☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report)

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

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

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

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

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

As of ~~August 2, 2021,~~July 27, 2022, there were approximately ~~103,483,148~~102,653,017 shares of the registrant’s common stock outstanding.

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

2. Financial Statement Details

Cash, Cash Equivalents, and Restricted Cash

Certain of the Company’s subsidiaries participate in a notional cash pooling arrangement to manage global liquidity requirements. As part of a master netting arrangement, the participants combine their cash balances in pooling accounts at the same financial institution with the ability to offset bank overdrafts of one participant against positive cash account balances held by another participant. Under the terms of the master netting arrangement, the financial institution has the right, ability, and intent to offset a positive balance in one account against an overdrawn amount in another account. Amounts in each of the accounts are unencumbered and unrestricted with respect to use. As such, the net cash balance related to this pooling arrangement is included in cash, cash equivalents, and restricted cash in the ~~unaudited~~ condensed consolidated balance sheets.

The Company’s net cash pool position consisted of the following (in thousands):


	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
Gross cash position	$	232,537		$	220,261		$	145,866		$	179,160
Less: cash borrowings		(205,632	)		(204,647	)		(138,840	)		(167,507	)
Net cash position	$	26,905		$	15,614		$	7,026		$	11,653

Accounts Receivable and Unbilled Services, net

Accounts receivable and unbilled services (including contract assets), net of allowance for doubtful accounts, consisted of the following (in thousands):


	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
Accounts receivable billed	$	768,681		$	774,605		$	904,775		$	873,265
Accounts receivable unbilled		234,402			211,285			235,692			241,799
Contract assets		374,157			366,506			473,911			417,411
Less: Allowance for doubtful accounts		(7,319	)		(7,615	)		(7,427	)		(7,585	)
Accounts receivable and unbilled services, net	$	1,369,921		$	1,344,781		$	1,606,951		$	1,524,890

Accounts Receivable Factoring Arrangement

The Company has an accounts receivable factoring agreement to sell certain eligible unsecured trade accounts receivable, at its option, without recourse, to an unrelated third-party financial institution for cash. For the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, the Company factored ~~$68.7~~$66.8 million and ~~$77.6~~$68.7 million, respectively, of trade accounts receivable on a non-recourse basis and received ~~$68.6~~$66.5 million and ~~$77.3~~$68.6 million, respectively, in cash proceeds from the sale. The fees associated with these transactions were insignificant.

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Goodwill

The changes in the carrying amount of goodwill by segment for the six months ended June 30, ~~2021~~2022 were as follows (in thousands):

Clinical
Solutions (a)

Commercial
Solutions (b)

Total

Balance as of December 31, 2020

$
3,216,335

$
1,559,843

$
4,776,178

Acquisitions (c)

8,105

—

8,105

Impact of foreign currency translation and other (d)

52,425

(46,924
)

5,501

Balance as of June 30, 2021

$
3,276,865

$
1,512,919

$
4,789,784


	Clinical Solutions (a)			Commercial Solutions (a)			Total
Balance as of December 31, 2021	$	3,448,699		$	1,507,316		$	4,956,015
Acquisitions (b)		1,903			—			1,903
Impact of foreign currency translation		(40,441	)		(19,427	)		(59,868	)
Balance as of June 30, 2022	$	3,410,161		$	1,487,889		$	4,898,050

(a) Accumulated impairment losses of $8.1 million associated with the Clinical Solutions segment were recorded prior to 2016 and related to the former Phase I Services segment, now a component of the Clinical Solutions segment. NaN impairment of goodwill was recorded for the six months ended June 30, ~~2021.~~2022.

(b) Accumulated impairment losses of $8.0 million associated with the Commercial Solutions segment were recorded prior to 2015 and related to the former Global Consulting segment, now a component of the Commercial Solutions segment. NaN impairment of goodwill was recorded for the six months ended June 30, 2021.

~~(c)~~ Amount represents goodwill recognized in connection with an insignificant acquisition ~~during the second quarter of 2021~~ and measurement period adjustments ~~to goodwill recognized~~ in connection with insignificant 2021 acquisitions during the ~~2020 acquisitions of SHCR Holdings Corporation (“Synteract”) and Illingworth Research Group™ (“Illingworth Research”)~~six months ended June 30, 2022 within the Clinical Solutions segment.

(d) Includes $44.2 million reallocation of goodwill from the Commercial Solutions segment to the Clinical Solutions segment to reflect the transfer of the Kinapse Regulatory and Operations Consulting service lines to align with management reporting in 2021.

Accumulated Other Comprehensive Loss, Net of Taxes

Accumulated other comprehensive loss, net of taxes, consisted of the following (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Beginning balance	$	(39,174	)	$	(131,111	)	$	(40,801	)	$	(71,593	)	$	(57,364	)	$	(39,174	)	$	(49,618	)	$	(40,801	)

Foreign currency translation:
Derivative instruments:
Beginning balance		(26,350	)		(105,545	)		(22,040	)		(56,757	)		7,019			(12,824	)		(2,621	)		(18,761	)
Other comprehensive income (loss) before reclassifications		8,825			2,870			4,515			(45,918	)		4,827			(488	)		13,439			284
Ending balance		(17,525	)		(102,675	)		(17,525	)		(102,675	)

Derivative instruments:
Beginning balance		(12,824	)		(25,566	)		(18,761	)		(14,836	)
Other comprehensive (loss) income before reclassifications		(488	)		(5,461	)		284			(17,971	)
Reclassification adjustments		5,196			4,330			10,361			6,110			(299	)		5,196			729			10,361
Ending balance		(8,116	)		(26,697	)		(8,116	)		(26,697	)		11,547			(8,116	)		11,547			(8,116	)

Foreign currency translation:
Beginning balance														(64,383	)		(26,350	)		(46,997	)		(22,040	)
Other comprehensive (loss) income before reclassifications														(69,826	)		8,825			(87,212	)		4,515
Ending balance														(134,209	)		(17,525	)		(134,209	)		(17,525	)

Accumulated other comprehensive loss, net of taxes	$	(25,641	)	$	(129,372	)	$	(25,641	)	$	(129,372	)	$	(122,662	)	$	(25,641	)	$	(122,662	)	$	(25,641	)

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Changes in accumulated other comprehensive loss consisted of the following (in thousands):

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Foreign currency translation adjustments:

Foreign currency translation adjustment, before taxes

$
9,375

$
2,870

$
4,357

$
(45,918
)
Income tax expense (benefit)

550

—

(158
)

—

Foreign currency translation adjustments, net of taxes

8,825

2,870

4,515

(45,918
)
Unrealized gain (loss) on derivative instruments:

Unrealized (loss) gain during period, before taxes

(654
)

(6,876
)

380

(26,659
)
Income tax (benefit) expense

(166
)

(1,415
)

96

(8,688
)
Unrealized (loss) gain during period, net of taxes

(488
)

(5,461
)

284

(17,971
)
Reclassification adjustment, before taxes

6,958

5,797

13,874

8,211

Income tax expense

1,762

1,467

3,513

2,101

Reclassification adjustment, net of taxes

5,196

4,330

10,361

6,110

Total unrealized gain (loss) on derivative instruments, net of taxes

4,708

(1,131
)

10,645

(11,861
)
Total other comprehensive income (loss), net of taxes

$
13,533

$
1,739

$
15,160

$
(57,779
)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Unrealized gain on derivative instruments:
Unrealized gain (loss) during period, before taxes	$	6,540		$	(654	)	$	18,207		$	380
Income tax expense (benefit)		1,713			(166	)		4,768			96
Unrealized gain (loss) during period, net of taxes		4,827			(488	)		13,439			284
Reclassification adjustment, before taxes		(405	)		6,958			988			13,874
Income tax (benefit) expense		(106	)		1,762			259			3,513
Reclassification adjustment, net of taxes		(299	)		5,196			729			10,361
Total unrealized gain on derivative instruments, net of taxes		4,528			4,708			14,168			10,645

Foreign currency translation adjustment:
Foreign currency translation adjustment, before taxes		(68,081	)		9,375			(88,178	)		4,357
Income tax expense (benefit)		1,745			550			(966	)		(158	)
Foreign currency translation adjustment, net of taxes		(69,826	)		8,825			(87,212	)		4,515

Total other comprehensive (loss) income, net of taxes	$	(65,298	)	$	13,533		$	(73,044	)	$	15,160

Other (Income) Expense, ~~(Income),~~ Net

Other (income) expense, ~~(income),~~ net consisted of the following (in thousands):

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Net realized foreign currency loss (gain)

$
570

$
3,045

$
1,762

$
(2,051
)
Net unrealized foreign currency loss (gain)

5,959

2,478

(3,563
)

(12,541
)
Other, net

1,298

238

(228
)

1,423

Total other expense (income), net

$
7,827

$
5,761

$
(2,029
)

$
(13,169
)


	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Net realized foreign currency loss	$	4,799		$	570	$	7,254		$	1,762
Net unrealized foreign currency (gain) loss		(9,503	)		5,959		(9,069	)		(3,563	)
Equity investment income		—			—		—			(1,100	)
Other, net		(448	)		1,298		1,305			872
Total other (income) expense, net	$	(5,152	)	$	7,827	$	(510	)	$	(2,029	)

3. ~~Acquisitions,~~Investments and Divestitures ~~and Investments~~

~~Synteract Acquisition~~

On December 9, 2020, the Company completed the acquisition of Synteract, effected through the purchase of 100% of the outstanding shares of Synteract for approximately $385.5 million in cash (net of approximately $28.0 million of cash acquired), which included payment of $1.0 million during the first quarter of 2021. Synteract is a contract research organization focused on the emerging biopharmaceutical industry, strengthening the Company’s position in the small to mid-sized category. The Company recognized $358.0 million of goodwill and $56.4 million of intangible assets, including acquired backlog and trade name, as a result of the acquisition. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. Goodwill is attributable to the acquired workforce as well as future synergies and is not deductible for income tax purposes. The operating results from the acquisition of Synteract have been included in the Company’s Clinical Solutions segment from the date of acquisition.

~~Table of Contents~~Investments

~~Illingworth Research Group Acquisition~~

On December 17, 2020, the Company completed the acquisition of Illingworth Research, a leading provider of clinical research home health services, adding new scale and capabilities to the Company’s clinical trial solutions. The total purchase consideration was $80.9 million (net of cash acquired of $1.1 million), which included payments of $9.0 million during the first quarter of 2021. The Company recognized $64.0 million of goodwill and $21.5 million of intangible assets, principally customer relationships, as a result of the acquisition. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. Goodwill is attributable to the acquired workforce as well as future synergies and is not deductible for income tax purposes. The operating results from the acquisition of Illingworth Research have been included in the Company’s Clinical Solutions segment from the date of acquisition.

The Company’s assessment of fair value and the purchase price allocation related to these 2020 acquisitions is preliminary and further adjustments may be necessary as additional information related to the fair values of assets acquired and liabilities assumed is assessed during the measurement period (up to one year from the respective acquisition dates).

Pro forma information for these acquisitions is not presented as the operations of the acquired businesses, individually and in the aggregate, are not significant to the overall operations of the Company.

~~Divestitures~~

During the second quarter of 2020, the Company sold its contingent staffing business to a related party in exchange for potential future cash consideration not to exceed $4.0 million. Based on the financial results of the business through May 31, 2021, the Company recognized $1.8 million of contingent consideration in other expense (income), net in the accompanying condensed consolidated statements of income for the three months ended June 30, 2021. The cash had not been received as of June 30, 2021, and therefore was recorded as a receivable in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet~~. Refer to “Note 15 – Related-Party Transactions” for further information.~~

During the fourth quarter of 2020, the Company sold its medication adherence business for consideration of $23.0 million, including cash consideration of $18.0 million, net of cash transferred, and convertible notes of $5.0 million. The Company received $5.0 million of cash proceeds from the notes receivable during the three months ended June 30, 2021. The Company is entitled to future cash consideration that is contingent on the financial performance of the sold business through 2021. The Company will recognize the contingent consideration in the consolidated statements of income in the period the contingency is resolved.

~~Investments~~

~~During the three months ended June 30,~~ 2020, the Company made a non-cash investment of ~~$27.3~~$27.3 million to acquire certain intellectual property rights from a customer in lieu of cash payment for services rendered. During the ~~three months ended June 30,~~second quarter of 2021, the Company exchanged the intellectual property for an equity method investment in an unconsolidated variable interest entity. The Company ~~will also provide~~provided the entity ~~$3.9~~$3.8 million in cash, in the form of a loan, during the third quarter of 2021. Based on the hypothetical liquidation book value of its investment as of June 30, 2022, the Company recorded losses of $1.1 million and $2.3 million to other (income) expense, net in the accompanying condensed consolidated statements of income for the three and six months ended June 30, 2022, respectively. Based on the hypothetical liquidation book value of its investment as of June 30, 2021, the Company recorded a ~~$2.8~~$2.8 million loss to other (income) expense, ~~(income),~~ net in the accompanying condensed ~~statements~~and consolidated statement of income for the three months ended June 30, 2021. As of June 30, 2022 and December 31, 2021, the book value of the Company’s investment was ~~$24.5~~$12.2 million and $16.2 million, respectively, and was included in other long-term assets in the accompanying condensed consolidated balance ~~sheet,~~sheets, with a maximum exposure to loss of approximately ~~$28.4~~$15.9 million as of June 30, 2022, which includes ~~anticipated~~ funding of the loan.

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Divestitures

During the second quarter of 2020, the Company sold its contingent staffing business to a related party in exchange for potential future cash consideration not to exceed $4.0 million. Based on the financial results of the business through May 31, 2022 and 2021, the Company recognized $2.2 million and $1.8 million of contingent consideration in other (income) expense, net in the accompanying condensed consolidated statements of income for the three months ended June 30, 2022 and 2021, respectively, which reflects the maximum amount of future cash consideration. The contingent cash consideration related to financial results through May 31, 2022 had not been received as of June 30, 2022, and therefore was recorded as a receivable in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

4. Long-Term Debt Obligations

The Company’s debt obligations consisted of the following (in thousands):


	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
Secured Debt
Term Loan A - tranche one due March 2024	$	173,852		$	183,715		$	149,195		$	149,195
Term Loan A - tranche two due August 2024		1,737,141			1,273,991			1,636,797			1,636,797
Term Loan B due August 2024		—			560,564
Accounts receivable financing agreement due October 2022		365,000			300,000
Revolving credit facility due August 2024								35,000			—
Accounts receivable financing agreement due October 2024								400,000			400,000
Total secured debt		2,275,993			2,318,270			2,220,992			2,185,992
Unsecured Debt
Senior Unsecured Notes due January 2029 (the “Notes”)		600,000			600,000
Senior notes due January 2029 (the “Notes”)								600,000			600,000
Total debt obligations		2,875,993			2,918,270			2,820,992			2,785,992
Less: Term loan original issuance discount		(3,091	)		(3,500	)		(1,809	)		(2,228	)
Less: Unamortized deferred issuance costs		(9,282	)		(12,716	)		(7,352	)		(8,043	)
Total debt obligations, non-current portion	$	2,863,620		$	2,902,054
Total long-term debt							$	2,811,831		$	2,775,721

Credit Agreement

The Company is party to a credit agreement (as amended, the “Credit Agreement”) that ~~included~~includes a ~~$1.55 billion~~ Term Loan A facility (“Term Loan A”) that has two tranches ~~tranche one that matures on March 26, 2024 and tranche two that matures on August 1, 2024, a $1.60 billion Term Loan B facility (“Term Loan B”) that was paid~~(as detailed in ~~full during~~ the ~~second quarter of 2021,~~table above), and a ~~$600.0~~$600.0 million revolving credit facility that matures on August 1, 2024 (the “Revolver”).

In February 2021, as a result of the Company’s First Lien Leverage Ratio (as defined in the Credit Agreement) being less than or equal to 2.5x, the Adjusted Eurocurrency Rate Spread (as defined in the Credit Agreement) on Term Loan A and the Revolver decreased from 1.50% to 1.25%.

