|
|
64,123
|
|
|||||
Diluted
|
42,897
|
|
|
63,207
|
|
|
64,452
|
|
|
65,773
|
|
|
66,341
|
|
|||||
Cash flow data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
34,034
|
|
|
$
|
152,428
|
|
|
$
|
160,047
|
|
|
$
|
220,408
|
|
|
$
|
329,792
|
|
Net cash used in investing activities
|
(11,472
|
)
|
|
(71,686
|
)
|
|
(34,614
|
)
|
|
(687,420
|
)
|
|
(55,473
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(5,956
|
)
|
|
(42,444
|
)
|
|
(101,595
|
)
|
|
507,009
|
|
|
(319,512
|
)
|
|||||
Other financial data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Backlog (at period end) (2)
|
$
|
2,141,112
|
|
|
$
|
2,440,123
|
|
|
$
|
2,934,823
|
|
|
$
|
3,535,611
|
|
|
$
|
4,224,225
|
|
Net new business (3)
|
1,493,652
|
|
|
1,696,635
|
|
|
2,076,484
|
|
|
2,413,730
|
|
|
2,644,791
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated balance sheet data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
85,192
|
|
|
$
|
121,065
|
|
|
$
|
144,623
|
|
|
$
|
192,229
|
|
|
$
|
144,221
|
|
Accounts receivable and unbilled services, net
|
338,781
|
|
|
415,077
|
|
|
439,053
|
|
|
627,003
|
|
|
568,099
|
|
|||||
Working capital
|
22,367
|
|
|
43,796
|
|
|
60,538
|
|
|
(94,592
|
)
|
|
(116,519
|
)
|
|||||
Total assets
|
2,214,484
|
|
|
2,228,743
|
|
|
2,190,391
|
|
|
3,358,046
|
|
|
3,186,467
|
|
|||||
Total long-term debt, net
|
924,444
|
|
|
889,514
|
|
|
797,052
|
|
|
1,225,397
|
|
|
1,082,384
|
|
|||||
Total liabilities
|
1,537,669
|
|
|
1,526,021
|
|
|
1,461,139
|
|
|
2,421,565
|
|
|
2,135,047
|
|
|||||
Total stockholders' equity
|
676,815
|
|
|
702,722
|
|
|
729,252
|
|
|
936,481
|
|
|
1,051,420
|
|
|||||
Total liabilities and stockholders' equity
|
2,214,484
|
|
|
2,228,743
|
|
|
2,190,391
|
|
|
3,358,046
|
|
|
3,186,467
|
|
(1)
|
On January 1, 2018, we adopted Accounting Standards Codification, or ASC, Topic 606, "Revenue from Contracts with Customers," or ASC 606, using the modified retrospective method for all contracts that were not completed as of January 1, 2018. Comparative prior period information continues to be accounted for under the accounting standards in effect for the period presented. The revenue captions for the years ended December 31, 2017 and 2016 have been recast to conform with the presentation of a single revenue total in the consolidated statement of operations as opposed to separate line items. Previously, the year ended December 31, 2017 included service revenue of $1,948.4 million and reimbursement revenue of $311.0 million. The year ended December 31, 2016 included service revenue of $1,580.0 million and reimbursement revenue of $231.7 million.
|
(2)
|
Our backlog consists of anticipated service revenue for our Clinical Research segment from new business awards that either have not started or are but have not been completed. Backlog varies from period to period depending upon new business awards and contract increases, cancellations and the amount of service revenue recognized under existing contracts.
|
(3)
|
For our Strategic Solutions offering, the value of new business awards is the anticipated service revenue to be recognized in the corresponding quarter of the next fiscal year. For the remainder of our business, 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. New business awards are for our Clinical Research segment.
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
U.S. dollars per:
|
|
|
|
|
|
|||
Euro
|
1.18
|
|
|
1.13
|
|
|
1.11
|
|
British pound
|
1.33
|
|
|
1.29
|
|
|
1.35
|
|
|
|
|
|
Change
|
|
|
||||||||||
|
|
Year Ended December 31, 2017
|
|
$ Change
|
|
Adoption of ASC 606 (1)
|
|
Year Ended December 31, 2018
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
1,948,374
|
|
|
$
|
348,475
|
|
|
$
|
—
|
|
|
|
||
Reimbursement revenue - out-of-pocket costs
|
|
311,015
|
|
|
(2,724
|
)
|
|
—
|
|
|
|
|||||
Total revenue
|
|
2,259,389
|
|
|
345,751
|
|
|
266,782
|
|
|
$
|
2,871,922
|
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
||||||||
Direct costs (exclusive of depreciation and amortization)
|
|
1,283,868
|
|
|
216,358
|
|
|
—
|
|
|
1,500,226
|
|
||||
Reimbursable out-of-pocket costs
|
|
311,015
|
|
|
(2,724
|
)
|
|
—
|
|
|
308,291
|
|
||||
Reimbursable investigator fees
|
|
—
|
|
|
—
|
|
|
262,114
|
|
|
262,114
|
|
||||
Selling, general and administrative
|
|
321,987
|
|
|
49,808
|
|
|
—
|
|
|
371,795
|
|
||||
Transaction-related costs
|
|
87,709
|
|
|
(51,892
|
)
|
|
—
|
|
|
35,817
|
|
||||
Depreciation and amortization
|
|
78,227
|
|
|
34,020
|
|
|
—
|
|
|
112,247
|
|
||||
Loss on disposal of fixed assets
|
|
358
|
|
|
(238
|
)
|
|
—
|
|
|
120
|
|
||||
Income from operations
|
|
176,225
|
|
|
100,419
|
|
|
4,668
|
|
|
281,312
|
|
||||
Interest expense, net
|
|
(46,729
|
)
|
|
(10,670
|
)
|
|
—
|
|
|
(57,399
|
)
|
||||
Loss on modification or extinguishment of debt
|
|
(15,023
|
)
|
|
14,071
|
|
|
—
|
|
|
(952
|
)
|
||||
Foreign currency losses, net
|
|
(39,622
|
)
|
|
38,579
|
|
|
—
|
|
|
(1,043
|
)
|
||||
Other expense, net
|
|
(304
|
)
|
|
(67
|
)
|
|
—
|
|
|
(371
|
)
|
||||
Income before income taxes and equity in income of unconsolidated joint ventures
|
|
74,547
|
|
|
142,332
|
|
|
4,668
|
|
|
221,547
|
|
||||
(Benefit from) provision for income taxes
|
|
(12,623
|
)
|
|
78,438
|
|
|
1,417
|
|
|
67,232
|
|
||||
Income before equity in income of unconsolidated joint ventures
|
|
87,170
|
|
|
63,894
|
|
|
3,251
|
|
|
154,315
|
|
||||
Equity in income of unconsolidated joint ventures, net of tax
|
|
123
|
|
|
20
|
|
|
—
|
|
|
143
|
|
||||
Net income
|
|
87,293
|
|
|
63,914
|
|
|
3,251
|
|
|
154,458
|
|
||||
Net income attributable to noncontrolling interest
|
|
(366
|
)
|
|
(187
|
)
|
|
—
|
|
|
(553
|
)
|
||||
Net income attributable to PRA Health Sciences, Inc.
|
|
$
|
86,927
|
|
|
$
|
63,727
|
|
|
$
|
3,251
|
|
|
$
|
153,905
|
|
(1) See Note 2, Significant Accounting Policies, to our consolidated financial statements for information about the adoption of ASC 606.
|
|
Year Ended December 31,
|
||||||
(in thousands)
|
2017
|
|
2016
|
||||
Revenue
|
|
|
|
||||
Service revenue
|
$
|
1,948,374
|
|
|
$
|
1,580,023
|
|
Reimbursement revenue
|
311,015
|
|
|
231,688
|
|
||
Total revenue
|
2,259,389
|
|
|
1,811,711
|
|
||
Operating expenses
|
|
|
|
||||
Direct costs (exclusive of depreciation and amortization)
|
1,283,868
|
|
|
1,032,688
|
|
||
Reimbursable out-of-pocket costs
|
311,015
|
|
|
231,688
|
|
||
Selling, general and administrative
|
321,987
|
|
|
269,893
|
|
||
Transaction-related costs
|
87,709
|
|
|
44,834
|
|
||
Depreciation and amortization
|
78,227
|
|
|
69,506
|
|
||
Loss on disposal of fixed assets
|
358
|
|
|
753
|
|
||
Income from operations
|
176,225
|
|
|
162,349
|
|
||
Interest expense, net
|
(46,729
|
)
|
|
(54,913
|
)
|
||
Loss on modification or extinguishment of debt
|
(15,023
|
)
|
|
(38,178
|
)
|
||
Foreign currency gains, net
|
(39,622
|
)
|
|
24,029
|
|
||
Other income (expense), net
|
(304
|
)
|
|
607
|
|
||
Income before income taxes and equity in income (losses) of unconsolidated joint ventures
|
74,547
|
|
|
93,894
|
|
||
Provision for income taxes
|
(12,623
|
)
|
|
28,494
|
|
||
Income before equity in income (losses) of unconsolidated joint ventures
|
87,170
|
|
|
65,400
|
|
||
Equity in income (losses) of unconsolidated joint ventures, net of tax
|
123
|
|
|
2,775
|
|
||
Net income
|
87,293
|
|
|
68,175
|
|
||
Net income attributable to noncontrolling interest
|
(366
|
)
|
|
—
|
|
||
Net income attributable to PRA Health Sciences, Inc.
