|
|
|
|
Delaware
|
|
46-3640387
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
Title of each class
|
|
Name of exchange on which registered
|
|
Trading symbol
|
Common Stock $0.01 par value
|
|
Nasdaq Global Select Market
|
|
PRAH
|
|
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
|
|
|
|
|
|
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
Class
|
|
Number of Shares Outstanding
|
|
Common Stock $0.01 par value
|
|
63,723,442
|
shares outstanding as of April 24, 2020
|
|
Item Number
|
|
Page
|
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2020
|
|
2019
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
150,804
|
|
|
$
|
236,232
|
|
Restricted cash
|
|
36
|
|
|
38
|
|
||
Accounts receivable and unbilled services, net of allowance for credit losses of $2,603 at March 31, 2020
|
|
692,251
|
|
|
658,517
|
|
||
Other current assets
|
|
111,832
|
|
|
90,780
|
|
||
Total current assets
|
|
954,923
|
|
|
985,567
|
|
||
Fixed assets, net
|
|
184,899
|
|
|
180,716
|
|
||
Operating lease right-of-use assets
|
|
185,483
|
|
|
186,343
|
|
||
Goodwill
|
|
1,659,891
|
|
|
1,502,756
|
|
||
Intangible assets, net
|
|
646,290
|
|
|
638,577
|
|
||
Other assets
|
|
49,670
|
|
|
50,471
|
|
||
Total assets
|
|
$
|
3,681,156
|
|
|
$
|
3,544,430
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current portion of borrowings under credit facilities
|
|
$
|
—
|
|
|
$
|
88,800
|
|
Current portion of long-term debt
|
|
25,000
|
|
|
25,000
|
|
||
Accounts payable
|
|
57,728
|
|
|
55,293
|
|
||
Accrued expenses and other current liabilities
|
|
372,327
|
|
|
304,799
|
|
||
Current portion of operating lease liabilities
|
|
37,347
|
|
|
37,603
|
|
||
Advanced billings
|
|
534,233
|
|
|
505,714
|
|
||
Total current liabilities
|
|
1,026,635
|
|
|
1,017,209
|
|
||
Long-term debt, net
|
|
1,267,973
|
|
|
1,140,178
|
|
||
Long-term portion of operating lease liabilities
|
|
171,277
|
|
|
172,370
|
|
||
Deferred tax liabilities
|
|
60,994
|
|
|
78,511
|
|
||
Other long-term liabilities
|
|
46,860
|
|
|
46,171
|
|
||
Total liabilities
|
|
2,573,739
|
|
|
2,454,439
|
|
||
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 -- 63,625,742 and 63,491,550 at March 31, 2020 and December 31, 2019, respectively
|
|
636
|
|
|
635
|
|
||
Additional paid-in capital
|
|
1,027,099
|
|
|
1,006,182
|
|
||
Accumulated other comprehensive loss
|
|
(204,260
|
)
|
|
(160,108
|
)
|
||
Retained earnings
|
|
283,942
|
|
|
243,282
|
|
||
Total stockholders' equity
|
|
1,107,417
|
|
|
1,089,991
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
3,681,156
|
|
|
$
|
3,544,430
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Revenue
|
|
$
|
783,708
|
|
|
$
|
722,022
|
|
Operating expenses:
|
|
|
|
|
||||
Direct costs (exclusive of depreciation and amortization)
|
|
403,862
|
|
|
377,888
|
|
||
Reimbursable expenses
|
|
176,841
|
|
|
140,620
|
|
||
Selling, general and administrative expenses
|
|
106,957
|
|
|
97,095
|
|
||
Transaction-related costs
|
|
609
|
|
|
—
|
|
||
Depreciation and amortization expense
|
|
32,278
|
|
|
27,608
|
|
||
(Gain) loss on disposal of fixed assets, net
|
|
(19
|
)
|
|
88
|
|
||
Income from operations
|
|
63,180
|
|
|
78,723
|
|
||
Interest expense, net
|
|
(13,487
|
)
|
|
(12,369
|
)
|
||
Foreign currency gains, net
|
|
7,842
|
|
|
6,128
|
|
||
Other expense, net
|
|
(4
|
)
|
|
(88
|
)
|
||
Income before income taxes
|
|
57,531
|
|
|
72,394
|
|
||
Provision for income taxes
|
|
16,871
|
|
|
28,138
|
|
||
Net income
|
|
40,660
|
|
|
44,256
|
|
||
Net income attributable to noncontrolling interest
|
|
—
|
|
|
(172
|
)
|
||
Net income attributable to PRA Health Sciences, Inc.
