PRA Health Sciences Inc
Annual Report 2019

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to .Commission file number: 001-36732 PRA Health Sciences, Inc.(Exact name of registrant as specified in its charter) Delaware46-3640387(State or other jurisdiction of(I.R.S. Employerincorporation or organization)Identification No.)4130 ParkLake Avenue, Suite 400, Raleigh, NC 27612(Address of principal executive offices) (Zip Code)(919) 786‑8200Registrant’s telephone number, including area code Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registered Trading symbolCommon Stock, par value $0.01 per share Nasdaq Global Select Market PRAHSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒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 (orfor 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 thischapter) 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, smaller reporting company, or an emerging growth company. See thedefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b‑2 of the Exchange Act.Large accelerated filerAccelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐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 accountingstandards 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 Act). Yes ☐ No ☒The aggregate market value of the voting and non‑voting common equity held by non‑affiliates of the registrant was approximately $5.9 billion based on the closing sale price as reportedby the Nasdaq Global Select Market on June 30, 2019. For purposes of this computation, shares of the registrant’s common stock held by affiliates, including executive officers, directors andcertain holders known to the registrant, have been excluded.Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.Class Number of Shares OutstandingCommon Stock $0.01 par value 63,562,894shares outstanding as of February 14, 2020DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission relating to the 2020 Annual Meeting of Stockholders are incorporatedherein by reference into Part III of this Annual Report on Form 10‑K to the extent stated herein. Such definitive proxy statement will be filed with the Securities and Exchange Commissionwithin 120 days after the end of the fiscal year to which this report relates. Table of ContentsPRA HEALTH SCIENCES, INC.ANNUAL REPORT ON FORM 10‑KFOR FISCAL YEAR ENDED DECEMBER 31, 2019TABLE OF CONTENTS ItemNumber Page No. PART I 1.Business21A.Risk Factors171B.Unresolved Staff Comments332.Properties333.Legal Proceedings334.Mine Safety Disclosures33 PART II 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities346.Selected Financial Data357.Management’s Discussion and Analysis of Financial Condition and Results of Operations417A.Quantitative and Qualitative Disclosures About Market Risk528.Financial Statements and Supplementary Data539.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure1029A.Controls and Procedures1029B.Other Information102 PART III 10.Directors, Executive Officers and Corporate Governance10211.Executive Compensation10212.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters10213.Certain Relationships and Related Transactions, and Director Independence10214.Principal Accountant Fees and Services103 PART IV 15.Exhibits, Financial Statement Schedules10316.Form 10-K Summary103 Exhibit Index104 Signatures105 iTable of ContentsFORWARD‑LOOKING STATEMENTS This Annual Report on Form 10‑K, or this report, contains forward‑looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such forward‑looking statementsreflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties andother factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or impliedby such forward‑looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward‑looking statements andshould be evaluated as such. Without limiting the foregoing, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,”“should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward‑looking statements. These forward‑lookingstatements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” in Part I, Item 1A of this report, and speakonly as of the date hereof. Unless legally required, we assume no obligation to update any such forward‑looking information to reflect actual results or changes inthe factors affecting such forward‑looking information. Market and Industry Data and ForecastsThis report includes data, forecasts and information obtained from industry publications and surveys and other information available to us. Forecasts andother metrics included in this report to describe our industry are inherently uncertain and speculative in nature, and actual results for any period may materiallydiffer. Estimates and forecasts involve uncertainties and risks and are subject to change based on various factors, including those described in the section titled"Risk Factors" included under Part I, Item 1A of this report. While we are not aware of any misstatements regarding the third-party industry data presented in thisreport, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying assumptions relied upon therein.The ISR 2019 Market Report, as defined below, represents research opinion or viewpoints published by Industry Standard Research, or ISR, a marketresearch firm. Such opinions or viewpoints should not be construed as statements of fact. The ISR 2019 Market Report speaks as of its original publication date(and not as of the date of this report) and the opinions expressed in the ISR 2019 Market Report are subject to change without notice. ISR does not endorse anyvendor, product or service depicted in its research publications.Website and Social Media Disclosure We use our website (www.prahs.com) as a channel of distribution of company information. The information we post through this channel may bedeemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, Securities and Exchange Commission, or SEC,filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.1Table of ContentsPart I Item 1. Business Overview We are one of the world’s leading global contract research organizations, or CROs, by revenue, providing outsourced clinical development and datasolution services to the biotechnology and pharmaceutical industries. We believe we are one of a select group of CROs with the expertise and capability to conductclinical trials across major therapeutic areas on a global basis. Our therapeutic expertise includes areas that are among the largest in pharmaceutical development,and we focus in particular on oncology, immunology, central nervous system, inflammation, respiratory, cardiometabolic and infectious diseases. We believe thatwe further differentiate ourselves from our competitors through our investments in medical informatics and clinical technologies designed to enhance efficiencies,improve study predictability and provide better transparency for our clients throughout their clinical development processes. Our Data Solutions segment allows usto better serve our clients across their entire product lifecycle by (i) improving clinical trial design, recruitment, and execution; (ii) creating real-world datasolutions based on the use of medicines by actual patients in normal situations; and (iii) increasing the efficiency of biotechnology and pharmaceutical companies'commercial organizations through enhanced analytics and outsourcing services. Our global clinical development platform includes more than 75 offices across North America, Europe, Asia, Latin America, South Africa, Australia andthe Middle East and more than 17,500 employees worldwide. Since 2000, we have participated in over 4,000 clinical trials worldwide, worked on marketed drugsacross several therapeutic areas and conducted the pivotal or supportive trials that led to U.S. Food and Drug Administration, or FDA, or international regulatoryapproval of more than 95 drugs. We offer flexible clinical development service offerings, which include embedded and functional outsourcing services in addition to traditional,project‑based clinical trial services. Our Strategic Solutions offerings provide Embedded Solutions™ and functional outsourcing services in which our teams arefully integrated within the client’s internal clinical development operations and are responsible for managing functions across the entire breadth of the client’s drugdevelopment pipeline. We believe that our Strategic Solutions offerings represent an innovative alternative to the traditional, project‑based approach and allow ourclients to maintain greater control over their clinical development processes. Our flexible clinical development service offerings expand our addressable marketbeyond the traditional outsourced clinical development market to include the clinical development spending that biopharmaceutical companies historically haveretained in‑house.Over the past 30 years, we have developed strong client relationships and have performed services for more than 300 biotechnology and pharmaceuticalclients. Our Strategic Solutions offerings have significantly expanded our relationships with large pharmaceutical companies in recent years, which has allowed usto pursue strategic alliances with these companies due to our global presence, broad therapeutic expertise and flexible clinical development service offerings.Additionally, we believe that we have built a reputation as a strategic partner of choice for biotechnology and small‑ to mid‑sized pharmaceutical companies as aresult of our competitively-differentiated platform and our long‑term track record of serving these companies. CRO Industry CROs provide drug development services, regulatory and scientific support, and infrastructure and staffing support to provide their clients with theflexibility to supplement their in‑house capabilities or to provide a fully outsourced solution. The CRO industry has grown from providing limited clinical trialservices in the 1970s to a full-service industry characterized by broad relationships with clients and by service offerings that encompass the entire drugdevelopment process. Today, CROs provide a comprehensive range of clinical services, including protocol design and management and monitoring of Phase Ithrough Phase IV clinical trials, data management, laboratory testing, medical and safety reviews and statistical analysis. In addition, CROs provide services thatgenerate high quality and timely data in support of applications for regulatory approval of new drugs or reformulations of existing drugs as well as new andexisting marketing claims. CROs leverage selected information technologies and procedures to efficiently capture, manage and analyze the large streams of datagenerated during a clinical trial. Drug development processes Discovering and developing new drugs is an expensive and time‑consuming process and is highly regulated and monitored through approval processesthat vary by region. Before a new prescription drug reaches commercialization, it must undergo extensive pre‑clinical and clinical testing and regulatory review, toverify that the drug is safe and effective.2Table of Contents A drug is first tested in pre‑clinical studies, which can take several years to complete. When a new molecule is synthesized or discovered, it is tested fortherapeutic value using various animal and tissue models. If the drug warrants further development, additional studies are completed and an investigational newdrug application, or IND, is submitted to the FDA. Once the IND becomes effective, the drug may proceed to the human clinical trial phase which generallyconsists of the following interrelated phases, which may overlap: Stages of Clinical Development Market trends ISR estimated in its “2019 CRO Market Size Projections: 2018-2023” report, or ISR 2019 Market Report, that the size of the worldwide CRO market wasapproximately $39 billion in 2018 and will grow at a 7.5% CAGR to $56 billion in 2023. This growth will be driven by an increase in the amount of research anddevelopment expenditure and levels of clinical development outsourcing by biopharmaceutical companies. Increased R&D spending ISR estimates in its 2019 Market Report that research and development, or R&D, expenditures by biopharmaceutical companies were approximately$315 billion in 2018 and will grow approximately 3% per year through 2023. Of this amount, approximately $130 billion was spent on development, including$93 billion on Phase I through IV clinical development. Growth drivers of R&D spending among biopharmaceutical companies include the need to replenish lostrevenues resulting from the patent expirations of a large number of high‑profile drugs in recent years which has resulted in the need for biopharmaceuticalcompanies to increase their R&D expenditures to eventually fill this revenue void with new drug approvals, and a healthy capital-raising environment amongbiotechnology companies in recent years. We believe biotechnology companies primarily use the capital to fund clinical trials, and due to the general lack ofexisting infrastructure, these trials are often contracted to CROs.Higher outsourcing penetration ISR estimates in its 2019 Market Report that approximately 42% of Phase I through IV clinical development spend is outsourced to CROs, and the levelsof penetration are expected to increase to approximately 49% by 2023. We believe this increase in outsourcing is due to several factors, including the need tomaximize R&D productively, the increasing burden of clinical trial complexity, and the desire to pursue simultaneous registration in multiple countries. •Maximizing Productivity and Reducing Cost—Productivity within the biopharmaceutical industry has declined over the past several years and the costof developing a new drug has significantly increased. The combined impact of declining R&D productivity and increased development costs hastranslated into significant pressure on margins and short‑term earnings for biopharmaceutical companies. We believe that the need for these companiesto maximize3Table of Contentsproductivity and lower costs will lead them to partner increasingly with CROs that can improve efficiency, and increase flexibility and speed acrosstheir clinical operations. •Increasing Clinical Trial Complexity—Over the last decade, the burden of clinical trial complexity has been increasingly difficult to manage due torequirements from regulatory authorities worldwide for greater amounts of clinical trial and safety data to support the approval of new drugs, andrequirements for adherence to increasingly complex and diverse regulations and guidelines. In an effort to minimize potential risks, these regulatoryagencies also typically require a greater amount of post‑approval information and monitoring of drugs on the market. To balance the conflictingdemands of a growing market with the need to control R&D expenses, biopharmaceutical companies partner with CROs that can provide servicesdesigned to generate high-quality and timely data in support of regulatory approvals of new drugs or the reformulations of existing drugs, as well assupport of post‑approval regulatory requirements. •Simultaneous Multi‑Country Registration—Given their desire to maximize efficiency and global market penetration to achieve higher potential returnson their R&D expenditures, biopharmaceutical companies are increasingly pursuing simultaneous, rather than sequential, regulatory new drugsubmissions and approvals in multiple countries. However, most biotechnology and small‑ to mid‑sized pharmaceutical companies do not possess thecapability or capacity to simultaneously conduct large‑scale clinical trials in more than one country. In addition, establishing and maintaining internalglobal infrastructure to pursue multiple regulatory approvals in different therapeutic categories and jurisdictions can be costly. Our History and Corporate Information PRA Health Sciences, Inc. was incorporated in Delaware in June 2013. Our wholly‑owned subsidiary, PRA Holdings, Inc., or PRA Holdings, wasincorporated in Delaware in July 2007 and its predecessors date back to 1982. Our qualified and experienced clinical and scientific staff has been deliveringclinical drug development services to our clients for more than 30 years and our service offerings now encompass the spectrum of the clinical drug developmentprocess. See Note 5 to our audited consolidated financial statements found elsewhere in this Annual Report on Form 10-K for additional information with respectto our recent acquisitions.Our Competitive Strengths Global CRO platform We are one of the largest CROs in the world by revenue focused on executing clinical trials on a global basis. Our global clinical development platformincludes more than 75 offices across North America, Europe, Asia, Latin America, South Africa, Australia and the Middle East and over 17,500 employeesworldwide. We are dedicated to the seamless execution of integrated clinical trials on multiple continents concurrently. We believe our global presence and scaleare important differentiators as biopharmaceutical companies are increasingly focused on greater patient access for increasingly complex clinical trials and gainingregulatory approval for new products in multiple jurisdictions simultaneously. Broad and flexible service offering We believe that we are one of a select group of CROs capable of providing both traditional, project‑based CRO services as well as embedded andfunctional outsourcing services. Our broad and flexible service offering allows us to meet the clinical research needs of a wide range of clients, from smallbiotechnology companies to large pharmaceutical companies. Through more than 30 years of experience, we have developed significant expertise executingcomplex drug development projects that span Phase I through Phase IV clinical trials. Our Product Registration offerings consist primarily of traditional,project‑based CRO services, where we have gained the reputation as a strategic partner of choice to biotechnology and pharmaceutical companies. Our StrategicSolutions offerings primarily cater to the needs of large pharmaceutical companies that seek to maintain greater control over their clinical trial processes. Therapeutic expertise in large segments of drug development Our therapeutic expertise encompasses areas that are among the largest in pharmaceutical development, including oncology, immunology, centralnervous system, inflammation and infectious diseases. We have participated in more than 2,400 clinical trials in these key areas since 2005, accounting for asubstantial majority of our total clinical trials during this period. We employ drug development experts with extensive experience across numerous therapeuticareas in preparing development plans, establishing study and protocol designs, identifying investigative sites and patients and submitting regulatory filings. Our4Table of Contentsstaff is highly experienced and includes approximately 850 Ph.Ds, 600 medical doctors and 275 doctors of pharmacy worldwide. Innovative approach to clinical trials using medical informatics We are committed to being an industry leader in developing global, scalable, and sustainable drug development solutions. We continuously improve oursystems and processes by investing in medical informatics, technology, analytics, and IT infrastructure. Our information system enables rapid, web‑based deliveryof clinical trial data to clients and project teams. We believe our proprietary analysis and application of data are key differentiators