|
$
|
86,927
|
|
|
$
|
68,175
|
|
|
|
|
|
Change
|
|
|
||||||||||
|
|
Year Ended December 31, 2017
|
|
$ Change
|
|
Adoption of ASC 606 (See Note 2)
|
|
Year Ended December 31, 2018
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
$
|
1,857,876
|
|
|
$
|
189,460
|
|
|
$
|
—
|
|
|
|
||
Reimbursement revenue - out-of-pocket costs
|
|
311,015
|
|
|
(2,724
|
)
|
|
—
|
|
|
|
|||||
Total revenue
|
|
2,168,891
|
|
|
186,736
|
|
|
266,782
|
|
|
2,622,409
|
|
||||
Segment profit
|
|
$
|
626,186
|
|
|
$
|
86,347
|
|
|
$
|
4,668
|
|
|
$
|
717,201
|
|
|
|
|
|
Change
|
|
|
||||||||||
|
|
Year Ended December 31, 2017
|
|
$ Change
|
|
Adoption of ASC 606 (See Note 2)
|
|
Year Ended December 31, 2018
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
90,498
|
|
|
$
|
159,015
|
|
|
$
|
—
|
|
|
$
|
249,513
|
|
Segment profit
|
|
38,320
|
|
|
45,770
|
|
|
—
|
|
|
84,090
|
|
|
Years Ended December 31,
|
|
Change
|
|||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|||||||||
(in thousands)
|
||||||||||||||
Service revenue
|
$
|
1,857,876
|
|
|
$
|
1,580,023
|
|
|
$
|
277,853
|
|
|
17.6
|
%
|
Segment profit
|
626,186
|
|
|
547,335
|
|
|
78,851
|
|
|
14.4
|
%
|
|||
Segment profit %
|
33.7
|
%
|
|
34.6
|
%
|
|
(0.9
|
)%
|
|
|
|
Years Ended December 31,
|
|
Change
|
||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
||||||||
(in thousands)
|
|||||||||||||
Service revenue
|
$
|
90,498
|
|
|
$
|
—
|
|
|
$
|
90,498
|
|
|
n/a
|
Segment profit
|
38,320
|
|
|
—
|
|
|
38,320
|
|
|
n/a
|
|||
Segment profit %
|
42.3
|
%
|
|
—
|
|
|
n/a
|
|
|
|
•
|
the 2016 First Lien Term Loan in an aggregate principal amount of up to $1,175.0 million; and
|
•
|
the 2016 Revolver in an aggregate principal amount of up to $225.0 million.
|
Pricing
Level
|
|
Total indebtedness
to EBITDA Ratio
|
|
Letter of
Credit
Fees
|
|
ABR Margin
Rate
|
|
Adjusted LIBOR
Margin Rate
|
|
Commitment
Fees
|
I
|
|
> 3.75x
|
|
2.00%
|
|
1.00%
|
|
2.00%
|
|
0.40%
|
II
|
|
< 3.75x but > 3.00x
|
|
1.75%
|
|
0.75%
|
|
1.75%
|
|
0.35%
|
III
|
|
< 3.00x but > 2.25x
|
|
1.50%
|
|
0.50%
|
|
1.50%
|
|
0.30%
|
IV
|
|
< 2.25x but > 1.50x
|
|
1.25%
|
|
0.25%
|
|
1.25%
|
|
0.25%
|
V
|
|
< 1.50x
|
|
1.00%
|
|
—%
|
|
1.00%
|
|
0.20%
|
•
|
100% of the net cash proceeds of the incurrence or issuance of certain debt; and
|
•
|
100% of the net cash proceeds of $5.0 million of certain non-ordinary course asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions.
|
•
|
create any liens;
|
•
|
make investments and acquisitions;
|
•
|
incur or guarantee additional indebtedness;
|
•
|
enter into mergers or consolidations and other fundamental changes;
|
•
|
conduct sales and other dispositions of property or assets;
|
•
|
enter into sale-leaseback transactions or hedge agreements;
|
•
|
prepay subordinated debt;
|
•
|
pay dividends or make other payments in respect of capital stock;
|
•
|
change the line of business;
|
•
|
enter into transactions with affiliates;
|
•
|
enter into burdensome agreements with negative pledge clauses and clauses restriction; and
|
•
|
subsidiary distributions.
|
|
Payments Due by Period
|
||||||||||||||||||
|
Less than 1
year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5
years
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Principal payments on long-term debt (1)
|
$
|
—
|
|
|
$
|
1,086,533
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,086,533
|
|
Interest payments on long-term debt (1)
|
42,461
|
|
|
78,694
|
|
|
—
|
|
|
—
|
|
|
121,155
|
|
|||||
Service purchase commitments (2)
|
89,455
|
|
|
123,872
|
|
|
14,086
|
|
|
68
|
|
|
227,481
|
|
|||||
Operating leases
|
43,675
|
|
|
78,417
|
|
|
54,473
|
|
|
90,978
|
|
|
267,543
|
|
|||||
Less: sublease income
|
(157
|
)
|
|
(314
|
)
|
|
(119
|
)
|
|
—
|
|
|
(590
|
)
|
|||||
Uncertain income tax positions (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Contingent consideration on acquisition (4)
|
83,249
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,249
|
|
|||||
Total
|
$
|
258,683
|
|
|
$
|
1,367,202
|
|
|
$
|
68,440
|
|
|
$
|
91,046
|
|
|
$
|
1,785,371
|
|
(1)
|
Principal payments are based on the terms contained in our credit agreements. Principal payments include payments on the first lien term debt and the accounts receivable financing agreement. Interest payments are based on the interest rate in effect on December 31, 2018.
|
(2)
|
Service purchase commitments are defined as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased.
|
(3)
|
As of December 31, 2018, our liability related to uncertain income tax positions was approximately $12.9 million; the entire amount has been excluded from the table as we are unable to predict when these liabilities will be paid due to the uncertainties in timing of the settlement of the income tax positions.
|
(4)
|
Represents contingent payments associated with our acquisitions.
|
•
|
We use the historical volatilities of a selected peer group as we do not have sufficient history to estimate the volatility of our common share price. We calculate expected volatility based on reported data for selected reasonably similar publicly traded companies for which the historical information is available. For the purpose of identifying peer companies, we consider characteristics such as industry, length of trading history, similar vesting terms and in‑the‑money option status. We plan to continue to use the guideline peer group volatility information until the historical volatility of our common shares is relevant to measure expected volatility for future award grants.
|
•
|
The risk‑free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options.
|
•
|
The dividend yield assumption is based on the history and expectation of dividend payouts.
|
•
|
For those options valued using the Black-Scholes model, the expected life is based upon the guidance provided by the FASB. For those options with a market condition valued under the lattice model, the expected life varies depending on the target stock price that triggers vesting.
|
•
|
We account for forfeitures as they occur.
|
/s/ Colin Shannon
|
|
/s/ Michael J. Bonello
|
|
|
|
Colin Shannon
|
|
Michael J. Bonello
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
|
Executive Vice President and Chief Financial Officer
|
(Principal Executive Officer)
|
|
(Principal Financial Officer)
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
144,221
|
|
|
$
|
192,229
|
|
Restricted cash
|
488
|
|
|
661
|
|
||
Accounts receivable and unbilled services, net
|
568,099
|
|
|
627,003
|
|
||
Prepaid expenses and other current assets
|
66,605
|
|
|
55,580
|
|
||
Income taxes receivable
|
2,942
|
|
|
1,551
|
|
||
Total current assets
|
782,355
|
|
|
877,024
|
|
||
Fixed assets, net
|
154,764
|
|
|
143,070
|
|
||
Goodwill
|
1,494,762
|
|
|
1,512,424
|
|
||
Intangible assets, net
|
704,446
|
|
|
783,836
|
|
||
Deferred tax assets
|
8,954
|
|
|
8,939
|
|
||
Investment in unconsolidated joint ventures
|
—
|
|
|
407
|
|
||
Deferred financing fees
|
1,373
|
|
|
1,844
|
|
||
Other assets
|
39,813
|
|
|
30,502
|
|
||
Total assets
|
$
|
3,186,467
|
|
|
$
|
3,358,046
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of borrowings under credit facilities
|
$
|
—
|
|
|
$
|
91,500
|
|
Current portion of long-term debt
|
—
|
|
|
28,789
|
|
||
Accounts payable
|
43,734
|
|
|
64,635
|
|
||
Accrued expenses and other current liabilities
|
369,477
|
|
|
303,875
|
|
||
Income taxes payable
|
44,306
|
|
|
13,606
|
|
||
Advanced billings
|
441,357
|
|
|
469,211
|
|
||
Total current liabilities
|
898,874
|
|
|
971,616
|
|
||
Deferred tax liabilities
|
100,712
|
|
|
112,181
|
|
||
Long-term debt, net
|
1,082,384
|
|
|
1,225,397
|
|
||
Other long-term liabilities
|
53,077
|
|
|
112,371
|
|
||
Total liabilities
|
2,135,047
|
|
|
2,421,565
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock (100,000,000 authorized shares; $0.01 par value)
|
|
|
|
||||
Issued and outstanding -- none
|
—
|
|
|
—
|
|
||
Common stock (1,000,000,000 authorized shares; $0.01 par value)
|
|
|
|
||||
Issued and outstanding -- 65,394,526 and 63,623,950 at December 31, 2018 and 2017, respectively
|
654
|
|
|
636
|
|
||
Additional paid-in capital
|
960,535
|
|
|
905,423
|
|
||
Accumulated other comprehensive loss
|
(170,659
|
)
|
|
(136,470
|
)
|
||
Retained earnings
|
254,500
|
|
|
161,182
|
|
||
Equity attributable to PRA Health Sciences, Inc. stockholders
|
1,045,030
|
|
|
930,771
|
|
||
Noncontrolling interest
|
6,390
|
|
|
5,710
|
|
||
Total stockholders' equity
|
1,051,420
|
|
|
936,481
|
|
||
Total liabilities and stockholders' equity
|
$
|
3,186,467
|
|
|
$
|
3,358,046
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue:
|
$
|
2,871,922
|
|
|
$
|
2,259,389
|
|
|
$
|
1,811,711
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Direct costs (exclusive of depreciation and amortization)
|
1,500,226
|
|
|
1,283,868
|
|
|
1,032,688
|
|
|||
Reimbursable out-of-pocket costs
|
308,291
|
|
|
311,015
|
|
|
231,688
|
|
|||
Reimbursable investigator fees
|
262,114
|
|
|
—
|
|
|
—
|
|
|||
Selling, general and administrative
|
371,795
|
|
|
321,987
|
|
|
269,893
|
|
|||
Transaction-related costs
|
35,817
|
|
|
87,709
|
|
|
44,834
|
|
|||
Depreciation and amortization
|
112,247
|
|
|
78,227
|
|
|
69,506
|
|
|||
Loss on disposal of fixed assets
|
120
|
|
|
358
|
|
|
753
|
|
|||
Income from operations
|
281,312
|
|
|
176,225
|
|
|
162,349
|
|
|||
Interest expense, net
|
(57,399
|
)
|
|
(46,729
|
)
|
|
(54,913
|
)
|
|||
Loss on modification or extinguishment of debt
|
(952
|
)
|
|
(15,023
|
)
|
|
(38,178
|
)
|
|||
Foreign currency (losses) gains, net
|
(1,043
|
)
|
|
(39,622
|
)
|
|
24,029
|
|
|||
Other (expense) income, net
|
(371
|
)
|
|
(304
|
)
|
|
607
|
|
|||
Income before income taxes and equity in income of unconsolidated joint ventures
|
221,547
|
|
|
74,547
|
|
|
93,894
|
|
|||
Provision for (benefit from) income taxes
|
67,232
|
|
|
(12,623
|
)
|
|
28,494
|
|
|||
Income before equity in income of unconsolidated joint ventures
|
154,315
|
|
|
87,170
|
|
|
65,400
|
|
|||
Equity in income of unconsolidated joint ventures, net of tax
|
143
|
|
|
123
|
|
|
2,775
|
|
|||
Net income
|
154,458
|
|
|
87,293
|
|
|
68,175
|
|
|||
Net income attributable to noncontrolling interest
|
(553
|
)
|
|
(366
|
)
|
|
—
|
|
|||
Net income attributable to PRA Health Sciences, Inc.