|
|
$
|
40,660
|
|
|
$
|
44,084
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
||||
Basic
|
|
$
|
0.65
|
|
|
$
|
0.68
|
|
Diluted
|
|
$
|
0.63
|
|
|
$
|
0.66
|
|
Weighted average common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
62,933
|
|
|
65,192
|
|
||
Diluted
|
|
64,339
|
|
|
66,847
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net income
|
|
$
|
40,660
|
|
|
$
|
44,256
|
|
Other comprehensive loss:
|
|
|
|
|
||||
Foreign currency translation adjustments, net of income tax of $4,041 and $0
|
|
(42,756
|
)
|
|
143
|
|
||
Unrealized losses on derivative instruments, net of income tax of $(1,157) and $(514)
|
|
(3,377
|
)
|
|
(1,433
|
)
|
||
Reclassification adjustments:
|
|
|
|
|
||||
Losses on derivatives included in net income, net of income taxes of $679 and $308
|
|
1,981
|
|
|
861
|
|
||
Comprehensive (loss) income
|
|
(3,492
|
)
|
|
43,827
|
|
||
Comprehensive income attributable to noncontrolling interest
|
|
—
|
|
|
(127
|
)
|
||
Comprehensive (loss) income attributable to PRA Health Sciences, Inc.
|
|
$
|
(3,492
|
)
|
|
$
|
43,700
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive
Loss (Note 15)
|
|
Retained
Earnings
|
|
Non-controlling Interest
|
|
|
|||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
|
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
Balance at December 31, 2019
|
63,492
|
|
|
$
|
635
|
|
|
$
|
1,006,182
|
|
|
$
|
(160,108
|
)
|
|
$
|
243,282
|
|
|
$
|
—
|
|
|
$
|
1,089,991
|
|
Exercise of common stock options and stock award distribution
|
90
|
|
|
1
|
|
|
2,907
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,908
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
15,425
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,425
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,660
|
|
|
—
|
|
|
40,660
|
|
||||||
Issuance of restricted stock for acquisition
|
44
|
|
|
—
|
|
|
2,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,585
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,152
|
)
|
|
—
|
|
|
—
|
|
|
(44,152
|
)
|
||||||
Balance at March 31, 2020
|
63,626
|
|
|
$
|
636
|
|
|
$
|
1,027,099
|
|
|
$
|
(204,260
|
)
|
|
$
|
283,942
|
|
|
$
|
—
|
|
|
$
|
1,107,417
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
40,660
|
|
|
$
|
44,256
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization expense
|
|
32,278
|
|
|
27,608
|
|
||
Amortization of debt issuance costs
|
|
421
|
|
|
448
|
|
||
Amortization of terminated interest rate swaps
|
|
1,565
|
|
|
1,631
|
|
||
Stock-based compensation expense
|
|
15,425
|
|
|
9,247
|
|
||
Change in fair value of acquisition-related contingent consideration
|
|
574
|
|
|
—
|
|
||
Unrealized foreign currency gains, net
|
|
(4,788
|
)
|
|
(7,967
|
)
|
||
Deferred income tax benefit
|
|
(18,524
|
)
|
|
(10,521
|
)
|
||
Other reconciling items
|
|
135
|
|
|
(78
|
)
|
||
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
|
|
|
|
|
||||
Accounts receivable, unbilled services and advanced billings
|
|
(7,600
|
)
|
|
(36,848
|
)
|
||
Other operating assets and liabilities
|
|
436
|
|
|
13,250
|
|
||
Net cash provided by operating activities
|
|
60,582
|
|
|
41,026
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchase of fixed assets
|
|
(21,460
|
)
|
|
(19,895
|
)
|
||
Proceeds from the sale of fixed assets
|
|
26
|
|
|
—
|
|
||
(Cash paid) proceeds received for interest on interest rate swap, net
|
|
(780
|
)
|
|
416
|
|
||
Distributions from unconsolidated joint ventures
|
|
—
|
|
|
418
|
|
||
Acquisition of Care Innovations, Inc., net of cash acquired
|
|
(159,078
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
|
(181,292
|
)
|
|
(19,061