and allow us to identify moreproductive investigative sites and speed patient enrollment, thereby decreasing drug development timelines. We have invested in, and acquired, large databases ofaggregated patient medical data, which we refer to as medical informatics, to clearly understand patient distribution and location. Specifically, we have acquireddata sources that give us significant amounts of information about patient populations in the U.S. to enhance enrollment; these include medical claims data,hospital master charge data, pharmacy data, laboratory data, and payor data. These investments in informatics gives us the capability to identify potential patientpopulations by location, diagnostic code, treating physician, medications, date diagnosed, last treatment, and other relevant metrics. Our medical informatics suiteincludes physician, hospital, and pharmacy databases that cover more than 290 million patient lives and approximately 10 billion patient and pharmacy claims inthe U.S.Leading enabler of integrated health data and analyticsThe acquisition of Symphony Health Solutions Corporation, or Symphony Health, in 2017 supports our commitment to enhancing the future of clinicaldevelopment with best-in-class technology solutions which enable deep, data-driven insights to optimize global clinical studies and drug commercialization. Diversified and attractive client base Over the past 30 years, we have developed strong client relationships and have performed services for more than 300 biotechnology and pharmaceuticalclients. We have significantly expanded our relationships with large pharmaceutical companies in recent years, which has allowed us to pursue strategic allianceswith these companies due to our global presence, broad therapeutic expertise and flexible clinical development service offerings. Additionally, we believe that wehave built a reputation as a strategic partner of choice for biotechnology and small‑ to mid‑sized pharmaceutical companies as a result of our competitivelydifferentiated platform and our long‑term track record of serving these companies. Our client relationships are also broad and diversified, and in the year endedDecember 31, 2019 our top 10 clients represented 54% of revenue, with no client representing more than 10% of revenue and our largest single study accountingfor approximately 1% of our revenue. Innovative management team We are led by a dedicated and experienced executive management team with an average of more than 20 years of experience across the global clinicalresearch, pharmaceutical and life sciences industries. This team has been responsible for building our global platform, successfully integrating our acquisitions,developing our advanced IT‑enabled infrastructure and realizing our significant growth in revenue and earnings over the past five years. Our Growth Strategy Leverage our strong market position within the biotechnology and small‑ to mid‑sized pharmaceutical market We believe our long‑term track record serving biotechnology and small‑ to mid‑sized pharmaceutical companies has resulted in our reputation as astrategic partner of choice for these companies. We believe that biotechnology and small‑ to mid‑sized pharmaceutical companies rely on full service CROs todeliver fast, effective and thorough support throughout the clinical development and regulatory processes, as these companies generally lack a global clinicaldevelopment infrastructure. We intend to leverage our strong relationships with biotechnology and small‑ to mid‑sized pharmaceutical companies to captureadditional business from these companies. In particular, we believe the CRO strategic alliances that have become prevalent with large pharmaceutical companiesover the past several years will increasingly be utilized by biotechnology and small‑ to mid‑sized pharmaceutical companies. We believe we are well-positioned totake advantage of these opportunities given the depth of our relationships and our proven track record serving these customers. 5Table of ContentsBuild deeper and broader relationships with large pharmaceutical companies Large pharmaceutical companies have increasingly focused on partnering with multi‑national CROs that offer a wide array of global therapeutic andservice capabilities. We have invested significantly in our global scale and infrastructure over the past several years to enhance our status as a service provider forthese companies. Expand our leading therapeutic expertise in existing and new areas We believe that our therapeutic expertise in all clinical phases of drug development is critical to the proper design and management of clinical trials and weintend to continue to capitalize on our strong market positions in several large therapeutic categories. We have established, and will continue to refine, ourscientific and therapeutic business development initiatives, which link our organization to key clinical opinion leaders and medical informatics data to moreeffectively leverage therapeutic expertise throughout our client engagement. Specifically, we believe that oncology, central nervous system, inflammation andinfectious diseases, which together represent the majority of all drug candidates currently in clinical development by biotechnology and pharmaceutical companies,will be significant drivers of our growth. In the area of oncology, we believe that the growth of targeted therapies, companion diagnostics and personalizedmedicine will continue to drive drug development. With the aging demographics, we believe we will see significant growth in the area of dementia andAlzheimer’s research and drug development, which is complemented by our specialty and focus in neurology. Additionally, we believe that development of nichetherapeutic drugs (orphan drugs) will continue to see considerable growth moving forward and we have a dedicated staff focused on the design and conduct oftrials for these drugs. Continue to enhance our tech-enabled CRO engagement modelThe acquisition of Symphony Health has provided us with rich data insights that will allow us to customize our clinical studies to be as unique as thepatients who they are designed around. By creatively harnessing the power of our technology and data assets, we are redefining the clinical development processfor a more patient-centric future.Continue to realize strategic benefits from recent acquisitions We believe we will continue to realize strategic benefits from the acquisitions we have completed over the past five years, resulting in additional revenuegrowth and margin improvements. We believe that our strategic acquisitions are complementary to our customer base and expect to generate incremental revenuegrowth by cross‑selling our full set of services to our existing and new customers, thereby expanding the scope of our customer relationships and generatingadditional revenue. Pursue selective and complementary acquisition strategy We are a selectively acquisitive company focused on growing our core service offerings, therapeutic capabilities and geographic reach into areas of highmarket growth. We have acquired 22 companies since 1997 and have established programs to help us identify acquisition targets and integrate them successfully.Our acquisition strategy is driven by our comprehensive commitment to serve client needs and we are continuously assessing the market for potential opportunities. Service Offerings We have two reportable segments: Clinical Research and Data Solutions. Our Clinical Research segment encompasses a broad array of services acrossthe spectrum of clinical development programs. Our Data Solutions segment provides data, analytics, technology, and consulting solutions to the life sciencesmarket. The offerings of our two segments complement each other and can provide enhanced value to our clients when delivered together, with each drivingdemand for the other.For financial information regarding our segments, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Segment Results of Operations" and Note 22 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.Clinical ResearchWe perform a broad array of services across the spectrum of clinical development programs, from the filing of INDs and similar regulatory applications toconducting all phases of clinical trials. Our core service offerings include:6Table of Contents•Product Registration, which includes Phase IIb through III product registration trials and Phase IV trials, inclusive of post‑marketing commitments andregistries;•Strategic Solutions, which provides Embedded Solutions and functional outsourcing services, in which our teams are fully integrated within the client’sinternal clinical development operations and responsible for managing functions across the entire breadth of the client’s drug development pipeline; and•Early Development Services, which includes Phase I through Phase IIa clinical trials and bioanalytical laboratoryservices. We provide many back office services to clients as well, including processing the payments to investigators and volunteers. We also collaborate withthird‑party vendors for services such as imaging, central lab and patient recruitment services.Product Registration Our Product Registration, or PR, offerings encompass the design, management and implementation of study protocols for Phase II through Phase IIIclinical trials, which are the critical building blocks of product development programs, as well as Phase IV, or post‑approval, clinical trials. We have extensiveresources and expertise to design and conduct studies on a global basis, develop integrated global product databases, collect and analyze trial data and prepare andsubmit regulatory submissions in the United States, Europe and other jurisdictions.A typical full‑scale program or project may involve the following components:•clinical program development, review and consultation and lifecycle managementplanning;•design of the clinical protocol and electronic case report forms, orCRFs;•feasibility studies for investigator interest and patient access andavailability;•patient recruitment and retentionservices;•project management;•investigator and site analysis for selection andqualification;•investigator handbook andmeetings;•investigational site support and clinicalmonitoring;•data management;•patient medical and safety management;•analysis andreporting;•medical and scientific publications; and•preparation of regulatoryfilings. As described below, we offer a suite of product registration service offerings to our clients to address the several components involved in conducting afull‑scale program or project. Clinical Trial Management—Our clinical trial management services, used by biotechnology and pharmaceutical clients, may be performed exclusively byus or in collaboration with the client’s internal staff or other CROs. With our broad clinical trial management capabilities, we conduct single site studies, multi‑siteU.S. and international studies and global studies on multiple continents. Through our electronic trial master file, we can create, collect, store, edit and retrieve anyelectronic document in any of our office locations worldwide, enabling our global project teams to work together efficiently regardless of where they arephysically located and allowing seamless transfer of work to a more efficient locale.7Table of Contents Project Management—Our project management group manages the development process, setting specific targets and utilizing various metrics to ensurethat a project moves forward in the right trajectory, resources are used optimally and client satisfaction is met. This group also oversees the implementation of awork breakdown structure, communication plan, and a risk and contingency program for each study. We believe that the management structure of our servicedelivery model sets us apart in the industry. Each individual project is assigned a director of project delivery and key strategic accounts are also assigned a generalpartner. As a member of the senior management team, the general partner works with the director of project delivery, the project management group and clientrepresentatives to ensure the highest level of client satisfaction. With approximately 450 project directors and project managers, we match our project managementpersonnel to projects based on experience and study specific parameters.Regulatory Affairs—Our team of global regulatory professionals has extensive experience working with biotechnology and pharmaceutical companiesand regulatory authorities worldwide. Our regulatory affairs group is comprised of an internal network of local regulatory experts who are native speakers incountries across North America, Latin America, Western and Eastern Europe, Africa and Asia Pacific. Regulatory team members and local regulatory experts actas clients’ representatives for submissions and direct communications with regulatory authorities in all regions. The group’s regulatory expertise enables rapidstudy start‑up and facilitates competitive product development plans and effective submission strategies. Therapeutic Expertise—Our therapeutic expertise group provides scientific and medical expertise and patient access and retention services worldwideacross a broad range of therapeutic areas. Our broad experience throughout various therapeutic areas allows us to offer a more complete global service offering toour clients. Our diverse therapeutic expertise group leverages best‑in‑class data assets to assist our clients with the design and implementation of entire clinicaldevelopment programs and our current and potential clients increasingly seek partners who can provide these capabilities. We provide clients with therapeuticexpertise in the design and implementation of high‑quality product development programs and help them achieve key development milestones in a cost and timeeffective manner. Our therapeutic expertise is used by both emerging biotechnology companies that lack clinical development infrastructure and pharmaceuticalcompanies that have limited internal medical resources or are exploring new therapeutic areas. Clinical Operations—Our clinical operations group provides clients with a full set of study site management and monitoring services in approximately 90countries worldwide, through our highly experienced team of clinical research associates and specialists. This experience includes knowledge of local regulations,medical practices, safety and individual therapeutic areas. We provide our clients with fully trained and locally based clinical teams led by experienced clinicalteam managers that initiate site start‑up, monitor activities and review data. Based in the Americas, Europe, Asia Pacific and Africa, these teams work from astrategic foundation that combines reliance on proven, consistent processes with the flexibility to adapt innovative ideas and technologies. Given our expertiseexecuting clinical trials around the world, we are positioned to meet our clients’ diverse needs and expectations. Our study start‑up services group, a unit withinclinical operations, manages the key components of rapid site activation and investigational site set‑up for clinical trials by utilizing our global and region specificexpertise. Data and Programming Services—Our global data and programming services group offers an innovative suite of technologies that gather and organizeclinical trial data. We employ industry leading electronic data capture technologies and innovative delivery systems to produce high quality and standardized dataand reports. We focus on evaluating a client’s needs, presenting optimal solutions for each trial and implementing the chosen solution effectively during projectexecution. To support these goals, we have built a group of technological experts in drug research that has a strong foundation in data management fundamentalsand core programming abilities. Safety and Risk Management—Our dedicated safety and risk management group helps clients design, implement, and operationalize the proper safetyprocedures for development through to post‑marketing, facilitating clear assessment and communication of patient safety profiles. We have centralized drug safetycenters in Mannheim, Germany; Swansea, U.K.; Charlottesville, Virginia, U.S. (with a satellite center in Lenexa, Kansas); Sao Paulo, Brazil; and Singapore.Centers are staffed with experienced drug safety associates responsible for integrating an effective risk minimization strategy for a drug product and generatinguseable information based on ongoing risk evaluation. Our team provides risk mitigation strategies at all stages of the drug development cycle and offers coresignal detection capabilities. Biostatistics and Medical Writing—Our global biostatistics and medical writing operations integrate our biostatistics, medical writing, pharmacokineticsand regulatory publishing groups. With a staff of industry experienced and therapeutically trained biostatisticians and medical writers, we offer clients expertise instatistical analysis, data pooling and regulatory reporting. This global team provides specialist consulting expertise and support to clients from the first stage ofprotocol design8Table of Contentsthrough post‑marketing surveillance and Phase IV studies. For publishing, we use a specialized electronic system that enables us to seamlessly assemble, manageand publish complex documents in compliance with applicable regulatory guidelines. Quality Assurance Services—Our global quality assurance group is staffed by a team of experienced professionals in the Americas, Europe and AsiaPacific. Our quality assurance department is entirely separate from and independent of the personnel engaged in the direction and conduct of clinical trials. Theobjective of the quality assurance group is the global promotion of ongoing quality awareness and continuous improvement of our processes. This group servesthese efforts by performing audits on the processes and systems used in the management of clinical trials to ensure compliance with study protocol and applicableregulatory requirements. This group has performed audits for a wide range of medical indications and in all phases of clinical trials across the globe. Real World Solutions (RWS)—Our global late-phase services group supports global and regional post‑approval trials with management locationscentralized in Pennsylvania, Germany, Mexico, and Singapore. Our experienced late‑phase services team assists clients with the post‑marketing process by helpingidentify trends and signals in large populations as well as planning and conducting safety surveillance studies, large‑sample trials, registries, restricted accessprograms, risk management programs, diagnostic trials and biomarker research. The team consists of industry leading strategic experts, operational specialists andepidemiologists who work with clients to identify post‑marketing research objectives and goals and translate them into comprehensive study designs. Strategic Solutions Our Strategic Solutions, or SS, offerings allow biotechnology and pharmaceutical companies to execute their internally‑managed development portfoliowith greater flexibility and to leverage their existing infrastructure to minimize redundancy. These offerings provide a broad spectrum of solutions that allow forthe efficient management and execution of critical clinical development functions for pharmaceutical clients. These services are embedded or