|
$
|
153,905
|
|
|
$
|
86,927
|
|
|
$
|
68,175
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.40
|
|
|
$
|
1.39
|
|
|
$
|
1.12
|
|
Diluted
|
$
|
2.32
|
|
|
$
|
1.32
|
|
|
$
|
1.06
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
64,123
|
|
|
62,437
|
|
|
60,759
|
|
|||
Diluted
|
66,341
|
|
|
65,773
|
|
|
64,452
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
154,458
|
|
|
$
|
87,293
|
|
|
$
|
68,175
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments net of tax $4,670, $0, and $0
|
(41,042
|
)
|
|
83,814
|
|
|
(95,019
|
)
|
|||
Unrealized gains (losses) on derivative instruments, net of income taxes of $1,007, $96, and $(622)
|
2,152
|
|
|
149
|
|
|
(978
|
)
|
|||
Reclassification adjustments:
|
|
|
|
|
|
||||||
Losses on derivatives included in net income, net of income taxes, $1,649, $2,699, and $2,303
|
4,828
|
|
|
4,156
|
|
|
3,618
|
|
|||
Comprehensive income (loss)
|
120,396
|
|
|
175,412
|
|
|
(24,204
|
)
|
|||
Comprehensive income attributable to noncontrolling interest
|
(680
|
)
|
|
(269
|
)
|
|
—
|
|
|||
Comprehensive income (loss) attributable to PRA Health Sciences, Inc.
|
$
|
119,716
|
|
|
$
|
175,143
|
|
|
$
|
(24,204
|
)
|
|
|
|
|
|
|
|
Accumulated
Other
Comprehensive
Loss
(Note 16)
|
|
Retained
Earnings
|
|
Non-controlling Interest
|
|
|
|||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
Balance at December 31, 2015
|
60,245
|
|
|
$
|
602
|
|
|
$
|
828,347
|
|
|
$
|
(132,307
|
)
|
|
$
|
6,080
|
|
|
$
|
—
|
|
|
$
|
702,722
|
|
Exercise of common stock options
|
1,303
|
|
|
13
|
|
|
642
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
655
|
|
||||||
Stock-based compensation
|
50
|
|
|
1
|
|
|
49,232
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,233
|
|
||||||
Income tax benefit from stock-based award activities
|
—
|
|
|
—
|
|
|
846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
846
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68,175
|
|
|
—
|
|
|
68,175
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,379
|
)
|
|
—
|
|
|
—
|
|
|
(92,379
|
)
|
||||||
Balance at December 31, 2016
|
61,598
|
|
|
616
|
|
|
879,067
|
|
|
(224,686
|
)
|
|
74,255
|
|
|
—
|
|
|
729,252
|
|
||||||
Exercise of common stock options
|
1,904
|
|
|
19
|
|
|
8,072
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,091
|
|
||||||
Issuance of common stock
|
5
|
|
|
—
|
|
|
375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
375
|
|
||||||
Stock-based compensation
|
117
|
|
|
1
|
|
|
17,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,910
|
|
||||||
Non-controlling interest related to Takeda joint venture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,441
|
|
|
5,441
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,927
|
|
|
366
|
|
|
87,293
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
88,216
|
|
|
—
|
|
|
(97
|
)
|
|
88,119
|
|
||||||
Balance at December 31, 2017
|
63,624
|
|
|
636
|
|
|
905,423
|
|
|
(136,470
|
)
|
|
161,182
|
|
|
5,710
|
|
|
936,481
|
|
||||||
Impact to retained earnings from adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60,587
|
)
|
|
—
|
|
|
(60,587
|
)
|
||||||
Balance at January 1, 2018
|
63,624
|
|
|
636
|
|
|
905,423
|
|
|
(136,470
|
)
|
|
100,595
|
|
|
5,710
|
|
|
875,894
|
|
||||||
Exercise of common stock options and employee stock purchase plan purchases
|
1,626
|
|
|
16
|
|
|
30,535
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,551
|
|
||||||
Stock award distributions net of shares for tax withholding
|
145
|
|
|
2
|
|
|
(5,339
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,337
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
29,916
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,916
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153,905
|
|
|
553
|
|
|
154,458
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,189
|
)
|
|
—
|
|
|
127
|
|
|
(34,062
|
)
|
||||||
Balance at December 31, 2018
|
65,395
|
|
|
$
|
654
|
|
|
$
|
960,535
|
|
|
$
|
(170,659
|
)
|
|
$
|
254,500
|
|
|
$
|
6,390
|
|
|
$
|
1,051,420
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
154,458
|
|
|
$
|
87,293
|
|
|
$
|
68,175
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
112,247
|
|
|
78,227
|
|
|
69,506
|
|
|||
Amortization of debt issuance costs and discount
|
2,111
|
|
|
2,108
|
|
|
4,433
|
|
|||
Amortization of terminated interest rate swaps
|
7,146
|
|
|
6,684
|
|
|
4,961
|
|
|||
Stock-based compensation expense
|
29,143
|
|
|
12,616
|
|
|
7,067
|
|
|||
Non-cash transaction related stock-based compensation expense
|
773
|
|
|
5,294
|
|
|
42,166
|
|
|||
Unrealized foreign currency (gains) losses
|
(3,307
|
)
|
|
39,700
|
|
|
(24,499
|
)
|
|||
Loss on modification or extinguishment of debt
|
952
|
|
|
15,023
|
|
|
38,178
|
|
|||
Loss on disposal of fixed assets
|
120
|
|
|
358
|
|
|
753
|
|
|||
Change in acquisition-related contingent consideration
|
34,538
|
|
|
74,969
|
|
|
(527
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
(143
|
)
|
|
(123
|
)
|
|
(2,775
|
)
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
(846
|
)
|
|||
Deferred income taxes
|
11,665
|
|
|
(75,915
|
)
|
|
(10,469
|
)
|
|||
Other reconciling items
|
30
|
|
|
763
|
|
|
(605
|
)
|
|||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
|
|
|
|
|
|
||||||
Accounts receivable and unbilled services
|
(17,017
|
)
|
|
(136,330
|
)
|
|
(31,313
|
)
|
|||
Prepaid expenses and other assets
|
(18,931
|
)
|
|
1,762
|
|
|
(10,071
|
)
|
|||
Accounts payable and other liabilities
|
31,579
|
|
|
35,792
|
|
|
(1,474
|
)
|
|||
Income taxes
|
5,241
|
|
|
10,640
|
|
|
7,308
|
|
|||
Advanced billings
|
14,216
|
|
|
61,547
|
|
|
79
|
|
|||
Payment of acquisition-related contingent consideration
|
(35,029
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by operating activities
|
329,792
|
|
|
220,408
|
|
|
160,047
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchase of fixed assets
|
(55,880
|
)
|
|
(61,318
|
)
|
|
(33,143
|
)
|
|||
Proceeds from the sale of fixed assets
|
43
|
|
|
56
|
|
|
10
|
|
|||
Cash received (paid) for interest on interest rate swap
|
181
|
|
|
(874
|
)
|
|
(913
|
)
|
|||
Cash received from the sale of marketable securities
|
183
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of Symphony Health Solutions Corporation, net of cash acquired
|
—
|
|
|
(521,182
|
)
|
|
—
|
|
|||
Payment of Symphony Health Solutions Corporation contingent consideration
|
—
|
|
|
(67,781
|
)
|
|
—
|
|
|||
Acquisition of Parallel 6, Inc., net of cash acquired
|
—
|
|
|
(38,859
|
)
|
|
—
|
|
|||
Acquisition of Takeda PRA Development Center KK, net of cash acquired
|
—
|
|
|
2,680
|
|
|
—
|
|
|||
Acquisition of Takeda Pharmaceutical Data Services, Ltd., net of cash acquired
|
—
|
|
|
(142
|
)
|
|
—
|
|
|||
Acquisition of Nextrials, Inc., net of cash acquired
|
—
|
|
|
—
|
|
|
(4,268
|
)
|
|||
Distributions from unconsolidated joint ventures
|
—
|
|
|
—
|
|
|
3,700
|
|
|||
Net cash used in investing activities
|
(55,473
|
)
|
|
(687,420
|
)
|
|
(34,614
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
550,000
|
|
|
625,000
|
|
|||
Repayment of long-term debt
|
(224,394
|
)
|
|