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings on line of credit
|
|
100,000
|
|
|
—
|
|
||
Repayments of line of credit
|
|
(55,000
|
)
|
|
—
|
|
||
Repayments of long-term debt
|
|
(6,250
|
)
|
|
—
|
|
||
Proceeds from stock issued under employee stock purchase plan and stock option exercises
|
|
2,908
|
|
|
10,419
|
|
||
Payments for debt issuance costs
|
|
(470
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
|
41,188
|
|
|
10,419
|
|
||
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash
|
|
(5,908
|
)
|
|
506
|
|
||
Change in cash, cash equivalents, and restricted cash
|
|
(85,430
|
)
|
|
32,890
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
236,270
|
|
|
144,709
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
|
$
|
150,840
|
|
|
$
|
177,599
|
|
|
|
March 31,
|
|
December 31,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2019
|
|
2018
|
||||||||
Cash and cash equivalents
|
|
$
|
150,804
|
|
|
$
|
177,142
|
|
|
$
|
236,232
|
|
|
$
|
144,221
|
|
Restricted cash
|
|
36
|
|
|
457
|
|
|
38
|
|
|
488
|
|
||||
Total cash, cash equivalents, and restricted cash
|
|
$
|
150,840
|
|
|
$
|
177,599
|
|
|
$
|
236,270
|
|
|
$
|
144,709
|
|
•
|
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
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,074
|
|
|
$
|
45,074
|
|
Interest rate swaps
|
|
—
|
|
|
6,416
|
|
|
—
|
|
|
6,416
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
6,416
|
|
|
$
|
45,074
|
|
|
$
|
51,490
|
|
|
|
Contingent Consideration
|
||
Balance at December 31, 2019
|
|
$
|
—
|
|
Initial estimate of Care Innovations contingent consideration
|
|
44,500
|
|
|
Change in fair value recognized in transaction-related costs
|
|
574
|
|
|
Balance at March 31, 2020
|
|
$
|
45,074
|
|
|
|
March 31,
|
|
December 31,
|
||
|
|
2020
|
|
2019
|
||
Customer A
|
|
11.0
|
%
|
|
11.2
|
%
|
Customer B
|
|
10.3
|
%
|
|
15.6
|
%
|
|
|
Three Months Ended March 31,
|
|||
|
|
2020
|
|
2019
|
|
Customer C
|
|
10.6
|
%
|
|
*
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2020
|
|
2019
|
||||
Accounts receivable
|
|
$
|
515,429
|
|
|
$
|
512,061
|
|
Unbilled services
|
|
179,425
|
|
|
149,194
|
|
||
Total accounts receivable and unbilled services
|
|
694,854
|
|
|
661,255
|
|
||
Less allowance for credit losses
|
|
(2,603
|
)
|
|
(2,738
|
)
|
||
Total accounts receivable and unbilled services, net
|
|
$
|
692,251
|
|
|
$
|
658,517
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2020
|
|
2019
|
||||
Advanced billings
|
|
$
|
534,233
|
|
|
$
|
505,714
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Lease cost:
|
|
|
|
||||
Operating lease cost
|
$
|
11,164
|
|
|
$
|
9,469
|
|
Short-term lease cost
|
570
|
|
|
536
|
|
||
Variable lease cost
|
1,968
|
|
|
1,684
|
|
||
Lease income
|
(47
|
)
|
|
(39
|
)
|
||
Net lease cost
|
$
|
13,655
|
|
|
$
|
11,650
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows
|
$
|
11,674
|
|
|
$
|
9,807
|
|
Right-of-use assets obtained in exchange for lease obligations
|
10,865
|
|
|
846
|
|
|
|
As of March 31,
|
|
As of December 31,
|
|
|
2020
|
|
2019
|
Weighted average remaining lease term
|
|
8.1 years
|
|
7.7 years
|
Weighted average discount rate
|
|
4.2%
|
|
4.3%
|
2020 (remaining)
|
|
$
|
32,779
|
|
2021
|
|
43,898
|
|
|
2022
|
|
35,756
|
|
|
2023
|
|
28,109
|
|
|
2024
|
|
19,512
|
|
|
Thereafter
|
|
86,220
|
|
|
Total lease payments
|
|
246,274
|
|
|
Less imputed interest
|
|
(37,650
|
)
|
|
Total
|
|
$
|
208,624
|
|
|
|
Clinical Research
|
|
Data Solutions
|
|
Consolidated
|
||||||
Balance at December 31, 2019
|
|
$
|
1,025,897
|
|
|
$
|
476,859
|
|
|
$
|
1,502,756
|
|
Acquisition of Care Innovations, Inc.
