NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The Company
PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of product development and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting.
Unaudited Interim Financial Information
The interim consolidated condensed financial statements include the accounts of the Company and variable interest entities where the Company is the primary beneficiary. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.
Recently Implemented Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2020 and the application of ASU 2016-13 did not have a material impact on the Company's consolidated condensed financial statements.
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this standard effective January 1, 2020 and the application of ASU 2017-04 did not have a material impact on the Company's consolidated condensed financial statements.
In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The Company adopted this standard effective January 1, 2020 and the application of ASU 2018-15 did not have a material impact on the Company's consolidated condensed financial statements.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes". The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the
methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The guidance is effective for the reporting period beginning after December 15, 2020, and the interim periods therein. The Company is currently assessing the potential impact of ASU 2019-12 on the Company's consolidated financial statements.
(2) Significant Accounting Policies
Significant accounting policies are detailed in "Note 3: Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2019.
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
2019
|
|
2018
|
|
Cash and cash equivalents
|
|
$
|
168,229
|
|
|
$
|
141,889
|
|
|
$
|
236,232
|
|
|
$
|
144,221
|
|
|
Restricted cash
|
|
—
|
|
|
326
|
|
|
38
|
|
|
488
|
|
|
Total cash, cash equivalents, and restricted cash
|
|
$
|
168,229
|
|
|
$
|
142,215
|
|
|
$
|
236,270
|
|
|
$
|
144,709
|
|
(3) Business Combinations
Care Innovations, Inc.
In January 2020, the Company acquired all of the outstanding equity interests of Care Innovations, Inc., or Care Innovations, an entity that provides digital health services. The purchase price was $208.6 million, which consisted of $161.5 million of cash, $2.6 million of restricted stock and $44.5 million of estimated contingent consideration in the form of a potential earn-out payment. The earn-out payment, which is capped at $50.0 million, is contingent on the achievement of two 2020 financial targets. The fair value of the contingent consideration was based on significant inputs not observed in the market and thus represented a Level 3 fair value measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to expand its ability to serve customers with technologies that deliver enhancements to the Company’s mobile health platform and provide expanded remote patient monitoring support to expand the Company's ability to deliver virtual and decentralized trials.
The acquisition of Care Innovations was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The consideration paid was allocated as follows: (i) $33.5 million to definite-lived intangible assets primarily consisting of developed technology with a weighted average amortization period of five years, (ii) $174.3 million to goodwill and (iii) $0.8 million to other net assets. The acquisition costs are included in transaction-related costs in the consolidated condensed statement of operations and were immaterial.
Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of September 2020, and in any case, no later than one year from the acquisition date in accordance with GAAP.
The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Care Innovations as they did not have a material effect on the Company’s consolidated results.
(4) Fair Value Measurements
The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.
Recurring Fair Value Measurements
The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of June 30, 2020 (in thousands):
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|
|
|
|
|
|
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|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Contingent consideration
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,074
|
|
|
$
|
45,074
|
|
|
Interest rate swaps
|
|
—
|
|
|
4,299
|
|
|
—
|
|
|
4,299
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
4,299
|
|
|
$
|
45,074
|
|
|
$
|
49,373
|
|
The Company values contingent consideration using models that include significant unobservable Level 3 inputs, such as projected market performance over the earn-out period along with estimates for market volatility and the discount rate applicable to potential cash payments. Interest rate swaps are measured at fair value using a market approach valuation technique. The valuation is based on an estimate of the net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation.
Changes in Level 3 financial liabilities measured on a recurring basis are as follows (in thousands):
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|
|
|
|
|
|
|
|
|
|
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 June 30, 2020
|
|
$
|
45,074
|
|
The $45.1 million balance at June 30, 2020, which was valued using a Monte Carlo simulation, relates to the earn-out payments to Care Innovations and is based on the achievement of certain financial targets. The primary assumptions that impact the earn-out valuation are the projected revenues and adjusted earnings before interest, taxes, depreciation and amortization of the acquired business, which are unobservable inputs into the valuation model. The liability is recorded in accrued expenses and other current liabilities in the consolidated condensed balance sheet. Refer to "Note 3 - Business Combinations" for additional information regarding the Care Innovations acquisition.