(125,513
|
)
|
|
(822,559
|
)
|
|||
Proceeds from accounts receivable financing agreement
|
60,000
|
|
|
20,000
|
|
|
120,000
|
|
|||
Repayment on accounts receivable financing agreement
|
(10,000
|
)
|
|
(20,000
|
)
|
|
—
|
|
|||
Borrowings on line of credit
|
—
|
|
|
121,500
|
|
|
110,000
|
|
|||
Repayments of line of credit
|
(91,500
|
)
|
|
(30,000
|
)
|
|
(110,000
|
)
|
|||
Payment of debt prepayment and debt extinguishment costs
|
—
|
|
|
(9,226
|
)
|
|
(17,824
|
)
|
|||
Payment for debt issuance costs
|
—
|
|
|
(6,588
|
)
|
|
(7,713
|
)
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
846
|
|
|||
Proceeds from stock issued under employee stock purchase plan and stock option exercises
|
31,382
|
|
|
7,236
|
|
|
655
|
|
|||
Taxes paid related to net shares settlement of equity awards
|
(5,337
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of acquisition-related contingent consideration
|
(79,663
|
)
|
|
(400
|
)
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(319,512
|
)
|
|
507,009
|
|
|
(101,595
|
)
|
|||
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash
|
(2,988
|
)
|
|
3,555
|
|
|
(625
|
)
|
|||
Change in cash, cash equivalents, and restricted cash
|
(48,181
|
)
|
|
43,552
|
|
|
23,213
|
|
|||
Cash, cash equivalents, and restricted cash, beginning of year
|
192,890
|
|
|
149,338
|
|
|
126,125
|
|
|||
Cash, cash equivalents, and restricted cash, end of year
|
$
|
144,709
|
|
|
$
|
192,890
|
|
|
$
|
149,338
|
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash and cash equivalents
|
$
|
144,221
|
|
|
$
|
192,229
|
|
|
$
|
144,623
|
|
Restricted cash
|
488
|
|
|
661
|
|
|
4,715
|
|
|||
Total cash, cash equivalents, and restricted cash
|
$
|
144,709
|
|
|
$
|
192,890
|
|
|
$
|
149,338
|
|
Furniture, fixtures and equipment
|
5-7 years
|
Computer hardware and software
|
3-7 years
|
Leasehold improvements
|
Lesser of the life of the lease or useful life of the improvements
|
•
|
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.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
3,318
|
|
|
$
|
—
|
|
|
$
|
3,318
|
|
Total
|
$
|
—
|
|
|
$
|
3,318
|
|
|
$
|
—
|
|
|
$
|
3,318
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
—
|
|
|
$
|
428
|
|
|
$
|
—
|
|
|
$
|
428
|
|
Marketable securities
|
393
|
|
|
—
|
|
|
—
|
|
|
393
|
|
||||
Total
|
$
|
393
|
|
|
$
|
428
|
|
|
$
|
—
|
|
|
$
|
821
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,644
|
|
|
$
|
50,644
|
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,644
|
|
|
$
|
50,644
|
|
|
|
Contingent consideration - Accrued expenses and other current liabilities
|
|
Contingent consideration - Other long-term liabilities
|
||||
Balance at December 31, 2016
|
|
$
|
1,735
|
|
|
$
|
1,019
|
|
Initial estimate of Symphony Health contingent consideration
|
|
90,394
|
|
|
18,390
|
|
||
Initial estimate of Parallel 6, Inc. contingent consideration
|
|
—
|
|
|
8,350
|
|
||
Payments on Nextrials contingent consideration
|
|
(400
|
)
|
|
—
|
|
||
Payments on Symphony Health contingent consideration
|
|
(67,788
|
)
|
|
—
|
|
||
Measurement period adjustments
|
|
24,388
|
|
|
14,279
|
|
||
Changes in fair value included in earnings
|
|
66,363
|
|
|
8,606
|
|
||
Transfer out
|
|
(114,692
|
)
|
|
—
|
|
||
Balance at December 31, 2017
|
|
—
|
|
|
50,644
|
|
||
Reclassification adjustment
|
|
50,644
|
|
|
(50,644
|
)
|
||
Change in fair value recognized in transaction-related costs
|
|
34,538
|
|
|
—
|
|
||
Transfer out
|
|
(85,182
|
)
|
|
—
|
|
||
Balance at December 31, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
identification of the contract, or contracts, with a customer;
|
•
|
identification of the performance obligations in the contract;
|
•
|
determination of the transaction price;
|
•
|
allocation of the transaction price to the performance obligations in the contract; and
|
•
|
recognition of revenue when, or as, the Company satisfies a performance obligation.
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Risk-free interest rate
|
2.8
|
%
|
|
1.9
|
%
|
|
1.5
|
%
|
Expected life, in years
|
6.3
|
|
|
6.3
|
|
|
6.3
|
|
Dividend yield
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Volatility
|
28.9
|
%
|
|
29.7
|
%
|
|
31.2
|
%
|
|
|
As Reported
|
|
Reclassification from adoption of ASC 606
|
|
Impact from adoption of ASC 606
|
|
Balances without adoption of ASC 606
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
2,871,922
|
|
|
$
|
(2,605,140
|
)
|
|
$
|
(266,782
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Service revenue
|
|
—
|
|
|
2,296,849
|
|
|
—
|
|
|
2,296,849
|
|
||||
Reimbursement revenue
|
|
—
|
|
|
308,291
|
|
|
—
|
|
|
308,291
|
|
||||
Total revenue
|
|
2,871,922
|
|
|
—
|
|
|
(266,782
|
)
|
|
2,605,140
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Direct costs (exclusive of depreciation and amortization)
|
|
1,500,226
|
|
|
—
|
|
|
—
|
|
|
1,500,226
|
|
||||
Reimbursable out-of-pocket costs
|
|
308,291
|
|
|
—
|
|
|
—
|
|
|
308,291
|
|
||||
Reimbursable investigator fees
|
|
262,114
|
|
|
—
|
|
|
(262,114
|
)
|
|
—
|
|
||||
Selling, general and administrative expenses
|
|
371,795
|
|
|
—
|
|
|
—
|
|
|
371,795
|
|
||||
Transaction-related costs
|
|
35,817
|
|
|
—
|
|
|
—
|
|
|
35,817
|
|
||||
Depreciation and amortization
|
|
112,247
|
|
|
—
|
|
|
—
|
|
|
112,247
|
|
||||
Loss on disposal of fixed assets, net
|
|
120
|
|
|
—
|
|
|
—
|
|
|
120
|
|
||||
Income from operations
|
|
$
|
281,312
|
|
|
$
|
—
|
|
|
$
|
(4,668
|
)
|
|
$
|
276,644
|
|
|
|
Purchase Price Allocation
|
|
Weighted Amortization Period
|
||
Cash and cash equivalents
|
|
$
|
26,297
|
|
|
|
Accounts receivable and unbilled services
|
|
39,132
|
|
|
|
|
Other current assets
|
|
23,726
|
|
|
|
|
Fixed assets
|
|
12,340
|
|
|
|
|
Customer relationships
|
|
190,100
|
|
|
10 years
|
|
Database
|
|
137,100
|
|
|
3 years
|
|
Tradename
|
|
2,000
|
|
|
2 years
|
|
Accounts payable and accrued expenses
|
|
(42,222
|
)
|
|
|
|
Advanced billings
|
|
(66,846
|
)
|
|
|
|
Deferred tax liabilities
|
|
(104,869
|
)
|
|
|
|
Other long-term liabilities
|
|
(6,740
|
)
|
|
|
|
Estimated fair value of net assets acquired
|
|
210,018
|
|
|
|
|
Purchase price, including contingent consideration and working capital adjustment
|
|
686,877
|
|
|
|
|
Total goodwill
|
|
$
|
476,859
|
|
|
|
|
December 31,
|
||||||
(in thousands, except per share amounts)
|
2017
|
|
2016
|
||||
Total revenue
|
$
|
2,408,770
|
|
|
$
|
2,011,544
|
|
Net income attributable to PRA Health Sciences, Inc.
|
104,700
|
|
|
45,836
|
|
||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
1.68
|
|
|
$
|
0.75
|
|
Diluted
|
$
|
1.59
|
|
|
$
|
0.71
|
|
•
|
a $6.4 million increase to transaction-related costs incurred by the Company during the year ended December 31, 2017 attributable to the transaction, with a corresponding $2.5 million increase to the benefit from income taxes.
|
•
|
a $3.1 million increase to loss on the modification or extinguishment of long-term debt incurred by the Company during the year ended December 31, 2017 attributable to the above transaction, with a corresponding $1.2 million increase to the benefit from income taxes.