|
|
174,334
|
|
|
—
|
|
|
174,334
|
|
|||
Currency translation
|
|
(17,199
|
)
|
|
—
|
|
|
(17,199
|
)
|
|||
Balance at March 31, 2020
|
|
$
|
1,183,032
|
|
|
$
|
476,859
|
|
|
$
|
1,659,891
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
||||||||||||
Customer relationships
|
$
|
552,840
|
|
|
$
|
(143,610
|
)
|
|
$
|
409,230
|
|
|
$
|
559,768
|
|
|
$
|
(137,728
|
)
|
|
$
|
422,040
|
|
Trade names (finite-lived)
|
29,875
|
|
|
(17,318
|
)
|
|
12,557
|
|
|
28,536
|
|
|
(16,582
|
)
|
|
11,954
|
|
||||||
Developed technology and other intangibles
|
74,174
|
|
|
(38,318
|
)
|
|
35,856
|
|
|
44,474
|
|
|
(35,654
|
)
|
|
8,820
|
|
||||||
Database
|
137,100
|
|
|
(66,463
|
)
|
|
70,637
|
|
|
137,100
|
|
|
(59,347
|
)
|
|
77,753
|
|
||||||
Total finite-lived intangible assets
|
793,989
|
|
|
(265,709
|
)
|
|
528,280
|
|
|
769,878
|
|
|
(249,311
|
)
|
|
520,567
|
|
||||||
Trade names (indefinite-lived)
|
118,010
|
|
|
—
|
|
|
118,010
|
|
|
118,010
|
|
|
—
|
|
|
118,010
|
|
||||||
Total intangible assets
|
$
|
911,999
|
|
|
$
|
(265,709
|
)
|
|
$
|
646,290
|
|
|
$
|
887,888
|
|
|
$
|
(249,311
|
)
|
|
$
|
638,577
|
|
2020 (remaining)
|
$
|
56,957
|
|
2021
|
70,376
|
|
|
2022
|
55,763
|
|
|
2023
|
43,561
|
|
|
2024
|
34,375
|
|
|
2025 and thereafter
|
267,248
|
|
|
Total
|
$
|
528,280
|
|
|
|
|
Principal amount
|
|
|
|||||||
|
Interest rate as of
|
|
March 31,
|
|
December 31,
|
|
|
|||||
|
March 31, 2020
|
|
2020
|
|
2019
|
|
Maturity Date
|
|||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|||||
First Lien Term Loan
|
2.52
|
%
|
|
$
|
993,750
|
|
|
$
|
1,000,000
|
|
|
October 2024
|
Revolver
|
2.52
|
%
|
|
133,800
|
|
|
88,800
|
|
|
October 2024
|
||
Accounts receivable financing agreement
|
3.07
|
%
|
|
170,000
|
|
|
170,000
|
|
|
May 2021
|
||
Total debt
|
|
|
1,297,550
|
|
|
1,258,800
|
|
|
|
|||
Less current portion of Revolver(1)
|
|
|
—
|
|
|
(88,800
|
)
|
|
|
|||
Less current portion of long-term debt
|
|
|
(25,000
|
)
|
|
(25,000
|
)
|
|
|
|||
Total long-term debt
|
|
|
1,272,550
|
|
|
1,145,000
|
|
|
|
|||
Less debt issuance costs
|
|
|
(4,577
|
)
|
|
(4,822
|
)
|
|
|
|||
Total long-term debt, net
|
|
|
$
|
1,267,973
|
|
|
$
|
1,140,178
|
|
|
|
Current maturities of long-term debt:
|
|
||
2020 (remaining)
|
$
|
18,750
|
|
2021
|
195,000
|
|
|
2022
|
25,000
|
|
|
2023
|
25,000
|
|
|
2024 and thereafter
|
1,033,800
|
|
|
Total
|
$
|
1,297,550
|
|
|
|
Options
|
|
Wtd. Average Exercise Price
|
|
Wtd. Average Remaining Contractual Life (in years)
|
|
Intrinsic Value (millions)
|
|||||
Outstanding at December 31, 2019
|
|
4,861,606
|
|
|
$
|
72.45
|
|
|
7.5
|
|
$
|
188.3
|
|
Granted
|
|
23,300
|
|
|
99.69
|
|
|
|
|
|
|||
Exercised
|
|
(74,940
|
)
|
|
38.80
|
|
|
|
|
|
|||
Expired or forfeited