Non-recurring Fair Value Measurements
Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets that are tested for impairment when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets that are tested for impairment annually on October 1 or when a triggering event occurs.
As of June 30, 2020, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $2,288.5 million and are identified as Level 3 assets. These assets are comprised of goodwill of $1,660.4 million and identifiable intangible assets, net of $628.1 million.
Refer to "Note 9 - Revolving Credit Facilities and Long-Term Debt" for additional information regarding the fair value of long-term debt balances.
(5) Concentration of Credit Risk and Expected Credit Losses
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, unbilled services, and derivatives. As of June 30, 2020, substantially all of the Company’s cash and cash equivalents and derivatives were held in or invested with large financial institutions.
Accounts receivable primarily include amounts due from pharmaceutical and biotechnology companies under credit terms that generally do not extend beyond 90 days. The Company maintains an allowance for expected credit losses resulting from the inability of its customers to make required payments. The Company performs credit reviews of each customer, monitors collections and payments from customers, and determines the allowance based upon historical experience and specific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debt expense within selling, general and administrative expenses in the consolidated condensed statements of operations.
Accounts receivable and unbilled services from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled services at the respective dates were as follows:
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|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2020
|
|
2019
|
|
Customer A
|
|
10.6
|
%
|
|
11.2
|
%
|
|
Customer B
|
|
11.2
|
%
|
|
15.6
|
%
|
|
Customer D
|
|
13.5
|
%
|
|
*
|
* Less than 10%
Revenue from individual customers greater than 10% of consolidated revenue in the respective periods was as follows:
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Customer C
|
|
*
|
|
*
|
|
10.3
|
%
|
|
*
|
* Less than 10%
(6) Accounts Receivable, Unbilled Services and Advanced Billings
Accounts receivable and unbilled services were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2020
|
|
2019
|
|
Accounts receivable
|
|
$
|
567,987
|
|
|
$
|
512,061
|
|
|
Unbilled services
|
|
166,558
|
|
|
149,194
|
|
|
Total accounts receivable and unbilled services
|
|
734,545
|
|
|
661,255
|
|
|
Less allowance for credit losses
|
|
(1,994)
|
|
|
(2,738)
|
|
|
Total accounts receivable and unbilled services, net
|
|
$
|
732,551
|
|
|
$
|
658,517
|
|
Unbilled services as of June 30, 2020 and December 31, 2019 includes $86.2 million and $76.0 million, respectively, of contract assets where the Company’s right to bill is conditioned on criteria other than the passage of time. Impairment losses on contract assets were immaterial in the three and six months ended June 30, 2020 and 2019.
Advanced billings were as follows (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
Advanced billings
|
|
$
|
549,381
|
|
|
$
|
505,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The $43.7 million increase in advanced billings from December 31, 2019 to June 30, 2020 was primarily due to the timing of billings to customers. During the six months ended June 30, 2020 and 2019, the Company recognized revenue of $414.3 million and $363.2 million related to advanced billings recorded as of January 1, 2020 and 2019, respectively.
Performance Obligations
Revenue recognized from reimbursable expenses and services completed in prior periods was $9.9 million and $17.6 million for the three and six months ended June 30, 2020, respectively, and $24.0 million and $50.4 million for the three and six months ended June 30, 2019, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and from contract modifications on long-term fixed price contracts executed in the current period, which results in changes to the transaction price.
The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year. These contracts are short in duration and revenue recognition generally follows the delivery of the promised services. The total transaction price for the undelivered performance obligation on contracts with an original initial contract term greater than one year is $5.3 billion as of June 30, 2020. This amount includes reimbursement revenue. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from one to five years.
(7) Leases
The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining lease terms of one year to 20 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments to the base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s sublease income is immaterial.