|
|
|
Purchase Price Allocation
|
||
Cash and cash equivalents
|
|
$
|
8,120
|
|
Other current assets
|
|
1,671
|
|
|
Other non-current assets
|
|
799
|
|
|
Accounts payable and accrued expenses
|
|
(2,380
|
)
|
|
Estimated fair value of net assets acquired
|
|
8,210
|
|
|
PRA purchase price
|
|
5,440
|
|
|
Fair value of Takeda's noncontrolling interest
|
|
5,440
|
|
|
Total goodwill
|
|
$
|
2,670
|
|
|
|
Purchase Price Allocation
|
|
Weighted Amortization Period
|
||
Cash and cash equivalents
|
|
$
|
132
|
|
|
|
Accounts receivable and unbilled services
|
|
929
|
|
|
|
|
Other current assets
|
|
26
|
|
|
|
|
Software intangible
|
|
15,500
|
|
|
5 years
|
|
Other intangibles
|
|
920
|
|
|
5 years
|
|
Accounts payable and accrued expenses
|
|
(780
|
)
|
|
|
|
Advanced billings
|
|
(692
|
)
|
|
|
|
Other long-term liabilities
|
|
(31
|
)
|
|
|
|
Estimated fair value of net assets acquired
|
|
16,004
|
|
|
|
|
Purchase price, including contingent consideration
|
|
47,339
|
|
|
|
|
Total goodwill
|
|
$
|
31,335
|
|
|
|
|
Purchase
Price Allocation |
|
Weighted
Amortization Period |
||
Cash and cash equivalents
|
$
|
94
|
|
|
|
Accounts receivable and unbilled services
|
211
|
|
|
|
|
Other current assets
|
96
|
|
|
|
|
Property, plant and equipment
|
111
|
|
|
|
|
Software intangible
|
5,574
|
|
|
5 years
|
|
Accounts payable and accrued expenses
|
(1,585
|
)
|
|
|
|
Other long-term liabilities
|
(1,663
|
)
|
|
|
|
Estimated fair value of net assets acquired
|
2,838
|
|
|
|
|
Purchase price, including contingent consideration
|
7,145
|
|
|
|
|
Total goodwill
|
$
|
4,307
|
|
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Accounts receivable
|
$
|
437,001
|
|
|
$
|
457,676
|
|
Unbilled services
|
133,147
|
|
|
170,760
|
|
||
Total accounts receivable and unbilled services
|
570,148
|
|
|
628,436
|
|
||
Less allowance for doubtful accounts
|
(2,049
|
)
|
|
(1,433
|
)
|
||
Total accounts receivable and unbilled services, net
|
$
|
568,099
|
|
|
$
|
627,003
|
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Beginning balance
|
$
|
1,433
|
|
|
$
|
1,203
|
|
|
$
|
2,641
|
|
Charged (credited) to income from operations
|
605
|
|
|
255
|
|
|
(652
|
)
|
|||
Write-offs, recoveries and the effects of foreign currency exchange
|
11
|
|
|
(25
|
)
|
|
(786
|
)
|
|||
Ending balance
|
$
|
2,049
|
|
|
$
|
1,433
|
|
|
$
|
1,203
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Advanced billings
|
|
$
|
441,357
|
|
|
$
|
469,211
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Leasehold improvements
|
$
|
58,300
|
|
|
$
|
49,548
|
|
Computer hardware and software
|
172,346
|
|
|
139,861
|
|
||
Furniture and equipment
|
45,962
|
|
|
44,325
|
|
||
Total fixed assets
|
276,608
|
|
|
233,734
|
|
||
Accumulated depreciation
|
(121,844
|
)
|
|
(90,664
|
)
|
||
Total fixed assets, net
|
$
|
154,764
|
|
|
$
|
143,070
|
|
|
Clinical Research
|
|
Data Solutions
|
|
Consolidated
|
||||||
Balance at December 31, 2016
|
$
|
971,980
|
|
|
$
|
—
|
|
|
$
|
971,980
|
|
Acquisition of Symphony Health
|
—
|
|
|
475,981
|
|
|
475,981
|
|
|||
Acquisition of Parallel 6
|
32,452
|
|
|
—
|
|
|
32,452
|
|
|||
Acquisition of TDC joint venture
|
2,670
|
|
|
—
|
|
|
2,670
|
|
|||
Acquisition of TDS
|
966
|
|
|
—
|
|
|
966
|
|
|||
Currency translation
|
28,375
|
|
|
—
|
|
|
28,375
|
|
|||
Balance at December 31, 2017
|
1,036,443
|
|
|
475,981
|
|
|
1,512,424
|
|
|||
Adjustments to Symphony Health purchase price allocation
|
—
|
|
|
878
|
|
|
878
|
|
|||
Adjustments to Parallel 6 purchase price allocation
|
(1,117
|
)
|
|
—
|
|
|
(1,117
|
)
|
|||
Currency translation
|
(17,423
|
)
|
|
—
|
|
|
(17,423
|
)
|
|||
Balance at December 31, 2018
|
$
|
1,017,903
|
|
|
$
|
476,859
|
|
|
$
|
1,494,762
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
||||||||||||
Customer relationships
|
$
|
555,915
|
|
|
$
|
(103,248
|
)
|
|
$
|
452,667
|
|
|
$
|
565,638
|
|
|
$
|
(72,133
|
)
|
|
$
|
493,505
|
|
Customer backlog
|
120,934
|
|
|
(120,934
|
)
|
|
—
|
|
|
123,746
|
|
|
(120,583
|
)
|
|
3,163
|
|
||||||
Trade names (finite-lived)
|
28,505
|
|
|
(12,810
|
)
|
|
15,695
|
|
|
28,558
|
|
|
(9,265
|
)
|
|
19,293
|
|
||||||
Patient list and other intangibles
|
44,474
|
|
|
(30,939
|
)
|
|
13,535
|
|
|
44,474
|
|
|
(24,226
|
)
|
|
20,248
|
|
||||||
Database
|
137,100
|
|
|
(32,561
|
)
|
|
104,539
|
|
|
137,100
|
|
|
(7,544
|
)
|
|
129,556
|
|
||||||
Non-competition agreements
|
2,679
|
|
|
(2,679
|
)
|
|
—
|
|
|
2,767
|
|
|
(2,706
|
)
|
|
61
|
|
||||||
Total finite-lived intangible assets
|
889,607
|
|
|
(303,171
|
)
|
|
586,436
|
|
|
902,283
|
|
|
(236,457
|
)
|
|
665,826
|
|
||||||
Trade names (indefinite-lived)
|
118,010
|
|
|
—
|
|
|
118,010
|
|
|
118,010
|
|
|
—
|
|
|
118,010
|
|
||||||
Total intangible assets
|
$
|
1,007,617
|
|
|
$
|
(303,171
|
)
|
|
$
|
704,446
|
|
|
$
|
1,020,293
|
|
|
$
|
(236,457
|
)
|
|
$
|
783,836
|
|
2019
|
$
|
68,583
|
|
2020
|
68,971
|
|
|
2021
|
63,868
|
|
|
2022
|
49,485
|
|
|
2023
|
37,748
|
|
|
2024 and thereafter
|
297,781
|
|
|
Total
|
$
|
586,436
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Compensation, including bonuses, fringe benefits and payroll taxes
|
$
|
133,758
|
|
|
$
|
125,658
|
|
Acquisition-related contingent consideration
|
83,249
|
|
|
114,692
|
|
||
Accrued data costs
|
17,422
|
|
|
15,669
|
|
||
Accrued reimbursable out-of-pocket and investigator costs
|
89,317
|
|
|
—
|
|
||
Other
|
42,751
|
|
|
44,591
|
|
||
Interest
|
2,980
|
|
|
3,265
|
|
||
Total accrued expenses and other current liabilities
|
$
|
369,477
|
|
|
$
|
303,875
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Term loans, first lien
|
$
|
916,533
|
|
|
$
|
1,140,927
|
|
Accounts receivable financing agreement
|
170,000
|
|
|
120,000
|
|
||
Total debt
|
1,086,533
|
|
|
1,260,927
|
|
||
Less current portion of long-term debt
|
—
|
|
|
(28,789
|
)
|
||
Total long-term debt
|
1,086,533
|
|
|
1,232,138
|
|
||
Less debt issuance costs
|
(4,149
|
)
|
|
(6,741
|
)
|
||
Total long-term debt, net
|
$
|
1,082,384
|
|
|
$
|
1,225,397
|
|
2019
|
$
|
—
|
|
2020
|
—
|
|
|
2021
|
1,086,533
|
|
|
Total
|
$
|
1,086,533
|
|
|
Options
|
|
Wtd. Average
Exercise Price
|
|
Wtd. Average
Remaining
Contractual Life
|
|
Intrinsic Value
(in millions)
|
|||||
Outstanding at December 31, 2017
|
5,245,625
|
|
|
$
|
39.14
|
|
|
7.6
|
|
$
|
272.4
|
|
Granted
|
1,569,000
|
|
|
98.22
|
|
|
|
|
|
|||
Exercised (1)
|
(1,690,088
|
)
|
|
21.93
|
|
|
|
|
|
|||
Expired/forfeited
|
(482,937
|
)
|
|
68.79
|
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
4,641,600
|
|
|
$
|
62.29
|
|
|
7.8
|
|
$
|
149.7
|
|
Exercisable at December 31, 2018
|
1,612,983
|
|
|
$
|
23.61
|
|
|
5.6
|
|
$
|
110.2
|
|
Options Outstanding
|
|
Options Exercisable
|
|||||||||||||||||
Exercise Price
|
|
Number of
Options
|
|
Wtd Average
Remaining Life
(in Years)
|
|
Wtd. Average
Exercise Price
|
|
Number of
Options
|
|
Wtd. Average
Remaining Life
(in Years)
|
|
Wtd. Average
Exercise Price
|
|||||||
$
|
2.94 - 11.73
|
|
1,142,281
|
|
|
5.0
|
|
$
|
11.55
|
|
|
1,142,281
|
|
|
5.0
|
|
$
|
11.55
|
|
$
|
16.42 - 75.37
|
|
794,119
|
|
|
7.2
|
|
$
|
47.34
|
|
|
280,252
|
|
|
6.4
|
|
$
|
37.17
|
|
$
|
75.81 - 82.99
|
|
1,415,950
|
|
|
8.7
|
|
$
|
76.82
|
|
|
190,450
|
|
|
8.6
|
|
$
|
75.99
|
|
$
|
83.25 - 116.11
|
|
1,289,250
|
|
|
9.6
|
|
$
|
100.50
|
|
|
—
|
|
|
—
|
|
$
|
—
|
|
|
Awards
|
|
Wtd. Average
Grant-Date
Fair Value
|
|
Intrinsic
Value
(millions)
|
|||||
Unvested at December 31, 2017
|
309,538
|
|
|
$
|
46.76
|
|
|
$
|
28.2
|
|
Granted
|
240,228
|
|
|
94.51
|
|
|
|
|||
Forfeited
|
(49,000
|
)
|
|
85.92
|
|
|
|
|||
Vested
|
(156,516
|
)
|
|
31.62
|
|
|
|
|||
Unvested at December 31, 2018
|
344,250
|
|
|
$
|
81.39
|
|
|
$
|
31.7
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Direct costs
|
$
|
9,508
|
|
|
$
|
3,552
|
|
|
$
|
1,813
|
|
Selling, general and administrative
|
19,635
|
|
|
9,064
|
|
|
5,254
|
|
|||
Transaction-related costs
|
773
|
|
|
5,294
|
|
|
42,166
|
|
|||