integrated within theclient’s internal clinical development operations to support the entire breadth of the client’s drug development pipeline. By embedding our employees within ourclients’ infrastructure, we create a strategic and interdependent relationship that allows us to anticipate our clients’ clinical trial demands and efficiently deploy ourskilled clinical professionals to meet our clients’ needs. Clinical functions supported by this service offering include study start‑up activities, site monitoring, studymanagement, data management, biostatistics, regulatory and product safety. We focus our solutions primarily on our clients’ Phase II through Phase IVdevelopment programs. While traditional, project‑based CRO offerings target the outsourced component of biopharmaceutical industry spending, our StrategicSolutions offerings address the total Phase II through IV development market. We pioneered the embedded services model described below, and we have extensiveexperience helping customers re‑align their operating model to more efficiently manage their development portfolio with greater flexibility and control. Our Strategic Solutions offerings include: Embedded Solutions—We believe we are the only company in the industry to offer a strategically scalable, fully‑embedded clinical development solution.Our Embedded Solutions model is designed to merge clinical operations expertise, management, infrastructure and support to create a flexible and integratedoperating model. The goal of our Embedded Solutions model is to enable our clients’ internally‑managed development processes to be executed with greaterflexibility. These solutions can be further enhanced by leveraging our systems and technology as required. In our Embedded Solutions model, we typically workwith our partners to assist in redesigning existing systems and processes to drive greater efficiency, speed and quality and to implement innovative approaches andenhanced technology. We employ a strong joint governance structure and robust metrics to measure and ensure strong quality, cycle time, productivity andservice‑level performance. Functional Services Provider Solutions—Our functional services provider offering provides dedicated capacity management within a single operatingplatform and within one function or across multiple functions and geographies. While the customer provides direction and functional management, we provideresources and line management, training and support. We also utilize business level metrics to help ensure that staff are deployed with the relevant experience andare producing consistent, repeatable results. Staff Augmentation Solutions—Our staff augmentation solutions offering provides clients with the ability to address their dynamic staffing needs bysupplying access to resources qualified to meet their clinical development needs. This allows clients to maintain flexibility while also reducing fixed costs. In orderto rapidly attract and recruit qualified employees for these situations, we have assembled what we believe is the largest team in the industry focused on personnelrecruitment. These individual professionals are hired as our employees and are managed by our teams, minimizing co‑employment related issues.9Table of ContentsThe customer has the ability to define the resources required according to the therapeutic‑ and disease‑specific experience required. These resources can be on siteat the customer’s facility, at our offices, or regionally based.Custom‑Built Development Solutions—Our custom‑built development solutions are designed to offer people, process, systems and development expertisethat enable the efficient internal development of a company’s product portfolio with greater control and flexibility, accelerated development timelines andsubstantially reduced costs. With the client’s core leadership in control, we help to build the development team our clients need, while enabling them to maintainthe flexibility to be nimble during the development lifecycle. Commercialization Services—Through our commercialization services offering, we assist our clients in addressing the challenge of commercializingproducts. We do this by deploying professionals who are knowledgeable in launch preparation and product lifecycle management. We assist customers inmanaging the product lifecycle by working with them to create concise messaging, engage thought leadership and health care providers, generate consumerenthusiasm for the product, and prepare for post‑marketing commitments. Our commercialization services offering utilizes our flexible service model and, as such,can be delivered as an Embedded Solution, through our functional service provider model, or through staff augmentation. Early Development Services Our Early Development Services, or EDS, offerings include a full range of services for Phase I and Phase IIa studies as well as bioanalytical analysis. Wehave conducted studies for major pharmaceutical companies in Europe, the United States and Japan, as well as for many smaller and emerging biotechnologycompanies. We have also built direct relationships with a large base of available subjects, including healthy volunteers and patient populations with specificmedical conditions. Acquisitions in recent years have allowed us to significantly expand our Phase I to Phase II services. This includes offerings focused on the conduct anddesign of early stage patient population studies, and therapeutically focused in human abuse liability, or HAL, addiction, pain, psychiatric, neurological, pediatricand infectious disease services. We are one of the largest providers of patient population for Phase I and confined Phase II to Phase III services in the UnitedStates, and are one of only a few CROs in the world that has the ability to design and conduct HAL studies, a regulatory‑required study for central nervous systemcompounds. We believe this enables us to provide our clients with a full range of Phase I to Phase II clinical research services in specialized patient populations forboth inpatient and outpatient settings. EDS also supports a variety of additional services, ranging from protocol development to data management and pharmacy services, includingmanufacturing of investigational medicinal products. Our state‑of‑the‑art laboratories provide pharmacokinetics, the branch of pharmacology concerned with themovement of drugs within the body, and pharmacodynamics, the branch of pharmacology concerned with the effects of drugs and the mechanism of their actionanalyses, including biomarkers, as needed. Our safety laboratory supports our own clinics and also acts as a central lab for medium sized Phase II trials. We alsoprovide clinical study reports, statistical analysis, medical writing and regulatory support. We focus on high‑end Phase I studies and specialize in more complex types of studies in which safety, intelligent design, and a wide range ofpharmacodynamics assessments are critical factors. We believe our Phase I team is a leader in new developments, such as microdosing studies, pain models, HALstudies and multi‑purpose protocols with adaptive designs. We have developed extensive methodologies enabling us to conduct studies with pharmacokineticsand/or pharmacodynamics objectives. We have more than 1,300 early development specialists working in five clinical pharmacology units located across four different countries, including theUnited States, the Netherlands and countries in Central and Eastern Europe. We are equipped with the technologies and infrastructure for high‑quality, efficientstudies on a wide range of drugs and indications. Over the past five years, we have conducted approximately 700 high‑level, complex early development clinicaltrials and more than 250 bioanalytical studies per year over the previous five years. Phase I through IIa Studies—For in‑house Phase I studies, we offer more than 400 beds worldwide and accommodate volunteers in our state‑of‑the‑artclinical pharmacology units, some of which are hospital-based. At these centers, volunteers are under constant medical supervision by a team of highlyexperienced medical professionals. We have a pool of more than 100,000 study participants (both healthy volunteers and various specific patient populations).In addition to in‑house studies, we use an innovative “unit‑on‑demand” business model that brings a Phase I center to patients. This model establishes aPhase I study environment in central medical facilities that specialize in the treatment of the target patient population. Physicians can recruit high volumes ofpatients using extensive networks of referring specialists and general practitioners. The studies occur in single center and multi‑national settings. We have also builtan extensive patient10Table of Contentsnetwork and database in areas including depression, schizophrenia, diabetes and hepatitis C. In addition to conducting Phase I and IIa studies in subjects, these sitesact as investigative sites in Phase IIb and III trials. We also offer full pharmacy capabilities and we operate a manufacturing site that complies with applicable current Good Manufacturing Practiceregulations and is designed for fast and flexible manufacturing of small batches of investigational medicinal product for studies. In addition, dedicated datamanagement professionals who can process clinical data into specific deliverables are integrated in each clinical pharmacology unit. Since a large proportion of drug compounds do not succeed in Phase I, we utilize IND trials that include “microdose” or “low‑dose” studies to screenmultiple candidates at an early stage and minimize the number of failing clinical product candidates. We have been closely involved in the field of microdosestudies over the past 10 years and have conducted approximately 30 microdose studies. Bioanalytical Laboratory—We offer clients two state‑of‑the‑art bioanalytical laboratories located in Assen, the Netherlands, and Lenexa, Kansas, UnitedStates. These bioanalytical laboratories have been harmonized with respect to standard operating procedures, work instructions and equipment. This provides ahigh level of consistency, continuity and efficiency. It also provides our clients with the ability to run studies in either laboratory, depending on the requirements ofthe study, and ensures that they will receive the same high level of service. Both bioanalytical laboratories are located within close proximity to their respectivePhase I clinical pharmacology unit, ensuring rapid sample processing for critical dose escalation decision making involving pharmacokinetic assays. Both facilitiesinclude laboratories for mass spectrometry and ultra‑ performance liquid chromatography, typically applied to small molecule analysis. For large molecules, suchas biologicals and biomarkers, our laboratories operate a wide variety of specialized assays, including ligand binding assays with a variety of detectionmethodologies and immunogenicity. In our fully licensed isotope laboratory, bioanalytical support is provided for mass balance and microdosing studies. Thelaboratories, combined with expert and highly educated staff, provide a full range of analytical services throughout the development process.Data SolutionsOur Data Solutions segment provides data, analytics, technology, and consulting solutions to the life sciences market. We have proprietary sources ofdata about pharmaceutical transactions that we purchase from pharmaceutical retailers, prescribers, payers and institutional users. The data is anonymized andincludes details on the patient, the location where they purchased the drug or therapy, and the payer. The details on the patient, although anonymous, are tracked insuch a way as to allow analysis of therapies and purchasing over a long term. They also include demographic data such as age, gender, race and diagnoses. Thedata is refreshed monthly.The core service offerings of our Data Solutions segment include:Market Intelligence ServicesTargeting and Compensation - Prescription and drug sales data services used primarily to compensate sales representatives. This data includes dispensedprescription data, non-retail pharmacy drug purchasing data and healthcare demographic and affiliations data.Pharmaceutical Audit Suite - National-level prescription and sales data services used primarily for market research. Data subscriptions include allproducts and therapeutic areas and are primarily accessed on-line through our business intelligence tool.Consulting & ServicesBrand Analytics - Anonymized patient-level data sets and services that enable a variety of commercial analytics, including patient compliance,persistency, product switching, share and counts, and diagnosis. The most significant offering is PatientSource, a comprehensive patient-level data set, providing adetailed view of patient treatment activity in a client-defined disease category. PatientSource includes data regarding prescribers, patients and payer dynamics.Managed Markets - A suite of prescription claims-based data products and analytic tools that leverage our exclusive claims lifecycle data to understandmanaged markets' influence on product demand.11Table of ContentsCommercial Effectiveness - A professional services unit providing offerings that enable clients to optimize promotion spend and activities. Offeringsinclude digital promotional measurement, advanced targeting, patient journey, and market landscape.Scientific Studies/Clinical Hubs - A unit providing services that include clinically-oriented data hubs and health economics studies to pharmaceuticalcompanies' medical affairs or health economics divisions. Our team provides real world evidence data to support the assessment of the clinical effectiveness ofdrugs.Apps & TechnologyHealth Data Services - Technology-enabled products and services that allow clients to access and analyze effectively Symphony Health and integratedthird-party data.Clients and Suppliers We serve a wide range of client types, including biotechnology and pharmaceutical companies. We have developed numerous strategic relationships inthe last five years. For the year ended December 31, 2019, we derived 50% of our revenue from large pharmaceutical companies, 17% of our revenue from small‑to mid‑sized pharmaceutical companies, 16% of our revenue from large biotechnology companies, and 17% of our revenue from all other biotechnologycompanies. In 2019 our top five clients represented approximately 38% of revenue; this revenue was derived from a combination of fixed‑fee contracts,fee‑for‑service contracts and time and materials contracts. No individual client or project accounted for 10% or more of revenue for either of the years endedDecember 31, 2019 or 2018. There was one client that accounted for 10% of revenue for the year ended December 31, 2017. We utilize a number of suppliers in our business, including data suppliers, central laboratory services, drug storage and shipping, foreign languagetranslation services and information technology. In 2019, our largest individual supplier, a data provider, was paid $32.0 million. In addition, our top 10 supplierstogether received payments during 2019 of approximately $159.8 million. We believe that we will continue to be able to meet our current and future supply needs. Sales and Marketing We have a proven sales team with the ability to build relationships with new clients and to grow within existing clients. Critical to our sales process is theinvolvement of our operations and global scientific and medical affairs teams who contribute their knowledge to project implementation strategies presented inclient proposals. These teams also work closely with the sales team to build long‑term relationships with biotechnology and pharmaceutical companies. Ourtherapeutic expertise team supports the sales effort by developing robust service offerings in its core therapeutic areas, which link our organization to key clinicalopinion leaders, global investigator networks and best‑in‑class vendors. We rely heavily on our past project performance, qualified teams, medical informatics dataand therapeutic expertise in winning new business. Our approach to proposal development, led by seasoned proposal developers in conjunction with insight from our drug development experts, allows us tosubmit proposals that address client requirements in a creative and tailored manner. Proposal teams conduct research on competing drugs and conduct feasibilitystudies among potential investigators to assess their interest and patient availability for proposals and presentations. Our proprietary, automated estimation systemallows for rapid and accurate creation of project budgets, which forms the initial basis for business management of budgets subsequent to award of the study. Competition Our Clinical Research business competes primarily with other full‑service CROs and in‑house research and development departments of pharmaceuticaland established biotech companies. Our principal traditional CRO competitors are ICON plc, IQVIA Holdings Inc., Laboratory Corporation of America Holdings,PAREXEL International Corporation, Pharmaceutical Product Development LLC, and Syneos Health, Inc. CROs compete on the basis of a number of factors, including reliability, past performance, expertise and experience in specific therapeutic areas, scope ofservice offerings, strengths in various geographic markets, technological capabilities, ability to manage large scale global clinical trials, and price. 