The components of lease cost were as follows (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Lease cost:
|
|
|
|
|
|
|
|
|
Operating lease cost
|
$
|
11,167
|
|
|
$
|
9,327
|
|
|
$
|
22,334
|
|
|
$
|
18,795
|
|
|
Short-term lease cost
|
281
|
|
|
772
|
|
|
851
|
|
|
1,308
|
|
|
Variable lease cost
|
1,684
|
|
|
1,937
|
|
|
3,649
|
|
|
3,621
|
|
|
Lease income
|
(46)
|
|
|
(44)
|
|
|
(93)
|
|
|
(83)
|
|
|
Net lease cost
|
$
|
13,086
|
|
|
$
|
11,992
|
|
|
$
|
26,741
|
|
|
$
|
23,641
|
|
Supplemental cash flow information related to leases was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows
|
$
|
10,080
|
|
|
$
|
8,683
|
|
|
$
|
21,755
|
|
|
$
|
18,491
|
|
|
Right-of-use assets obtained in exchange for lease obligations
|
4,484
|
|
|
20,202
|
|
|
15,349
|
|
|
21,048
|
|
Other supplemental information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30,
|
|
As of December 31,
|
|
|
|
2020
|
|
2019
|
|
Weighted average remaining lease term
|
|
8.2 years
|
|
7.7 years
|
|
Weighted average discount rate
|
|
4.2%
|
|
4.3%
|
Maturities of operating lease liabilities were as follows as of June 30, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2020 (remaining)
|
|
$
|
22,125
|
|
|
2021
|
|
45,086
|
|
|
2022
|
|
36,732
|
|
|
2023
|
|
29,032
|
|
|
2024
|
|
20,112
|
|
|
Thereafter
|
|
87,889
|
|
|
Total lease payments
|
|
240,976
|
|
|
Less imputed interest
|
|
(36,204)
|
|
|
Total
|
|
$
|
204,772
|
|
As of June 30, 2020, the Company has no material non-cancelable operating leases that have not yet commenced.
(8) Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
(16,660)
|
|
|
—
|
|
|
(16,660)
|
|
|
Balance at June 30, 2020
|
|
$
|
1,183,571
|
|
|
$
|
476,859
|
|
|
$
|
1,660,430
|
|
There are no accumulated impairment charges as of June 30, 2020 and December 31, 2019.
Goodwill recorded in connection with the acquisition of Care Innovations was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of Care Innovations and expected synergies with the Company’s existing operations.
Intangible Assets
Intangible assets consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Gross Amount
|
|
Accumulated Amortization
|
|
Net Amount
|
|
Customer relationships
|
$
|
554,014
|
|
|
$
|
(152,467)
|
|
|
$
|
401,547
|
|
|
$
|
559,768
|
|
|
$
|
(137,728)
|
|
|
$
|
422,040
|
|
|
Trade names (finite-lived)
|
29,901
|
|
|
(18,104)
|
|
|
11,797
|
|
|
28,536
|
|
|
(16,582)
|
|
|
11,954
|
|
|
Developed technology and other intangibles
|
74,174
|
|
|
(40,940)
|
|
|
33,234
|
|
|
44,474
|
|
|
(35,654)
|
|
|
8,820
|
|
|
Database
|
137,100
|
|
|
(73,579)
|
|
|
63,521
|
|
|
137,100
|
|
|
(59,347)
|
|
|
77,753
|
|
|
Total finite-lived intangible assets
|
795,189
|
|
|
(285,090)
|
|
|
510,099
|
|
|
769,878
|
|
|
(249,311)
|
|
|
520,567
|
|
|
Trade names (indefinite-lived)
|
118,010
|
|
|
—
|
|
|
118,010
|
|
|
118,010
|
|
|
—
|
|
|
118,010
|
|
|
Total intangible assets
|
$
|
913,199
|
|
|
$
|
(285,090)
|
|
|
$
|
628,109
|
|
|
$
|
887,888
|
|
|
$
|
(249,311)
|
|
|
$
|
638,577
|
|
Amortization expense was $19.0 million and $38.2 million for the three and six months ended June 30, 2020, respectively, and $17.2 million and $34.3 million for the three and six months ended June 30, 2019, respectively.