On June 30, 2021 (the “Closing Date”), the Company entered into Amendment No. 5 (the “Fifth Amendment”) to the Credit Agreement. The Fifth Amendment modified the Credit Agreement to increase Term Loan A in an aggregate principal amount of $495.0 million (“Incremental Term Loan A”). Incremental Term Loan A was funded on the Closing Date, and the proceeds were used, along with cash on hand, to repay the outstanding Term Loan B in full under the Credit Agreement and to pay fees and expenses in connection with the Fifth Amendment and the incurrence of Incremental Term Loan A. Incremental Term Loan A has the same terms as Term Loan A under the Credit Agreement, and is subject to the same covenants. The Company recorded an additional discount of $0.5 million against the Term Loan A borrowings in connection with the Fifth Amendment, which is being amortized as a component of interest expense using the effective interest method over the term of Term Loan A.

During the six months ended June 30, 2021, the Company made $41.8 million and $560.5 million of voluntary prepayments against Term Loan A and Term Loan B, respectively, which were applied to future principal payments. As a result of ~~these and~~ previous voluntary prepayments, the Company is not required to make a mandatory payment against the principal balance of Term Loan A until October 2023. As of June 30, 2022, ~~and~~ the interest rate on Term Loan ~~B has been paid in full. In connection with these~~A was ~~prepayments, the Company recorded a $2.2 million and $2.8 million loss on extinguishment of debt during the three and six months ended June 30, 2021, respectively.~~2.92%.

Revolver and Letters of Credit

The Revolver includes letters of credit (“LOCs”) with a sublimit of ~~$150.0~~$150.0 million. As of June 30, ~~2021,~~2022, there were 0$35.0 million of outstanding Revolver borrowings and ~~$16.7~~$14.1 million of LOCs outstanding, leaving ~~$583.3~~$550.9 million of available borrowings under the Revolver, including ~~$133.3~~$135.9 million available for LOCs. As of June 30, 2022, the interest rate on the Revolver was 2.84%.

13The Notes

The Notes bear interest at a rate of 3.625% per annum, payable semi-annually in arrears that began on July 15, 2021, and will mature on January 15, 2029.

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The lease for the Company’s corporate headquarters in Morrisville, North Carolina includes a provision that may require the Company to issue a LOC in certain amounts to the landlord based on the debt rating of the Company issued by Moody’s Investors Service (or other nationally-recognized debt rating agency, such as S&P Global Ratings). As of June 30, 2021, the Company’s debt rating was such that no LOC is currently required. Any LOC issued in accordance with the aforementioned requirements could be issued under the Company’s Revolver, and, if issued under the Revolver, would reduce its available borrowing capacity by the same amount accordingly.

Accounts Receivable Financing Agreement

The Company has an accounts receivable financing agreement (as amended) with a termination date of October ~~3, 2022,~~2024, unless terminated earlier pursuant to its terms. On January 28, 2021, the Company amended this agreement to increase the amount it can borrow from $300.0 million to $365.0 million, and drew down the additional $65.0 million to partially fund the Term Loan A and Term Loan B voluntary prepayments. ~~Accordingly, there was no incremental impact on the Company’s total debt.~~

Under the accounts receivable financing agreement, certain of the Company’s consolidated subsidiaries sell accounts receivable and unbilled services (including contract assets) balances to a wholly-owned, bankruptcy-remote special purpose entity. The Company has guaranteed the performance of the obligations of existing and future subsidiaries that sell and service the accounts receivable under this agreement. The available borrowing capacity varies monthly according to the levels of the Company’s eligible accounts receivable and unbilled services (including contract assets). Loans under this agreement will accrue interest at a reserve-adjusted LIBOR rate or a base rate equal to the higher of the applicable lender’s prime rate and the federal funds rate plus 0.50%.

As of June 30, ~~2021,~~2022, the Company had ~~$365.0~~$400.0 million of outstanding borrowings under this agreement, which are recorded in long-term debt on the accompanying ~~unaudited~~ condensed consolidated balance sheet. There was 0 remaining borrowing capacity available under this agreement as of June 30, ~~2021.~~

~~Maturities of Debt Obligations~~

2022. As of June 30, ~~2021,~~2022, the interest rate on the accounts receivable financing agreement was 2.58%.

Maturities of Debt Obligations

As of June 30, 2022, the contractual maturities of the Company’s debt obligations (excluding finance leases) were as follows (in thousands):

	Principal
Remainder of 2021	$	—
2022		385,856
				Principal
Remainder of 2022				$	—
2023		125,875			21,732
2024		1,764,262			2,199,260
2025		—			—
2026 and thereafter		600,000
Less: Deferred issuance costs		(9,282	)
2026					—
2027 and thereafter					600,000
Less: Term loan original issuance discount		(3,091	)		(1,809	)
Less: Unamortized deferred issuance costs					(7,352	)
Total	$	2,863,620		$	2,811,831

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5. Derivatives

Interest Rate Swaps

The Company has entered into various interest rate swaps to mitigate its exposure to changes in interest rates on its term ~~loans.~~

In June 2018, the Company entered into an interest rate swap with multiple counterparties that had an initial aggregate notional value of $1.01 billion, an effective date of December 31, 2018, and expired on June 30, 2021.

loan. In March 2020, the Company entered into interest rate swaps with multiple counterparties. The interest rate swaps had an initial aggregate notional value of ~~$549.2~~$549.2 million that increased to ~~$1.42~~$1.42 billion on June 30, 2021, an effective date of March 31, 2020, and will expire on March 31, 2023. As of June 30, ~~2021,~~2022, the notional value of these interest rate swaps was ~~$1.42~~$1.07 billion.

Foreign Exchange Forward

On October 30, 2020, the Company entered into a foreign exchange forward in order to minimize monthly foreign currency remeasurement gains or losses on non-functional currency monetary balances. The foreign exchange forward notional value may be adjusted each month as the exposure balance changes. The Company did not designate the derivative as a hedge. All changes in the fair value of the foreign exchange forward are recorded in earnings every month to other (income) expense, ~~(income),~~ net in the accompanying condensed consolidated statements of income. The Company recognized ~~$0.4~~$5.6 million and ~~$1.5~~$7.5 million of realized losses during the three and six months ended June 30, 2022, respectively, and $0.4 million and $1.5 million of realized gains during the three and six months ended June 30, 2021, respectively, related to this foreign exchange forward. As of June 30, ~~2021,~~2022, the notional value of this foreign exchange forward was ~~$65.0~~$75.0 million.

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Fair Values

The fair values of the Company’s derivative financial instruments and the line items on the accompanying condensed consolidated balance sheets to which they were recorded were as follows (in thousands):


		Balance Sheet Classification	June 30, 2021		December 31, 2020		Balance Sheet Classification	June 30, 2022		December 31, 2021
Interest rate swaps - current		Accrued expenses	$	6,212	$	17,045	Prepaid expenses and other current assets	$	18,317	$	—
Interest rate swaps - non-current		Other long-term liabilities		2,151		5,572	Other long-term assets		—		948
Fair value of derivative assets								$	18,317	$	948

Interest rate swaps - current							Accrued expenses	$	—	$	1,827
Fair value of derivative liabilities	Fair value of derivative liabilities		$	8,363	$	22,617		$	—	$	1,827

6. Fair Value Measurements

Assets and Liabilities Carried at Fair Value

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s financial assets and liabilities carried at fair value included cash and cash equivalents, restricted cash, trading securities, accounts receivable, unbilled services (including contract assets), accounts payable, accrued expenses, deferred revenue, contingent obligations, liabilities under the accounts receivable financing agreement, and derivative instruments.

The fair values of cash and cash equivalents, restricted cash, accounts receivable, unbilled services (including contract assets), accounts payable, accrued expenses, deferred revenue, and the liabilities under the accounts receivable financing agreement approximate their respective carrying amounts because of the liquidity and short-term nature of these financial instruments.

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Financial Instruments Subject to Recurring Fair Value Measurements

As of June 30, 2022, the fair values of the major classes of the Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):


	Level 1		Level 2		Level 3		Investments Measured at Net Asset Value		Total
Assets:
Trading securities (a)	$	20,207	$	—	$	—	$	—	$	20,207
Partnership interests (b)		—		—		—		12,753		12,753
Derivative instruments (c)		—		18,317		—		—		18,317
Total assets	$	20,207	$	18,317	$	—	$	12,753	$	51,277

Liabilities:
Contingent obligations related to acquisitions (d)	$	—	$	—	$	17,747	$	—	$	17,747
Total liabilities	$	—	$	—	$	17,747	$	—	$	17,747

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As of December 31, 2021, the fair values of the major classes of the Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):

Level 1

Level 2

Level 3

Investments
Measured
at Net
Asset Value

Total

Assets:

Trading securities (a)

$
24,802

$
—

$
—

$
—

$
24,802

Partnership interest (b)

—

—

—

9,073

9,073

Total assets

$
24,802

$
—

$
—

$
9,073

$
33,875

Liabilities:

Derivative instruments (c)

$
—

$
8,363

$
—

$
—

$
8,363

Contingent obligations related to acquisitions (d)

—

—

995

—

995

Total liabilities

$
—

$
8,363

$
995

$
—

$
9,358

~~As of December 31, 2020, the fair values of the major classes of the Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):~~


	Level 1		Level 2		Level 3		Investments Measured at Net Asset Value		Total		Level 1		Level 2		Level 3		Investments Measured at Net Asset Value		Total
Assets:
Trading securities (a)	$	22,950	$	—	$	—	$	—	$	22,950	$	24,775	$	—	$	—	$	—	$	24,775
Partnership interest (b)		—		—		—		8,665		8,665
Partnership interests (b)												—		—		—		11,176		11,176
Derivative instruments (c)												—		948		—		—		948
Total assets	$	22,950	$	—	$	—	$	8,665	$	31,615	$	24,775	$	948	$	—	$	11,176	$	36,899

Liabilities:
Derivative instruments (c)	$	—	$	22,617	$	—	$	—	$	22,617	$	—	$	1,827	$	—	$	—	$	1,827
Contingent obligations related to acquisitions (d)		—		—		6,793		—		6,793		—		—		17,997		—		17,997
Total liabilities	$	—	$	22,617	$	6,793	$	—	$	29,410	$	—	$	1,827	$	17,997	$	—	$	19,824

(a) Represents the fair value of investments in mutual funds based on quoted market prices that are used to fund the liability associated with the Company’s deferred compensation plan.

(b) The Company has committed to invest ~~$21.5~~$21.5 million as a limited partner in 2 private equity funds. The private equity funds invest in opportunities in the healthcare and life sciences industry. As of June 30, ~~2021,~~2022, the Company’s remaining unfunded commitment in the private equity funds was ~~$14.1~~$11.2 million. The Company holds minor ownership interests (less than 3%3%) in each of the private equity funds and has determined that it does not exercise significant influence over the private equity funds’ operating and finance activities. As the private equity funds do not have readily determinable fair values, the Company has estimated the fair values using each fund’s Net Asset Value, the amount by which the value of all assets exceeds all debt and liabilities, in accordance with ~~ASC~~Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies.

(d) Represents the fair value of contingent consideration obligations related to acquisitions. The fair values of these liabilities are determined based on the Company’s best estimate of the probable timing and amount of settlement.

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The following table presents a reconciliation of changes in the carrying amount of contingent obligations classified as Level 3 for the six months ended June 30, ~~2021~~2022 (in thousands):

Balance as of December 31, 2020

$
6,793

Additions (a)

1,008

Changes in fair value recognized in earnings

(610
)
Payments (b)

(6,196
)
Balance as of June 30, 2021

$
995


Balance as of December 31, 2021	$	17,997
Additions		0
Changes in fair value recognized in earnings		(250	)
Payments		0
Balance as of June 30, 2022	$	17,747

~~(a) Represents obligations in connection with the insignificant acquisition made during the second quarter of 2021.~~

(b) The Company made payments during the first quarter of 2021 to fully settle the contingent tax-sharing obligation arising from inVentiv Health, Inc.’s 2016 merger with Double Eagle Parent, Inc. (see “Note 16 – Commitments and Contingencies” for further information).

During the six months ended June 30, ~~2021,~~2022, there were 0 transfers of assets or liabilities between Level 1, Level 2, or Level 3 fair value measurements.

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Financial Instruments Subject to Non-Recurring Fair Value Measurements

Certain assets, including goodwill and identifiable intangible assets, are carried on the accompanying condensed consolidated balance sheets at cost and, subsequent to initial recognition, are measured at fair value on a non-recurring basis when certain identified events or changes in circumstances that may have a significant adverse effect on the carrying values of these assets occur. These assets are classified as Level 3 fair value measurements within the fair value hierarchy. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate a triggering event has occurred. Intangible assets are tested for impairment upon the occurrence of certain triggering events. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, assets carried on the condensed consolidated balance sheets and not remeasured to fair value on a recurring basis totaled ~~$5.65~~$5.67 billion and ~~$5.71~~$5.83 billion, respectively.

Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

The estimated fair values of the term ~~loans~~loan (based on tranche) and the Notes are determined based on the price that the Company would have had to pay to settle the liabilities. As these liabilities are not actively traded, they are classified as Level 2 fair value measurements. The estimated fair values of the Company’s term ~~loans~~loan (based on tranche) and the Notes were as follows (in thousands):

June 30, 2021

December 31, 2020

Carrying
Value (a)

Estimated
Fair Value

Carrying
Value (a)

Estimated
Fair Value

Term Loan A - tranche one due March 2024

$
173,571

$
173,635

$
183,320

$
183,026

Term Loan A - tranche two due August 2024

1,734,331

1,741,484

1,271,255

1,269,213

Term Loan B due August 2024

—

—

560,194

560,144

Senior Unsecured Notes due January 2029

600,000

598,500

600,000

602,412


	June 30, 2022				December 31, 2021
	Carrying Value (a)		Estimated Fair Value		Carrying Value (a)		Estimated Fair Value
Term Loan A - tranche one due March 2024	$	149,043	$	146,957	$	149,008	$	148,945
Term Loan A - tranche two due August 2024		1,635,140		1,588,167		1,634,756		1,635,138
Senior notes due January 2029		600,000		513,000		600,000		595,500

(a) The carrying value of the term loan debt is shown net of original issue discounts.

7. Restructuring and Other Costs

During the three and six months ended June 30, 2022 and 2021, the Company incurred employee severance and benefit costs, facility and lease termination costs, and other costs related to ~~the Company’s~~its restructuring activities. These costs were primarily related to the Company’s ForwardBound margin enhancement initiative. The costs incurred during the three and six months ended June 30, 2020 were primarily related to the Company’s cost management strategies in response to the COVID-19 pandemic as well as the Company’s ~~ForwardBound~~ ~~initiative.~~

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Restructuring and other costs consisted of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Employee severance and benefit costs	$	2,084	$	7,647	$	8,377	$	15,268	$	2,368	$	2,084	$	17,188	$	8,377
Facility and lease termination costs		1,882		375		2,770		1,108		3,671		1,882		3,352		2,770
Other costs		—		149		47		515		2,944		—		4,000		47
Total restructuring and other costs	$	3,966	$	8,171	$	11,194	$	16,891	$	8,983	$	3,966	$	24,540	$	11,194

The Company expects to continue to incur costs related to restructuring of its operations in order to achieve cost savings and the targeted synergies related to its acquisitions. However, the timing and the amount of these costs depends on various factors, including, but not limited to, identifying and realizing synergy opportunities and executing the integration of its combined operations. The Company may also continue to incur additional restructuring and other costs during 2022 and beyond ~~2021~~ related to its ForwardBound margin enhancement initiative.

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Accrued Restructuring Liabilities

The following table summarizes activity related to employee severance and benefit costs within accrued restructuring liabilities for the ~~liabilities associated with restructuring and other costs~~six months ended June 30, 2022 (in thousands):

	Employee Severance Costs			Other Costs			Total
Balance as of December 31, 2020	$	5,830		$	—		$	5,830
Balance as of December 31, 2021										$	6,657
Expenses incurred (a)		8,425			(1	)		8,424			17,188
Payments		(10,878	)		1			(10,877	)		(13,376	)
Balance as of June 30, 2021	$	3,377		$	—		$	3,377
Balance as of June 30, 2022										$	10,469

(a) The amount of expenses incurred for the six months ended June 30, ~~2021~~2022 excludes ~~$2.8~~$4.0 million of other costs that are included in accounts payable and $3.4 million of facility lease closure and lease termination costs that are reflected as ~~a reduction~~reductions of operating lease right-of-use assets, current portion of operating lease obligations, and operating lease long-term obligations under ASC Topic 842, Leases,on the ~~unaudited~~accompanying condensed consolidated balance ~~sheet under ASC 842.~~sheet.