Total stock-based compensation expense
|
$
|
29,916
|
|
|
$
|
17,910
|
|
|
$
|
49,233
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Domestic
|
$
|
45,672
|
|
|
$
|
(52,083
|
)
|
|
$
|
(61,226
|
)
|
Foreign
|
175,875
|
|
|
126,630
|
|
|
155,120
|
|
|||
|
$
|
221,547
|
|
|
$
|
74,547
|
|
|
$
|
93,894
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
14,793
|
|
|
$
|
30,084
|
|
|
$
|
151
|
|
State
|
776
|
|
|
2,607
|
|
|
1,842
|
|
|||
Foreign
|
39,998
|
|
|
30,601
|
|
|
36,970
|
|
|||
Total current income tax expense
|
55,567
|
|
|
63,292
|
|
|
38,963
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
14,224
|
|
|
(70,041
|
)
|
|
(2,230
|
)
|
|||
State
|
1,403
|
|
|
(1,203
|
)
|
|
(451
|
)
|
|||
Foreign
|
(3,962
|
)
|
|
(4,671
|
)
|
|
(7,788
|
)
|
|||
Total deferred income tax expense (benefit)
|
11,665
|
|
|
(75,915
|
)
|
|
(10,469
|
)
|
|||
Total income tax expense (benefit)
|
$
|
67,232
|
|
|
$
|
(12,623
|
)
|
|
$
|
28,494
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Net operating loss carryforwards
|
$
|
15,741
|
|
|
$
|
48,603
|
|
Accruals and reserves
|
13,496
|
|
|
15,943
|
|
||
Equity based compensation
|
8,821
|
|
|
7,447
|
|
||
Prepaid expenses and other
|
15,809
|
|
|
13,492
|
|
||
Deferred and unbilled revenue
|
55,771
|
|
|
24,937
|
|
||
Tax credits
|
2,645
|
|
|
15,111
|
|
||
|
112,283
|
|
|
125,533
|
|
||
Valuation allowance
|
(9,824
|
)
|
|
(25,226
|
)
|
||
Total deferred tax assets (net of valuation allowance)
|
102,459
|
|
|
100,307
|
|
||
Identified intangibles
|
(177,845
|
)
|
|
(190,115
|
)
|
||
Depreciable, amortizable and other property
|
(16,372
|
)
|
|
(13,434
|
)
|
||
Deferred tax liabilities
|
(194,217
|
)
|
|
(203,549
|
)
|
||
Net deferred tax liability
|
$
|
(91,758
|
)
|
|
$
|
(103,242
|
)
|
Long-term deferred tax asset
|
$
|
8,954
|
|
|
$
|
8,939
|
|
Long-term deferred tax liability
|
$
|
(100,712
|
)
|
|
$
|
(112,181
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Beginning balance
|
$
|
7,911
|
|
|
$
|
12,432
|
|
|
$
|
11,729
|
|
Additions based on tax positions related to current year
|
764
|
|
|
1,641
|
|
|
1,196
|
|
|||
Additions for income tax positions of prior years
|
1,065
|
|
|
400
|
|
|
542
|
|
|||
Impact of changes in exchange rates
|
(58
|
)
|
|
427
|
|
|
(127
|
)
|
|||
Impact of change in federal tax rate
|
4,236
|
|
|
(3,536
|
)
|
|
—
|
|
|||
Settlements with tax authorities
|
(180
|
)
|
|
(108
|
)
|
|
(559
|
)
|
|||
Reductions for income tax positions for prior years
|
(456
|
)
|
|
(3,174
|
)
|
|
(349
|
)
|
|||
Reductions due to lapse of applicable statute of limitations
|
(391
|
)
|
|
(171
|
)
|
|
—
|
|
|||
Ending balance
|
$
|
12,891
|
|
|
$
|
7,911
|
|
|
$
|
12,432
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Beginning balance
|
$
|
25,226
|
|
|
$
|
21,689
|
|
|
$
|
23,205
|
|
Additions - excess benefit offset to NOL change
|
—
|
|
|
12,623
|
|
|
—
|
|
|||
Additions - purchase accounting
|
—
|
|
|
219
|
|
|
—
|
|
|||
Additions - other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Additions - charged to expense
|
1,428
|
|
|
12,863
|
|
|
3,421
|
|
|||
Additions - U.S. federal tax rate change
|
—
|
|
|
1,330
|
|
|
—
|
|
|||
Deductions - charged to expense (including translation adjustments)
|
(16,830
|
)
|
|
(23,498
|
)
|
|
(4,937
|
)
|
|||
Ending balance
|
$
|
9,824
|
|
|
$
|
25,226
|
|
|
$
|
21,689
|
|
Years Ended December 31,
|
Leases
|
|
Sublease
Rental
Income
|
|
Net Total
|
||||||
2019
|
$
|
43,675
|
|
|
$
|
(157
|
)
|
|
$
|
43,518
|
|
2020
|
40,948
|
|
|
(157
|
)
|
|
40,791
|
|
|||
2021
|
37,469
|
|
|
(157
|
)
|
|
37,312
|
|
|||
2022
|
30,238
|
|
|
(80
|
)
|
|
30,158
|
|
|||
2023
|
24,235
|
|
|
(39
|
)
|
|
24,196
|
|
|||
2024 and thereafter
|
90,978
|
|
|
—
|
|
|
90,978
|
|
|||
Total
|
$
|
267,543
|
|
|
$
|
(590
|
)
|
|
$
|
266,953
|
|
|
Balance Sheet
Classification
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Notional amount
|
|
Asset
|
|
Notional amount
|
|
Asset
|
|||||||||
Derivatives in an asset position:
|
Other current assets
|
|
|
|
|
|
|
|
$
|
250,000
|
|
|
$
|
428
|
|
||
|
Other assets
|
|
$
|
625,000
|
|
|
$
|
3,318
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts)
|
2018
|
|
2017
|
|
2016
|
||||||
Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) on derivatives
|
$
|
3,159
|
|
|
$
|
245
|
|
|
$
|
(1,600
|
)
|
Amount of loss recognized in other (expense) income, net on derivatives (ineffective portion)
|
—
|
|
|
—
|
|
|
1
|
|
|||
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives
|
(6,477
|
)
|
|
(6,855
|
)
|
|
(5,921
|
)
|
|
Foreign
Currency
Translation
|
|
Derivative
Instruments
|
|
Total
|
||||||
Balance at December 31, 2015
|
$
|
(106,072
|
)
|
|
$
|
(26,235
|
)
|
|
$
|
(132,307
|
)
|
Other comprehensive loss before reclassifications, net of tax
|
(95,019
|
)
|
|
(978
|
)
|
|
(95,997
|
)
|
|||
Reclassification adjustments, net of tax
|
—
|
|
|
3,618
|
|
|
3,618
|
|
|||
Balance at December 31, 2016
|
(201,091
|
)
|
|
(23,595
|
)
|
|
(224,686
|
)
|
|||
Other comprehensive income before reclassifications, net of tax
|
83,911
|
|
|
149
|
|
|
84,060
|
|
|||
Reclassification adjustments, net of tax
|
—
|
|
|
4,156
|
|
|
4,156
|
|
|||
Balance at December 31, 2017
|
(117,180
|
)
|
|
(19,290
|
)
|
|
(136,470
|
)
|
|||
Other comprehensive (loss) income before reclassifications, net of tax
|
(41,169
|
)
|
|
2,152
|
|
|
(39,017
|
)
|
|||
Reclassification adjustments, net of tax
|
—
|
|
|
4,828
|
|
|
4,828
|
|
|||
Balance at December 31, 2018
|
$
|
(158,349
|
)
|
|
$
|
(12,310
|
)
|
|
$
|
(170,659
|
)
|
|
Years Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Basic weighted average common shares outstanding
|
64,123
|
|
|
62,437
|
|
|
60,759
|
|
Effect of dilutive stock options and RSAs/RSUs
|
2,218
|
|
|
3,336
|
|
|
3,693
|
|
Diluted weighted average common shares outstanding
|
66,341
|
|
|
65,773
|
|
|
64,452
|
|
Anti-dilutive shares
|
1,620
|
|
|
741
|
|
|
305
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Income taxes, net of refunds
|
$
|
43,127
|
|
|
$
|
47,829
|
|
|
$
|
27,644
|
|
Interest
|
48,911
|
|
|
48,330
|
|
|
48,156
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Issuance of common stock for the acquisition of Value Health Solutions, Inc.
|
—
|
|
|
369
|
|
|
—
|
|
|||
Accrued fixed assets purchases
|
10,312
|
|
|
3,962
|
|
|
2,644
|
|
|||
Cashless exercises of stock options
|
12,390
|
|
|
13,252
|
|
|
9,456
|
|
|
Year Ended
|
||
|
December 31, 2018
|
||
Revenue:
|
|
||
Americas:
|
|
|
|
United States
|
$
|
1,962,509
|
|
Other
|
47,116
|
|
|
Americas
|
2,009,625
|
|
|
Europe, Africa, and Asia-Pacific
|
|
||
United Kingdom
|
689,345
|
|
|
Netherlands
|
115,778
|
|
|
Other
|
57,174
|
|
|
Europe, Africa, and Asia-Pacific
|
862,297
|
|
|
Total revenue
|
$
|
2,871,922
|
|
|
Years Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Service Revenue (1):
|
|
|
|
||||
Americas:
|
|
|
|
||||
United States
|
$
|
1,310,772
|
|
|
$
|
1,063,625
|
|
Other
|
42,227
|
|
|
33,320
|
|
||
Americas
|
1,352,999
|
|
|
1,096,945
|
|
||
Europe, Africa, and Asia-Pacific
|
|
|
|
||||
United Kingdom
|
479,623
|
|
|
394,363
|
|
||
Netherlands
|
79,555
|
|
|
68,118
|
|
||
Other
|
36,197
|
|
|
20,597
|
|
||
Europe, Africa, and Asia-Pacific
|
595,375
|
|
|
483,078
|
|
||
Total service revenue
|
1,948,374
|
|
|
1,580,023
|
|
||
Reimbursement revenues
|
311,015
|
|
|
231,688
|
|
||
Total revenue
|
$
|
2,259,389
|
|
|
$
|
1,811,711
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Long-lived assets:
|
|
|
|
||||
Americas:
|
|
|
|
||||
United States
|
$
|
118,860
|
|
|
$
|
107,952
|
|
Other
|
950
|
|
|
1,714
|
|
||
Americas
|
119,810
|
|
|
109,666
|
|
||
Europe, Africa, and Asia-Pacific
|
|
|
|
||||
United Kingdom
|
4,153
|
|
|
4,182
|
|
||
Netherlands
|
18,321
|
|
|
15,876
|
|
||
Other
|
12,480
|
|
|
13,346
|
|
||
Europe, Africa, and Asia-Pacific
|
34,954
|
|
|
33,404
|
|
||
Total long-lived assets
|
$
|
154,764
|
|
|
$
|
143,070
|
|
•
|
Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services.