The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):
|
|
|
|
|
|
|
|
2020 (remaining)
|
$
|
37,897
|
|
|
2021
|
70,435
|
|
|
2022
|
55,823
|
|
|
2023
|
43,619
|
|
|
2024
|
34,431
|
|
|
2025 and thereafter
|
267,894
|
|
|
Total
|
$
|
510,099
|
|
(9) Revolving Credit Facilities and Long-Term Debt
The Company had the following debt outstanding as of June 30, 2020 and December 31, 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal amount
|
|
|
|
|
|
|
Interest rate as of
|
|
June 30,
|
|
December 31,
|
|
|
|
|
June 30, 2020
|
|
2020
|
|
2019
|
|
Maturity Date
|
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|
First Lien Term Loan
|
1.68
|
%
|
|
$
|
987,500
|
|
|
$
|
1,000,000
|
|
|
October 2024
|
|
Revolver
|
1.68
|
%
|
|
133,800
|
|
|
88,800
|
|
|
October 2024
|
|
Accounts receivable financing agreement(1)
|
2.39
|
%
|
|
170,000
|
|
|
170,000
|
|
|
May 2021
|
|
Total debt
|
|
|
1,291,300
|
|
|
1,258,800
|
|
|
|
|
Less current portion of Revolver(2)
|
|
|
—
|
|
|
(88,800)
|
|
|
|
|
Less current portion of long-term debt
|
|
|
(25,000)
|
|
|
(25,000)
|
|
|
|
|
Total long-term debt
|
|
|
1,266,300
|
|
|
1,145,000
|
|
|
|
|
Less debt issuance costs
|
|
|
(4,330)
|
|
|
(4,822)
|
|
|
|
|
Total long-term debt, net
|
|
|
$
|
1,261,970
|
|
|
$
|
1,140,178
|
|
|
|
(1) The Company has excluded its Accounts Receivable Financing Agreement from current liabilities at June 30, 2020 as the Company has the intent and ability to refinance the obligation on a long-term basis prior to its maturity date of May 31, 2021 as supported by the available capacity under the Revolver.
(2) The Company assesses its ability and intent to repay the outstanding borrowings on the Revolver at the end of each reporting period in order to determine the proper balance sheet classification. Outstanding borrowings on the Revolver that the Company intends to repay in less than 12 months are classified as current.
As of June 30, 2020, the contractual maturities of the Company's debt obligations were as follows (in thousands):
|
|
|
|
|
|
|
|
Current maturities of long-term debt:
|
|
|
2020 (remaining)
|
$
|
12,500
|
|
|
2021
|
195,000
|
|
|
2022
|
25,000
|
|
|
2023
|
25,000
|
|
|
2024 and thereafter
|
1,033,800
|
|
|
Total
|
$
|
1,291,300
|
|
The Company's primary financing arrangements are its senior secured credit facility (the "Senior Secured Credit Facility"), which consists of a first lien term loan ("First Lien Term Loan") and a revolving credit facility (the "Revolver"), and its Accounts Receivable Financing Agreement.
Senior Secured Credit Facility
The overall capacity of the Senior Secured Credit Facility is $1.75 billion (consisting of a $1.0 billion First Lien Term Loan and a $750.0 million Revolver). As collateral for borrowings under the Senior Secured Credit Facility, the Company granted a pledge on primarily all of its assets, the interests of wholly-owned U.S. restricted subsidiaries, and a portion of the interests of wholly-owned non-U.S. restricted subsidiaries. The Company is subject to certain financial covenants, which require the Company to maintain certain debt-to-EBITDA and interest expense-to-EBITDA ratios. The Senior Secured Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to 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 make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under the Senior Secured Credit Facilities, subject to compliance with applicable law, as of June 30, 2020 and December 31, 2019, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Senior Secured Credit Facility also contains customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.0% to 2.0%, in the case of LIBOR loans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of one-, two-, three- or six-month base interest rates. The credit agreement governing the Senior Secured Credit Facility includes provisions that allow the agreement to be amended to replace the LIBOR rate with a comparable or successor floating rate.