12Table of ContentsThe CRO industry remains highly fragmented, with several hundred smaller, limited service providers and a small number of full‑service companies withglobal capabilities. We believe there are significant barriers to becoming a global provider offering a broad range of services and products. These barriers include:•the cost and experience necessary to develop broad therapeuticexpertise;•the ability to manage large, complex international clinicalprograms;•the ability to deliver high‑quality services consistently for large drug development projects;•the experience to prepare regulatory submissions on a global basis;and•the infrastructure and knowledge to respond to the global needs ofclients. Our Data Solutions business competes with a diverse set of businesses. We generally compete with other information, analytics, technology, services andconsulting companies, as well as with government agencies, private payers and other healthcare companies that provide their data directly to others. Our offeringscompete with a number of firms, including IQVIA Inc., OptumHealth, Cognizant Technology Solutions, Decision Resources Group, and ZS Associates.Backlog Our studies and projects are performed over varying durations, ranging from several months to several years. Backlog represents anticipated servicerevenue from contracted new business awards that either have not started or are in process but have not been completed for our Clinical Research segment.Canceled contracts and scope reductions are removed from backlog as they occur. Our backlog at December 31, 2019, 2018 and 2017 was approximately$4.7 billion, $4.2 billion and $3.5 billion, respectively. Cancellations totaled $360.4 million, $378.8 million and $366.0 million for the years ended December 31,2019, 2018 and 2017, respectively. We believe our backlog as of any date is not necessarily a meaningful indicator of our future results for a variety of reasons. First, studies vary in duration.For instance, some studies that are included in our backlog may be completed in 2019, while others may be completed in later years. Second, the scope of studiesmay change, which may either increase or decrease the amount of backlog. Third, studies may be terminated or delayed at any time by the client or regulatoryauthorities. Delayed contracts remain in our backlog until a determination of whether to continue, modify or cancel the study is made.We had $2,663.6 million, $2,644.8 million and $2,413.7 million in net new business awards for our Clinical Research segment in the years endedDecember 31, 2019, 2018, and 2017, respectively. Net new business represents gross new business awards less cancellations for the period.We exclude our Data Solutions segment from backlog and new business awards due to the short-term nature of its contracts.For more details regarding risks related to our backlog, see “Risk Factors—Our backlog may not convert to service revenue at the historical conversionrate.” Intellectual Property We develop and use proprietary methodologies, analytics, systems, technologies and other intellectual property throughout our business, including anumber of patents as well as other proprietary information regarding our methodologies, technologies, systems and analytics. We rely upon a combination of legal,technical, and administrative safeguards to protect our proprietary and confidential information and trade secrets, and patent, copyright and trademark laws toprotect other intellectual property rights. We also hold various federal trademark registrations and pending applications in the United States and other jurisdictions,including PRA Health Sciences, Nextrials, Parallel 6, and Symphony Health. Trademarks and service marks generally may be renewed indefinitely so long as theyare in use and/or their registrations are properly maintained, and so long as they have not been found to have become generic. The technology and other intellectualproperty rights owned and licensed by us are important to our business, although our management believes that our business, as a whole, is not dependent uponany one intellectual property or group of such properties. Government Regulation In the United States, the FDA governs the conduct of clinical trials of drug products in human subjects, the form and content of regulatory applications,including, but not limited to, IND applications for human clinical testing, and the13Table of Contentsdevelopment, approval, manufacture, safety, labeling, storage, record keeping, and marketing of drug products. The FDA has similar authority and similarrequirements with respect to the clinical testing of biological products and medical devices. In the European Union, or EU, similar laws and regulations applywhich may vary slightly from one member state to another and are enforced by the European Medicines Agency or respective national member states’ authorities,depending on the case. Governmental regulation directly affects our business. Increased regulation leads to more complex clinical trials and an increase in potential business forus. Conversely, a relaxation in the scope of regulatory requirements, such as the introduction of simplified marketing applications for pharmaceutical andbiological products, could decrease the business opportunities available to us. We must perform our clinical drug and biologic services in compliance with applicable laws, rules and regulations, including “Good Clinical Practices,”or GCP, which govern, among other things, the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of clinical trials. Before ahuman clinical trial may begin, the manufacturer or sponsor of the clinical product candidate must file an IND with the FDA, which contains, among other things,the results of preclinical tests, manufacturer information, and other analytical data. A separate submission to an existing IND must also be made for eachsuccessive clinical trial conducted during product development. Each clinical trial must be conducted in accordance with an effective IND. In addition, underGCP, each human clinical trial we conduct is subject to the oversight of an independent institutional review board, or IRB, which is an independent committee thathas the regulatory authority to review, approve and monitor a clinical trial. The FDA, the IRB, or the sponsor may suspend or terminate a clinical trial at any timeon various grounds, including a finding that the study subjects are being exposed to an unacceptable health risk. In the EU, we must perform our clinical drugservices in compliance with similar laws and regulations. In order to comply with GCP and other regulations, we must, among other things:•comply with specific requirements governing the selection of qualifiedinvestigators;•obtain specific written commitments from theinvestigators;•obtain IRB review and approval of the clinicaltrial;•verify that appropriate patient informed consent is obtained before the patient participates in a clinicaltrial;•ensure adverse drug reactions resulting from the administration of a drug or biologic during a clinical trial are medically evaluated and reported in atimely manner;•monitor the validity and accuracy ofdata;•verify drug or biologic accountability;•instruct investigators and study staff to maintain records and reports;and•permit appropriate governmental authorities access to data forreview. We must also maintain reports in compliance with applicable regulatory requirements for each study for auditing by the client and regulatory authorities. A failure to comply with applicable regulations relating to the conduct of clinical trials or the preparation of marketing applications could lead to a varietyof sanctions. For example, violations of GCP could result, depending on the nature of the violation and the type of product involved, in the issuance of a warningletter, suspension or termination of a clinical study, refusal of the FDA to approve a clinical trial or marketing applications or withdrawal of such applications,injunction, seizure of investigational products, civil penalties, criminal prosecutions, or debarment from assisting in the submission of new drug applications. We monitor our clinical trials to test for compliance with applicable laws and regulations in the United States and the non‑U.S. jurisdictions in which weoperate. We have adopted standard operating procedures that are designed to satisfy regulatory requirements and serve as a mechanism for controlling andenhancing the quality of our clinical trials. In the United States, our procedures were developed to ensure compliance with GCP and associated guidelines. WithinEurope, all work is carried out in accordance with the Guideline for Good Clinical Practice ICH E6 (R2) adopted by the European Medicines Agency asEMA/CHMP/ICH/135/95. In order to facilitate global clinical trials, we have implemented common standard operating procedures across our regions to assureconsistency whenever feasible. 14Table of ContentsThe Standards for Privacy of Individually Identifiable Health Information, or the Privacy Rule, and the Security Rule, issued under the Health InsurancePortability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health, or HITECH, Act of 2009,collectively HIPAA, as well as applicable state privacy and security laws and regulations, restrict the use and disclosure of certain protected health information, orPHI, and establish standards to protect individuals’ electronic PHI that is created, received, used or maintained by certain entities. Under the Privacy Rule,“covered entities” may not use or disclose PHI without the authorization of the individual who is the subject of the PHI, unless such use or disclosure isspecifically permitted by the Privacy Rule or required by law. We are not a covered entity under HIPAA. However, in connection with our clinical development activities, we do receive PHI from covered entitiessubject to HIPAA. In order for those covered entities to disclose PHI to us, the covered entity must obtain an authorization from the research subject that meets thePrivacy Rule requirements, or make such disclosure pursuant to an exception to the Privacy Rule’s authorization requirement. We are both directly and indirectlyaffected by the privacy provisions surrounding individual authorizations because many investigators with whom we are involved in clinical trials are directlysubject to them as a HIPAA “covered entity” and because we obtain identifiable health information from third parties that are subject to such regulations. Becauseof amendments to the HIPAA data security and privacy rules, there are some instances where we may be a HIPAA “business associate” of a “covered entity,”meaning that we may be directly liable for any breaches in PHI and other HIPAA violations. As part of our research activities, we require covered entities thatperform research activities on our behalf to comply with HIPAA, including the Privacy Rule’s authorization requirement, and applicable state privacy and securitylaws and regulations. In Europe, the European Union General Data Protection Regulation, or the EU GDPR, requires organizations working with the personal data of EUcitizens to have established processes related to its collection and use. Organizations must have objective evidence of compliance (Principle of Accountability)with the EU GDPR. The penalties for non-compliance are significant, including up to four percent of an organization's global annual revenue. There are alsoadministrative penalties where transfers of personal data may be stopped. As PRA is a global organization, such a disruption in data transfers could pose significantoperational challenges.We maintain applicable registrations with the Drug Enforcement Administration, or DEA, that enable us to use controlled substances in connection withour research services. Controlled substances are those drugs and drug products that appear on one of five schedules promulgated and administered by the DEAunder the Controlled Substances Act. This act governs, among other things, the distribution, recordkeeping, handling, security, and disposal of controlledsubstances. Our DEA registrations authorize us to receive, conduct testing on, and distribute controlled substances in Schedules II through V. A failure to complywith the DEA’s regulations governing these activities could lead to a variety of sanctions, including the revocation or the denial of a renewal of our DEAregistration, injunctions, or civil or criminal penalties. Environmental Regulation and Liability We are subject to various laws and regulations relating to the protection of the environment and human health and safety in the countries in which we dobusiness, including laws and regulations governing the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites and themaintenance of a safe workplace. Our operations include the use, generation, and disposal of hazardous materials and medical wastes. We may, in the future, incurliability under environmental statutes and regulations for contamination of sites we own or operate (including contamination caused by prior owners or operatorsof such sites), the off‑site disposal of hazardous substances and for personal injuries or property damage arising from exposure to hazardous materials from ouroperations. We believe that we have been and are in substantial compliance with all applicable environmental laws and regulations and that we currently have noliabilities under such environmental requirements that could reasonably be expected to materially harm our business, results of operations or financial condition.Liability and Insurance We may be liable to our clients for any failure to conduct their studies properly according to the agreed‑upon protocol and contract. If we fail to conduct astudy properly in accordance with the agreed‑upon procedures, we may have to repeat a study or a particular portion of the services at our expense, reimburse theclient for the cost of the services and/or pay additional damages. 15Table of ContentsAt our clinical pharmacology units, we study the effects of drugs on healthy volunteers. In addition, in our clinical business we, on behalf of our clients,contract with physicians who render professional services, including the administration of the substance being tested, to participants in clinical trials, many ofwhom are seriously ill and are at great risk of further illness or death as a result of factors other than their participation in a trial. As a result, we could be held liablefor bodily injury, death, pain and suffering, loss of consortium, or other personal injury claims and medical expenses arising from a clinical trial. In addition, wesometimes engage the services of vendors necessary for the conduct of a clinical trial, such as laboratories or medical diagnostic specialists. Because these vendorsare engaged as subcontractors, we are responsible for their performance and may be held liable for damages if the subcontractors fail to perform in the mannerspecified in their contract. To reduce our potential liability, and as a requirement of the GCP regulations, informed consent is required from each volunteer and patient. In addition,our clients provide us with contractual indemnification for all of our service related contracts. These indemnities generally do not, however, protect us againstcertain of our own actions such as those involving negligence or misconduct. Our business, financial condition and operating results could be harmed if we wererequired to pay damages or incur defense costs in connection with a claim that is not indemnified, that is outside the scope of an indemnity or where the indemnity,although applicable, is not honored in accordance with its terms. We maintain errors, omissions, and professional liability insurance in amounts we believe to be appropriate. This insurance provides coverage forvicarious liability due to negligence of the investigators who contract with us, as well as claims by our clients that a clinical trial was compromised due to an erroror omission by us. If our insurance coverage is not adequate, or if insurance coverage does not continue to be available on terms acceptable to us, our business,financial condition, and operating results could be materially harmed. SeasonalityAlthough our business is not generally seasonal, our Clinical Research segment typically experiences a slight decrease in its revenue growth rate duringthe fourth quarter due to holiday vacations and a similar decrease in new business awards in the first quarter due to our clients’ budgetary cycles and vacationsduring the year‑end holiday period. Our Data Solutions segment usually experiences an increase in revenue during the fourth quarter as many pharmaceuticalcompanies use a portion of funds remaining in their annual budgets to purchase its data offerings.Employees As of December 31, 2019, we had over 17,500 employees, of which approximately 42% were in the United States, approximately 34% were in Europe,approximately 3% were in Canada, and approximately 21% were in Africa, Latin America, and Asia Pacific. Some of our employees located outside of the UnitedStates are represented by workers council or labor unions. We believe that our employee relations are satisfactory. Approximately 38% of employees hold aMaster’s level degree or higher. We have approximately 1,900 employees that hold a Ph.D, M.D. or other doctorate level degrees. Available Information We are subject to the informational requirements of the Exchange Act and, in accordance therewith, file reports, including annual, quarterly and currentreports, proxy statements and other information with the SEC. Copies of our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports onForm 8‑K and our proxy statements for our annual meetings of stockholders, and any amendments or supplements to those reports, as well as Section 16 reportsfiled by our insiders, are available free of charge on our website as soon as reasonably practicable after we file the reports with, or furnish the reports to the SEC.Our website address is http://www.prahs.com, and our investor relations website is located at investor.prahs.com. Information on our website is not incorporatedby reference herein. In addition, the SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and otherinformation regarding issuers that file electronically with the SEC.16Table of ContentsItem 1A. Risk Factors You should consider carefully the risks and uncertainties described below together with the other information included in this Annual Report onForm 10‑K, including our consolidated financial statements and related notes thereto. The occurrence of any of the following risks may materially and adverselyaffect our business, financial condition, results of operations and future prospects, which could in turn materially affect the price of our common stock. The potential loss, delay or non‑renewal of our contracts, or the non‑payment by our clients for services that we have performed, could adversely affect ourresults. We routinely experience termination, cancellation and non‑renewals of contracts by our clients in the ordinary course of business, and the number ofcancellations can vary significantly from year to year. Most of our clients for traditional, project‑based clinical trial services can terminate our contracts without cause upon 30 to 60 days’ notice. For example,our cancellation percentage for traditional, project‑based Phase I through IV trials for the years ended December 31, 2019 and 2018 was 16% and 17%,respectively. Our traditional, project‑based clients may delay, terminate or reduce the scope of our contracts for a variety of reasons beyond our control, includingbut not limited to: •decisions to forgo or terminate a particular clinical trial;•lack of available financing, budgetary limits or changingpriorities;•actions by regulatoryauthorities;•production problems resulting in shortages of the drug beingtested;•failure of the drug being tested to satisfy safety requirements or efficacycriteria;•unexpected or undesired clinical results;•insufficient patient enrollment in atrial;•insufficient investigatorrecruitment;•decisions to downsize product development portfolios;•dissatisfaction with our performance, including the quality of data provided and our ability to meet agreed uponschedules;•shift of business to another CRO or internal resources;•product withdrawal following market launch;or•shut down of our clients’ manufacturingfacilities. In addition, our clients for our Strategic Solutions offerings may elect not to renew our contracts for a variety of reasons beyond our control, including inthe event that we are unable to provide staff sufficient in number or experience as required for a project. In the event of termination, our contracts often provide for fees for winding down the study, but these fees may not be sufficient for us to maintain ourprofit margins, and termination or non‑renewal may result in lower resource utilization rates, including with respect to personnel who we are not able to place onanother client engagement. Clinical trials can be costly and a material portion of our revenue is derived from emerging biotechnology and small to mid‑sized pharmaceuticalcompanies, which may have limited access to capital. In addition, we provide services to such companies before they pay us for some of our services. There is arisk