|
•
|
Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily to the Company’s life science clients.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Clinical Research
|
$
|
2,622,409
|
|
|
$
|
2,168,891
|
|
|
$
|
1,811,711
|
|
Data Solutions
|
249,513
|
|
|
90,498
|
|
|
—
|
|
|||
Total revenue
|
2,871,922
|
|
|
2,259,389
|
|
|
1,811,711
|
|
|||
Direct costs (exclusive of depreciation and amortization):
|
|
|
|
|
|
||||||
Clinical Research
|
1,334,803
|
|
|
1,231,690
|
|
|
1,032,688
|
|
|||
Data Solutions
|
165,423
|
|
|
52,178
|
|
|
—
|
|
|||
Total direct costs (exclusive of depreciation and amortization)
|
1,500,226
|
|
|
1,283,868
|
|
|
1,032,688
|
|
|||
Reimbursable out-of-pocket costs:
|
|
|
|
|
|
||||||
Clinical Research
|
308,291
|
|
|
311,015
|
|
|
231,688
|
|
|||
Data Solutions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total reimbursable out-of-pocket costs
|
308,291
|
|
|
311,015
|
|
|
231,688
|
|
|||
Reimbursable investigator fees:
|
|
|
|
|
|
||||||
Clinical Research
|
262,114
|
|
|
—
|
|
|
—
|
|
|||
Data Solutions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total reimbursable investigator fees
|
262,114
|
|
|
—
|
|
|
—
|
|
|||
Segment profit:
|
|
|
|
|
|
||||||
Clinical Research
|
717,201
|
|
|
626,186
|
|
|
547,335
|
|
|||
Data Solutions
|
84,090
|
|
|
38,320
|
|
|
—
|
|
|||
Total segment profit
|
$
|
801,291
|
|
|
$
|
664,506
|
|
|
$
|
547,335
|
|
Less expenses not allocated to segments:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
371,795
|
|
|
321,987
|
|
|
269,893
|
|
|||
Transaction-related costs
|
35,817
|
|
|
87,709
|
|
|
44,834
|
|
|||
Depreciation and amortization
|
112,247
|
|
|
78,227
|
|
|
69,506
|
|
|||
Loss on disposal of fixed assets, net
|
120
|
|
|
358
|
|
|
753
|
|
|||
Consolidated income from operations
|
281,312
|
|
|
176,225
|
|
|
162,349
|
|
|||
Interest expense, net
|
(57,399
|
)
|
|
(46,729
|
)
|
|
(54,913
|
)
|
|||
Loss on modification or extinguishment of debt
|
(952
|
)
|
|
(15,023
|
)
|
|
(38,178
|
)
|
|||
Foreign currency (losses) gains, net
|
(1,043
|
)
|
|
(39,622
|
)
|
|
24,029
|
|
|||
Other (expense) income, net
|
(371
|
)
|
|
(304
|
)
|
|
607
|
|
|||
Consolidated income before income taxes and equity in income of unconsolidated joint ventures
|
$
|
221,547
|
|
|
$
|
74,547
|
|
|
$
|
93,894
|
|
|
2018
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenue
|
$
|
701,837
|
|
|
$
|
722,841
|
|
|
$
|
717,596
|
|
|
$
|
729,648
|
|
Income from operations (1)
|
71,948
|
|
|
73,796
|
|
|
38,812
|
|
|
96,756
|
|
||||
Provision for income taxes
|
17,654
|
|
|
17,490
|
|
|
20,248
|
|
|
11,840
|
|
||||
Income before equity in gains of unconsolidated joint ventures
|
39,187
|
|
|
42,236
|
|
|
1,810
|
|
|
71,082
|
|
||||
Equity in income of unconsolidated joint ventures
|
28
|
|
|
46
|
|
|
44
|
|
|
25
|
|
||||
Net income
|
39,215
|
|
|
42,282
|
|
|
1,854
|
|
|
71,107
|
|
||||
Net (income) loss attributable to non-controlling interests
|
(234
|
)
|
|
(305
|
)
|
|
(359
|
)
|
|
345
|
|
||||
Net income attributable to PRA Health Sciences, Inc.
|
38,981
|
|
|
41,977
|
|
|
1,495
|
|
|
71,452
|
|
||||
Comprehensive income (loss)
|
61,294
|
|
|
8,185
|
|
|
(31
|
)
|
|
50,948
|
|
||||
Comprehensive (income) loss attributable to noncontrolling interest
|
(582
|
)
|
|
(48
|
)
|
|
(193
|
)
|
|
143
|
|
||||
Comprehensive income (loss) attributable to PRA Health Sciences, Inc.
|
$
|
60,712
|
|
|
$
|
8,137
|
|
|
$
|
(224
|
)
|
|
$
|
51,091
|
|
Basic earnings per share (2)
|
$
|
0.61
|
|
|
$
|
0.66
|
|
|
$
|
0.02
|
|
|
$
|
1.10
|
|
Diluted earnings per share (2)
|
$
|
0.59
|
|
|
$
|
0.64
|
|
|
$
|
0.02
|
|
|
$
|
1.07
|
|
|
2017
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Service revenue
|
$
|
427,080
|
|
|
$
|
457,942
|
|
|
$
|
494,550
|
|
|
$
|
568,802
|
|
Reimbursement revenue
|
60,680
|
|
|
75,782
|
|
|
87,459
|
|
|
87,094
|
|
||||
Total revenue
|
487,760
|
|
|
533,724
|
|
|
582,009
|
|
|
655,896
|
|
||||
Income from operations (3)
|
49,986
|
|
|
64,850
|
|
|
57,776
|
|
|
3,613
|
|
||||
Provision for (benefit from) income taxes (4)
|
7,883
|
|
|
10,193
|
|
|
(18,241
|
)
|
|
(12,458
|
)
|
||||
Income (loss) before equity in gains of unconsolidated joint ventures (5)
|
25,182
|
|
|
29,632
|
|
|
48,582
|
|
|
(16,226
|
)
|
||||
Equity in gains of unconsolidated joint ventures
|
42
|
|
|
26
|
|
|
24
|
|
|
31
|
|
||||
Net income (loss)
|
25,224
|
|
|
29,658
|
|
|
48,606
|
|
|
(16,195
|
)
|
||||
Net (income) loss attributable to non-controlling interests
|
—
|
|
|
(112
|
)
|
|
(401
|
)
|
|
147
|
|
||||
Net income (loss) attributable to PRA Health Sciences, Inc.
|
25,224
|
|
|
29,546
|
|
|
48,205
|
|
|
(16,048
|
)
|
||||
Comprehensive income (loss)
|
42,552
|
|
|
63,892
|
|
|
75,348
|
|
|
(6,380
|
)
|
||||
Comprehensive (income) loss attributable to noncontrolling interest
|
—
|
|
|
(50
|
)
|
|
(373
|
)
|
|
154
|
|
||||
Comprehensive income (loss) attributable to PRA Health Sciences, Inc.
|
$
|
42,552
|
|
|
$
|
63,842
|
|
|
$
|
74,975
|
|
|
$
|
(6,226
|
)
|
Basic earnings (loss) per share (2)
|
$
|
0.41
|
|
|
$
|
0.47
|
|
|
$
|
0.77
|
|
|
$
|
(0.25
|
)
|
Diluted earnings (loss) per share (2)
|
$
|
0.39
|
|
|
$
|
0.45
|
|
|
$
|
0.73
|
|
|
$
|
(0.25
|
)
|
(1)
|
During the three months ended September 30, 2018, the Company recorded $42.6 million of transaction-related costs associated with the change in fair value of contingent consideration. During the three months ended March 31, 2018, the Company recorded an $11.6 million reduction to transaction-related costs associated with the change in fair value of contingent consideration.
|
(2)
|
The sum of the quarterly per share amounts may not equal per share amounts reported for year‑to‑date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for each period.
|
(3)
|
During the three months ended December 31, 2017, the Company recorded $75.0 million of transaction-related costs associated with the change in fair value of contingent consideration. During the three months ended September 30, 2017, transaction-related costs consisted of $6.4 million of fees incurred in connection with the acquisition of Symphony Health, $5.3 million of stock-based compensation expense related to the release of the transfer restrictions on vested options, and $1.0 million of third-party fees incurred in connection with the August 2017 secondary offering. These amounts were offset by a $1.0 million adjustment to the change in fair value of contingent consideration.
|
(4)
|
During the three months ended September 30, 2017 and December 31, 2017, the Company recorded a benefit from income taxes of $18.2 million and $12.5 million, respectively. The benefit was due primarily to (i) the benefit realized from the tax deduction of stock awards in excess of the amount recognized in the financial statements per guidance under ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, (ii) the release of the valuation allowance against the federal net deferred tax assets, and additionally during the three months ended December 31, 2017 (iii) the U.S. federal rate decrease effect on an overall net deferred tax liability due to the recent law changes in the Tax Cuts and Jobs Act.
|
(5)
|
During the three months ended September 30, 2017 and December 31, 2017, the Company recorded a loss on extinguishment of debt of $3.1 million and $11.9 million, respectively. The loss on extinguishment of debt recorded during the three months ended September 30, 2017 related to the Incremental Borrowings on the Company’s term debt. The loss on extinguishment of debt recorded during the three months ended December 31, 2017 related to the refinancing of the Company’s 2016 Credit Facilities and the redemption of the Company's Senior Notes. Refer to Note 9, Current Borrowings and Long-Term Debt, for additional information regarding the items noted above.
|
|
Page
|
Exhibit
Number
|
|
Description of Exhibit
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|||
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
|||
|
|||
|
|||
|
|||
|
|
||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
101*
|
|
The following financial information from PRA Health Sciences, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 formatted in XBRL: (i) Consolidated Balance Sheets as of December 31, 2018 and December 31, 2017, (ii) Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016, and (v) Notes to Consolidated Financial Statements
|
|
|
|
PRA Health Sciences, Inc.
|
||
|
By:
|
/s/ Michael J. Bonello
|
|
|
|
Name:
|
Michael J. Bonello
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Signature
|
|
Capacity
|
|
|
|
/s/ Colin Shannon
|
|
|
Colin Shannon
|
|
President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
|
|
|
|
/s/ Michael J. Bonello
|
|
|
Michael J. Bonello
|
|
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
|
/s/ Jeffrey T. Barber
|
|
|
Jeffrey T. Barber
|
|
Director
|
|
|
|
/s/ Max C. Lin
|
|
|
Max C. Lin
|
|
Director
|
|
|
|
/s/ James C. Momtazee
|
|
|
James C. Momtazee
|
|
Director
|
|
|
|
/s/ Matthew P. Young
|
|
|
Matthew P. Young
|
|
Director
|
|
|
|
/s/ Linda S. Grais
|
|
|
Linda S. Grais
|
|
Director
|
|
|
|
/s/ Alexander G. Dickinson
|
|
Director
|
Alexander G. Dickinson
|
|
|
Executive
|
|
|
|
/s/ Michael J. Bonello
|
|
Michael J. Bonello
|
|
|
|
PRA Health Sciences, Inc.
|
|
|
|
/s/ Colin Shannon
|
|
Colin Shannon
|
|
Chief Executive Officer
|
Jurisdiction of Organization
|
|
Entity Name
|
Argentina
|
|
Pharmaceutical Research Associates Ltda Suc. Argentina
|
Argentina
|
|
RPS Research S.A.
|
Australia
|
|
Pharmaceutical Research Associates Pty Limited
|
Australia
|
|
RPS Australia Pty Ltd
|
Austria
|
|
RPS Research Austria GmbH
|
Belarus
|
|
IOOO IMP-Logistics Bel
|
Belarus
|
|
Pharmaceutical Research Associates CIS, LLC, Minsk Rep Office
|
Belgium
|
|
Pharmaceutical Research Associates Belgium BVBA
|
Bermuda
|
|
RPS Bermuda, Ltd.