The First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installments through September 30, 2024, with the remaining balance due at maturity. There are no voluntary prepayment penalties and prepayment is required upon the issuance of certain debt or asset sales or other events.
The Revolver requires the Company to pay to the lenders a commitment fee for unused commitments of 0.15% to 0.35% based on the Company’s debt-to-EBITDA ratio. Principal amounts are due and payable in full at maturity. In addition, at June 30, 2020 and December 31, 2019, the Company had $5.6 million and $5.4 million, respectively, in letters of credit outstanding, which are secured by the Revolver.
Accounts Receivable Financing Agreement
Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Company may prepay loans upon one business day's prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice.
The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions that provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.
As of December 31, 2019, there was $30.0 million of remaining capacity available under the accounts receivable financing agreement. However, as of June 30, 2020, borrowing capacity was limited to $17.7 million due to an increase in the Company's non-U.S. dollar receivables, which are excluded from the calculation of the borrowing base to the extent they exceed 2.5% of the eligible accounts receivable balance.
Fair Value of Debt
The estimated fair value of the Company’s debt and outstanding borrowings under its revolving credit facilities was $1,287.9 million and $1,255.8 million at June 30, 2020 and December 31, 2019, respectively. The fair values of the term loans, borrowings under credit facilities, and accounts receivable financing agreement were determined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.
(10) Stockholders’ Equity
Authorized Shares
The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01.
Share Repurchase Program
On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing the repurchase of up to $500.0 million of the Company's common stock in open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amount of its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31, 2021.
As of June 30, 2020, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program.
(11) Stock-Based Compensation
Stock Option and RSA/RSU Activity
The 2020 Stock Incentive Plan, or the 2020 Plan, was approved by stockholders at the annual meeting on May 18, 2020. The 2020 Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws. The 2020 Plan authorized the issuance of 2,500,000 shares of common stock plus all shares that remained available under the prior plan on May 18, 2020.
The Company granted 527,740 service-based options and 398,676 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $19.1 million and $38.4 million, respectively, during the six months ended June 30, 2020.
Aggregated information regarding the Company’s option plans is summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
527,740
|
|
|
103.14
|
|
|
|
|
|
|
Exercised
|
|
(221,743)
|
|
|
47.97
|
|
|
|
|
|
|
Expired or forfeited
|
|
(205,750)
|
|
|
94.62
|
|
|
|
|
|
|
Outstanding at June 30, 2020
|
|
4,961,853
|
|
|
$
|
75.89
|
|
|
7.3
|
|
$
|
116.4
|
|
|
Exercisable at June 30, 2020
|
|
1,807,363
|
|
|
$
|
45.50
|
|
|
5.3
|
|
$
|
95.3
|
|
The Company’s RSAs/RSUs activity in 2020 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Wtd. Average Grant-Date Fair Value
|
|
Intrinsic Value (millions)
|
|
Unvested at December 31, 2019
|
|
632,436
|
|
|
$
|
91.07
|
|
|
$
|
70.3
|
|
|
Granted
|
|
398,676
|
|
|
96.32
|
|
|
|
|
Forfeited
|
|
(30,730)
|
|
|
91.91
|
|
|
|
|
Vested
|
|
(110,187)
|
|
|
63.95
|
|
|
|
|
Unvested at June 30, 2020
|
|
890,195
|
|
|
$
|
96.75
|
|
|
$
|
86.6
|
|
Employee Stock Purchase Plan
In April 2017, the Board approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of any offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ESPP will generally be in six month increments, with the administrator of the ESPP having the right to establish different offering periods. The Company recognized stock-based compensation expense of $2.7 million and $2.1 million associated with the ESPP during the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, there have been 396,775 shares issued and 2,603,225 shares reserved for future issuance under the ESPP.