that we may initiate a clinical trial for a client, and the client subsequently becomes unwilling or unable to fund the completion of the trial. In such a situation,notwithstanding the client’s ability or willingness to pay for or otherwise facilitate the completion of the trial, we may be legally or ethically bound to complete orwind down the trial at our own expense. Because the contracts included in our backlog can generally be terminated without cause, we do not believe that our backlog as of any date is necessarilya meaningful predictor of future results. In addition, we may not realize the full benefits of our backlog of contractually committed services if our clients cancel,delay or reduce their commitments under our contracts with them. For the reasons described above, the loss or delay of a large contract or the loss or delay ofmultiple contracts or a17Table of Contentsclients' non-payment for services could adversely affect our revenue and profitability. In addition, the terminability of our contracts puts increased pressure on ourquality control efforts, since not only can our contracts be terminated by clients as a result of poor performance, but any such termination may also affect ourability to obtain future contracts from the client involved and others. We believe the risk of loss or delay of multiple contracts is even greater in those cases wherewe are party to broader partnering arrangements with global biopharmaceutical companies. We bear financial risk if we underprice our fixed‑fee contracts or overrun cost estimates, and our financial results can also be adversely affected by failure toreceive approval for change orders or delays in documenting change orders. Most of our traditional, project‑based Phase I through IV contracts are fixed‑fee contracts. We bear the financial risk if we initially underprice ourcontracts or otherwise overrun our cost estimates. In addition, contracts with our clients are subject to change orders, which we commonly experience and whichoccur when the scope of work we perform needs to be modified from that originally contemplated by our contract with the client. Modifications can occur, forexample, when there is a change in a key trial assumption or parameter, a significant change in timing or a change in staffing needs. Furthermore, if we are notsuccessful in converting out‑of‑scope work into change orders under our current contracts, we bear the cost of the additional work. Such underpricing, significantcost overruns or delay in documentation of change orders could have a material adverse effect on our business, results of operations, financial condition or cashflows. Our backlog may not convert to revenue at the historical conversion rate. Backlog represents anticipated revenue from contracted new business awards, excluding reimbursable out-of-pocket costs or reimbursable investigatorfees, that either have not started or are in process but have not been completed. Our backlog was $4.7 billion, $4.2 billion, and $3.5 billion at December 31, 2019,2018, and 2017, respectively. Our revenue conversion rate is based on a financial and operational analysis performed by our project management teams andrepresents the level of effort expected to be expended at a specific point in time. Once work begins on a project, revenue is recognized over the duration of theproject. Projects may be terminated or delayed by the client or delayed by regulatory authorities for reasons beyond our control. To the extent projects are delayed,the timing of our revenue could be affected. In the event that a client cancels a contract, we generally would be entitled to receive payment for all servicesperformed up to the cancellation date and subsequent client authorized services related to terminating the canceled project. Generally, however, we have nocontractual right to the full amount of the revenue reflected in our backlog in the event of a contract cancellation. The duration of the projects included in ourbacklog, and the related revenue recognition, range from a few months to many years. Our backlog may not be indicative of our future results, and we may notrealize all the anticipated future revenue reflected in our backlog. A number of factors may affect the realization of our revenue from backlog, including:•the size, complexity and duration of theprojects;•the cancellation or delay of projects; and•change in the scope of work during the course of aproject.Fluctuations in our reported backlog levels also result from the fact that we may receive a small number of relatively large orders in any given reportingperiod that may be included in our backlog. Revenue recognition on larger, more global projects could be slower than on smaller, less global projects for a varietyof reasons, including but not limited to, an extended period of negotiation between the time the project is awarded to us and the actual execution of the contract, aswell as an increased time frame for obtaining the necessary regulatory approvals.The relationship of backlog to realized revenues is indirect and may vary over time. As we increasingly compete for and enter into large contracts that aremore global in nature, there can be no assurance about the rate at which our backlog will convert into revenue. A decrease in this conversion rate would mean thatthe rate of revenue recognized on contracts may be slower than what we have experienced in the past, which could materially and adversely impact our revenueand results of operations on a quarterly and annual basis. Additionally, delayed projects will remain in backlog and will not generate revenue at the rate originallyexpected, which could impair our cash flows and results of operations in the short-term. Because of these large orders, our backlog in that reporting period mayreach levels that may not be sustained in subsequent reporting periods. 18Table of ContentsIf we are unable to attract suitable investigators and patients for our clinical trials, our clinical development business may suffer. The recruitment of investigators and patients for clinical trials is essential to our business. Patients typically include people from the communities inwhich the clinical trials are conducted. Our clinical development business could be adversely affected if we are unable to attract suitable and willing investigatorsor patients for clinical trials on a consistent basis. For example, if we are unable to engage investigators to conduct clinical trials as planned or enroll sufficientpatients in clinical trials, we may need to expend additional funds to obtain access to resources or else be compelled to delay or modify the clinical trial plans,which may result in additional costs to us. These considerations might result in our being unable to successfully achieve our projected development timelines, orpotentially even lead us to consider the termination of ongoing clinical trials or development of a product. Our embedded and functional outsourcing solutions could subject us to significant employment liability. With our embedded and functional outsourcing services, we place employees at the physical workplaces of our clients. The risks of this activity includeclaims of errors and omissions, misuse or misappropriation of client proprietary information, theft of client property and torts or other claims under employmentliability, co‑employment liability or joint employment liability. We have policies and guidelines in place to reduce our exposure to such risks, but if we fail tofollow these policies and guidelines we may suffer reputational damage, loss of client relationships and business, and monetary damages.If we lose the services of key personnel or are unable to recruit and retain experienced personnel, our business could be adversely affected. Our success substantially depends on the collective performance, contributions and expertise of our senior management team and other key personnel,including qualified management, professional, scientific and technical operating staff and qualified sales representatives for our contract sales services. There issignificant competition for qualified personnel in the biopharmaceutical services industry, particularly those with higher educational degrees, such as a medicaldegree, a Ph.D or an equivalent degree. The departure of any key executive, the payment of increased compensation to attract and retain qualified personnel, or ourinability to continue to identify, attract and retain qualified personnel or replace any departed personnel in a timely fashion, may impact our ability to grow ourbusiness and compete effectively in our industry and may negatively affect our ability to meet financial and operational goals. Furthermore, clients or othercompanies seeking to develop in‑house capabilities may hire some of our senior management or key employees. We cannot assure you that a court would enforcethe non‑competition provisions in our employment agreements. Our business depends on the continued effectiveness and availability of our information systems, including the information systems we use to provide ourservices to our clients, and failures of these systems may materially limit our operations. Due to the global nature of our business and our reliance on information systems to provide our services, we have increased, and intend to continue toincrease, our use of web‑enabled and other integrated information systems in delivering our services. We also provide access to similar information systems tocertain of our clients in connection with the services we provide them. As the breadth and complexity of our information systems continue to grow, we willincreasingly be exposed to the risks inherent in the development, integration and ongoing operation of evolving information systems, including:•disruption, impairment or failure of data centers, telecommunications facilities or other key infrastructureplatforms;•security breaches of, cyberattacks on and other failures or malfunctions in our critical application systems or their associated hardware;and•excessive costs, excessive delays or other deficiencies in systems development and deployment.The materialization of any of these risks may impede the processing of data, the delivery of databases and services, and the day‑to‑day management ofour business and could result in the corruption, loss or unauthorized disclosure of proprietary, confidential or other data. While we have disaster recovery plans inplace, they might not adequately protect us in the event of a system failure. Despite any precautions we take, damage from fire, floods, hurricanes, power loss,telecommunications failures, computer viruses, information system security breaches and similar events at our various computer facilities could result ininterruptions in the flow of data to our servers and from our servers to our clients. Corruption or loss of data may result in the need to repeat a trial at no cost to theclient, but at significant cost to us, or result in the termination of a contract or damage to our reputation. Additionally, significant delays in system enhancements orinadequate performance of new or upgraded systems once completed could damage our reputation and harm our business. Finally, long‑term disruptions in theinfrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities and acts of terrorism, particularly involving cities in whichwe have offices, could adversely affect our business.19Table of ContentsAlthough we carry property and business interruption insurance, our coverage might not be adequate to compensate us for all losses that may occur.A failure or breach of our IT systems or technology could result in sensitive customer information being compromised or otherwise significantly disrupt ourbusiness operations, which would negatively materially affect our reputation and/or results of operations.In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-sponsoredintrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and in governmentagencies have increased in recent years, and security industry experts and government officials have warned about the risks of hackers and cyberattacks targetingbusinesses such as ours. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulentlyinduce employees, customers, or others to disclosure information or unwittingly provide access to systems or data. Unauthorized disclosure of sensitive orconfidential data, whether through system failure or employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose clients.Similarly, unauthorized access to or through our information systems or those we develop for our clients, whether by our employees or third parties, including acyberattack by computer programmers and hackers who may develop and deploy viruses, worms or other malicious software programs, could cause severalnegative consequences, including the following: negative publicity, loss of client confidence, significant remediation costs, time-consuming and costly regulatoryinvestigations, legal liability and damage to our reputation. Any of these could contribute to a loss of customers or substantial costs for us, which could have amaterial adverse effect on our results of operations. In addition, our liability insurance might not be sufficient in type or amount to adequately cover us againstclaims related to security breaches, cyberattacks and other related breaches.We have experienced and expect to continue to experience actual or attempted cyberattacks of our IT systems or networks. However, to date,cybersecurity attacks directed at us have not had a material impact on our financial results. While we have certain cybersecurity safeguards in place designed toprotect and preserve the integrity of our information technology systems, due to the evolving nature of security threats and the potential negative consequences of acybersecurity attack outlined above, the impact of any future incidents cannot be reasonably predicted. Our clients are also increasingly requiring cybersecurityprotections and mandating cybersecurity standards in our products, and we may incur additional costs to comply with such demands. In addition, our efforts toaddress a cybersecurity attack may not be successful, potentially resulting in the theft, loss, destruction or corruption of information we store electronically, as wellas unexpected interruptions, delays or cessation of service. Any of these outcomes could cause serious harm to our business operations and materially adverselyaffect our financial condition and results of operations. We may be adversely affected by client concentration or concentration in therapeutic classes in which we conduct clinical trials. We derive a substantial portion of our revenues from a limited number of large clients. In 2019, we derived 38% of our revenue from our top five clients.In addition, approximately 39% of our backlog, as of December 31, 2019, is concentrated among five clients. If any large client decreases or terminates itsrelationship with us, our business, results of operations or financial condition could be materially adversely affected. Additionally, we conduct multiple clinical trials for different clients in single therapeutic classes, particularly in the areas of oncology and immunology.Conducting multiple clinical trials for different clients in a single therapeutic class involving drugs with the same or similar chemical action has in the past, andmay in the future, adversely affect our business if some or all of the trials are canceled because of new scientific information or regulatory judgments that affect thedrugs as a class or if industry consolidation results in the rationalization of drug development pipelines.If we do not keep pace with rapid technological changes, our services may become less competitive or obsolete. The biopharmaceutical industry generally, and drug development and clinical research more specifically, are subject to rapid technological changes. Ourcurrent competitors or other businesses might develop technologies or services that are more effective or commercially attractive than, or render obsolete, ourcurrent or future technologies and services. If our competitors introduce superior technologies or services and if we cannot make enhancements to remaincompetitive, our competitive position would be harmed. If we are unable to compete successfully, we may lose clients or be unable to attract new clients, whichcould lead to a decrease in our revenue and financial condition.20Table of ContentsIf we are unsuccessful at investing in growth opportunities, our business could be materially and adversely affected.We continue to invest significantly in growth opportunities, including the development and acquisition of new data, technologies and services to meet ourclients’ needs. We also continue to invest significantly in growth opportunities in emerging markets, such as the development, launch and enhancement of servicesin emerging countries and regions, including India, China, Eastern Europe and Latin America. We believe healthcare spending in these emerging markets willcontinue to grow over the next five years, and we consider our presence in these markets to be an important focus of our growth strategy.There is no assurance that our investment plans or growth strategy will be successful or will produce a sufficient or any return on our investments.Further, if we are unable to develop new technologies and services, clients do not purchase our new technologies and services, our new technologies and servicesdo not work as intended, or there are delays in the availability or adoption of our new technologies and services, then we may not be able to grow our business orgrowth may occur more slowly than anticipated. Additionally, although we expect continued growth in healthcare spending in emerging markets, such spendingmay occur more slowly or not at all, and we may not benefit from our investments in these markets.We plan to fund growth opportunities with cash from operations or from financings. There can be no assurance that those sources will be available insufficient amounts to fund future growth opportunities when needed.Any of the foregoing could have a material and adverse effect on our operating results and financial condition.If we are unable to successfully identify, acquire and integrate existing businesses, services and technologies, our business, results of operations and financialcondition could be adversely impacted.We anticipate that a portion of our future growth may come from acquiring existing businesses, services or technologies. The success of any acquisitionwill depend upon, among other things, our ability to effectively integrate acquired personnel, operations, services and technologies into our business and to retainthe key personnel and clients of our acquired businesses. In addition, we may be unable to identify suitable acquisition opportunities or obtain any necessaryfinancing on commercially acceptable terms. We may also spend time and money investigating and negotiating with potential acquisition targets but not completethe transaction. Any future acquisition could involve other risks, including, among others, the assumption of additional liabilities and expenses, difficulties andexpenses in connection with integrating the acquired companies and achieving the expected benefits, issuances of potentially dilutive securities or interest-bearingdebt, loss of key employees of the acquired