|
|
(83,775
|
)
|
|
92.92
|
|
|
|
|
|
|||
Outstanding at March 31, 2020
|
|
4,726,191
|
|
|
$
|
72.75
|
|
|
7.3
|
|
$
|
85.1
|
|
Exercisable at March 31, 2020
|
|
1,892,291
|
|
|
$
|
45.52
|
|
|
5.6
|
|
$
|
77.2
|
|
|
|
Awards
|
|
Wtd. Average Grant-Date Fair Value
|
|
Intrinsic Value (millions)
|
|||||
Unvested December 31, 2019
|
|
632,436
|
|
|
$
|
91.07
|
|
|
$
|
70.3
|
|
Granted
|
|
53,702
|
|
|
109.04
|
|
|
|
|
||
Forfeited
|
|
(5,700
|
)
|
|
95.94
|
|
|
|
|
||
Vested
|
|
(86,000
|
)
|
|
58.95
|
|
|
|
|||
Unvested March 31, 2020
|
|
594,438
|
|
|
$
|
97.30
|
|
|
$
|
49.4
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Direct costs
|
|
$
|
3,853
|
|
|
$
|
2,928
|
|
Selling, general and administrative
|
|
11,572
|
|
|
6,319
|
|
||
Total stock-based compensation expense
|
|
$
|
15,425
|
|
|
$
|
9,247
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
Balance Sheet Classification
|
|
Notional
amount
|
|
Asset/(Liability)
|
|
Notional
amount
|
|
Asset/(Liability)
|
||||||||
Accrued expenses and other current liabilities
|
|
$
|
625,000
|
|
|
$
|
(6,416
|
)
|
|
$
|
625,000
|
|
|
$
|
(2,976
|
)
|
|
|
$
|
625,000
|
|
|
$
|
(6,416
|
)
|
|
$
|
625,000
|
|
|
$
|
(2,976
|
)
|
|
|
Three Months Ended March 31,
|
||||||
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)
|
|
2020
|
|
2019
|
||||
Amount of pre-tax loss recognized in other comprehensive (loss) income
|
|
$
|
(4,534
|
)
|
|
$
|
(1,947
|
)
|
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net
|
|
(2,660
|
)
|
|
(1,169
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Interest expense, net
|
|
$
|
(13,487
|
)
|
|
$
|
(12,369
|
)
|
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
|
|
|
|
|
||||
Loss reclassified from accumulated other comprehensive loss into interest expense, net
|
|
(2,660
|
)
|
|
(1,169
|
)
|
|
|
Foreign
Currency
Translation, Net of Tax
|
|
Derivative
Instruments, Net of Tax
|
|
Total
|
||||||
Balance at December 31, 2019
|
|
$
|
(149,342
|
)
|
|
$
|
(10,766
|
)
|
|
$
|
(160,108
|
)
|
Other comprehensive loss before reclassifications
|
|
(42,756
|
)
|
|
(3,377
|
)
|
|
(46,133
|
)
|
|||
Reclassification adjustments
|
|
—
|
|
|
1,981
|
|
|
1,981
|
|
|||
Balance at March 31, 2020
|
|
$
|
(192,098
|
)
|
|
$
|
(12,162
|
)
|
|
$
|
(204,260
|
)
|
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
Basic weighted average common shares outstanding
|
|
62,933
|
|
|
65,192
|
|
Effect of dilutive stock options and other awards under share-based compensation programs
|
|
1,406
|
|
|
1,655
|
|
Diluted weighted average common shares outstanding
|
|
64,339
|
|
|
66,847
|
|
|
|
|
|
|
||
Anti-dilutive shares
|
|
2,399
|
|
|
1,523
|
|
•
|
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 customers.