Stock-based Compensation Expense
Stock-based compensation expense related to employee stock plans are summarized below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Direct costs
|
|
$
|
3,196
|
|
|
$
|
3,167
|
|
|
$
|
7,049
|
|
|
$
|
6,095
|
|
|
Selling, general and administrative
|
|
12,649
|
|
|
6,749
|
|
|
24,221
|
|
|
13,068
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation expense
|
|
$
|
15,845
|
|
|
$
|
9,916
|
|
|
$
|
31,270
|
|
|
$
|
19,163
|
|
(12) Income Taxes
The Company’s effective income tax rate was 30.5% and 38.3% for the six months ended June 30, 2020 and 2019, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 21% for the six months ended June 30, 2020 is primarily due to (i) geographic distribution of global pre-tax income (ii) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, and (iii) state income taxes. The effective tax rate for the six months ended June 30, 2019 included the effect of base erosion anti-abuse tax, or BEAT. No provision for BEAT is included in the effective rate for the six months ended June 30, 2020.
Significant judgment is required related to the application of the recent U.S. tax reform, or the Act, particularly with respect to GILTI and BEAT provisions. If changes occur in the Company’s tax structure, the structure of its arrangements, interpretations, or regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision.
GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities. During the six months ended June 30, 2020, there was no significant change in uncertain tax positions.
(13) Commitments and Contingencies
Legal Proceedings
The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company.
(14) Derivatives
The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk arising from movement in market interest rates. Accordingly, the Company has instituted an interest rate hedging program that uses interest rate swaps designated as cash flow hedges to mitigate interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.
The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of June 30, 2020 and December 31, 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
December 31, 2019
|
|
|
|
Balance Sheet Classification
|
|
Notional
amount
|
|
Liability
|
|
Notional
amount
|
|
Liability
|
|
Accrued expenses and other current liabilities
|
|
$
|
625,000
|
|
|
$
|
(4,299)
|
|
|
$
|
625,000
|
|
|
$
|
(2,976)
|
|
|
|
|
$
|
625,000
|
|
|
$
|
(4,299)
|
|
|
$
|
625,000
|
|
|
$
|
(2,976)
|
|
The Company records the change in the fair value of derivatives designated as hedging instruments under ASC 815 to accumulated other comprehensive loss in the Company's consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings, including the associated tax impact, when the hedged item affects earnings or is no longer expected to occur. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period.
The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income for the three and six months ended June 30, 2020 and 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Amount of pre-tax loss recognized in other comprehensive income (loss)
|
|
$
|
(538)
|
|
|
$
|
(3,977)
|
|
|
$
|
(5,072)
|
|
|
$
|
(5,924)
|
|
|
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net
|
|
(4,217)
|
|
|
(1,247)
|
|
|
(6,876)
|
|
|
(2,416)
|
|
The Company expects that $5.7 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.
The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three and six months ended June 30, 2020 and 2019, respectively, is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Interest expense, net
|
|
$
|
(11,895)
|
|
|
$
|
(12,491)
|
|
|
$
|
(25,382)
|
|
|
$
|
(24,860)
|
|
|
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
|
|
|
|
|
|
|
|
|
|
Loss reclassified from accumulated other comprehensive loss into interest expense, net
|
|
(4,217)
|
|
|
(1,247)
|
|
|
(6,876)
|
|
|
(2,416)
|
|
(15) Accumulated Other Comprehensive Loss
Below is a summary of the components of accumulated other comprehensive loss (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
(30,974)
|
|
|
(3,643)
|
|
|
(34,617)
|
|
|
Reclassification adjustments
|
|
—
|
|
|
4,940
|
|
|
4,940
|
|
|
Balance at June 30, 2020
|
|
$
|
(180,316)
|
|
|
$
|
(9,469)
|
|
|
$
|
(189,785)
|
|
Foreign Currency Translation
The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound (GBP), Canadian dollar (CAD) and Russian ruble (RUB) exchange rates against the U.S. dollar. The U.S. dollar strengthened by 6.5%, 4.6%, and 12.3% versus the GBP, CAD, and RUB, respectively, between December 31, 2019 and June 30, 2020. The movement in the GBP, CAD and RUB contributed to a $18.3 million, $2.1 million, and $3.9 million increase in other comprehensive loss, respectively, during the six months ended June 30, 2020.