The Company expects the employee severance and benefit costs accrued as of June 30, ~~2021~~2022 will be paid within the next twelve ~~months. Liabilities associated with restructuring~~months and ~~other costs~~ are included inwithin accrued expenses ~~and other long-term liabilities~~ on the accompanying condensed consolidated balance ~~sheets.~~sheet.

8. Shareholders’ Equity

Shares Outstanding

Shares of common stock outstanding were as follows (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021			2020			2022		2021			2022			2021
Common stock shares, beginning balance		104,226			104,161		103,935			103,866			102,558		104,226			103,764			103,935
Repurchases of common stock		(900	)		—		(1,500	)		(600	)		0		(900	)		(1,929	)		(1,500	)
Issuances of common stock		147			75		1,038			970			89		147			812			1,038
Common stock shares, ending balance		103,473			104,236		103,473			104,236			102,647		103,473			102,647			103,473

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Stock Repurchase ~~Program~~Programs

On November 17, 2020, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to an aggregate of ~~$300.0~~$300.0 million of the Company’s Class A common stock, par value ~~$0.01~~$0.01 per share, to be executed from time to time in open market transactions effected through a broker at prevailing market prices, in block trades, or through privately negotiated transactions through December 31, 2022 (the ~~“Stock~~“2021 Stock Repurchase Program”). The 2021 Stock Repurchase Program took effect on January 1, 2021.

On May 25, 2022, the Board approved a new stock repurchase program (the “2022 Stock Repurchase Program”) that took effect immediately and replaced the 2021 Stock Repurchase Program. The 2022 Stock Repurchase Program authorizes the Company to repurchase up to $350.0 million of the Company’s Class A common stock, par value $0.01, and will expire on December 31, 2024.

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The 2022 Stock Repurchase Program does not obligate the Company to repurchase any particular amount of the Company’s common stock, and may be modified, extended, suspended, or discontinued at any time. The timing and amount of repurchases will be determined by the Company’s management based on a variety of factors such as the market price of the Company’s common stock, the Company’s corporate cash requirements, and overall market conditions. The 2022 Stock Repurchase Program is subject to applicable legal requirements, including federal and state securities laws and applicable Nasdaq rules. The Company may also repurchase shares of its common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares of the Company’s common stock to be repurchased when the Company might otherwise be precluded from doing so by law.

During the ~~six~~three months ended June 30, ~~2021,~~2022, there were no repurchases under the ~~Company repurchased 1,500,000 shares of its common stock in private transactions under the~~2021 Stock Repurchase Program ~~for a total purchase price of approximately $117.5 million.~~or the 2022 Stock Repurchase Program.

The following table sets forth repurchase activity under the 2021 Stock Repurchase Program from inception through ~~June 30, 2021:~~the program’s termination on May 25, 2022:


	Total number of shares purchased		Average price paid per share		Approximate dollar value of shares purchased (in thousands)		Total number of shares purchased		Average price paid per share		Approximate dollar value of shares purchased (in thousands)
March 2021		600,000	$	74.18	$	44,505		600,000	$	74.18	$	44,505
May 2021		400,000		81.04		32,416		400,000		81.04		32,416
June 2021		500,000		81.20		40,600		500,000		81.20		40,600
February 2022								515,003		78.52		40,439
March 2022								1,413,920		77.46		109,522
Total		1,500,000			$	117,521		3,428,923			$	267,482

The Company immediately retired all of the repurchased common stock and charged the par value of the shares to common stock. The excess of the repurchase price over the par value was applied on a pro rata basis against additional paid-in capital, with the remainder applied to accumulated deficit.

As of June 30, ~~2021,~~2022, the Company had remaining authorization to repurchase up to ~~approximately $182.5~~$350.0 million of shares of its common stock under the 2022 Stock Repurchase Program.

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9. Earnings Per Share

The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Numerator:
Net income	$	41,905	$	3,911	$	80,629	$	37,485	$	77,744	$	41,905	$	123,920	$	80,629
Denominator:
Basic weighted average common shares outstanding		103,937		104,198		104,105		104,232		102,596		103,937		103,130		104,105
Effect of dilutive securities:
Stock options and other awards under deferred share-based compensation programs		1,082		1,021		1,133		1,198		476		1,082		611		1,133
Diluted weighted average common shares outstanding		105,019		105,219		105,238		105,430		103,072		105,019		103,741		105,238
Earnings per share:
Basic	$	0.40	$	0.04	$	0.77	$	0.36	$	0.76	$	0.40	$	1.20	$	0.77
Diluted	$	0.40	$	0.04	$	0.77	$	0.36	$	0.75	$	0.40	$	1.19	$	0.77

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Potential common shares outstanding that are considered anti-dilutive are excluded from the computation of diluted earnings per share. Potential common shares related to stock options and other awards under share-based compensation programs may be determined to be anti-dilutive based on the application of the treasury stock method. Potential common shares are also considered anti-dilutive in periods when the Company incurs a net loss.

The number of potential shares outstanding that were anti-dilutive and therefore excluded from the computation of diluted earnings per share, weighted for the portion of the period they were outstanding, were 774,405, 143,958 ~~1,051,560, 155,062,~~, 469,724, and ~~981,239~~155,062 for the three and six months ended June 30, 2022 and 2021, ~~and 2020,~~ respectively.

10. Income Taxes

Income Tax Expense

For the tthree and six months ended June 30, 2022, the Company recorded income tax expense of $~~hree~~25.9 million and $33.3 million, respectively, compared to pre-tax income of $103.7 million and $157.2 million, respectively. Income tax expense for the three and six months ended June 30, 2022 included discrete tax benefits of $0.3 million and $6.4 million, respectively, primarily related to excess tax benefits from share-based compensation. The effective tax rates for the three and six months ended June 30, 2022, excluding discrete items, varied from the United States (“U.S.”) federal statutory income tax rate of 21.0% primarily due to state and local taxes on U.S. income, foreign income inclusions such as the Global Intangible Low-Taxed Income (“GILTI”) provisions, and research and development credits.

For the three and six months ended June 30, 2021, the Company recorded income tax expense of ~~$9.1~~$9.1 million and ~~$17.4~~$17.4 million, respectively, compared to pre-tax income of ~~$51.0~~$51.0 million and ~~$98.1~~$98.1 million, respectively. Income tax expense for the three and six months ended June 30, 2021 included discrete tax benefits of ~~$2.2~~$2.2 million and ~~$5.8~~$5.8 million, respectively, primarily related to excess tax benefits from share-based compensation. The effective tax rates for the three and six months ended June 30, 2021, excluding discrete items, varied from the U.S. federal statutory income tax rate of ~~21.0%~~21.0% primarily due to foreign tax credits, foreign income inclusions such as the ~~Global Intangible Low-Taxed Income (“GILTI”)~~GILTI provisions, and state and local taxes on U.S. income.

For the three and six months ended June 30, 2020, the Company recorded income tax expense of $3.7 million and $11.9 million, respectively, compared to pre-tax income of $7.6 million and $49.4 million, respectively. Income tax expense for the three and six months ended June 30, 2020 included a discrete tax expense of $1.6 million and a discrete tax benefit of $5.5 million, respectively, primarily related to ~~excess tax benefits from share-based compensation and the benefit from foreign tax credits claimed on amended returns filed during the year. The effective tax rates for the~~ ~~three and six months ended June 30, 2020, excluding discrete items, varied from~~ ~~the~~ ~~U.S.~~ ~~federal statutory income tax rate of 21.0% primarily due to foreign income inclusions such as the GILTI provisions, state and local taxes on U.S. income, and research and general business credits~~.

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Unrecognized Tax Benefits

The Company’s gross unrecognized tax benefits, exclusive of associated interest and penalties, were$~~9.6~~11.7 million and ~~$9.0~~$12.1 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The ~~increase~~decrease of ~~$0.6~~$0.4 million was primarily due to ~~unrecognized tax benefits~~lapses in ~~foreign jurisdictions.~~statutes of limitations and changes in exchange rates. The Company believes it is reasonably possible that its unrecognized tax benefits may decrease by approximately ~~$0.6~~$1.4 million within the next 12 months as a result of lapses in statutes of limitations.

Tax Returns under Audit

The Company is not currently under any U.S. federal income tax audits, however, income tax returns are under examination by tax authorities in several state and foreign jurisdictions. The Company’s federal and state tax filings are open to investigations in numerous years due to net operating loss carryforwards. Additionally, the Company currently has an ongoing examination for tax years ~~2017 and 2018~~2014 to 2019 in the United Kingdom. The United Kingdom is the jurisdiction with the Company’s largest foreign operations. The Company believes that its reserve for uncertain tax positions is adequate to cover existing risks or exposures related to all open tax years and jurisdictions.

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11. Revenue from Contracts with Customers

Unsatisfied Performance Obligations

As of June 30, ~~2021,~~2022, the total aggregate transaction price allocated to the unsatisfied performance obligations under contracts with contract terms greater than one year and that are not accounted for as a series pursuant to ASC Topic 606, Revenue from Contracts with Customers and all the related amendments was ~~$7.15~~$6.57 billion. This amount includes revenue associated with reimbursable out-of-pocket expenses. 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.~~years. The amount of unsatisfied performance obligations is presented net of any constraints and, as a result, is lower than the potential contractual revenue. The contracts excluded due to constraints include contracts that do not commence within a certain period of time or that require the Company to undertake numerous activities to fulfill these performance obligations, including various activities that are outside of the Company’s control.

Timing of Billing and Performance

During the three and six months ended June 30, ~~2021,~~2022, the Company recognized approximately ~~$393.6~~$389.3 million and ~~$526.3~~$547.8 million, respectively, of revenue that was included in the deferred revenue balance at the beginning of the respective periods. During the three and six months ended June 30, ~~2021,~~2022, there were reductions of approximately ~~$5.8~~$1.5 million and ~~$32.6~~$2.4 million, respectively, ofin the Company’s revenue recognized ~~was allocated~~related to performance obligations partially satisfied in previous ~~periods,~~ ~~substantially all of which was associated with changes in scope or price for full service clinical studies.~~periods. The gross and net amounts of revenue recognized solely from changes in estimates were not material.

12. Segment Information

The Company is managed through 2 reportable segments: Clinical Solutions and Commercial Solutions. Each reportable segment consists of multiple service offerings that, when combined, create a fully integrated biopharmaceutical services organization. Clinical Solutions offers ~~a variety~~comprehensive global services for the development of ~~services~~ diagnostics, drugs, biologics, devices, and digital therapeutics that span~~spanning~~ Phases I to IV of clinical ~~development~~development. The segment is organized around clinical pharmacology and bioanalytical services, workforce deployment, ,full-service clinical studies, real world evidence, and consulting. This segment offers individual services including ~~full service global studies, as well as individual service offerings such as~~product development and regulatory consulting, project management, protocol development, investigational site recruitment, clinical monitoring, ~~investigator recruitment,~~technology-enabled patient recruitment ~~data management,~~ and ~~study start-up to assist customers with their drug development process.~~ engagement, clinical home health services, clinical trial diversity, biometrics, and regulatory affairs; all across a comprehensive range of therapeutic areas. Commercial Solutions provides the pharmaceutical, biotechnology, and healthcare industries with commercialization services, including deployment solutions, communication solutions ~~(public~~(public relations, advertising, and medical communications), and consulting services.

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The Company’s Chief Operating Decision Maker ~~(“CODM”~~(the “CODM”) reviews segment performance and allocates resources based upon segment revenue and income from operations. Inter-segment revenue is eliminated from the segment reporting ~~presented~~provided to the CODM and is not included in the segment revenue presented in the table below. Certain costs are not allocated to the Company’s reportable segments and are reported as general corporate expenses. These costs primarily consist of share-based compensation, general operating expenses associated with the Board and the Company’s senior leadership, finance, investor relations, and internal audit functions, and transaction and integration-related expenses. The Company does not allocate depreciation, amortization, asset impairment charges, or restructuring and other costs to its segments. Prior period segment results have been recast to ~~reflect the transfer of the Kinapse Regulatory and Operations Consulting service lines from Commercial Solutions~~conform to ~~Clinical Solutions~~insignificant changes to ~~align with~~ management reporting in ~~2021.~~2022. Additionally, the CODM reviews the Company’s assets on a consolidated basis and does not allocate assets to its reportable segments for purposes of assessing segment performance or allocating resources.

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Information about reportable segment operating results was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Revenue:
Clinical Solutions	$	991,142	$	755,822	$	1,929,096	$	1,638,323	$	1,025,715	$	992,936	$	2,044,085	$	1,932,503
Commercial Solutions		291,469		257,577		562,260		538,431		335,024		289,675		652,907		558,853
Total revenue		1,282,611		1,013,399		2,491,356		2,176,754		1,360,739		1,282,611		2,696,992		2,491,356
Segment direct costs:
Clinical Solutions		750,810		597,486		1,466,923		1,279,660		753,451		752,171		1,528,119		1,469,526
Commercial Solutions		233,644		200,300		453,686		433,958		273,578		232,283		534,543		451,083
Total segment direct costs		984,454		797,786		1,920,609		1,713,618		1,027,029		984,454		2,062,662		1,920,609
Segment selling, general, and administrative expenses:
Clinical Solutions		89,303		64,609		176,835		140,953		88,863		89,303		178,765		176,835
Commercial Solutions		20,318		18,986		41,289		41,596		21,094		20,318		42,829		41,289
Total segment selling, general, and administrative expenses		109,621		83,595		218,124		182,549		109,957		109,621		221,594		218,124
Segment operating income:
Clinical Solutions		151,029		93,727		285,338		217,710		183,401		151,462		337,201		286,142
Commercial Solutions		37,507		38,291		67,285		62,877		40,352		37,074		75,535		66,481
Total segment operating income		188,536		132,018		352,623		280,587		223,753		188,536		412,736		352,623
Direct costs and operating expenses not allocated to segments:
Share-based compensation included in direct costs		8,127		8,106		17,222		16,288		7,868		8,127		16,667		17,222
Share-based compensation included in selling, general, and administrative expenses		8,312		8,069		16,570		15,885		8,323		8,312		16,857		16,570
Corporate selling, general, and administrative expenses		26,736		16,680		47,289		35,457		20,760		26,736		40,755		47,289
Restructuring and other costs		3,966		8,171		11,194		16,891		8,983		3,966		24,540		11,194
Depreciation and amortization		57,711		56,021		115,649		112,128		61,221		57,711		123,423		115,649
Total income from operations	$	83,684	$	34,971	$	144,699	$	83,938	$	116,598	$	83,684	$	190,494	$	144,699

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13. Operations by Geographic Location

The following table summarizes total revenue by geographic area (in thousands, all intercompany transactions have been eliminated):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Revenue:
North America (a)	$	774,228	$	638,564	$	1,513,229	$	1,391,609	$	806,640	$	774,228	$	1,588,294	$	1,513,229
Europe, Middle East, and Africa		328,895		242,326		645,071		510,348		340,384		328,895		695,977		645,071
Asia-Pacific		144,233		110,186		270,690		227,239		172,965		144,233		333,768		270,690
Latin America		35,255		22,323		62,366		47,558		40,750		35,255		78,953		62,366
Total revenue	$	1,282,611	$	1,013,399	$	2,491,356	$	2,176,754	$	1,360,739	$	1,282,611	$	2,696,992	$	2,491,356

(a) Revenue for the North America region includes revenue attributable to the ~~United States~~U.S. of ~~$722.8~~$754.7 million and ~~$608.7~~$722.8 million, or ~~56.4%~~55.5% and ~~60.1%~~56.4% of total revenue, for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Revenue for the North America region includes revenue attributable to the ~~United States~~U.S. of ~~$1,416.7~~$1,491.2 million and $~~$1,322.2~~1,416.7 million, or ~~56.9%~~55.3% and ~~60.7%~~56.9% of total revenue, for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. No other country represented more than 10% of total revenue for any period.