companies, transaction costs, diversion of management’s attention from other business concerns and, with respect tothe acquisition of foreign companies, the inability to overcome differences in foreign business practices, language and customs. Our failure to identify potentialacquisitions, complete targeted acquisitions and integrate completed acquisitions could have a material adverse effect on our business, financial condition andresults of operations.We may experience challenges with the acquisition, development, enhancement or deployment of technology necessary for our business.We operate in businesses that require sophisticated computer systems and software for data collection, data processing, cloud-based platforms, analytics,statistical projections and forecasting, mobile computing, and other applications and technologies, particularly in our Data Solutions business. We seek to addressour technology risks by increasing our reliance on the use of innovations by cross-industry technology leaders and adapt these for our biopharmaceutical andhealthcare industry clients. Some of these technologies supporting the industries we serve are changing rapidly and we must continue to adapt to these changes in atimely and effective manner at an acceptable cost. We also must continue to deliver data to our clients in forms that are easy to use while simultaneously providingclear answers to complex questions. There can be no guarantee that we will be able to develop, acquire or integrate new technologies, that these new technologieswill meet our clients’ needs or achieve expected investment goals, or that we will be able to do so as quickly or cost-effectively as our competitors. Significanttechnological change could render certain of our services obsolete. Moreover, the introduction of new services embodying new technologies could render certainof our existing services obsolete. Our continued success will depend on our ability to adapt to changing technologies, manage and process ever-increasing amountsof data and information and improve the performance, features and reliability of our services in response to changing client and industry demands. We mayexperience difficulties that could delay or prevent the successful design, development, testing, introduction or marketing of our services. New services, orenhancements to existing services, may not adequately meet the requirements of current and prospective clients or achieve any degree of significant marketacceptance. These types of failures could have a material adverse effect on our operating results and financial condition. Our business is subject to international economic, political and other risks that could negatively affect our results of operations and financial condition.21Table of Contents We have significant operations in non‑U.S. countries that may require complex arrangements to deliver services on global contracts for our clients.Additionally, we have established operations in locations remote from our most developed business centers. As a result, we are subject to heightened risks inherentin conducting business internationally, including the following: •conducting a single trial across multiple countries is complex, and issues in one country, such as a failure to comply with local regulations orrestrictions, may affect the progress of the trial in the other countries, for example, by limiting the amount of data necessary for a trial to proceed,resulting in delays or potential cancellation of contracts, which in turn may result in loss of revenue; •non‑U.S. countries could enact legislation or impose regulations or other restrictions, including unfavorable labor regulations or tax policies, whichcould have an adverse effect on our ability to conduct business in or expatriate profits from those countries;•tax rates in certain non‑U.S. countries may exceed those in the United States and non‑U.S. earnings may be subject to withholding requirements or theimposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation;•certain non‑U.S. countries are expanding or may expand their regulatory framework with respect to patient informed consent, protection andcompensation in clinical trials, which could delay or inhibit our ability to conduct trials in such jurisdictions or which could materially increase the risksassociated with performing trials in such jurisdictions;•the regulatory or judicial authorities of non‑U.S. countries may not enforce legal rights and recognize business procedures in a manner to which we areaccustomed or would reasonably expect;•we may have difficulty complying with a variety of laws and regulations in non‑U.S. countries, some of which may conflict with laws in the UnitedStates;•changes in political and economic conditions may lead to changes in the business environment in which we operate, as well as changes in non‑U.S.currency exchange rates;•the adoption and expansion of trade restrictions, the occurrence or escalation of a “trade war,” or other governmental action related to tariffs or tradeagreements or policies among the governments of the United States and other countries, such as China, could adversely impact demand for ourservices, our costs, our clients, and the U.S. economy;•regulatory changes and economic conditions following “Brexit” (the United Kingdom’s exit from the European Union), including uncertainties as to itseffect on trade laws, tariffs and taxes, could create instability and volatility in the global financial and currency markets, conflicting or redundantregulatory regimes in Europe (such as the European Medicines Agency ("EMA") relocation from the United Kingdom to the Netherlands) and politicalinstability;•clients in non‑U.S. jurisdictions may have longer payment cycles, and it may be more difficult to collect receivables in non‑U.S. jurisdictions;and•natural disasters, pandemics or international conflict, including terrorist acts, could interrupt our services, endanger our personnel or cause projectdelays or loss of trial materials or results.These risks and uncertainties could negatively impact our ability to, among other things, perform large, global projects for our clients. Furthermore, ourability to deal with these issues could be affected by applicable U.S. laws and the need to protect our assets. In addition, we may be more susceptible to these risksas we enter and continue to target growth in emerging countries and regions, including India, China, Eastern Europe and Latin America, which may be subject to arelatively higher risk of political instability, economic volatility, crime, corruption and social and ethnic unrest, all of which are exacerbated in many cases by alack of an independent and experienced judiciary and uncertainties in how local law is applied and enforced. The materialization of any such risks could have anadverse impact on our financial condition and results of operations. Due to the global nature of our business, we may be exposed to liabilities under the Foreign Corrupt Practices Act and various non‑U.S. anti‑corruption laws,and any allegation or determination that we violated these laws could have a material adverse effect on our business. We are required to comply with the U.S. Foreign Corrupt Practices Act, or FCPA, and other U.S. and non‑U.S. anti‑corruption laws, which prohibitcompanies from engaging in bribery, including corruptly or improperly offering, promising, or providing money or anything else of value to non‑U.S. officials andcertain other recipients. In addition, the22Table of ContentsFCPA imposes certain books, records, and accounting control obligations on public companies and other issuers. We operate in parts of the world in whichcorruption can be common and compliance with anti‑bribery laws may conflict with local customs and practices. Our global operations face the risk ofunauthorized payments or offers being made by employees, consultants, sales agents, and other business partners outside of our control or without ourauthorization. It is our policy to implement safeguards to prohibit these practices by our employees and business partners with respect to our operations. However,irrespective of these safeguards, or as a result of monitoring compliance with such safeguards, it is possible that we or certain other parties may discover or receiveinformation at some point that certain employees, consultants, sales agents, or other business partners may have engaged in corrupt conduct for which we might beheld responsible. Violations of the FCPA or other non‑U.S. anti‑corruption laws may result in restatements of, or irregularities in, our financial statements as wellas severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financialcondition. In some cases, companies that violate the FCPA may be debarred by the U.S. government and/or lose their U.S. export privileges. Changes inanti‑corruption laws or enforcement priorities could also result in increased compliance requirements and related costs which could adversely affect our business,financial condition and results of operations. In addition, the U.S. or other governments may seek to hold us liable for successor liability FCPA violations orviolations of other anti‑corruption laws committed by companies in which we invest or that we acquired or will acquire. If we fail to perform our services in accordance with contractual requirements, government regulations and ethical considerations, we could be subject tosignificant costs or liability and our reputation could be adversely affected. We contract with biotechnology and pharmaceutical companies to perform a wide range of services to assist them in bringing new drugs to market. Ourservices include monitoring clinical trials, laboratory analysis, electronic data capture, patient recruitment, data analytics, technology solutions and other relatedservices. Such services are complex and subject to contractual requirements, government regulations, and ethical considerations. For example, we are subject toregulation by the FDA and comparable non‑U.S. regulatory authorities relating to our activities in conducting pre‑clinical and clinical trials. The clinical trialprocess must be conducted in accordance with regulations promulgated by the FDA under the Federal Food, Drug and Cosmetic Act, which requires the drug to betested and studied in certain ways. In the United States, before human clinical testing may begin, a manufacturer must file an IND with the FDA. Further, an IRBfor each medical center proposing to participate in the clinical trial must review and approve the protocol for the clinical trial before the medical center’sinvestigators participate. Once initiated, clinical trials must be conducted pursuant to and in accordance with the applicable IND, the requirements of the relevantIRBs, and GCP regulations. Similarly, before clinical trials begin, a drug is tested in pre‑clinical studies that are expected to comply with Good Laboratory Practicerequirements. We are also subject to regulation by the DEA, which regulates the distribution, recordkeeping, handling, security, and disposal of controlledsubstances. If we fail to perform our services in accordance with these requirements, regulatory authorities may take action against us. Such actions may includeinjunctions or failure to grant marketing approval of products, imposition of clinical holds or delays, suspension or withdrawal of approvals, rejection of datacollected in our studies, license revocation, product seizures or recalls, operational restrictions, civil or criminal penalties or prosecutions, damages or fines. Clientsmay also bring claims against us for breach of our contractual obligations and patients in the clinical trials and patients taking drugs approved on the basis of thosetrials may bring personal injury claims against us. Any such action could have a material adverse effect on our results of operations, financial condition andreputation. Such consequences could arise if, among other things, the following occur: Improper performance of our services. The performance of clinical development services is complex and time‑consuming. For example, we may makemistakes in conducting a clinical trial that could negatively impact or obviate the usefulness of the trial or cause the results of the trial to be reported improperly. Ifthe trial results are compromised, we could be subject to significant costs or liability, which could have an adverse impact on our ability to perform our servicesand our reputation would be harmed. As examples:•non‑compliance generally could result in the termination of ongoing clinical trials or the disqualification of data for submission to regulatoryauthorities;•compromise of data from a particular trial, such as failure to verify that adequate informed consent was obtained from patients, could require us torepeat the trial under the terms of our contract at no further cost to our client, but at a potentially substantial cost to us; and•breach of a contractual term could result in liability for damages or termination of thecontract. Large clinical trials can cost tens of millions of dollars, and while we endeavor to contractually limit our exposure to such risks, improper performance ofour services could have a material adverse effect on our financial condition, damage our reputation and result in the cancellation of current contracts by theaffected client or other current clients or failure to obtain future contracts from the affected client or other current or potential clients.23Table of Contents Investigation of clients. From time to time, one or more of our clients are investigated by regulatory authorities or enforcement agencies with respect toregulatory compliance of their clinical trials, programs or the marketing and sale of their drugs. In these situations, we have often provided services to our clientswith respect to the clinical trials, programs or activities being investigated, and we are called upon to respond to requests for information by the authorities andagencies. There is a risk that either our clients or regulatory authorities could claim that we performed our services improperly or that we are responsible forclinical trial or program compliance. If our clients or regulatory authorities make such claims against us and prove them, we could be subject to damages, fines orpenalties. In addition, negative publicity regarding regulatory compliance of our clients’ clinical trials, programs or drugs could have an adverse effect on ourbusiness and reputation. If we fail to comply with certain healthcare laws, including fraud and abuse laws, we could face substantial penalties and our business, results of operations,financial condition and prospects could be adversely affected. Even though we do not order healthcare services or bill directly to Medicare, Medicaid or other third‑party payors, certain federal and state healthcarelaws and regulations pertaining to fraud and abuse are and will be applicable to our business. We could be subject to healthcare fraud and abuse laws of both thefederal government and the states in which we conduct our business. Because of the breadth of these laws and the narrowness of available statutory and regulatoryexceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If we or our operations are found to bein violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminalpenalties, damages, fines, imprisonment and the curtailment or restructuring of our operations, any of which could materially adversely affect our ability to operateour business and our financial results. Our services could subject us to potential liability that may adversely affect our results of operations and financial condition. Our Clinical Research business involves the testing of new drugs on patients in clinical trials. Our involvement in the clinical trial and developmentprocess creates a risk of liability for personal injury to or death of patients, particularly those with life‑threatening illnesses, resulting from adverse reactions to thedrugs administered during testing or after regulatory approval. For example, we may be sued in the future by individuals alleging personal injury due to theirparticipation in clinical trials and seeking damages from us under a variety of legal theories. If we are required to pay damages or incur defense costs in connectionwith any personal injury claim that is outside the scope of indemnification agreements we have with our clients, if any indemnification agreement is not performedin accordance with its terms or if our liability exceeds the amount of any applicable indemnification limits or available insurance coverage, our financial condition,results of operations and reputation could be materially and adversely affected. We might also not be able to obtain adequate insurance or indemnification for thesetypes of risks at reasonable rates in the future. We also contract with physicians to serve as investigators in conducting clinical trials. Investigators are typically located at hospitals, clinics or other sitesand supervise the administration of the investigational drug to patients during the course of a clinical trial. If the investigators commit errors or make omissionsduring a clinical trial that result in harm to trial patients or if the investigators commit errors or make omissions in the administration of a drug to a patient, claimsfor personal injury or products liability damages may result. Additionally, if the investigators engage in fraudulent or negligent behavior, trial data may becompromised, which may require us to repeat the clinical trial or subject us to liability or regulatory action. We do not believe we are legally responsible for themedical care rendered by such third‑party investigators, and we expect that we would vigorously defend any claims brought against us. However, it is possible wecould be found liable for claims with respect to the actions of third‑party investigators. Some of our services involve direct interaction with clinical trial patients and operation of Phase I and IIa clinical facilities, which could create potentialliability that may adversely affect our results of operations and financial condition. We operate facilities where Phase I to IIa clinical trials are conducted, which ordinarily involve testing an investigational drug on a limited number ofindividuals to evaluate its safety, determine a safe dosage range and identify side effects. Failure to operate such a facility in accordance with applicableregulations could result in disruptions to our operations. Additionally, we face risks associated with adverse events resulting from the administration of such drugsand the professional malpractice of medical care providers. We also directly employ nurses and other trained employees who assist in implementing the testinginvolved in our clinical trials, such as drawing blood from subjects. Any professional malpractice or negligence by such investigators, nurses or other employeescould potentially result in liability to us in the event of personal injury to or death of a subject in clinical trials. Damages and/or the related defense costs,particularly if they were to exceed the limits of any24Table of Contentsindemnification agreements and insurance coverage we may have, may adversely affect our financial condition, results of operations and reputation. Our insurance may not cover all of our indemnification obligations and other liabilities associated with our