|
|
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||
|
|
Clinical Research
|
|
Data Solutions
|
|
Total
|
|
Clinical Research
|
|
Data Solutions
|
|
Total
|
||||||||||||
Revenue
|
|
$
|
726,135
|
|
|
$
|
57,573
|
|
|
$
|
783,708
|
|
|
$
|
666,631
|
|
|
$
|
55,391
|
|
|
$
|
722,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct costs (exclusive of depreciation and amortization)
|
|
358,351
|
|
|
45,511
|
|
|
403,862
|
|
|
337,515
|
|
|
40,373
|
|
|
377,888
|
|
||||||
Reimbursable expenses
|
|
176,841
|
|
|
—
|
|
|
176,841
|
|
|
140,620
|
|
|
—
|
|
|
140,620
|
|
||||||
Segment profit
|
|
190,943
|
|
|
12,062
|
|
|
203,005
|
|
|
188,496
|
|
|
15,018
|
|
|
203,514
|
|
||||||
Less expenses not allocated to segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative expenses
|
|
|
|
|
|
106,957
|
|
|
|
|
|
|
97,095
|
|
||||||||||
Transaction-related costs
|
|
|
|
|
|
609
|
|
|
|
|
|
|
—
|
|
||||||||||
Depreciation and amortization expense
|
|
|
|
|
|
32,278
|
|
|
|
|
|
|
27,608
|
|
||||||||||
(Gain) loss on disposal of fixed assets, net
|
|
|
|
|
|
(19
|
)
|
|
|
|
|
|
88
|
|
||||||||||
Income from operations
|
|
|
|
|
|
63,180
|
|
|
|
|
|
|
78,723
|
|
||||||||||
Interest expense, net
|
|
|
|
|
|
(13,487
|
)
|
|
|
|
|
|
(12,369
|
)
|
||||||||||
Foreign currency gains, net
|
|
|
|
|
|
7,842
|
|
|
|
|
|
|
6,128
|
|
||||||||||
Other expense, net
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
(88
|
)
|
||||||||||
Income before income taxes
|
|
|
|
|
|
$
|
57,531
|
|
|
|
|
|
|
$
|
72,394
|
|
|
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||
|
|
Clinical Research
|
|
Data Solutions
|
|
Total
|
|
Clinical Research
|
|
Data Solutions
|
|
Total
|
||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States
|
|
$
|
466,863
|
|
|
$
|
57,573
|
|
|
$
|
524,436
|
|
|
$
|
442,969
|
|
|
$
|
55,391
|
|
|
$
|
498,360
|
|
Other
|
|
10,007
|
|
|
—
|
|
|
10,007
|
|
|
12,573
|
|
|
—
|
|
|
12,573
|
|
||||||
Total Americas
|
|
476,870
|
|
|
57,573
|
|
|
534,443
|
|
|
455,542
|
|
|
55,391
|
|
|
510,933
|
|
||||||
Europe, Africa, and Asia-Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United Kingdom
|
|
199,764
|
|
|
—
|
|
|
199,764
|
|
|
171,238
|
|
|
—
|
|
|
171,238
|
|
||||||
Netherlands
|
|
28,067
|
|
|
—
|
|
|
28,067
|
|
|
24,367
|
|
|
—
|
|
|
24,367
|
|
||||||
Other
|
|
21,434
|
|
|
—
|
|
|
21,434
|
|
|
15,484
|
|
|
—
|
|
|
15,484
|
|
||||||
Total Europe, Africa, and Asia-Pacific
|
|
249,265
|
|
|
—
|
|
|
249,265
|
|
|
211,089
|
|
|
—
|
|
|
211,089
|
|
||||||
Total revenue
|
|
$
|
726,135
|
|
|
$
|
57,573
|
|
|
$
|
783,708
|
|
|
$
|
666,631
|
|
|
$
|
55,391
|
|
|
$
|
722,022
|
|
•
|
Workforce: In response to the outbreak and business disruption, first and foremost, we have prioritized the health and safety of our employees and we have closed the majority of our physical office locations worldwide. However, most of our workforce is able to work remotely in an effective way.