|
Brazil
|
|
Pharmaceutical Research Associates Ltda.
|
Brazil
|
|
RPS do Brasil Serviços de Pesquisas LTDA.
|
British Virgin Islands
|
|
RPS China Inc.
|
Bulgaria
|
|
Pharmaceutical Research Associates Bulgaria EOOD
|
Canada
|
|
3065613 Nova Scotia Company
|
Canada
|
|
Pharmaceutical Research Associates Inc.
|
Canada (Québec)
|
|
Services de Recherche Pharmaceutique Inc.
|
Chile
|
|
Pharmaceutical Research Associates Chile SpA
|
Chile
|
|
RPS Chile LTDA.
|
China
|
|
PRA China (Shanghai) Co., Ltd.
|
China
|
|
RPS (Beijing) Inc.
|
China (branch office of RPS Beijing)
|
|
RPS (Beijing) Inc., Shanghai Branch
|
Colombia
|
|
Pharmaceutical Research Associates Colombia SAS
|
Colombia
|
|
RPS Colombia LTDA.
|
Costa Rica
|
|
Research Pharmaceutical Services Costa Rica, LTDA.
|
Croatia
|
|
Pharm Research Associates d.o.o. Ltd. for clinical trials
|
Czech Republic
|
|
Pharmaceutical Research Associates CZ, s.r.o.
|
Denmark
|
|
Pharmaceutical Research Associates Denmark ApS
|
Egypt
|
|
RPS Egypt (Limited Liability Company)
|
Estonia
|
|
RPS Estonia OÜ
|
Finland
|
|
Pharmaceutical Research Associates Finland Oy
|
France
|
|
Pharmaceutical Research Associates Sarl
|
France
|
|
ReSearch Pharmaceutical Services France S.A.S.
|
Georgia
|
|
Pharmaceutical Research Associates Georgia LLC
|
Germany
|
|
Pharmaceutical Research Associates GmbH
|
Germany
|
|
RPS Research Italy GmbH
|
Ghana
|
|
Pharm Research Associates (UK) Limited, Ghana Branch
|
Greece
|
|
Pharmaceutical Research Associates Greece A.E.
|
Guatemala
|
|
RPS Guatemala, S.A.
|
Hong Kong
|
|
PRA Health Sciences (Hong Kong) Limited
|
Hong Kong
|
|
RPS Hong Kong Limited
|
Hungary
|
|
Pharmaceutical Research Associates, Hungary Research and Development Ltd.
|
Iceland
|
|
RPS Iceland ehf.
|
India
|
|
Kinship Technologies Private Limited
|
India
|
|
Pharmaceutical Research Associates India Private Limited
|
India
|
|
PRA Pharmaceutical India Private Limited
|
India
|
|
RPS Research India Private Limited
|
Jurisdiction of Organization
|
|
Entity Name
|
Ireland
|
|
Research Pharmaceutical Services (Outsourcing Ireland) Limited
|
Israel
|
|
Pharmaceutical Research Associates Israel Ltd.
|
Italy
|
|
Pharmaceutical Research Associates Italy S.r.l.
|
Italy (branch of PRA Germany)
|
|
Pharmaceutical Research Associates GmbH sede secondaria
|
Japan
|
|
PRA Health Sciences KK
|
Japan
|
|
Takeda PRA Development Center KK
|
Japan
|
|
K.K. RPS Japan
|
Kenya
|
|
PRA Health Sciences Kenya Ltd.
|
Latvia
|
|
RPS Latvia SIA
|
Lithuania
|
|
UAB RPS Lithuania
|
Malaysia
|
|
RPS Malaysia Sdn. Bhd.
|
Mexico
|
|
Pharmaceutical Research Associates Mexico S. de R.L. de C. V.
|
México
|
|
RPS Research México, S. de R.L. de C.V.
|
México
|
|
RPS Research Servicios, S. de R.L. de C.V.
|
The Netherlands
|
|
Pharmaceutical Research Associates C.V.
|
The Netherlands
|
|
Pharmaceutical Research Associates Group B.V.
|
The Netherlands
|
|
Pharmaceutical Research Associates Holdings B.V.
|
The Netherlands
|
|
Pharmaceutical Research Associates Metaholdings B.V.
|
The Netherlands
|
|
PRA International B.V.
|
The Netherlands
|
|
PRA International Operations B.V.
|
The Netherlands
|
|
ReSearch Pharmaceutical Services Netherlands B.V.
|
The Netherlands
|
|
ReSearch Pharmaceutical Services Netherlands C.V.
|
New Zealand
|
|
Pharmaceutical Research Associates New Zealand Limited
|
Norway
|
|
RPS Research Norway AS
|
Panama
|
|
RPS Panama Inc.
|
Peru
|
|
Pharmaceutical Research Associates Peru Sociedad Anonima Cerrada (aka PRA Peru SAC)
|
Perú
|
|
RPS Perú S.A.C.
|
Philippines
|
|
RPS Research Philippines, Inc.
|
Poland
|
|
Pharmaceutical Research Associates Sp. z o.o.
|
Poland
|
|
RPS Polska sp. z o.o.
|
Portugal
|
|
PRA International Portugal, Unipessoal Lda.
|
Puerto Rico
|
|
Research Pharmaceutical Services Puerto Rico, Inc.
|
Romania
|
|
Pharmaceutical Research Associates Romania Srl
|
Russia
|
|
Pharmaceutical Research Associates CIS, LLC, Moscow Branch
|
Russia
|
|
Pharmaceutical Research Associates CIS, LLC, St. Petersburg Branch
|
Russia
|
|
ZAO IMP Logistics
|
Russia
|
|
LLC RPS Research
|
Serbia
|
|
Pharmaceutical Research Associates doo Belgrade, Dragise Basovana 10/1
|
Serbia
|
|
Research Pharmaceutical Services d.o.o. Beograd-Stari grad u likvidaciji
|
Singapore
|
|
Pharmaceutical Research Associates Singapore Pte. Ltd.
|
Singapore
|
|
RPS Research Singapore Pte. Ltd.
|
Slovakia
|
|
Pharmaceutical Research Associates SK s.r.o.
|
Slovakia
|
|
RPS Slovakia s.r.o. v likvidácii
|
South Africa
|
|
PRA Pharmaceutical SA (Proprietary) Limited
|
South Africa
|
|
RPS Research South Africa (Proprietary) Limited
|
South Korea
|
|
Pharmaceutical Research Associates Korea Limited
|
Spain
|
|
Pharmaceutical Research Associates Espana, S.A.U.
|
Spain
|
|
RPS ReSearch Ibérica, S.L.
|
Jurisdiction of Organization
|
|
Entity Name
|
Spain
|
|
RPS Spain S.L.
|
Sweden
|
|
PRA International Sweden AB
|
Sweden
|
|
RPS Sweden AB
|
Switzerland
|
|
PRA Switzerland AG
|
Switzerland
|
|
RPS ReSearch Switzerland GmbH
|
Taiwan
|
|
Pharmaceutical Research Associates Taiwan, Inc.
|
Taiwan
|
|
RPS Taiwan Ltd.
|
Thailand
|
|
RPS Research (Thailand) Co., Ltd.
|
Turkey
|
|
PRA Clinical Research & Development Turkey AE
|
Ukraine
|
|
Pharmaceutical Research Associates Ukraine, LLC
|
Ukraine
|
|
OOO IMP-Logistics Ukraine
|
Ukraine
|
|
RPS Ukraine, LLC
|
United Kingdom
|
|
IMP Logistics UK Limited
|
United Kingdom
|
|
Pharm Research Associates (UK) Limited
|
United Kingdom
|
|
Pharm Research Associates Russia Limited
|
United Kingdom
|
|
Sterling Synergy Systems Limited
|
United States (California)
|
|
ClinStar LLC
|
United States (California)
|
|
Nextrials, Inc.
|
United States (California)
|
|
Pharmaceutical Research Associates CIS, LLC
|
United States (California)
|
|
Pharmaceutical Research Associates Eastern Europe, LLC
|
United States (Delaware)
|
|
CRI NewCo, Inc.
|
United States (Delaware)
|
|
CRI Worldwide, LLC
|
United States (Delaware)
|
|
International Medical Technical Consultants, LLC
|
United States (Delaware)
|
|
Parallel 6, Inc.
|
United States (Delaware)
|
|
PRA Early Development Research, Inc.
|
United States (Delaware)
|
|
PRA Holdings, Inc.
|
United States (Delaware)
|
|
PRA Health Holdco, Inc.
|
United States (Delaware)
|
|
PRA Receivables, LLC
|
United States (Delaware)
|
|
PRA International, LLC
|
United States (Delaware)
|
|
Sunset Hills, LLC
|
United States (Delaware)
|
|
ReSearch Pharmaceutical Services, Inc.
|
United States (Delaware)
|
|
ReSearch Pharmaceutical Services, LLC
|
United States (Delaware)
|
|
Roy RPS Holdings LLC
|
United States (Delaware)
|
|
RPS Parent Holding LLC
|
United States (Delaware)
|
|
RPS Global Holdings, LLC
|
United States (Delaware)
|
|
Source Healthcare Analytics, LLC
|
United States (Delaware)
|
|
Symphony Health Solutions Corporation
|
United States (New Jersey)
|
|
CRI International, LLC
|
United States (Utah)
|
|
Lifetree Clinical Research, LC
|
United States (Virginia)
|
|
Pharmaceutical Research Associates, Inc.
|
Uruguay
|
|
RPS Global S.A.
|
Uruguay
|
|
RPS Latin America S.A
|
1.
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2018 of PRA Health Sciences, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: February 28, 2019
|
|
|
|
|
/s/ Colin Shannon
|
|
Colin Shannon
|
|
President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2018 of PRA Health Sciences, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: February 28, 2019
|
|
|
|
|
/s/ Michael J. Bonello
|
|
Michael J. Bonello
|
|
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
|
•
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
|
|
|
Date: February 28, 2019
|
|
|
|
By:
|
/s/ Colin Shannon
|
|
|
Colin Shannon
|
|
|
President, Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer)
|
|
|
•
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
|
|
|
Date: February 28, 2019
|
|
|
|
By:
|
/s/ Michael J. Bonello
|
|
|
Michael J. Bonello
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|