Derivative Instruments
See "Note 14 - Derivatives" for further information on changes to accumulated other comprehensive loss related to the derivative instruments.
(16) Net Income Per Share
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicable period. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plans.
The following table reconciles the basic to diluted weighted average shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Basic weighted average common shares outstanding
|
|
63,168
|
|
|
65,328
|
|
|
63,050
|
|
|
65,261
|
|
|
Effect of dilutive stock options and other awards under share-based compensation programs
|
|
1,289
|
|
|
1,435
|
|
|
1,348
|
|
|
1,545
|
|
|
Diluted weighted average common shares outstanding
|
|
64,457
|
|
|
66,763
|
|
|
64,398
|
|
|
66,806
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive shares
|
|
2,543
|
|
|
2,071
|
|
|
2,441
|
|
|
1,797
|
|
The dilutive and anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, and unrecognized compensation expense for outstanding awards.
(17) Segments
The Company is managed through two reportable segments: (i) the Clinical Research segment and (ii) the Data Solutions segment. In accordance with the provisions of ASC 280, "Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company.
•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.
The Company's chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. Asset information by segment is not presented, as this measure is not used by the chief operating decision-maker to assess the Company's performance.
The Company’s reportable segment information is presented below (in thousands):
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Three Months Ended June 30, 2020
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Three Months Ended June 30, 2019
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Clinical Research
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Data Solutions
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Total
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Clinical Research
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Data Solutions
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Total
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Revenue
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$
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667,247
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$
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62,644
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$
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729,891
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$
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702,227
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$
|
61,082
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|
$
|
763,309
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|
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Direct costs (exclusive of depreciation and amortization)
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343,241
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52,098
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395,339
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|
342,119
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44,130
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386,249
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Reimbursable expenses
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148,145
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|
122
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148,267
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|
161,097
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—
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161,097
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Segment profit
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175,861
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10,424
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186,285
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|
199,011
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16,952
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|
215,963
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Less expenses not allocated to segments:
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Selling, general and administrative expenses
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109,980
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98,804
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Depreciation and amortization expense
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32,485
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28,591
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Loss on disposal of fixed assets, net
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|
194
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555
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Income from operations
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|
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|
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43,626
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|
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88,013
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Interest expense, net
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(11,895)
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(12,491)
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Foreign currency losses, net
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(10,750)
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(9,671)
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Other income, net
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|
5
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|
|
8
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Income before income taxes
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$
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20,986
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$
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65,859
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Six Months Ended June 30, 2020
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Six Months Ended June 30, 2019
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|
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Clinical Research
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Data Solutions
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Total
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Clinical Research
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Data Solutions
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Total
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Revenue
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$
|
1,393,384
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|
|
$
|
120,216
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|
|
$
|
1,513,600
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|
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$
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1,368,857
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|
|
$
|
116,474
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|
$
|
1,485,331
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Direct costs (exclusive of depreciation and amortization)
|
|
701,593
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|
|
97,609
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|
799,202
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|
|
679,634
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84,503
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|
|
764,137
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Reimbursable expenses
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|
324,986
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|
|
122
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|
|
325,108
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|
|
301,716
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|
—
|
|
|
301,716
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Segment profit
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366,805
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|
|
22,485
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|
|
389,290
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|
|
387,507