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The following table summarizes long-lived assets by geographic area ~~(in~~(in thousands, all intercompany transactions have been eliminated):


	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Property and equipment, net:
North America (a)	$	150,296	$	161,531	$	193,233	$	165,446
Europe, Middle East, and Africa		37,239		38,745		34,330		37,004
Asia-Pacific		10,694		11,167		19,639		13,615
Latin America		5,759		4,757		7,689		6,592
Total property and equipment, net	$	203,988	$	216,200	$	254,891	$	222,657

(a) Long-lived assets for the North America region include property and equipment, net attributable to the ~~United States~~U.S. of ~~$144.5~~$186.1 million and ~~$156.0~~$160.0 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

14. Concentration of Credit Risk

Financial assets that subject the Company to credit risk primarily consist of cash and cash equivalents, accounts receivable, and unbilled services (including contract assets). The Company’s cash and cash equivalents consist principally of cash and are maintained at several financial institutions with reputable credit ratings. The Company maintains cash depository accounts with several financial institutions worldwide and is exposed to credit risk related to the potential inability to access liquidity in financial institutions where its cash and cash equivalents are concentrated. The Company has not historically incurred any losses with respect to these balances and believes that they bear minimal credit risk.

As of June 30, 2022 and December 31, 2021, substantially all of the ~~amount of~~Company’s cash and cash equivalents were held ~~outside of~~within the United States by the Company’s foreign subsidiaries was $145.0 million, or 56% of the total consolidated cash and cash equivalents balance. As of December 31, 2020, the amount of cash and cash equivalents held outside of the United States by the Company’s foreign subsidiaries was $50.7 million, or 19% of the total consolidated cash and cash equivalents balance.U.S.

No single customer accounted for greater than ~~10%~~10% of the Company’s revenue for the three and six months ended June 30, ~~2021 and 2020.~~2022 or 2021.

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As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, no single customer accounted for greater than ~~10%~~10% of the Company’s accounts receivable and unbilled services (including contract assets) balances.

15. Related-Party Transactions

For the three and six months ended June 30, ~~2021,~~2022, the Company had combined revenue of ~~$1.2~~$2.2 million and ~~$1.9~~$3.6 million, respectively, ~~and, as of~~from ~~June 30, 2021~~4~~, combined receivables of $1.6 million from 2~~ customers whose board of directors each included a member who was also a member of the Company’s Board. As of June 30, 2022, the Company had combined receivables of $0.3 million from 2 customers whose board of directors included a member who was also a member of the Company’s Board.

On February 8, 2022, the Company completed an insignificant acquisition, which was associated with the 2021 acquisition of RxDataScience, Inc., through an arm’s-length transaction. A member of the Company’s management was a minority shareholder of the acquired company. For additional information, refer to “Note 2 – Financial Statements Details – Goodwill.”

For the three and six months ended June 30, 2021, the Company ~~incurred expenses~~had combined revenue of ~~$0.7~~$1.2 million and ~~$1.4~~$1.9 million, respectively, ~~for professional services obtained from the related party noted in the paragraph below.~~

In May 2020, the Company sold its contingent staffing business to a related party in exchange for potential future cash consideration not to exceed $4.0 million. Based on the financial results of the business through May 31, 2021, the Company recognized $1.8 million of contingent consideration in other expense (income), net in the accompanying condensed consolidated statements of income for the three months ended June 30, 2021. The cash had not been receivedand, as of June 30, 2021, ~~and therefore~~combined receivables of $1.6 million from 2 customers whose board of directors each included a member who was ~~recorded as~~also a ~~receivable in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet. The future cash consideration is contingent on the financial performance~~member of the ~~sold business through May 31, 2023. The Company will recognize the contingent consideration in the consolidated statements~~Company’s Board.

Table of ~~income in the period the contingency is resolved. NaN significant related-party revenue was recorded for the six months ended June 30, 2020~~Contents.

16. Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims and legal actions arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, other than ~~the specific matters described below,~~Vaitkuvienë v. Syneos Health, Inc., et al, No. 18-0029 (E.D.N.C.) (the “Vaitkuvienë action”), if decided adversely, is not expected to have a material adverse effect on the ~~Company's~~Company’s business, financial condition, results of operations, or cash flows.

~~On December 1, 2017,~~ There have been no updates from the ~~first~~description of 2 virtually identical actions alleging federal securities law claims was filed against the Company and certain of its officers on behalf of a putative class of its shareholders. The first action, captioned Bermudez v. INC Research, Inc., et al, No. 17-09457 (S.D.N.Y.) in the Southern District of New York, names as defendants the Company, Michael Bell, Alistair Macdonald, Michael Gilbertini, and Gregory S. Rush (the “Bermudez action”), and the second action, Vaitkuvienë v. Syneos Health, Inc., et al, No. 18-0029 (E.D.N.C.) in the Eastern District of North Carolina, filed on January 25, 2018 (the “Vaitkuvienë action”), names as defendants the Company, Alistair Macdonald, and Gregory S. Rush (the “Initial Defendants”). Both complaints allege similar claims under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of purchasers of the Company’s common stock between May 10, 2017 and November 8, 2017 (for the Vaitkuvienë action) and November 9, 2017 (for the Bermudez action). The complaints allege that the Company published inaccurate or incomplete information regarding, among other things, the financial performance and business outlook for inVentiv’s business prior to the 2017 merger (the “Merger”) with Double Eagle Parent, Inc. (“inVentiv”), the parent company of inVentiv Health, Inc., and with respect to the combined company following the Merger. On January 30, 2018, 2 alleged shareholders separately filed motions seeking to be appointed lead plaintiff and approving the selection of lead counsel. On March 30, 2018, Plaintiff in the Bermudez action filed a notice of voluntary dismissal of the Bermudez action, without prejudice, and as to all defendants. On May 29, 2018, the Court in the Vaitkuvienë action ~~appointed~~included in “Note 17 – Commitments and Contingencies” to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the 2021 Form 10-K.

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San Antonio Fire & Police Pension Fund and El Paso Firemen & Policemen’s Pension Fund as Lead Plaintiffs and, on June 7, 2018, the Court entered a schedule providing for, among other things, Lead Plaintiffs to file an amended complaint by July 23, 2018 (later extended to July 30, 2018). Lead Plaintiffs filed their amended complaint on July 30, 2018, which also includes a claim against the Initial Defendants, as well as each member of the board of directors at the time of the INC Research - inVentiv Health merger vote in July 2017 (the “Defendants”), contending that the inVentiv merger proxy was misleading under Section 14(a) of the Act. Lead Plaintiffs seek, among other things, orders (i) declaring that the lawsuit is a proper class action and (ii) awarding compensatory damages in an amount to be proven at trial, including interest thereon, and reasonable costs and expenses incurred in this action, including attorneys’ fees and expert fees, to Lead Plaintiffs and other class members. Defendants filed a Motion to Dismiss Plaintiffs’ Amended Complaint on September 20, 2018. Lead Plaintiffs filed a Response in Opposition to such motion on November 21, 2018, and Defendants filed a Reply to such response on December 5, 2018. The District Court referred the Motion to Dismiss to a magistrate judge for a report and recommendation. On September 26, 2019, the magistrate judge stayed the action and, on August 7, 2020, the magistrate judge lifted the stay. Also on August 7, 2020, the magistrate judge issued a report (the “Magistrate Report”) recommending to the District Court that Defendants’ Motion to Dismiss be denied. On September 4, 2020, Defendants filed written objections to the Magistrate Report, requesting that the District Court grant the Motion to Dismiss. Lead Plaintiffs filed ~~a Response in Opposition to such objections on October 2, 2020. The Company and the other defendants deny the allegations in these complaints and intend to defend vigorously against these claims.~~

The Company is presently unable to predict the duration, scope, or result of the foregoing putative class actions, or any other related lawsuit. As such, the Company is presently unable to develop a reasonable estimate of a possible loss or range of losses, if any, related to these matters. While the Company intends to defend the putative class action litigation vigorously, the outcome of such litigation or any other litigation is necessarily uncertain. The Company could be forced to expend significant resources in the defense of these lawsuits or future ones, and it may not prevail. As such, these matters could have a material adverse effect on the Company's business, annual, or interim results of operations, cash flows, or its financial condition.

~~Assumed Contingent Tax-Sharing Obligations~~

As a result of the Merger, the Company assumed contingent tax-sharing obligations arising from inVentiv Health, Inc.’s 2016 merger with Double Eagle Parent, Inc. During the first quarter of 2021, the Company made payments of $6.2 million to fully settle this outstanding obligation. As of December 31, 2020, the estimated fair value of the assumed contingent tax-sharing obligations was $6.8 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021 (our “2021 Form 10-K”).

In addition to historical condensed consolidated financial information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. T~~herefore,~~Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such, including our business strategy, the future impact of the COVID-19 pandemic on our business, financial results, and financial condition, impacts from economic trends including inflation and increased interest rates, benefits of acquisitions, and planned capital expenditures. Without limiting the foregoing, the words “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “would,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.

We caution you that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation, regional, national, or global political, economic, business, competitive, market, and regulatory conditions and the following: risks associated with the COVID-19 pandemic; our potential failure to generate a large number of new business awards and the risk of delay, termination, reduction in scope, or failure to go to contract of our business awards; our potential failure to convert backlog to revenue; fluctuations in our operating results and effective income tax rate; the impact of potentially underpricing our contracts, overrunning our cost estimates, or failing to receive approval for or experiencing delays with documentation of change orders; cyber-security and other risks associated with our information systems infrastructure; changes and costs of compliance with regulations related to data privacy; concentration of our customers or therapeutic areas; the risks associated with doing business ~~internationally;~~internationally, including risks related to the ~~impact of the U.K.’s withdrawal from the European Union;~~war in Ukraine; challenges by tax authorities of our intercompany transfer pricing policies; our potential failure to successfully increase our market share, grow our business, and execute our growth strategies; our ability to effectively upgrade our information systems; our failure to perform our services in accordance with contractual requirements, regulatory standards, and ethical considerations; risks related to the management of clinical trials; ~~risks related to investments in our customers’ businesses or drugs and our related commercial rights strategies;~~ the need to hire, develop, and retain key personnel; the impact of unfavorable economic conditions, including the uncertain international economic environment and changes in foreign currency exchange rates; effective income tax rate fluctuations; our ability to protect our intellectual property; risks related to our acquisition strategy, including our ability to realize synergies; our relationships with customers who are in competition with each other; any failure to realize the full value of our goodwill and intangible assets; risks related to restructuring; our compliance with anti-corruption and anti-bribery laws; our dependence on third parties; potential employment liability; the increasing focus on environmental sustainability and social initiatives; our ability to utilize net operating loss carryforwards and other tax attributes; downgrades of our credit ratings; competition in the biopharmaceutical services industry; outsourcing trends and changes in aggregate spending and research and development budgets; the impact of, including changes in, government regulations and healthcare reform; intense competition faced by our customers from lower cost generic products and other competing products; our ability to keep pace with rapid technological

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change; the cost of and our ability to service our substantial indebtedness; and other risks related to ownership of our common stock. For a

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further discussion of the risks relating to our business, refer to ~~“Risk Factors” in~~ Part I, Item 1A, of“Risk Factors” in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended December 31, 2020.~~10-K.

Overview of Our Business and Services

We are ~~a leading global~~the only fully integrated biopharmaceutical solutions organization ~~providing~~purpose-built to accelerate customer success. We lead with a ~~full suite of~~product development mindset, strategically blending clinical development, medical affairs, and commercial ~~services~~capabilities to address modern market realities for customers in the biopharmaceutical, biotechnology, and healthcare industries. We offer both stand-alone and integrated biopharmaceutical product development solutions ranging from ~~Early Phase~~early phase (Phase I) clinical trials to the full commercialization of biopharmaceutical products, with the goal of increasing the likelihood of regulatory approval and commercial success.

Our operations are divided into two reportable segments, Clinical Solutions and Commercial Solutions. Our Clinical Solutions segment offers ~~a variety~~comprehensive global services for the development of ~~services~~ ~~spanning~~ diagnostics, drugs, biologics, devices, and digital therapeutics that span Phases I to IV of clinical ~~development, including full service global~~development. The segment is organized around clinical pharmacology and bioanalytical services, workforce deployment, full-service clinical studies,~~and~~ real world evidence, ~~programs, as well as individual service offerings such as clinical monitoring, investigator recruitment, patient recruitment, data management,~~ and ~~study start-up to assist customers with their drug development process.~~consulting. Our Commercial Solutions segment provides commercialization services, including deployment solutions, communication solutions ~~(public~~(public relations, advertising, and medical communications), and consulting services. We integrate our clinical and commercial capabilities into customized solutions by sharing knowledge, data, and ~~insights through our Biopharmaceutical Acceleration Model.~~insights. This collaboration across the development and commercialization continuum facilitates unique insights into patient populations, therapeutic environments, product timelines, and the competitive landscape. For a further discussion, refer to ~~“Business” in~~ Part I, Item 1, “Business” in our 2021 Form 10-K.

The ongoing COVID-19 pandemic and associated economic repercussions have significantly impacted, and are expected to continue to impact, our business and our operations. Within Clinical Solutions, the pandemic has accelerated the adoption of ~~our Annual Report on Form 10-K~~virtual engagement with sites and patients, creating increased demand for decentralized solutions capabilities. As a result, we have continued to experience reduced travel and other reimbursable out-of-pocket expenses related to lower physical monitoring visits for Clinical Solutions relative to pre-pandemic levels. We have also experienced a reduction in the ~~fiscal year ended December 31, 2020.~~

~~Prior period segment results have been recast to reflect the transfer of the Kinapse Regulatory and Operations Consulting service lines from~~costs associated with investigational medicinal products, which has also resulted in lower reimbursable out-of-pocket expenses. Within Commercial Solutions, we have continued to ~~Clinical Solutions~~experience fewer field team visits to ~~align with management reporting in 2021.~~

~~COVID-19 Pandemic~~

~~On March 11, 2020, the World Health Organization designated the outbreak of the novel strain of coronavirus that causes the disease known as COVID-19~~healthcare providers and increased virtual investigator meetings. Therefore, we expect reimbursable out-of-pocket expenses as a ~~global pandemic. Governments and businesses around the world have taken unprecedented actions~~percentage of revenue to ~~mitigate~~remain lower relative to pre-pandemic levels. With the spread of COVID-19 ~~including, but not limited to, shelter-in-place orders, quarantines, significant restrictions on travel, social distancing practices as well as restrictions that prohibit many employees from~~ ~~going to work in person. As a result, we experienced significant~~variants, the ongoing impacts toof the COVID-19 pandemic could adversely impact our business and results of operations from COVID-19 during 2020 and to a lesser extent for the six months ended June 30, 2021. While certain governments have eased restrictions, the pandemic continues to be disruptive to our business. The pandemic and associated economic impacts are expected to continue to ~~impact our future financial condition, results of operations and cash flows.~~

operations. For a further discussion of this and other risks relating to our business, refer to ~~“Risk Factors” in~~ Part I, Item 1A, of“Risk Factors” in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended~~ ~~December 31, 2020~~.10-K.

27Prior period segment results have been recast to conform to insignificant changes to management reporting in 2022.

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New Business Awards and Backlog

We add new business awards to backlog when we enter into a contract or when we receive a written commitment from the customer selecting us as a service provider, provided that:

•

collection of the award value is probable;

•

the project or projects are expected to commence within a certain period of time from the end of the quarter in which the award was granted;

•

project contingencies such as the outcome of other clinical trials, funding approvals, or other events, are not anticipated to prevent the project or projects from commencing in accordance with the expected timeline;

•

the customer has entered or intends to enter into a comprehensive contract as soon as practicable; and

•

for awards related to deployment solutions and functional service provider offerings, a maximum of twelve months of services are included in the award value.

•

~~collection of the award value is probable;~~

•

~~the project or projects are expected to commence within a certain period of time from the end of the quarter in which the award was granted;~~

•

~~the customer has entered or intends to enter into a comprehensive contract as soon as practicable; and~~

•

~~for awards related to deployment solutions and functional service provider offerings, a maximum of twelve months of services are included in the award value.~~

In addition, we continually evaluate our backlog to determine if any of the previously awarded work is no longer expected to be performed, regardless of whether we have received formal cancellation notice from the customer. If we determine that any previously awarded work is no longer probable of being performed, we remove the value from our backlog based on the risk of cancellation. We recognize revenue from these awards as services are performed, provided we have received proper authorization from the customer.