operations. We maintain insurance designed to provide coverage for ordinary risks associated with our operations and our ordinary indemnification obligations. Thecoverage provided by such insurance may not be adequate for all claims we may make or may be contested by our insurance carriers. If our insurance is notadequate or available to pay liabilities associated with our operations, or if we are unable to purchase adequate insurance at reasonable rates in the future, ourprofitability may be adversely impacted. Exchange rate fluctuations may affect our results of operations and financial condition. During 2019, approximately 16% of our revenue and 35% of our operating expenses were denominated in currencies other than the U.S. dollar,particularly the Euro and the British pound. Because a portion of our revenue and expenses are denominated in currencies other than the U.S. dollar and ourfinancial statements are reported in U.S. dollars, changes in non‑U.S. currency exchange rates could significantly affect our results of operations and financialcondition. The revenue and expenses of our non‑U.S. operations are generally denominated in local currencies and translated into U.S. dollars for financial reportingpurposes. Accordingly, exchange rate fluctuations will affect the translation of non‑U.S. results into U.S. dollars for purposes of reporting our consolidated results. We are subject to non‑U.S. currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cashsettlement of a transaction. We earn revenue from our service contracts over a period of several months and, in some cases, over several years. Accordingly,exchange rate fluctuations during this period may affect our profitability with respect to such contracts. We may limit these risks through exchange rate fluctuation provisions stated in our service contracts, or we may hedge our transaction risk with non‑U.S.currency exchange contracts or options. We have not, however, hedged any of our non‑U.S. currency transaction risk, and we may experience fluctuations infinancial results from our operations outside the United States and non‑U.S. currency transaction risk associated with our service contracts. Our relationships with existing or potential clients who are in competition with each other may adversely impact the degree to which other clients or potentialclients use our services, which may adversely affect our results of operations. The biopharmaceutical industry is highly competitive, with companies each seeking to persuade payors, providers and patients that their drug therapiesare more cost‑effective than competing therapies marketed or developed by competing firms. In addition to the adverse competitive interests thatbiopharmaceutical companies have with each other, these companies also have adverse interests with respect to drug selection and reimbursement with otherparticipants in the healthcare industry, including payors and providers. Biopharmaceutical companies also compete to be first to the market with new drugtherapies. We regularly provide services to biopharmaceutical companies that compete with each other, and we sometimes provide services to such clientsregarding competing drugs in development. Our existing or future relationships with our biopharmaceutical clients have in the past deterred, and may continue todeter, other biopharmaceutical clients from using our services or, in certain instances, have resulted in our clients seeking to place limits on our ability to servetheir competitors and other industry participants. In addition, our further expansion into the broader healthcare market may adversely impact our relationships withbiopharmaceutical clients, and such clients may elect not to use our services, reduce the scope of services that we provide to them or seek to place restrictions onour ability to serve clients in the broader healthcare market with interests that are adverse to theirs. Any loss of clients or reductions in the level of revenues from aclient could have a material adverse effect on our results of operations, business and prospects.The biopharmaceutical services industry is fragmented and highly competitive. The biopharmaceutical services industry is fragmented and highly competitive and if we do not compete successfully, our business will suffer. We oftencompete for business with other biopharmaceutical services companies, universities, niche providers and discovery and development departments within ourclients, some of which are large biopharmaceutical services companies in their own right with greater resources than ours. As part of our business model, we andour competitors typically form preferred vendor relationships. Both for us and our competitors, these relationships generally are not contractual and are subject tochange at any time. We may find reduced access to certain potential clients due to the preferred arrangements between vendors and our competitors, which mayexist for extended periods of time.25Table of ContentsAdditionally, there are few barriers to entry for smaller specialized companies. Because of their size and focus, these companies might competeeffectively against larger companies like us, which could have a material adverse impact on our business. The industry is also highly fragmented, with numeroussmaller specialized companies and a handful of full‑service companies with global capabilities similar to ours. Increased competition has led to price and otherforms of competition, which may result in acceptance of less favorable contract terms that could adversely affect our operating results. As a result of competitivepressures, in recent years our industry has experienced consolidation. This trend is likely to produce more competition from the resulting larger companies for bothclients and acquisition candidates.Our effective income tax rate may fluctuate for different reasons, including the U.S. Tax Cuts and Jobs Act enacted in 2017, which may adversely affect ouroperations, earnings and earnings per share. Our effective income tax rate is influenced by our projected profitability in the various taxing jurisdictions in which we operate. The global nature of ourbusiness increases our tax risks. In addition, as a result of increased funding needs by governments resulting from fiscal stimulus measures, revenue authorities inmany of the jurisdictions in which we operate are known to have become more active in their tax collection activities. Changes in the distribution of profits andlosses among taxing jurisdictions may have a significant impact on our effective income tax rate, which in turn could have an adverse effect on our net income andearnings per share. The application of tax laws in various taxing jurisdictions, including the United States, is subject to interpretation, and tax authorities in variousjurisdictions may have diverging and sometimes conflicting interpretations of the application of tax laws. Changes in tax laws or tax rulings in the United States orother tax jurisdictions in which we operate, could materially impact our effective tax rate. Factors that may affect our effective income tax rate include, but are not limited to:•the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no income tax benefit can berecognized;•actual and projected full year pre‑tax income, including differences between actual and anticipated income before taxes in variousjurisdictions;•changes in tax laws, or in the interpretation or application of tax laws, in various taxing jurisdictions, including the U.S. Tax Cuts and JobsAct;•audits or other challenges by taxing authorities;and•the establishment of valuation allowances against a portion or all of certain deferred income tax assets if we determined that it is more likely than notthat future income tax benefits will not be realized.In addition, our effective income tax rate is influenced by U.S. tax law, which has been substantially modified by the U.S. Tax Cuts and Jobs Act. Thefollowing provisions of the U.S. Tax Cuts and Jobs Act could have an adverse effect on our tax rate if it is determined that the provisions are applicable to theCompany:•global intangible low-taxed income;•limitations on the U.S. deductions for net businessinterest;•base erosion anti-abuse provisions;and•performance-based compensation subject to $1 million limit.These changes may cause fluctuations in our effective income tax rate that could adversely affect our results of operations and cause fluctuations in ourearnings and earnings per share.We have a significant amount of goodwill and intangible assets on our balance sheet, and our results of operations may be adversely affected if we fail torealize the full value of our goodwill and intangible assets. Our balance sheet reflects goodwill and intangibles assets of $1,502.8 million and $638.6 million, respectively, as of December 31, 2019. Collectively,goodwill and intangibles assets represented 60% of our total assets as of December 31, 2019. In accordance with generally accepted accounting principles, orGAAP, goodwill and indefinite-lived intangible assets are not amortized, but are subject to a periodic impairment evaluation. We assess the realizability of ourindefinite-lived intangible assets and goodwill annually and conduct an interim evaluation whenever events or changes in circumstances, such as operating lossesor a significant decline in earnings associated with the acquired business or asset, indicate that these assets may be impaired. In addition, we review long‑livedassets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. If indicators ofimpairment are present, we evaluate26Table of Contentsthe carrying value in relation to estimates of future undiscounted cash flows. Our ability to realize the value of the goodwill and intangible assets will depend on thefuture cash flows of the businesses we have acquired, which in turn depend in part on how well we have integrated these businesses into our own business. Thecarrying amount of the goodwill could be impaired if there is a downturn in our business or our industry or other factors that affect the fair value of our business, inwhich case a charge to earnings would become necessary. If we are not able to realize the value of the goodwill and intangible assets, we may be required to incurmaterial charges relating to the impairment of those assets. Such impairment charges could materially and adversely affect our operating results and financialcondition. See Note 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10‑K for a further discussion of our goodwill andintangible asset impairment testing. Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. Under Sections 382 and 383 of the U.S. Internal Revenue Code, if a corporation undergoes an “ownership change” (generally defined as a greater than50 percentage point change, by value, in the aggregate stock ownership of certain stockholders over a three‑year period), the corporation’s ability to use itspre‑change net operating loss carryforwards to offset its future taxable income and other pre‑change tax attributes may be limited. We have experienced at leastone ownership change in the past. We may experience additional ownership changes in the future. In addition, future changes in our stock ownership could result inadditional ownership changes. Any such ownership changes could limit our ability to use our net operating loss carryforwards to offset any future taxable incomeand other tax attributes. State and non‑U.S. tax laws, as well as the results of examinations and audits by the IRS and other taxing authorities, may also limit ourability to utilize net operating loss carryforwards and other tax attributes. We rely on third parties to provide certain data and other information to us. Our suppliers or providers might increase our cost to obtain, restrict our use of orrefuse to license data, which could lead to our inability to access certain data or provide certain services and, as a result, materially and adversely affect ouroperating results and financial condition.Our services are derived from, or include, the use of data we collect from third parties. We have several data suppliers that provide us a broad and diversescope of information that we collect, use in our business and sell.We generally enter into long-term contractual arrangements with many of our data suppliers. At the time we enter into a new data supply contract orrenew an existing contract, suppliers may increase our cost to obtain and use the data provided by such supplier, increase restrictions on our ability to use or sellsuch data, or altogether refuse to license the data to us. Also, our data suppliers may fail to meet or adhere to our quality control standards or fail to deliver the datato us. Although no single supplier is material to our business, if suppliers that collectively provide a significant amount of the data we receive or use were toincrease our costs to obtain or use such data, further restrict our access to or use of such data, fail to meet or adhere to our quality control standards, refuse toprovide data or fail to deliver data to us, our ability to provide data-dependent services to our clients may be adversely impacted, which could have a materialadverse effect on our business, results of operations, financial condition or cash flow.We rely on third parties for important products, services and licenses to certain technology and intellectual property rights and we might not be able tocontinue to obtain such products, services and licenses. We depend on certain third parties to provide us with products and services critical to our business. Such services include, among others, suppliers ofdrugs for patients participating in trials, suppliers of kits for use in our laboratories, suppliers of reagents for use in our testing equipment and providers ofmaintenance services for our equipment. The failure of any of these third parties to adequately provide the required products or services adequately, or to do so incompliance with applicable regulatory requirements, could have a material adverse effect on our business.Some of our services rely on intellectual property, technology and other similar property owned and/or controlled by third parties. Our licenses to thisproperty and technology could terminate or expire and we might not be able to replace these licenses in a timely manner. Also, we might not be able to renew theselicenses on similar terms and conditions. Failure to renew these licenses, or renewals of these licenses on less advantageous terms, could have a material adverseeffect on our business, results of operations, financial condition or cash flow. We have only a limited ability to protect our intellectual property rights, both domestically and internationally, and these rights are important to our success. Our success depends, in part, upon our ability to develop, use and protect our proprietary methodologies, analytics, systems, technologies and otherintellectual property in both our Clinical Research and Data Solutions businesses. We rely upon a combination of trade secrets, confidentiality policies,nondisclosure, invention assignment and other contractual27Table of Contentsarrangements, and copyright, trademark, patent and trade secret laws, to protect our intellectual property rights. Existing laws of the various countries in which weprovide services or solutions offer only limited protection of our intellectual property rights, and the protection in some countries may be very limited. The laws ofsome foreign countries, especially certain developing countries with emerging economies in Asia, Eastern European and Latin America, do not protect intellectualproperty rights to the same extent as federal and state laws in the United States. Additionally, both in developed and developing countries, these laws are subject tochange at any time and certain agreements may not be fully enforceable, which could further restrict our ability to protect our innovations.Our intellectual property rights may not prevent competitors from independently developing services similar to, or duplicative of, ours. For instance,unauthorized parties may attempt to copy or reverse engineer certain aspects of our products that we consider proprietary or our proprietary information mayotherwise become known or may be independently developed by our competitors or other third parties. Further, the steps we take in this regard might not beadequate to prevent or deter infringement or other misappropriation of our intellectual property by competitors, former employees or other third parties, and wemight not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, our intellectual property rights. Enforcing our rights might alsorequire considerable time, money and oversight, and we may not be successful in enforcing our rights. It may not be possible to enforce intellectual property rightseffectively in some countries at all or to the same extent as in the United States and other countries, and many companies have encountered significant problems inprotecting and defending intellectual property rights in foreign jurisdictions. Depending on the circumstances, we might need to grant a specific client greater rights in intellectual property developed in connection with a contractthan we otherwise generally do. In certain situations, we might forgo all rights to the use of intellectual property we create, which would limit our ability to reusethat intellectual property for other clients. Any limitation on our ability to provide a service or solution could cause us to lose revenue generating opportunities andrequire us to incur additional expenses to develop or license new or modified solutions for future projects. Outsourcing trends in the biopharmaceutical industry and changes in aggregate spending and R&D budgets could adversely affect our operating results andgrowth rate. We provide services to the biopharmaceutical industry, and our revenues depend on the outsourcing trends and R&D expenditures in the industry.Economic factors (including the success of fundraising efforts, the overall health of the capital markets, consolidations), regulatory developments, patentprotection issues and industry trends that affect biopharmaceutical companies in turn affect our business. Biopharmaceutical companies also continue to seeklong‑term strategic collaborations with global CROs with favorable pricing terms. Competition for these collaborations is intense and we may decide to forgo anopportunity or we may not be selected, in which case a competitor may enter into the collaboration and our business with the client, if any, may be limited. Inaddition, if the biopharmaceutical industry reduces overall R&D spending or outsourcing of clinical trials, or such outsourcing fails to grow at projected rates, ouroperations and financial condition could be materially and adversely affected. All of these events could adversely affect our business, results of operations orfinancial condition. Consolidation in the biopharmaceutical industry could lead to a reduction in our revenues. Several large biopharmaceutical companies have completed mergers and acquisitions that will consolidate the outsourcing trends and R&D expendituresinto fewer companies. Large pharmaceutical companies represent a significant portion of our customer base. The pharmaceutical industry is currently undergoing aperiod of increased merger activity. As a result of this and future consolidations, our