|
•
|
Backlog: We have not experienced any material COVID-19 related trial cancellations. However, due to travel restrictions put in place as a result of COVID-19, business development activity began to slow at the end of the quarter, with bid-defense meeting postponements and delays in study award decision-making. This has had an impact on new business awards in both the Clinical Research and Data Solutions segments, leading to a decrease in gross new business awards in the first quarter of 2020 compared to the prior year period as disclosed below.
|
•
|
Clinical Research segment: During March 2020, we began to experience global site closures, which has led to a decline in site-based monitoring. We have been able to implement remote monitoring activities through the use of our technology platforms in an effort to mitigate the impact of these site closures. Limitations on
|
•
|
Data Solutions segment: Our Data Solutions segment is relatively more insulated from the effects of the virus, due to its high proportion of recurring license revenue. However, businesses in this segment that rely on face-to-face interactions or are dependent on in-person gatherings, events or conferences may experience significant disruption.
|
•
|
Mitigation strategies: In light of the current situation, we have initiated proactive cost management strategies. These include, among other things, hiring restrictions, reductions in third-party costs and certain compensation adjustments. We have also implemented proactive cash conservation initiatives, including delaying some capital expenditures and halting voluntary debt repayments.
|
•
|
Liquidity position: We believe that we have a strong liquidity position, which includes cash on hand and access to our revolving credit facility. We are currently subject to two debt covenants in our Senior Secured Credit Facility:
|
|
|
Requirement:
|
|
As of March 31, 2020
|
Total indebtedness to EBITDA
|
|
≤ 4.25x
|
|
1.87x
|
Interest expense to EBITDA
|
|
≥ 3.00x
|
|
11.68x
|
•
|
global intangible low-taxed income, or GILTI;
|
•
|
limitations on the U.S. deductions for net business interest;
|
•
|
base erosion anti-abuse provisions, or BEAT; and
|
•
|
performance-based compensation subject to $1 million limit.
|
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
U.S. dollars per:
|
|
|
|
|
||
Euro
|
|
1.10
|
|
|
1.14
|
|
British pound
|
|
1.28
|
|
|
1.30
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
(in thousands)
|
|
|
|
|
||||
Revenue
|
|
$
|
783,708
|
|
|
$
|
722,022
|
|
Operating expenses:
|
|
|
|
|
||||
Direct costs (exclusive of depreciation and amortization)
|
|
403,862
|
|
|
377,888
|
|
||
Reimbursable expenses
|
|
176,841
|
|
|
140,620
|
|
||
Selling, general and administrative expenses
|
|
106,957
|
|
|
97,095
|
|
||
Transaction-related costs
|
|
609
|
|
|
—
|
|
||
Depreciation and amortization expense
|
|
32,278
|
|
|
27,608
|
|
||
(Gain) loss on disposal of fixed assets
|
|
(19
|
)
|
|
88
|
|
||
Income from operations
|
|
63,180
|
|
|
78,723
|
|
||
Interest expense, net
|
|
(13,487
|
)
|
|
(12,369
|
)
|
||
Foreign currency gains, net
|
|
7,842
|
|
|
6,128
|
|
||
Other expense, net
|
|
(4
|
)
|
|
(88
|
)
|
||
Income before income taxes
|
|
57,531
|
|
|
72,394
|
|
||
Provision for income taxes
|
|
16,871
|
|
|
28,138
|
|
||
Net income
|
|
40,660
|
|
|
44,256
|
|
||
Net income attributable to noncontrolling interest
|
|
—
|
|
|
(172
|
)
|
||
Net income attributable to PRA Health Sciences, Inc.