We report new business awards for our Clinical Solutions and Commercial Solutions segments on a trailing twelve months (“TTM”) basis. Our total backlog represents backlog for our Clinical Solutions segment and the deployment solutions offering within our Commercial Solutions segment. We do not report backlog for the remaining service offerings in the Commercial Solutions segment.

Backlog

Our backlog consists of anticipated future revenue from business awards that either have not started, or that are in process and have not been completed. Our backlog also reflects any cancellation or adjustment activity related to these awards. The average duration of our contracts will fluctuate from period to period based on the contracts comprising our backlog at any given time. The majority of our contracts contain early termination provisions that typically require notice periods ranging from 30 to 90 days.

Our backlog as of June 30 was as follows (in millions):


	2021		2020		Change				2022		2021		Change
Clinical Solutions	$	10,966.9	$	9,023.2	$	1,943.7	21.5	%	$	10,634.4	$	10,972.6	$	(338.2	)	(3.1	)%
Commercial Solutions - Deployment Solutions		718.4		609.7		108.7	17.8	%		821.6		718.4		103.2		14.4	%
Total backlog	$	11,685.3	$	9,632.9	$	2,052.4	21.3	%	$	11,456.0	$	11,691.0	$	(235.0	)	(2.0	)%

We expect approximately ~~$2.38~~$2.45 billionof our backlog as of June 30, ~~2021~~2022 will be recognized as revenue during the remainder of ~~2021.~~2022. We adjust the amount of our backlog each quarter for the effects of fluctuations in foreign currency exchange rates.

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Net New Business Awards

New business awards, net of cancellations, for the TTM periods ended June 30 were as follows (in millions):


	2021		2020		2022		2021
Clinical Solutions	$	4,971.5	$	4,596.4	$	3,901.5	$	4,983.2
Commercial Solutions		1,257.4		1,200.2		1,400.3		1,245.7
Total net new business awards	$	6,228.9	$	5,796.6	$	5,301.8	$	6,228.9

New business awards have varied and may continue to vary significantly from quarter to quarter. Fluctuations in our net new business award levels often result from the fact that we may receive a small number of relatively large orders in any given reporting period. Because of these large orders, our backlog and net new business awards in a reporting period may reach levels that are not sustainable in subsequent reporting periods.

We believe that our backlog and net new business awards might not be consistent indicators of future revenue because they have been, and likely will continue to be, affected by a number of factors, including the variable size and duration of projects, many of which are performed over several years, and changes to the scope of work during the course of projects. Additionally, projects may be canceled or delayed by the customer or regulatory authorities. Net new business awards and backlog have been and we expect will continue to be affected by the broad effects of the COVID-19 pandemic on the global economy and major financial markets, as well as various other risks and uncertainties detailed in Part I, Item 1A, “Risk Factors” in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended December 31, 2020.~~10-K. We generally do not have a contractual right to the full amount of the awards reflected in our backlog. If a customer cancels an award, we might be reimbursed for the costs we have incurred. As we increasingly compete for and enter into large contracts that are more global in nature, we expect that the rate at which our backlog and net new business awards convert into revenue is likely to decrease, and the duration of projects and the period over which related revenue is recognized to lengthen. For more information about risks related to our backlog see Part I, Item 1A, “Risk Factors -– Risks Related to Our Business -– Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog.” in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended December 31, 2020.~~10-K.

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Results of Operations

The following table sets forth amounts from our ~~unaudited~~ condensed consolidated statements of income along with dollar and percentage changes (in thousands, except percentages):


	Three Months Ended June 30,									Three Months Ended June 30,
	2021		2020		Change					2022		2021		Change
Revenue	$	1,282,611	$	1,013,399	$	269,212		26.6	%	$	1,360,739	$	1,282,611	$	78,128		6.1	%
Costs and operating expenses:
Direct costs (exclusive of depreciation and amortization)		992,581		805,892		186,689		23.2	%		1,034,897		992,581		42,316		4.3	%
Selling, general, and administrative expenses		144,669		108,344		36,325		33.5	%		139,040		144,669		(5,629	)	(3.9	)%
Restructuring and other costs		3,966		8,171		(4,205	)	(51.5	)%		8,983		3,966		5,017		126.5	%
Depreciation and amortization		57,711		56,021		1,690		3.0	%		61,221		57,711		3,510		6.1	%
Total operating expenses		1,198,927		978,428		220,499		22.5	%		1,244,141		1,198,927		45,214		3.8	%
Income from operations		83,684		34,971		48,713		139.3	%		116,598		83,684		32,914		39.3	%
Total other expense, net		32,645		27,323		5,322		19.5	%		12,914		32,645		(19,731	)	(60.4	)%
Income before provision for income taxes		51,039		7,648		43,391		567.4	%		103,684		51,039		52,645		103.1	%
Income tax expense		9,134		3,737		5,397		144.4	%		25,940		9,134		16,806		184.0	%
Net income	$	41,905	$	3,911	$	37,994		971.5	%	$	77,744	$	41,905	$	35,839		85.5	%

	Six Months Ended June 30,									Six Months Ended June 30,
	2021		2020		Change					2022		2021		Change
Revenue	$	2,491,356	$	2,176,754	$	314,602		14.5	%	$	2,696,992	$	2,491,356	$	205,636		8.3	%
Costs and operating expenses:
Direct costs (exclusive of depreciation and amortization)		1,937,831		1,729,906		207,925		12.0	%		2,079,329		1,937,831		141,498		7.3	%
Selling, general, and administrative expenses		281,983		233,891		48,092		20.6	%		279,206		281,983		(2,777	)	(1.0	)%
Restructuring and other costs		11,194		16,891		(5,697	)	(33.7	)%		24,540		11,194		13,346		119.2	%
Depreciation and amortization		115,649		112,128		3,521		3.1	%		123,423		115,649		7,774		6.7	%
Total operating expenses		2,346,657		2,092,816		253,841		12.1	%		2,506,498		2,346,657		159,841		6.8	%
Income from operations		144,699		83,938		60,761		72.4	%		190,494		144,699		45,795		31.6	%
Total other expense, net		46,649		34,515		12,134		35.2	%		33,318		46,649		(13,331	)	(28.6	)%
Income before provision for income taxes		98,050		49,423		48,627		98.4	%		157,176		98,050		59,126		60.3	%
Income tax expense		17,421		11,938		5,483		45.9	%		33,256		17,421		15,835		90.9	%
Net income	$	80,629	$	37,485	$	43,144		115.1	%	$	123,920	$	80,629	$	43,291		53.7	%

Revenue

For the three months ended June 30, ~~2021,~~2022, our revenue increased by ~~$269.2~~$78.1 million, or ~~26.6%~~6.1%, to ~~$1,282.6~~$1,360.7 million from ~~$1,013.4~~$1,282.6 million for the three months ended June 30, ~~2020.~~2021. For the six months ended June 30, ~~2021,~~2022, our revenue increased by ~~$314.6~~$205.6 million, or ~~14.5%~~8.3%, to ~~$2,491.4~~$2,697.0 million from ~~$2,176.8~~$2,491.4 million for the six months ended June 30, ~~2020. These~~2021. The increases were primarily driven by growth in both our Clinical Solutions and Commercial Solutions segments as discussed below.

No single customer accounted for greater than 10% of our total consolidated revenue for the three and six months ended June 30, ~~2021 and 2020.~~2022 or 2021. Revenue from our top five customers accounted for approximately 23% of revenue for both the three and six months ended June 30, 2022, and 22% of revenue for both the three and six months ended June 30, ~~2021 and 2020.~~2021.

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Revenue for each of our segments was as follows (dollars in thousands):


	Three Months Ended June 30,														Three Months Ended June 30,
	2021		% of total			2020		% of total			Change				2022		% of total			2021		% of total			Change
Clinical Solutions	$	991,142		77.3	%	$	755,822		74.6	%	$	235,320	31.1	%	$	1,025,715		75.4	%	$	992,936		77.4	%	$	32,779	3.3	%
Commercial Solutions		291,469		22.7	%		257,577		25.4	%		33,892	13.2	%		335,024		24.6	%		289,675		22.6	%		45,349	15.7	%
Total revenue	$	1,282,611				$	1,013,399				$	269,212	26.6	%	$	1,360,739				$	1,282,611				$	78,128	6.1	%

	Six Months Ended June 30,														Six Months Ended June 30,
	2021		% of total			2020		% of total			Change				2022		% of total			2021		% of total			Change
Clinical Solutions	$	1,929,096		77.4	%	$	1,638,323		75.3	%	$	290,773	17.7	%	$	2,044,085		75.8	%	$	1,932,503		77.6	%	$	111,582	5.8	%
Commercial Solutions		562,260		22.6	%		538,431		24.7	%		23,829	4.4	%		652,907		24.2	%		558,853		22.4	%		94,054	16.8	%
Total revenue	$	2,491,356				$	2,176,754				$	314,602	14.5	%	$	2,696,992				$	2,491,356				$	205,636	8.3	%

Clinical Solutions

For the three and six months ended June 30, ~~2021,~~2022, revenue attributable to our Clinical Solutions segment increased compared to the same periods in the prior year, primarily driven by ~~recovery from the COVID-19 pandemic~~increased project start-ups related to large pharmaceutical customers and, to a lesser extent, the acquisitions of ~~SHCR Holdings~~StudyKIK Corporation ~~(“Synteract”)~~ and ~~Illingworth Research Group™ (“Illingworth Research”) that were completed~~RxDataScience, Inc. in the ~~fourth quarter~~second half of ~~2020. The recovery from the COVID-19 pandemic includes increased project start-ups, including COVID-19 projects that generally have higher reimbursable out-of-pocket expenses. The revenue~~2021. These increases were partially offset by decreases in revenue from projects related to ~~the divestiture of our contingent staffing business in the second quarter of 2020.~~COVID-19, which generally experience higher reimbursable out-of-pocket expenses. For the three and six months ended June 30, ~~2021~~2022, revenue was ~~positively~~negatively impacted by ~~$27.7~~$22.9 million and ~~$37.3~~$34.7 million, respectively, from fluctuations in foreign currency exchange rates compared to the same periods in the prior year.

~~Although we are aggressively managing our response to~~The impact from the COVID-19 pandemic ~~we expect that the COVID-19 pandemic will continue to negatively impact~~on our Clinical Solutions revenue ~~throughout 2021,~~continues to decrease. We believe the primary ongoing impact to revenue from the COVID-19 pandemic relates to increased demand for decentralized solutions capabilities including remote monitoring, which results in lower reimbursable out-of-pocket expenses. Therefore, we expect reimbursable out-of-pocket expenses as a percentage of revenue to remain lower relative to pre-pandemic levels.

The war in Ukraine has not had a material impact on our revenue; however, that could change depending on the ~~continuation~~magnitude of the ~~pandemic.~~conflict and the imposition of additional sanctions by the United States (“U.S.”) and other countries. We continue to adapt our strategic approach as the crisis persists and we are continuing our risk assessments in neighboring countries to be proactive about potential future challenges. Banking and economic sanctions imposed on Russia continue to present challenges to clinical trials. We are monitoring these sanctions to ensure we are in compliance and we are adapting our operations to address both the sanctions and the increasing logistical challenges of conducting trials in Russia. At this time, we ~~believe that the ongoing~~are continuing to service patients in Ukraine and Russia in existing trials where possible. We are generally no longer initiating new clinical trial activities in either Ukraine or Russia, though we may do so on a case-by-case basis. Any impacts to our revenue ~~in our Clinical Solutions segment will~~are expected to be ~~less significant but similar~~temporary in nature as we work with customers to ~~those experienced~~explore alternate sources of recruiting new patients, including potentially activating sites in 2020 with the most significant being the trend of more remote monitoring visits and delayed patient enrollment, resulting in lower reimbursable out-of-pocket expenses and related revenue as the recovery continues. We expect a moderate increase in the use of remote monitoring from pre-COVID-19 levels, although below levels necessitated in 2020.other regions.

Commercial Solutions

For the three and six months ended June 30, ~~2021,~~2022, revenue attributable to our Commercial Solutions segment increased compared to the same periods in the prior year, primarily driven by ~~recovery~~increased project start-ups, including new deployments of field teams. For the three and six months ended June 30, 2022, revenue was negatively impacted by $5.3 million and $7.5 million, respectively, from fluctuations in foreign currency exchange rates compared to the same periods in the prior year.

Table of Contents

The impact from the COVID-19 pandemic ~~and strength in new project start-ups. The revenue increases were partially offset by decreases related to the~~ ~~divestiture of our medication adherence business in the fourth quarter of 2020.~~

~~Although we are aggressively managing our response to the COVID-19 pandemic, we expect that the COVID-19 pandemic will continue to negatively impact~~on our Commercial Solutions revenue ~~throughout 2021, depending on~~continues to decrease. We believe the ~~continuation of the pandemic. At this time, we believe that the~~primary ongoing impacts to revenue ~~in our Commercial Solutions segment will be temporary and~~ relate to ~~delayed decision-making related to new business awards, delays or cancellations of existing projects,~~ declines in field team visits to healthcare providers and increased virtual investigator meetings, ~~and travel disruptions, similar to but less significant than those experienced in 2020, resulting~~which result in lower reimbursable out-of-pocket expenses. Therefore, we expect reimbursable out-of-pocket expenses ~~and~~as a percentage of revenue to remain lower relative to pre-pandemic ~~levels as the recovery continues.~~ levels.

~~Table of Contents~~

Direct Costs

Direct costs consist principally of compensation expense and benefits associated with our employees and other employee-related costs, and reimbursable out-of-pocket expenses directly related to delivering on our projects. While we have some ability to manage the majority of these costs relative to the amount of contracted services we have during any given period, direct costs as a percentage of revenue can vary from period to period. Such fluctuations are due to a variety of factors, including, among others: (i) the level of staff utilization on our projects; (ii) adjustments to the timing of work on specific customer contracts; (iii) the experience mix of personnel assigned to projects; (iv) the service mix and pricing of our contracts; and (v) the timing of the incurrence of reimbursable out-of-pocket expenses. Relative to pre-pandemic levels, we ~~have experienced~~continue to experience reduced travel and other reimbursable out-of-pocket expenses related to lower physical monitoring visits for Clinical Solutions, as well as fewer field team visits to healthcare providers and investigator meetings for Commercial Solutions. As discussed above, we expect reimbursable out-of-pocket expenses to remain lower relative to pre-pandemic levels.

Direct costs ~~consisted of the following~~were as follows (dollars in thousands):


	Three Months Ended June 30,										Three Months Ended June 30,
	2021			2020			Change				2022			2021			Change
Direct costs (exclusive of depreciation and amortization)	$	992,581		$	805,892		$	186,689	23.2	%	$	1,034,897		$	992,581		$	42,316	4.3	%
% of revenue		77.4	%		79.5	%						76.1	%		77.4	%
Gross margin %		22.6	%		20.5	%						23.9	%		22.6	%

	Six Months Ended June 30,										Six Months Ended June 30,
	2021			2020			Change				2022			2021			Change
Direct costs (exclusive of depreciation and amortization)	$	1,937,831		$	1,729,906		$	207,925	12.0	%	$	2,079,329		$	1,937,831		$	141,498	7.3	%
% of revenue		77.8	%		79.5	%						77.1	%		77.8	%
Gross margin %		22.2	%		20.5	%						22.9	%		22.2	%

For the three months ended June 30, ~~2021,~~2022, our direct costs increased by ~~$186.7~~$42.3 million, or ~~23.2%~~4.3%, compared to the three months ended June 30, ~~2020.~~2021. For the six months ended June 30, ~~2021,~~2022, our direct costs increased by ~~$207.9~~$141.5 million, or ~~12.0%~~7.3%, compared to the six months ended June 30, ~~2020. These~~2021. The increases were primarily driven by ~~higher reimbursable out-of-pocket expenses, temporary cost management strategies in response~~increased billable headcount to ~~the COVID-19 pandemic in the prior year, and impacts from the acquisitions that were completed in the fourth quarter~~support revenue growth.