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|
31,971
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|
419,478
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Less expenses not allocated to segments:
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|
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Selling, general and administrative expenses
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|
216,936
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195,898
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Transaction-related costs
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|
|
609
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|
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|
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—
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Depreciation and amortization expense
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|
|
|
|
|
64,763
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|
|
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|
|
56,199
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Loss on disposal of fixed assets, net
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|
175
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|
|
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|
|
644
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Income from operations
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106,807
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166,737
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Interest expense, net
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|
(25,382)
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(24,860)
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Foreign currency losses, net
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(2,908)
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|
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(3,544)
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Other expense, net
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—
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(80)
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Income before income taxes
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$
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78,517
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$
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138,253
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Revenue by geographic location for each segment is as follows (in thousands):
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|
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Three Months Ended June 30, 2020
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Three Months Ended June 30, 2019
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|
|
|
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|
|
Clinical Research
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Data Solutions
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Total
|
|
Clinical Research
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Data Solutions
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Total
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Revenue
|
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Americas:
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United States
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|
$
|
442,641
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|
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$
|
62,644
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|
|
$
|
505,285
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|
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$
|
458,279
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|
|
$
|
61,082
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|
|
$
|
519,361
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|
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Other
|
|
5,611
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|
|
—
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|
|
5,611
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|
|
12,440
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|
|
—
|
|
|
12,440
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Total Americas
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448,252
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|
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62,644
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510,896
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|
|
470,719
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|
|
61,082
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|
|
531,801
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Europe, Africa, and Asia-Pacific
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|
|
|
|
|
|
|
|
|
|
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|
|
United Kingdom
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|
193,974
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|
|
—
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|
|
193,974
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|
|
188,228
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—
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|
|
188,228
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|
|
Netherlands
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|
11,044
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|
|
—
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|
|
11,044
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|
|
28,328
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|
|
—
|
|
|
28,328
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|
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Other
|
|
13,977
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|
|
—
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|
|
13,977
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|
|
14,952
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|
|
—
|
|
|
14,952
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|
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Total Europe, Africa, and Asia-Pacific
|
|
218,995
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|
|
—
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|
|
218,995
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|
|
231,508
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|
|
—
|
|
|
231,508
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|
|
Total revenue
|
|
$
|
667,247
|
|
|
$
|
62,644
|
|
|
$
|
729,891
|
|
|
$
|
702,227
|
|
|
$
|
61,082
|
|
|
$
|
763,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
|
Clinical Research
|
|
Data Solutions
|
|
Total
|
|
Clinical Research
|
|
Data Solutions
|
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
909,505
|
|
|
$
|
120,216
|
|
|
$
|
1,029,721
|
|
|
$
|
901,248
|
|
|
$
|
116,474
|
|
|
$
|
1,017,722
|
|
|
Other
|
|
15,619
|
|
|
—
|
|
|
15,619
|
|
|
25,013
|
|
|
—
|
|
|
25,013
|
|
|
Total Americas
|
|
925,124
|
|
|
120,216
|
|
|
1,045,340
|
|
|
926,261
|
|
|
116,474
|
|
|
1,042,735
|
|
|
Europe, Africa, and Asia-Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
393,738
|
|
|
—
|
|
|
393,738
|
|
|
359,465
|
|
|
—
|
|
|
359,465
|
|
|
Netherlands
|
|
39,111
|
|
|
—
|
|
|
39,111
|
|
|
52,695
|
|
|
—
|
|
|
52,695
|
|
|
Other
|
|
35,411
|
|
|
—
|
|
|
35,411
|
|
|
30,436
|
|
|
—
|
|
|
30,436
|
|
|
Total Europe, Africa, and Asia-Pacific
|
|
468,260
|
|
|
—
|
|
|
468,260
|
|
|
442,596
|
|
|
—
|
|
|
442,596
|
|
|
Total revenue
|
|
$
|
1,393,384
|
|
|
$
|
120,216
|
|
|
$
|
1,513,600
|
|
|
$
|
1,368,857
|
|
|
$
|
116,474
|
|
|
$
|
1,485,331
|
|
(18) Overview of the Impact of the COVID-19 Pandemic
A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, during the second half of March 2020 and the entire second quarter of 2020, the Company experienced disruptions in its global operations as the COVID-19 virus continued to spread and impact countries in which the Company operates. From mid-March through the end of June, the Company's operations were impacted by the inaccessibility of investigator sites and an inability to screen and enroll patients due to stay at home orders and travel restrictions. The full extent of the COVID-19 outbreak in 2020 and its impact on the Company's operations is uncertain. A prolonged outbreak could continue to interrupt the operations of the Company and its customers and suppliers.