|
|
$
|
40,660
|
|
|
$
|
44,084
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
(in thousands)
|
|
|
|
|
||||
Revenue
|
|
$
|
726,135
|
|
|
$
|
666,631
|
|
Segment profit
|
|
190,943
|
|
|
188,496
|
|
||
Segment profit %
|
|
26.3
|
%
|
|
28.3
|
%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
(in thousands)
|
|
|
|
|
||||
Revenue
|
|
$
|
57,573
|
|
|
$
|
55,391
|
|
Segment profit
|
|
12,062
|
|
|
15,018
|
|
||
Segment profit %
|
|
21.0
|
%
|
|
27.1
|
%
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Remaining 2020 (9 Months)
|
|
2021 and 2022
|
|
2023 and 2024
|
|
Thereafter
|
|
Total
|
||||||||||
Principal payments on long-term debt (1)
|
|
$
|
18,750
|
|
|
$
|
220,000
|
|
|
$
|
1,058,800
|
|
|
$
|
—
|
|
|
$
|
1,297,550
|
|
Interest payments on long-term debt (1)
|
|
25,538
|
|
|
57,239
|
|
|
48,380
|
|
|
—
|
|
|
131,157
|
|
|||||
Contingent consideration on acquisition (2)
|
|
—
|
|
|
45,074
|
|
|
—
|
|
|
—
|
|
|
45,074
|
|
|||||
Total
|
|
$
|
44,288
|
|
|
$
|
322,313
|
|
|
$
|
1,107,180
|
|
|
$
|
—
|
|
|
$
|
1,473,781
|
|
•
|
delays, difficulties or a suspension in enrolling patients in our ongoing and planned clinical trials;
|
•
|
delays, difficulties or a suspension in clinical site initiation, including difficulties in recruiting clinical site investigators;
|
•
|
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
|
•
|
interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal, state or local governments; and
|
•
|
limitations in employee resources that would otherwise be focused on our business and the conduct of our clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, and governmental orders that limit the ability of our employees to leave their homes.
|
•
|
delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;
|
•
|
delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;
|
•
|
interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;
|
•
|
changes in local regulations as part of a response to the COVID-19 outbreak that may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
|
•
|
delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and
|
•
|
refusal of the United States Food and Drug Administration to accept data from clinical trials in these affected geographies.
|
(a)
|
Not applicable.
|
(b)
|
Not applicable.
|
(c)
|
Purchases of Equity Securities by the Issuer
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
32.2*
|
|
|
|
|
|
101*
|
|
The following financial information from PRA Health Sciences, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in inline XBRL (iXBRL): (i) Consolidated Condensed Balance Sheets as of March 31, 2020 and December 31, 2019, (ii) Consolidated Condensed Statements of Operations for the three months ended March 31, 2020 and 2019, (iii) Consolidated Condensed Statements of Comprehensive Income for the three months ended March 31 2020 and 2019, (iv) Consolidated Condensed Statements of Changes in Stockholders' Equity for the three months ended March 31, 2020 and 2019, (v) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2020 and 2019, and (v) Notes to Consolidated Condensed Financial Statements.
|
|
|
|
104*
|
|
Cover page from PRA Health Sciences, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted iXBRL and contained in Exhibit 101.
|
|
|
|
|
|
*
|
|
Filed herewith
|
|
PRA HEALTH SCIENCES, INC.
|
|
|
|
/s/ Michael J. Bonello
|
|
Michael J. Bonello
|
|
Executive Vice President and Chief Financial Officer
|
|
(Authorized Signatory)
|
|
|
Date: May 1, 2020
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 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 May 1, 2020
|
|
|
|
|
/s/ Colin Shannon
|
|
Colin Shannon
|
|
President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 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 May 1, 2020
|
|
|
|
|
/s/ Michael J. Bonello
|
|
Michael J. Bonello
|
|
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
|
|
Date May 1, 2020
|
By:
|
/s/ Colin Shannon
|
|
|
Colin Shannon
|
|
|
President, Chief Executive Officer and Chairman of the Board of Directors
|
|
|
(Principal Executive Officer)
|
|
Date May 1, 2020
|
By:
|
/s/ Michael J. Bonello
|
|
|
Michael J. Bonello
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|