Table of ~~2020. These increases were partially offset by decreases from business divestitures in 2020.~~ Contents

Clinical Solutions

~~Clinical Solutions~~

Direct costs for our Clinical Solutions segment, excluding share-based compensation expense, were as follows (dollars in thousands):


	Three Months Ended June 30,										Three Months Ended June 30,
	2021			2020			Change				2022			2021			Change
Direct costs	$	750,810		$	597,486		$	153,324	25.7	%	$	753,451		$	752,171		$	1,280	0.2	%
% of segment revenue		75.8	%		79.1	%						73.5	%		75.8	%
Segment gross margin %		24.2	%		20.9	%						26.5	%		24.2	%

	Six Months Ended June 30,										Six Months Ended June 30,
	2021			2020			Change				2022			2021			Change
Direct costs	$	1,466,923		$	1,279,660		$	187,263	14.6	%	$	1,528,119		$	1,469,526		$	58,593	4.0	%
% of segment revenue		76.0	%		78.1	%						74.8	%		76.0	%
Segment gross margin %		24.0	%		21.9	%						25.2	%		24.0	%

~~Table of Contents~~

For the three months ended June 30, ~~2021,~~2022, our Clinical Solutions segment direct costs increased by ~~$153.3~~$1.3 million, or ~~25.7%~~0.2%, compared to the three months ended June 30, ~~2020.~~2021. For the six months ended June 30, ~~2021,~~2022, our Clinical Solutions segment direct costs increased by ~~$187.3~~$58.6 million, or ~~14.6%~~4.0%, compared to the six months ended June 30, ~~2020. These~~2021. The increases were primarily driven by ~~higher reimbursable out-of-pocket expenses, temporary cost management strategies in response~~increased billable headcount to ~~the COVID-19 pandemic in the prior year, impacts from the acquisitions that were completed in the fourth quarter of 2020, and the negative impacts of foreign exchange rate fluctuations. These~~support revenue growth. The increases were partially offset by ~~the divestiture of our~~ ~~contingent staffing business in the second quarter of 2020 and~~ positive impacts from fluctuations in foreign currency exchange rates, lower reimbursable out-of-pocket expenses related to COVID-19 projects, and our ForwardBound margin enhancement initiative.

Gross margins for our Clinical Solutions segment were ~~24.2%~~26.5% and ~~20.9%~~24.2% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~24.0%~~25.2% and ~~21.9%~~24.0% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Gross margins were higher during the current year periods as compared to the same periods in the prior year primarily due to ~~revenue growth~~lower reimbursable out-of-pocket expenses and positive impacts from ~~our~~ ~~ForwardBound~~ ~~margin enhancement initiative,~~fluctuations in foreign exchange rates, partially offset by ~~higher reimbursable out-of-pocket expenses~~ increased billable headcount costs and~~the negative impacts~~ a larger proportion of ~~foreign exchange rate fluctuations.~~contract labor.

Commercial Solutions

Direct costs for our Commercial Solutions segment, excluding share-based compensation expense, were as follows (dollars in thousands):


	Three Months Ended June 30,
	2022			2021			Change
Direct costs	$	273,578		$	232,283		$	41,295	17.8	%
% of segment revenue		81.7	%		80.2	%
Segment gross margin %		18.3	%		19.8	%

	Six Months Ended June 30,
	2022			2021			Change
Direct costs	$	534,543		$	451,083		$	83,460	18.5	%
% of segment revenue		81.9	%		80.7	%
Segment gross margin %		18.1	%		19.3	%

Three Months Ended June 30,

2021

2020

Change

Direct costs

$
233,644

$
200,300

$
33,344

16.6
%
% of segment revenue

80.2
%

77.8
%

Segment gross margin %

19.8
%

22.2
%

Six Months Ended June 30,

2021

2020

Change

Direct costs

$
453,686

$
433,958

$
19,728

4.5
%
% of segment revenue

80.7
%

80.6
%

Segment gross margin %

19.3
%

19.4
%

For the three months ended June 30, ~~2021,~~2022, our Commercial Solutions segment direct costs increased by ~~$33.3~~$41.3 million, or ~~16.6%~~17.8%, compared to the three months ended June 30, ~~2020.~~2021. For the six months ended June 30, ~~2021,~~2022, our Commercial Solutions segment direct costs increased by ~~$19.7~~$83.5 million, or ~~4.5%~~18.5%, compared to the six months ended June 30, ~~2020.~~2021. These increases were primarily ~~related~~driven by increased billable headcount to ~~recovery from the COVID-19 pandemic and temporary cost management strategies in the prior year, partially offset by the divestiture~~support revenue growth.

Table of ~~our medication adherence business in the fourth quarter of 2020.~~Contents

Gross margins for our Commercial Solutions segment were ~~19.8%~~18.3% and ~~22.2%~~19.8% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~19.3%~~18.1% and ~~19.4%~~19.3% for the six months ended June 30, 2022 and 2021, ~~and 2020.~~respectively. Gross margins were lower during the current year periods as compared to the same periods in the prior year ~~primarily~~ due to higher costs in the current year primarily driven by recovery from the COVID-19 pandemic, including the impact of temporary cost management strategies in response to the COVID-19 pandemic in the prior year.a less favorable revenue mix.

~~Table of Contents~~

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were as follows (dollars in thousands):


	Three Months Ended June 30,										Three Months Ended June 30,
	2021			2020			Change				2022			2021			Change
Selling, general, and administrative expenses	$	144,669		$	108,344		$	36,325	33.5	%	$	139,040		$	144,669		$	(5,629	)	(3.9	)%
% of total revenue		11.3	%		10.7	%						10.2	%		11.3	%

	Six Months Ended June 30,										Six Months Ended June 30,
	2021			2020			Change				2022			2021			Change
Selling, general, and administrative expenses	$	281,983		$	233,891		$	48,092	20.6	%	$	279,206		$	281,983		$	(2,777	)	(1.0	)%
% of total revenue		11.3	%		10.7	%						10.4	%		11.3	%

Selling, general, and administrative expenses for the three and six months ended June 30, ~~2021 increased~~2022 decreased compared to the same periods in ~~2020~~2021 primarily due to ~~the acquisitions that were completed in the fourth quarter of 2020, including higher~~lower transaction, integration-related, and ~~integration-related expenses, and temporary cost management strategies in response to the COVID-19 pandemic in the prior year.~~other expenses. These ~~increases~~decreases were partially offset by ~~positive impacts from our~~ ~~ForwardBound~~ ~~margin enhancementinitiative. Transaction and integration-related expenses are no longer reported separately and are included in selling,~~increased headcount. Selling, general, and administrative ~~expenses.~~expenses for the three and six months ended June 30, 2022 included costs resulting from the war in Ukraine, including incremental costs related to impacted employees and ongoing assessment of imposed sanctions.

Restructuring and Other Costs

Restructuring and other costs were ~~$4.0~~$9.0 millionand ~~$8.2~~$4.0 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$11.2~~$24.5 million and ~~$16.9~~$11.2 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The costs incurred during the three and six months ended June 30, 2022 and 2021 were primarily related to our ForwardBound margin enhancement initiative as we continue the ongoing evaluations of our workforce and facilities infrastructure needs in an effort to optimize our resources. ~~The costs incurred during~~ForwardBound includes optimization programs across our entire business. During the ~~three~~first half of 2022, these ForwardBound initiatives included specific actions focused on streamlining the operations of our Clinical Solutions segment to optimize efficiency and ~~six months ended June 30, 2020 were primarily related to our cost management strategies in response to~~enhance the ~~COVID-19 pandemic as well as our~~ ~~ForwardBound~~delivery of customer projects. ~~initiative.~~

Restructuring and other costs consisted of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Employee severance and benefit costs	$	2,084	$	7,647	$	8,377	$	15,268	$	2,368	$	2,084	$	17,188	$	8,377
Facility and lease termination costs		1,882		375		2,770		1,108		3,671		1,882		3,352		2,770
Other costs		—		149		47		515		2,944		—		4,000		47
Total restructuring and other costs	$	3,966	$	8,171	$	11,194	$	16,891	$	8,983	$	3,966	$	24,540	$	11,194

We expect to continue to incur costs related to the restructuring of our operations in order to achieve cost savings and the targeted synergies related to our acquisitions. However, the timing and the amount of these costs depends on various factors, including, but not limited to, identifying and realizing synergy opportunities and executing the integration of our combined operations. We may also continue to incur additional restructuring and other costs during 2022 and beyond ~~2021~~ related to our ForwardBound margin enhancement initiative.

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Depreciation and Amortization Expense

Total depreciation and amortization expense was ~~$57.7~~$61.2 million and ~~$56.0~~$57.7 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$115.6~~$123.4 million and ~~$112.1~~$115.6 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The increases in total depreciation and amortization expense in the current year compared to the prior year periods were primarily due to ~~the~~vehicle fleet leases, internal-use software, and intangible assets from acquisitions ~~that were~~ completed in the ~~fourth quarter~~second half of ~~2020, partially offset by decreases due to fully amortized intangible assets from prior acquisitions.~~2021.

Total Other Expense, Net

Total other expense, net consisted of the following (dollars in thousands):


	Three Months Ended June 30,											Three Months Ended June 30,
	2021			2020			Change					2022			2021			Change
Interest income	$	—		$	(122	)	$	122		100.0	%	$	(36	)	$	—		$	(36	)	n/m
Interest expense		22,619			21,684			935		4.3	%		18,102			22,619			(4,517	)		(20.0	)%
Loss on extinguishment of debt		2,199			—			2,199		100.0	%		—			2,199			(2,199	)		(100.0	)%
Other expense, net		7,827			5,761			2,066		35.9	%
Other (income) expense, net													(5,152	)		7,827			(12,979	)	n/m
Total other expense, net	$	32,645		$	27,323		$	5,322		19.5	%	$	12,914		$	32,645		$	(19,731	)		(60.4	)%

	Six Months Ended June 30,											Six Months Ended June 30,
	2021			2020			Change					2022			2021			Change
Interest income	$	(71	)	$	(458	)	$	387		84.5	%	$	(39	)	$	(71	)	$	32			45.1	%
Interest expense		45,947			48,142			(2,195	)	(4.6	)%		33,867			45,947			(12,080	)		(26.3	)%
Loss on extinguishment of debt		2,802			—			2,802		100.0	%		—			2,802			(2,802	)		(100.0	)%
Other income, net		(2,029	)		(13,169	)		11,140		84.6	%		(510	)		(2,029	)		1,519			74.9	%
Total other expense, net	$	46,649		$	34,515		$	12,134		35.2	%	$	33,318		$	46,649		$	(13,331	)		(28.6	)%

Total other expense, net was ~~$32.6~~$12.9 million and ~~$27.3~~$32.6 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$46.6~~$33.3 millionand ~~$34.5~~$46.6 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~increase~~decreases in interest expense for the three months ended June 30, 2021 was primarily due to a higher fixed rate on the interest rate swaps that expired on June 30, 2021, which was not fully offset by the lower interest rates on our variable interest rate debt. ~~The decrease in interest expense for the six months ended June 30, 2021 was~~were primarily due to reductions in our higher interest rate debt as a result of debt prepayments and refinancing ~~transactions, as well as lower~~transactions. Due to market forecasts for the London Inter-bank Offered Rate (“LIBOR”), we believe we may experience higher interest ~~rates on our variable interest rate debt. The loss on extinguishment~~expense during the remainder of ~~debt was~~ the ~~result of our debt prepayments and refinancing transaction.~~ year relative to the first half. Other (income) expense, net ~~and other income, net~~ primarily ~~consist~~consists of foreign currency gains and losses that result from exchange rate fluctuations on our monetary asset balances denominated in currencies other than our functional ~~currency.~~currency, other gains and losses related to investments, and contingent consideration related to divested businesses.

Income Tax Expense

For the three and six months ended June 30, 2022, we recorded income tax expense of $25.9 million and $33.3 million, respectively, compared to pre-tax income of $103.7 million and $157.2 million, respectively. Income tax expense for the three and six months ended June 30, 2022 included discrete tax benefits of $0.3 million and $6.4 million, respectively, primarily related to excess tax benefits from share-based compensation. The effective tax rates for the three and six months ended June 30, 2022, excluding discrete items, varied from the U.S. federal statutory income tax rate of 21.0% primarily due to state and local taxes on U.S. income, foreign income inclusions such as the Global Intangible Low-Taxed Income (“GILTI”) provisions, and research and development credits.

Table of Contents

For the three and six months ended June 30, 2021,, we recorded income tax expense of $9.1 million and $17.4 million, respectively, compared to pre-tax income of $51.0 million and $98.1 million, respectively. Income tax expense for the three and six months ended June 30, 2021 included discrete tax benefits of $2.2 million and $5.8 million, respectively, primarily related to excess tax benefits from share-based compensation. The effective tax rates for the three and six months ended June 30, 2021, excluding discrete items, varied from the U.S. federal statutory income tax rate of 21.0% primarily due to foreign tax credits, foreign income inclusions such as the ~~Global Intangible Low-Taxed Income (“GILTI”)~~GILTI provisions, and state and local taxes on U.S. income.

~~Table of Contents~~

~~For the three and six months ended June 30, 2020, we recorded income tax expense of $3.7 million and $11.9 million, respectively, compared to pre-tax income~~ of $7.6 million and $49.4 million, respectively. Income tax expense for the three and six months ended June 30, 2020 included a discrete tax expense of $1.6 million and a discrete tax benefit of $5.5 million, respectively, primarily related to excess tax benefits from share-based compensation and the benefit from foreign tax credits claimed on amended returns filed during the year. The effective tax rates for the three and six months ended June 30, 2020, excluding discrete items, varied from the U.S. federal ~~statutory income tax rate of 21.0% primarily due to foreign income inclusions such as the GILTI provisions, state and local taxes on U.S. income, and research and general business credits.~~

We currently maintain a valuation allowance against a portion of our state deferred tax assets and a portion of our foreign deferred tax assets as of June 30, ~~2021.~~2022. We intend to continue to maintain a valuation allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Liquidity and Capital Resources

Key measures of our liquidity were as follows (in thousands):


	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Balance sheet statistics:
Cash and cash equivalents	$	260,868	$	271,901	$	105,880	$	106,363
Restricted cash		267		272		108		112
Working capital (excluding restricted cash)		151,681		160,409		174,304		112,228

As of June 30, ~~2021,~~2022, we had ~~$261.1~~$106.0 million of cash, cash equivalents, and restricted cash. As of June 30, ~~2021, the amount~~2022, substantially all of our cash, ~~and~~ cash equivalents, and restricted cash was held ~~outside of~~within the ~~United States by our foreign subsidiaries was $145.0 million, or 56% of the total consolidated cash and cash equivalents balance.~~U.S. In addition, we had ~~$583.3~~$550.9 million (net of ~~$16.7~~$14.1 million in outstanding letters of credit (“LOCs”)) available for borrowing under our revolving credit facility (the “Revolver”), of which ~~$133.3~~$135.9 million was available for LOCs.

We have historically funded our operations and growth, including acquisitions, primarily with our working capital, cash flow from operations, and funds available through various borrowing arrangements. Our principal liquidity requirements are to fund our debt service obligations, capital expenditures, expansion of service offerings, possible acquisitions, integration and restructuring costs, geographic expansion, stock repurchases, working capital, and other general corporate expenses. Cash flow from operations also could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic on the global economy and major financial markets, as well as other risks detailed in Part I, Item 1A, “Risk Factors” in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended December 31, 2020~~.10-K. Based on past performance and current expectations, we believe our cash and cash equivalents, cash generated from operations, and funds available under the Revolver will be sufficient to meet our working capital needs, capital expenditures, scheduled debt and interest payments, income tax obligations, and other currently anticipated liquidity requirements for at least the next 12 months.

Indebtedness

As of June 30, ~~2021,~~2022, we had approximately ~~$2.92~~$2.89 billion of total principal indebtedness (including ~~$42.9~~$73.1 million in finance lease obligations), consisting of ~~$1.91~~$1.79 billion in term loan debt, $35.0 million under our Revolver, $600.0 million of ~~3.625%~~ senior notes (the “Notes”), and ~~$365.0~~$400.0 million in borrowings against our accounts receivable financing agreement. ~~Approximately $859.5 million~~ See “Note 4 – Long-Term Debt Obligations” of our ~~indebtedness (excluding finance leases) was subject to variable interest rates.~~

unaudited condensed consolidated financial statement~~Table~~s in Part I, Item 1 of ~~Contents~~

~~The Notes~~

On November 24, 2020, we completed the issuance and sale of $600.0 million aggregate principal amount of the Notes. The Notes were issued pursuant to an indenture (the “Indenture”), which provides, among other things, that the Notes are senior unsecured obligations of us and are guaranteed, jointly and severally,this Quarterly Report on ~~a senior unsecured basis, by certain of our subsidiaries.~~

We may redeem some or all of the Notes at any time prior to January 15, 2024 at a redemption price equal to 100% of the aggregate principal amount of the Notes to be redeemed plus a “make-whole” premium and accrued and unpaid interest. In addition, prior to July 15, 2023, we may redeem up to 40% of the original principal amount of the Notes with proceeds of certain equity offerings at a redemption price equal to 103.625% of the aggregate principal amount of such Notes plus accrued and unpaid interest. On or after January 15, 2024, we may redeem some or all of the Notes at the redemption prices set forth in the Indenture plus accrued and unpaid interest. The Indenture contains covenants that limit the ability of us and our restricted subsidiaries to, among other things, (1) incur additional liens, (2) engage in certain sale and leaseback transactions, and (3) conduct mergers, consolidations, or asset sales. These covenants are subject to exceptions and qualifications set forth in the Indenture.

If we sell certain of our assets or experience specific kinds of changes of control, we are required to offer to repurchase the Notes at a repurchase price equal to (1) par plus any accrued and unpaid interest in the case of an asset sale or (2) 101% of the aggregate principal amount thereof plus any accrued and unpaid interest in the case of a change of control.

~~Credit Agreement~~

~~We are party to a credit agreement (as amended, the “Credit Agreement”) that included a $1.55 billion Term Loan A facility (“Term Loan A”)~~ ~~that has two tranches, tranche one that matures on March 26, 2024 and tranche two that matures on August 1, 2024, a $1.60 billion Term Loan B facility (“Term Loan B”) that was paid in full during the second quarter of 2021, and a $600.0 million Revolver that matures on August 1, 2024.~~ ~~The Revolver includes LOCs with a sublimit of $150.0 million.~~

In February 2021, as a result of our First Lien Leverage Ratio (as defined in the Credit Agreement) being less than or equal to 2.5x, the Adjusted Eurocurrency Rate Spread (as defined in the Credit Agreement) on Term Loan A and the Revolver decreased from 1.50% to 1.25%.

On June 30, 2021 (the “Closing Date”), we entered into Amendment No. 5 (the “Fifth Amendment”) to the Credit Agreement. The Fifth Amendment modified the Credit Agreement to increase Term Loan A in an aggregate principal amount of $495.0 million (“Incremental Term Loan A”). Incremental Term Loan A was funded on the Closing Date, and the proceeds were used, along with cash on hand, to repay the outstanding Term Loan B in full under the Credit Agreement and to pay fees and expenses in connection with the Fifth Amendment and the incurrence of Incremental Term Loan A. Incremental Term Loan A has the same terms as Term Loan A under the Credit Agreement, and is subject to the same covenants. We recorded an additional discount of $0.5 million against the Term Loan A borrowings in connection with the Fifth Amendment, which is being amortized as a component of interest expense using the effective interest method over the term of Term Loan A.

During the six months ended June 30, 2021, we made $41.8 million and $560.5 million of voluntary prepayments against Term Loan A and Term Loan B, respectively, which were applied to future principal payments. As a result of these and previous voluntary prepayments, we are not required to make a mandatory payment against the principal balance of Term Loan A until October 2022 ~~and Term Loan B has been paid in full. In connection with these~~ ~~prepayments, we recorded a $2.2 million and $2.8 million loss on extinguishment of debt during the three and six months ended June 30, 2021, respectively.~~

~~Table of Contents~~

~~Our ability to make payments on our indebtedness and to fund planned capital expenditures~~ and necessary working capital will depend on our ability to generate cash in the future. Our ability to meet our cash needs through cash flows from operations will depend on the demand for our services,Form 10-Q as well as general economic, financial, competitive, and other factors, many of which are beyond our control, including the broad effects of the COVID-19 pandemic on the global economy and major financial markets. Our business may not generate cash flow in an amount sufficient to enable us to pay the principal of, or interest on, our indebtedness, or to fund our other liquidity needs, including working capital, capital expenditures, acquisitions, investments, and other general corporate requirements. If we cannot fund our liquidity needs, we will have to take actions such as reducing or delaying capital expenditures, acquisitions or investments, selling assets, restructuring or refinancing our debt, reducing the scopePart II, Item 7 of our ~~operations and growth plans, or seeking~~2021 Form 10-K for additional ~~capital. We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all, or that they would permit us to meet~~details regarding our ~~scheduled~~long-term debt service obligations. The Credit Agreement contains covenant restrictions that limit our ability to direct the use of proceeds from any disposition of assets and, as a result, we may not be allowed to use the proceeds from any such dispositions to satisfy all currentarrangements.

Our long-term debt ~~service obligations.~~

~~Debt Covenants~~

~~Our Credit Agreement contains usual and~~arrangements contain customary restrictive ~~covenants. Our Credit Agreement requires us to maintain a maximum First Lien Leverage Ratio (as defined in the Credit Agreement) of no more than 4.5 to 1.0~~covenants and, as ~~of the last day of each fiscal quarter from and after March 31, 2020.~~

The Indenture also contains customary events of default, including (1) failure to make required payments, (2) failure to comply with certain covenants, (3) failure to pay certain other indebtedness, (4) certain events of bankruptcy and insolvency, and (5) failure to pay certain judgments. An event of default under the Indenture allows either the Trustee or the holders of at least 25% in aggregate principal amount of the Notes, as applicable, issued under such Indenture, to accelerate the amounts due under the Notes, or in the case of a bankruptcy or insolvency, will automatically cause the acceleration of the amounts due under the Notes.

As of June 30, ~~2021,~~2022, we were in compliance with all applicable debt covenants.

~~Revolver and Letters of Credit~~

The Revolver includes LOCs with a sublimit of $150.0 million. As of June 30, 2021, there were no outstanding Revolver borrowings and $16.7 million of LOCs outstanding, leaving $583.3 million of available borrowings under the Revolver, including $133.3 million available for LOCs.

~~Accounts Receivable Financing Agreement~~

We have an accounts receivable financing agreement (as amended) with a termination date of October 3, 2022, unless terminated earlier pursuant to its terms. On January 28, 2021, we amended this agreement to increase the amount we can borrow from $300.0 million to $365.0 million, and drew down the additional $65.0 million to partially fund the Term Loan A and Term Loan B voluntary prepayments. Accordingly, ~~there was no incremental impact on the outstanding principal of our debt.~~ 34~~As of June 30, 2021, we had $365.0 million of outstanding borrowings under this agreement with no remaining borrowing capacity available.~~

Table of Contents

Interest Rates

We have entered into various interest rate swaps to mitigate our exposure to changes in interest rates on our term ~~loans.~~loan. As of June 30, ~~2021,~~2022, the percentage of our total principal debt (excluding finance leases) that is subject to fixed interest rates was approximately ~~70%~~59%. Each quarter-point increase or decrease in the applicable floating interest rate atas of June 30, ~~2021~~2022 would change our annual interest expense by approximately ~~$2.1~~$2.9 million.

Stock Repurchase ~~Program~~Programs

~~On November 17, 2020, our Board authorized~~During the ~~repurchase of up to an aggregate of $300.0 million of our Class A common stock, par value $0.01 per~~three months ended June 30, 2022, there were no share to be executed from time to time in open market transactions effected through a broker at prevailing market prices, in block trades, or through privately negotiated transactions through December 31, 2022 (the “Stock Repurchase Program”). Therepurchases under either the 2021 Stock Repurchase Program ~~took effect on January 1, 2021. Share repurchases are funded primarily with our working capital, cash flow from operations, and funds available through various borrowing arrangements.~~

~~The~~or the 2022 Stock Repurchase ~~Program does not obligate us to repurchase any particular amount~~Program. See “Note 8 – Shareholders’ Equity” of our ~~Class A common stock, and may be modified, extended, suspended, or discontinued at any time. The timing and amount~~unaudited condensed consolidated financial statements in Part I, Item 1 of ~~repurchases are determined by our management based~~this Quarterly Report on a variety of factors such as the market price of our Class A common stock, our corporate cash requirements, and overall market conditions. The Stock Repurchase Program is subject to applicable legal requirements, including federal and state securities laws ~~and applicable Nasdaq rules~~Form 10-Q for additional details.. We may also repurchase shares of our Class A common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares of our Class A common stock to be repurchased when we might otherwise be precluded from doing so by law.

~~The following table sets forth repurchase activity under the Stock Repurchase Program from inception through June 30, 2021:~~

Total number of
shares purchased

Average price
paid per share

Approximate
dollar value of
shares purchased
(in thousands)

March 2021

600,000

$
74.18

$
44,505

May 2021

400,000

81.04

32,416

June 2021

500,000

81.20

40,600

Total

1,500,000

$
117,521

As of June 30, ~~2021,~~2022, we had remaining authorization to repurchase up to ~~approximately $182.5~~$350.0 million of shares of our common stock under the 2022 Stock Repurchase Program.

Cash, Cash Equivalents and Restricted Cash

Our cash flows from operating, investing, and financing activities were as follows (in thousands):


	Six Months Ended June 30,									Six Months Ended June 30,
	2021			2020			Change			2022			2021			Change
Net cash provided by operating activities	$	215,795		$	155,165		$	60,630		$	170,789		$	215,795		$	(45,006	)
Net cash used in investing activities		(31,280	)		(37,280	)		6,000			(51,063	)		(31,280	)		(19,783	)
Net cash (used in) provided by financing activities		(190,823	)		56,238			(247,061	)
Net cash used in financing activities											(134,519	)		(190,823	)		56,304

~~Table of Contents~~

Cash Flows from Operating Activities

Cash flows provided by operating activities ~~increased~~decreased by ~~$60.6~~$45.0 million during the six months ended June 30, ~~2021~~2022 compared to the six months ended June 30, ~~2020.~~2021. The ~~increase~~decrease is primarily due to ~~higher cash-related net income and positive~~negative changes in operating assets and liabilities relative to the prior year ~~period.~~period, partially offset by higher cash-related net income. Fluctuations in accounts receivable, unbilled services (including contract assets), and deferred revenue occur on a regular basis as we perform services, achieve milestones or other billing criteria, send invoices to customers, and collect outstanding accounts receivable. This activity varies by individual customer and contract. We attempt to negotiate payment terms that provide for payment of services prior to or soon after the provision of services, but the levels of accounts receivable, unbilled services (including contract assets), and deferred revenue can vary significantly from period to ~~period~~.period.

Cash Flows from Investing Activities

For the six months ended June 30, 2022, we used $51.1 million in cash for investing activities, which included $47.9 million for purchases of property and equipment. We continue to closely monitor our capital expenditures while making strategic investments in the development of our information technology infrastructure to meet the needs of our workforce, enable efficiencies, reduce business continuity risks, and conform to changes in governing rules and regulations.

For the six months ended June 30, 2021, we used $31.3 million in cash for investing activities, which consisted of $14.6 million of payments related to acquisitions and $22.3 million for purchases of property and equipment, partially offset by proceeds of $5.0 million from notes receivable from a divestiture and $0.7 million from unconsolidated affiliates. ~~We continue to closely monitor our capital expenditures, especially in light~~

Table of the COVID-19 pandemic, while making strategic investments in the development of our information technology infrastructure to meet the needs of our workforce, enable efficiencies, reduce business continuity risks, and conform to changes in governing rules and regulations.Contents

Cash Flows from Financing Activities

For the six months ended June 30, ~~2020~~,2022, we used ~~$37.3~~$134.5 million in cash for ~~investing~~financing activities, which consisted primarily of ~~$30.1 million~~repurchases of our common stock and payments related to tax withholdings for ~~purchases of property and equipment and $7.2 million for investments in unconsolidated affiliates.~~share-based compensation. These payments were partially offset by net proceeds from our Revolver.

~~Cash Flows from Financing Activities~~

For the six months ended June 30, 2021, we used $190.8 million in cash for financing activities, which consisted primarily of repurchases of our common stock, net repayments of long-term debt, and payments related to tax withholdings for share-based compensation. These payments were partially offset by proceeds from our accounts receivable financing ~~arrangement.~~agreement.

~~For the~~ ~~six months ended June 30, 2020, our financing activities provided~~ ~~$56.2 million~~in cash, which consisted primarily of a net $150.0 million draw on our Revolver, partially offset by repurchases of our common stock, contingent consideration payments, and repayments of long-term debt.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses during the period, as well as disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, valuation of goodwill and identifiable intangibles, and tax-related contingencies and valuation allowances. These estimates are based on the information available to management at the time these estimates, judgments, and assumptions are made. Actual results may differ materially from these estimates. There have been no significant changes to our critical accounting policies and ~~estimates.~~estimates from those disclosed in our 2021 Form 10-K. For additional information on all of our critical accounting policies and estimates, refer to Part II -– Item 7 -– Management’s Discussion and Analysis included in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended December 31, 2020.~~10-K.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our ~~Annual Report on~~2021 Form ~~10-K for the fiscal year ended~~ ~~December 31, 2020~~.10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Changes in Internal Controls

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

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are party to legal proceedings incidental to our business. While our management currently believes the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our consolidated financial statements, litigation is subject to inherent uncertainties. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on our financial condition and results of operations.

~~Please refer to “Note 16 – Commitments and Contingencies”~~ ~~of our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q~~ ~~for additional material developments to legal proceedings included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.~~

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in our ~~Annual Report on~~2021 Form ~~10-K for the year ended~~ ~~December 31, 2020. Refer to “Risk Factors” in Part 1, Item 1A of that report for~~10-K. For a detailed discussion of risk factors affecting ~~us.~~us, refer to Part I, Item 1A, “Risk Factors” in that report.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

Recent Sales of Unregistered Securities

Not applicable.

~~Table of Contents~~

Purchases of Equity Securities by the Issuer

During the three months ended June 30, 2021, we repurchased 900,000 shares of our Class A common stock, $0.01 par value per share in private transactions under our previously announced stock repurchase program described below, for a total purchase price of approximately $73.0 million. As of June 30, 2021, we have remaining authorization to repurchase up to approximately $182.5 million of shares of our Class A common stock under the Stock Repurchase Program.

Period

Total number of shares purchased

Average price paid per share

Total number of shares purchased as part of publicly announced plans or programs (1)

Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)

April 1, 2021 - April 30, 2021

—

$
—

—

$
255,495

May 1, 2021 - May 31, 2021

400,000

$
81.04

400,000

$
223,079

June 1, 2021 - June 30, 2021

500,000

$
81.20

500,000

$
182,479

900,000

900,000

~~(1)~~ On November 17, 2020, our Board authorized the repurchase of up to an aggregate of $300.0 million of our Class A common stock, par value $0.01 per share, to be executed from time to time in open market transactions effected through a broker at prevailing market prices, in block trades, or through privately negotiated transactions through December 31, 2022 (the ~~“Stock~~“2021 Stock Repurchase Program”). The 2021 Stock Repurchase Program took effect on January 1, 2021.

On May 25, 2022, our Board approved a new stock repurchase program (the “2022 Stock Repurchase Program”) that took effect immediately and replaced the 2021 Stock Repurchase Program. The 2022 Stock Repurchase Program authorizes the repurchase of up to an aggregate of $350.0 million of our Class A common stock, par value $0.01, and will expire on December 31, 2024. Share repurchases are funded primarily with our working capital, cash flow from operations, and funds available through various borrowing arrangements.

The 2022 Stock Repurchase Program does not obligate us to repurchase any particular amount of our Class A common stock, and may be modified, extended, suspended, or discontinued at any time. The timing and amount of repurchases ~~are~~will be determined by our management based on a variety of factors such as the market price of our Class A common stock, our corporate cash requirements, and overall market conditions. The 2022 Stock Repurchase Program is subject to applicable legal requirements, including federal and state securities laws and applicable Nasdaq ~~rules~~.rules. We may also repurchase shares of our Class A common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares of our Class A common stock to be repurchased when we might otherwise be precluded from doing so by law.

~~We immediately retired all~~There were no share repurchases for the three months ended June 30, 2022, under either the 2021 Stock Repurchase Program or the 2022 Stock Repurchase Program. As of ~~the repurchased~~June 30, 2022, we have remaining authorization to repurchase up to $350.0 million of shares of our Class A common stock ~~and charged~~under the ~~par value~~2022 Stock Repurchase Program.

Table of ~~the shares to common stock. The excess of the repurchase price over the par value was applied on a pro rata basis against additional paid-in capital, with the remainder applied to accumulated deficit.~~Contents

Item 5. Other Information.

~~Not applicable.~~On August 1, 2022, Syneos Health, Inc. (the “Company”) and Paul Colvin agreed that Mr. Colvin would separate from his employment with the Company and its subsidiaries, effective September 30, 2022. In addition, Mr. Colvin stepped down from his role as Chief Business Officer and all other offices with the Company effective June 30, 2022 (which role was not considered an “executive officer” under Rule 3b-7 of the Securities Exchange Act of 1934, as amended). In connection with his separation, Mr. Colvin will be entitled to severance payments and benefits under the Company’s Executive Severance Plan, subject to his execution and non-revocation of a general release of claims.

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Item 6. Exhibits

Incorporated by Reference
(Unless Otherwise Indicated)
Exhibit
Number

Exhibit Description
Form
File No.
Exhibit
Filing Date
4.1

Second Supplemental Indenture, dated as of May 25, 2021, among the Company, the subsidiary guarantors named on the signature pages thereto, the other guarantors, and Wells Fargo Bank, National Association, as trustee.
—
—
—
Filed herewith
10.1

Form of Global Restricted Stock Unit Award Agreement for Directors under Syneos Health, Inc. 2018 Equity Incentive Plan.
—
—
—
Filed herewith
10.2

Share Repurchase Agreement, dated April 30, 2021, by and among Syneos Health, Inc. and certain selling stockholders named therein.
8-K
001-36730
10.1
May 5, 2021
10.3

Share Repurchase Agreement, dated June 1, 2021, by and among Syneos Health, Inc. and certain selling stockholders named therein.
8-K
001-36730
10.1
June 4, 2021
10.4

Amendment No. 5 to the Credit Agreement, dated as of June 30, 2021, among the Company, the other borrowers party thereto, the lenders party thereto, JPMorgan Chase Bank N.A., as Administrative Agent, and each of the other parties thereto.
8-K
001-36730
10.1
July 1, 2021
31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
—
—
—
Filed herewith
31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
—
—
—
Filed herewith
32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
—
—
—
Furnished herewith
32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
—
—
—
Furnished herewith
101.INS

Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
—
—
—
Filed herewith
101.SCH

Inline XBRL Taxonomy Extension Schema Document.
—
—
—
Filed herewith
101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.
—
—
—
Filed herewith
101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.
—
—
—
Filed herewith
101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.
—
—
—
Filed herewith
101.PRE

Inline Taxonomy Extension Presentation Linkbase Document.
—
—
—
Filed herewith
104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
—
—
—
Filed herewith


		Incorporated by Reference (Unless Otherwise Indicated)
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
3.1	Certificate of Incorporation of INC Research Holdings, Inc.	8-K	001-36730	3.1	August 1, 2017
3.2	Certificate of Amendment of Certificate of Incorporation of Syneos Health, Inc.	8-K	001-36730	3.1	January 8, 2018
3.3	Certificate of Amendment to the Certificate of Incorporation of Syneos Health, Inc.	8-K	001-36730	3.1	June 1, 2022
3.4	Third Amended and Restated Bylaws of Syneos Health, Inc.	8-K	001-36730	3.2	June 1, 2022
4.1	Fourth Supplemental Indenture, dated as of April 5, 2022, among the Guaranteeing Subsidiaries, the Company, the other Guarantors, and Wells Fargo Bank, National Association, as trustee.	10-Q	001-36730	4.1	April 28, 2022
10.1	Letter Agreement between Syneos Health, Inc. and Michelle Keefe, dated April 29, 2022.	8-K	001-36730	10.1	April 29, 2022
10.2	Letter Agreement between Syneos Health, Inc. and Michael Brooks, dated April 29, 2022.	8-K	001-36730	10.2	April 29, 2022
10.3	Consulting Agreement between Syneos Health, Inc. and Alistair Macdonald, dated April 29, 2022.	8-K	001-36730	10.4	April 29, 2022
10.4	Agreement between Syneos Health UK Limited and Alistair Macdonald, dated April 29, 2022 and July 8, 2022.	—	—	—	Filed herewith
10.5	Deed of Amendment related to the Consulting Agreement and Settlement Agreement between Syneos Health UK Limited, Syneos Health, Inc. and Alistair Macdonald, dated June 29, 2022.	—	—	—	Filed herewith
10.6	Form of Global Restricted Stock Unit Award Agreement under Syneos Health, Inc. 2018 Equity Incentive Plan (U.S. Participants) (2022).	—	—	—	Filed herewith
10.7	Form of Indemnification and Advancement Agreement.	—	—	—	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	—	—	—	Filed herewith
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	—	—	—	Filed herewith
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	Furnished herewith
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	Furnished herewith
101.INS	Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.	—	—	—	Filed herewith
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	—	—	—	Filed herewith

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101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	—	—	—	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	—	—	—	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	—	—	—	Filed herewith
101.PRE	Inline Taxonomy Extension Presentation Linkbase Document.	—	—	—	Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	—	—	—	Filed herewith

~~SIGNATURE~~40

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SYNEOS HEALTH, INC.


Date: August ~~6, 2021~~1, 2022	BY:	~~/s/~~ /s/ Jason Meggs
		Jason Meggs
		Chief Financial Officer (Principal Financial Officer)

4441


Delaware		27-3403111
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	SYNH	The Nasdaq Stock Market LLC


	June 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
	(in thousands, except par value)						(in thousands, except par value)
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	261,135		$	272,173		$	105,988		$	106,475
Accounts receivable and unbilled services, net		1,369,921			1,344,781			1,606,951			1,524,890
Prepaid expenses and other current assets		117,240			121,058			168,932			135,091
Total current assets		1,748,296			1,738,012			1,881,871			1,766,456
Property and equipment, net		203,988			216,200			254,891			222,657
Operating lease right-of-use assets		222,034			223,285			185,031			209,408
Goodwill		4,789,784			4,776,178			4,898,050			4,956,015
Intangible assets, net		831,072			933,525			759,436			854,067
Deferred income tax assets		37,614			35,059			33,670			35,387
Other long-term assets		186,886			141,047			203,723			193,103
Total assets	$	8,019,674		$	8,063,306		$	8,216,672		$	8,237,093

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	107,772		$	113,684		$	99,319		$	107,535
Accrued expenses		625,623			611,042			656,874			614,441
Deferred revenue		802,256			793,068			887,180			868,455
Current portion of operating lease obligations		43,636			42,082			40,408			43,058
Current portion of finance lease obligations		17,061			17,455			23,678			20,627
Total current liabilities		1,596,348			1,577,331			1,707,459			1,654,116
Long-term debt		2,863,620			2,902,054			2,811,831			2,775,721
Operating lease long-term obligations		217,341			221,760			181,994			205,798
Finance lease long-term obligations		25,881			31,522			49,389			34,181
Deferred income tax liabilities		13,739			20,216			82,519			78,062
Other long-term liabilities		64,131			68,311			54,415			76,660
Total liabilities		4,781,060			4,821,194			4,887,607			4,824,538

Commitments and contingencies (Note 16)

Shareholders’ equity:
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding at June 30, 2021 and December 31, 2020		—			0
Common stock, $0.01 par value; 600,000 shares authorized, 103,473 and 103,935 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		1,035			1,039
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021								0			0
Common stock, $0.01 par value; 600,000 shares authorized, 102,647 and 103,764 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively								1,026			1,038
Additional paid-in capital		3,430,375			3,461,747			3,425,584			3,474,088
Accumulated other comprehensive loss, net of taxes		(25,641	)		(40,801	)		(122,662	)		(49,618	)
Accumulated deficit		(167,155	)		(179,873	)
Retained earnings (accumulated deficit)								25,117			(12,953	)
Total shareholders’ equity		3,238,614			3,242,112			3,329,065			3,412,555
Total liabilities and shareholders’ equity	$	8,019,674		$	8,063,306		$	8,216,672		$	8,237,093


	Six Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2022			2021
	(in thousands)						(in thousands)
Cash flows from operating activities:
Net income	$	80,629		$	37,485		$	123,920		$	80,629
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		115,649			112,128			123,423			115,649
Share-based compensation		33,792			32,173			33,524			33,792
(Recovery from) provision for doubtful accounts		(473	)		379
(Benefit from) provision for deferred income taxes		(13,024	)		8,750
Foreign currency transaction gains		(3,563	)		(12,541	)
Recovery from doubtful accounts								(426	)		(473	)
Provision for (benefit from) deferred income taxes								4,206			(13,024	)
Foreign currency transaction adjustments								(9,069	)		(3,563	)
Fair value adjustment of contingent obligations		(597	)		(3,943	)		0			(597	)
Loss on extinguishment of debt		2,802			—			0			2,802
Other non-cash items		5,007			1,501			(5,636	)		5,007
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, unbilled services, and deferred revenue		(8,269	)		52,670			(77,602	)		(8,269	)
Accounts payable and accrued expenses		30,117			(64,757	)		40,772			30,117
Other assets and liabilities		(26,275	)		(8,680	)		(62,323	)		(26,275	)
Net cash provided by operating activities		215,795			155,165			170,789			215,795
Cash flows from investing activities:
Payments related to acquisitions of businesses, net of cash acquired		(14,635	)		—			(1,574	)		(14,635	)
Proceeds from notes receivable from divestiture		5,000			—			0			5,000
Purchases of property and equipment		(22,337	)		(30,078	)		(47,912	)		(22,337	)
Proceeds from (investments in) unconsolidated affiliates		692			(7,202	)
(Investments in) proceeds from unconsolidated affiliates								(1,577	)		692
Net cash used in investing activities		(31,280	)		(37,280	)		(51,063	)		(31,280	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of discount		494,505			—			0			494,505
Payments of debt financing costs		(544	)		—			0			(544	)
Repayments of long-term debt		(602,277	)		(19,375	)		0			(602,277	)
Proceeds from accounts receivable financing agreement		65,000			6,600			0			65,000
Repayments of accounts receivable financing agreement		—			(6,600	)
Proceeds from revolving line of credit		—			300,000			130,000			0
Repayments of revolving line of credit		—			(150,000	)		(95,000	)		0
Payments of contingent consideration related to acquisitions		(6,196	)		(26,634	)		0			(6,196	)
Payments of finance leases		(8,380	)		(8,904	)		(1,886	)		(8,380	)
Payments for repurchases of common stock		(117,521	)		(32,029	)		(149,961	)		(117,521	)
Proceeds from exercises of stock options		14,482			12,784			12,390			14,482
Payments related to tax withholdings for share-based compensation		(29,892	)		(19,604	)		(30,062	)		(29,892	)
Net cash (used in) provided by financing activities		(190,823	)		56,238
Net cash used in financing activities								(134,519	)		(190,823	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(4,730	)		5,218			14,306			(4,730	)
Net change in cash, cash equivalents, and restricted cash		(11,038	)		179,341			(487	)		(11,038	)
Cash, cash equivalents, and restricted cash - beginning of period		272,173			163,689			106,475			272,173
Cash, cash equivalents, and restricted cash - end of period	$	261,135		$	343,030		$	105,988		$	261,135


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
	(in thousands)												(in thousands)
Shareholders’ equity, beginning balance	$	3,236,877		$	2,977,922		$	3,242,112		$	3,029,654		$	3,301,559		$	3,236,877		$	3,412,555		$	3,242,112
Impact from adoption of ASU 2016-13		—			—			—			(2,771	)
Shareholders’ equity, adjusted beginning balance		3,236,877			2,977,922			3,242,112			3,026,883

Common stock:
Beginning balance		1,042			1,042			1,039			1,039			1,026			1,042			1,038			1,039
Repurchases of common stock		(9	)		—			(15	)		(6	)		—			(9	)		(19	)		(15	)
Issuances of common stock		2			—			11			9			—			2			7			11
Ending balance		1,035			1,042			1,035			1,042			1,026			1,035			1,026			1,035

Additional paid-in capital:
Beginning balance		3,440,840			3,430,740			3,461,747			3,441,471			3,410,524			3,440,840			3,474,088			3,461,747
Repurchases of common stock		(29,778	)		—			(49,595	)		(19,734	)		—			(29,778	)		(64,092	)		(49,595	)
Issuances of common stock		2,874			(63	)		(15,569	)		(7,058	)		(1,131	)		2,874			(17,936	)		(15,569	)
Share-based compensation		16,439			16,175			33,792			32,173			16,191			16,439			33,524			33,792
Ending balance		3,430,375			3,446,852			3,430,375			3,446,852			3,425,584			3,430,375			3,425,584			3,430,375

Accumulated other comprehensive loss:
Beginning balance		(39,174	)		(131,111	)		(40,801	)		(71,593	)		(57,364	)		(39,174	)		(49,618	)		(40,801	)
Unrealized gain (loss) on derivative instruments, net of taxes		4,708			(1,131	)		10,645			(11,861	)
Unrealized gain on derivative instruments, net of taxes														4,528			4,708			14,168			10,645
Foreign currency translation adjustment, net of taxes		8,825			2,870			4,515			(45,918	)		(69,826	)		8,825			(87,212	)		4,515
Ending balance		(25,641	)		(129,372	)		(25,641	)		(129,372	)		(122,662	)		(25,641	)		(122,662	)		(25,641	)

Accumulated deficit:
Retained earnings (accumulated deficit)
Beginning balance		(165,831	)		(322,749	)		(179,873	)		(341,263	)		(52,627	)		(165,831	)		(12,953	)		(179,873	)
Impact from adoption of ASU 2016-13		—			—			—			(2,771	)
Adjusted beginning balance		(165,831	)		(322,749	)		(179,873	)		(344,034	)
Repurchases of common stock		(43,229	)		—			(67,911	)		(12,289	)		—			(43,229	)		(85,850	)		(67,911	)
Net income		41,905			3,911			80,629			37,485			77,744			41,905			123,920			80,629
Ending balance		(167,155	)		(318,838	)		(167,155	)		(318,838	)		25,117			(167,155	)		25,117			(167,155	)

Shareholders’ equity, ending balance	$	3,238,614		$	2,999,684		$	3,238,614		$	2,999,684		$	3,329,065		$	3,238,614		$	3,329,065		$	3,238,614


☒	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


☐	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	PART I - FINANCIAL INFORMATION

		Page

Item 1.	Financial Statements	3

	Condensed Consolidated Statements of Income for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	3

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	4

	Condensed Consolidated Balance Sheets as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	6

	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4136

Item 4.	Controls and Procedures	4136

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	4137

Item 1A.	Risk Factors	4137

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	4137

Item 5.	Other Information	4238

Item 6.	Exhibits	4339

	Signature	4441

	Clinical Solutions (a)		Commercial Solutions (b)			Total
Balance as of December 31, 2020	$	3,216,335	$	1,559,843		$	4,776,178
Acquisitions (c)		8,105		—			8,105
Impact of foreign currency translation and other (d)		52,425		(46,924	)		5,501
Balance as of June 30, 2021	$	3,276,865	$	1,512,919		$	4,789,784

Balance as of December 31, 2020	$	6,793
Additions (a)		1,008
Changes in fair value recognized in earnings		(610	)
Payments (b)		(6,196	)
Balance as of June 30, 2021	$	995

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (1)		Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)
April 1, 2021 - April 30, 2021		—	$	—		—	$	255,495
May 1, 2021 - May 31, 2021		400,000	$	81.04		400,000	$	223,079
June 1, 2021 - June 30, 2021		500,000	$	81.20		500,000	$	182,479
		900,000				900,000