client diversity may decrease and our business may be adversely affected. Inaddition, consolidation and other factors in the biopharmaceutical industry, may slow decision making by our clients or result in the delay or cancellation ofclinical trials.The U.S. and international healthcare industry is subject to political, economic and/or regulatory influences and changes, such as healthcare reform, all ofwhich could adversely affect both our customers’ business and our business.Governments worldwide have increased efforts to expand healthcare coverage while at the same time curtailing and better controlling the increasing costsof healthcare. In recent years, the U.S. Congress enacted healthcare reform legislation that expanded health insurance coverage and imposed healthcare industrycost containment measures. More recently, there has been considerable discussion in the United States about repeal of or changes to current healthcare laws andlitigation challenging such laws, and in 2019, U.S. tax reform legislation removed the financial penalty for individuals who do not have health insurance. At thesame time, certain members of the U.S. Congress have proposed measures that would expand the role of government-sponsored coverage, including single payeror so-called “Medicare-for-All” proposals, the actual implementation or likelihood of which could have far-reaching implications for the healthcare industry. It isuncertain what changes, new legislation or regulations will be adopted or how any such changes, new legislation or regulations would impact28Table of Contentsour business. If cost-containment efforts or other measures substantially changing existing insurance models limit our customers’ profitability, they may decreaseR&D spending, which could decrease the demand for our services and materially adversely affect our growth prospects. Likewise, if a simplified or more relaxeddrug approval process is adopted, the demand for our services may decrease.The U.S. Congress has also considered and might adopt other legislation that could put downward pressure on the prices that biopharmaceuticalcompanies can charge for prescription drugs. In addition, government bodies may have adopted or are considering the adoption of healthcare reform to control theincreasing cost of healthcare. Cost-containment measures, whether instituted by healthcare providers or imposed by governments or through new governmentregulations, could result in greater selectivity in the number of pharmaceutical products available for purchase, resulting in third-party payers potentiallychallenging the price and cost-effectiveness of certain pharmaceutical products. In addition, in many major markets outside the United States, pricing approval isrequired before sales may commence. As a result, significant uncertainty exists as to the reimbursement status of approved healthcare products. Any of thesefactors could harm our customers’ businesses, which, in turn, could materially adversely hurt our business.In addition to healthcare reform proposals, the expansion of managed care organizations, which focus on reducing healthcare costs by limitingexpenditures on pharmaceutical products and medical devices, could result in biopharmaceutical and medical device companies spending less on R&D, whichcould decrease the demand for our services. If this were to occur, we would have fewer business opportunities and our revenues could decrease, potentiallymaterially.Government bodies may also adopt healthcare legislation or regulations that are more burdensome than existing regulations. For example, product safetyconcerns and recommendations from the FDA’s Drug Safety Oversight Board could change the regulatory environment for drug products, including the process forconducting clinical trials of drug and biologic product candidates, FDA product approval and post-approval safety surveillance. These and other changes inregulation could increase our expenses or limit our ability to offer some of our services. Additionally, new or heightened regulatory requirements may have anegative impact on the ability of our customers to conduct and fund clinical trials for new medicines, which could reduce the demand for our services.We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in theUnited States or abroad. For example, certain policies of the Trump administration may impact our business and industry. Namely, the Trump administration hastaken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay,the FDA’s ability to engage in routine oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval ofmarketing applications. It is difficult to predict how these executive actions will be implemented, and the extent to which they will impact the FDA. Current and proposed laws and regulations regarding the protection of personal data could result in increased risks of liability or increased cost to us or couldlimit our service offerings. The confidentiality, collection, use and disclosure of personal data, including clinical trial patient‑specific information, are subject to governmentalregulation generally in the country in which the personal data was collected or used. For example, U.S. federal regulations under HIPAA generally requireindividuals’ written authorization, in addition to any required informed consent, before PHI may be used for research and such regulations specify standards forde‑identifications and for limited data sets. We may also be subject to applicable state privacy and security laws and regulations in states in which we operate. Weare both directly and indirectly affected by the privacy provisions surrounding individual authorizations because many investigators with whom we are involved inclinical trials are directly subject to them as a HIPAA “covered entity” and because we obtain PHI from third parties that are subject to such regulations. Becauseof amendments to the HIPAA data security and privacy rules, there are some instances where we may be a HIPAA “business associate” of a “covered entity,”meaning that we may be directly liable for any breaches in PHI and other HIPAA violations. These amendments may subject us to HIPAA’s enforcement scheme,which, as amended, can result in up to $1.5 million in annual civil penalties for each HIPAA violation. In the EU and other jurisdictions, personal data includes any information that relates to an identified or identifiable natural person with health informationcarrying additional obligations, including obtaining the explicit consent from the individual for collection, use or disclosure of the information. In addition, we aresubject to laws and regulations with respect to cross‑border transfers of such data out of certain jurisdictions in which we operate, including the EU. If we areunable to transfer data between and among countries and regions in which we operate, it could affect the manner in which we provide our services or adverselyaffect our financial results. The United States, the EU and its member states, and other countries where we have operations continue to issue new privacy and dataprotection rules and regulations that relate to personal data and health information. For instance, the EU GDPR, which took effect in 2018, imposes stringent dataprotection requirements and29Table of Contentsprovides for penalties up to the greater of €20 million or 4% of worldwide gross revenue for violations. Federal, state and non‑U.S. governments may propose,adopt or have adopted additional legislation governing the collection, possession, use or dissemination of personal data, such as personal health information, andpersonal financial data as well as security breach notification rules for loss, theft or unauthorized use of such data that results in significant harm to individuals. Forinstance, the California Consumer Privacy Act (the “CCPA”), which grants expanded rights to access and delete personal information and opt out of certainpersonal information sharing, among other things, became effective on January 1, 2020. Due to the geographic scope of our operations, the EU GDPR, the CCPA,and other privacy and security-related laws and regulations currently in effect or that may come into effect may increase our responsibility and liability in relationto personal data that we process, and we may be required to put in place additional mechanisms ensuring compliance with privacy laws and regulations.Failure to comply with these data protection and privacy regulations and rules in various jurisdictions, or to resolve any serious privacy or securitycomplaints, could subject us to regulatory sanctions, criminal prosecution or civil liability. Additional legislation or regulation of this type might, among otherthings, require us to implement new security measures and processes or bring within the legislation or regulation de‑identified health or other personal data, each ofwhich may require substantial expenditures or limit our ability to offer some of our services. Additionally, if we violate applicable laws, regulations or dutiesrelating to the use, privacy or security of personal data, we could be subject to civil liability or criminal prosecution, be forced to alter our business practices andsuffer reputational harm.The biopharmaceutical industry has a history of patent and other intellectual property litigation, and we might be involved in costly intellectual propertylawsuits. The biopharmaceutical industry has a history of intellectual property litigation, and these lawsuits will likely continue in the future. Accordingly, we mayface patent infringement suits by companies that have patents for similar business processes or other suits alleging infringement of their intellectual property rights.Legal proceedings relating to intellectual property could be expensive, take significant time and divert management’s attention from other business concerns,regardless of the outcome of the litigation. If we do not prevail in an infringement lawsuit brought against us, we might have to pay substantial damages, and wecould be required to stop the infringing activity or obtain a license to use technology on unfavorable terms. Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt obligations and may otherwise restrict ouractivities. As of December 31, 2019, we had total indebtedness of $1,258.8 million, which consisted of: $170.0 million principal amount of variable rate accountsreceivable financing due in 2021, $1,000.0 million principal amount of variable rate first lien term loans due in 2024, or the First Lien Term Loan, and $88.8million of borrowings under our revolving line of credit, or the Revolver. The First Lien Term Loan and Revolver are collectively known as the Senior SecuredCredit Facility. Specifically, our high level of debt could have important consequences to our business and financial condition, including:•making it more difficult for us to satisfy our obligations with respect to ourdebt;•limiting our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions or other generalcorporate requirements;•requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount ofcash flow available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes;•increasing our vulnerability to adverse changes in general economic, industry and competitiveconditions;•exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Senior Secured Credit Facility andaccounts receivable financing agreement, are at variable rates of interest;•limiting our flexibility in planning for and reacting to changes in the industry in which wecompete;•placing us at a disadvantage compared to other, less leveraged competitors;and•increasing our cost ofborrowing.Despite our level of indebtedness, we may incur more debt and undertake additional obligations. Incurring such debt or undertaking such additionalobligations could further exacerbate the risks to our financial condition. 30Table of ContentsAlthough the credit agreement governing the Senior Secured Credit Facility, as amended, contains restrictions on the incurrence of additionalindebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions couldincrease. To the extent new debt is added to our current debt levels, the risks to our financial condition would increase.If we do not comply with the covenants in our financing agreements, we may not have the funds necessary to pay all of our indebtedness that could becomedue. The credit agreement governing the Senior Secured Credit Facility and the accounts receivable financing agreement, as amended, require us to complywith certain covenants. In particular, our credit agreement prohibits us from incurring any additional indebtedness, except in specified circumstances, or amendingthe terms of agreements relating to certain existing junior indebtedness, if any, in a manner materially adverse to the lenders under our credit agreement withouttheir respective approval. Further, our credit agreement and the accounts receivable financing agreement contain customary covenants, including covenants thatrestrict our ability to acquire and dispose of assets, engage in mergers or reorganizations, pay dividends or make investments. A violation of any of these covenantscould cause an event of default under our financing agreements.If we default on our financing agreements, all outstanding amounts could become immediately due and payable. If any of the holders of our indebtednessaccelerate the repayment of such indebtedness, there can be no assurance that we will have sufficient assets to repay our indebtedness. If we were unable to repaythose amounts, the holders of our secured indebtedness could proceed against the collateral granted to them to secure that indebtedness. Any acceleration ofamounts due or the substantial exercise by the lenders of their rights under applicable security documents would likely have a material adverse effect on us. We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under ourindebtedness that may not be successful. Our ability to satisfy our debt obligations will depend upon, among other things:•our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and otherfactors, many of which are beyond our control; and•the future availability of borrowings under our Senior Secured Credit Facility, which depends on, among other things, our compliance with thecovenants in those facilities. It cannot be assured that our business will generate sufficient cash flow from operations, or that future borrowings will be available under our SeniorSecured Credit Facility or otherwise, in an amount sufficient to fund our liquidity needs. If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets,seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet ourscheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition atsuch time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrictour business operations. In addition, the terms of existing or future debt agreements, may restrict us from adopting some of these alternatives. In the absence ofsuch operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet ourdebt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all and any proceeds that we could realize fromany such dispositions may not be adequate to meet our debt service obligations then due. Interest rate fluctuations may affect our results of operations and financial condition. Because all of our debt is variable‑rate debt, fluctuations in interest rates could have a material effect on our business. We currently utilize derivativefinancial instruments such as interest rate swaps to hedge our exposure to interest rate fluctuations, but such instruments may not be effective in reducing ourexposure to interest fluctuations, and we may discontinue utilizing them at any time. As a result, we may incur higher interest costs if and when interest ratesincrease. These higher interest costs could have a material adverse impact on our financial condition and the levels of cash we maintain for working capital.The interest rates of our term loans are priced using a spread over LIBOR. 31Table of ContentsLIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending between banks on the London interbank market and is widelyused as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in our term loans such that the interest due to ourcreditors pursuant to a term loan extended to us is calculated using LIBOR. Most of our term loan agreements contain a stated minimum value for LIBOR.In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.It is unclear if at that time whether or not LIBOR will cease to exist, or if new methods of calculating LIBOR will be established such that it continues to exist after2021 or if replacement conventions will be developed. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steeringcommittee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short-term repurchaseagreements, backed by Treasury securities (“SOFR”). SOFR is observed and backward-looking, which stands in contrast with LIBOR under the currentmethodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Given that SOFR is asecured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR). Whether or not SOFRattains market traction as a LIBOR replacement tool remains in question. As such, the future of LIBOR at this time is uncertain. At this time, due to a lack ofconsensus existing as to what rate or rates may become accepted alternatives to LIBOR, it is impossible to predict the effect of any such alternatives on ourliquidity. However, if LIBOR ceases to exist, we may need to renegotiate our credit agreements that utilize LIBOR as a factor in determining the interest rate toreplace LIBOR with the new standard that is established. Additionally, these changes may have an adverse impact on the value of or interest earned on anyLIBOR-based marketable securities, loans and derivatives that are included in our financial assets and liabilities.Changes in accounting standards may adversely affect our financial statements.From time to time the Financial Accounting Standards Board, or FASB, and SEC issue new or revised guidance that we are required to adopt. It is possiblethat future accounting standards may require changes to our current accounting treatment and may require us to make changes to our accounting systems andprocesses. These changes could have a material impact on our business, results of operations and financial condition. See Note 2 to our audited consolidatedfinancial statements included elsewhere in this Annual Report on Form 10-K for details regarding recently implemented accounting standards and recently issuedaccounting pronouncements and the potential impact they may have on the Company. Provisions of our corporate governance documents and Delaware law could make any change in our board of directors or in control of our company moredifficult. Our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law contain provisions, such as provisionsauthorizing, without a vote of stockholders, the issuance of one or more series of preferred stock, that could make it difficult or expensive for a third party to pursuea tender offer, change in control or takeover attempt that is opposed by our management and board of directors even if such a transaction would be beneficial toour stockholders. We also have a staggered board of directors that could make it more difficult for stockholders to change the composition of our board of directorsin any one year. These anti‑takeover provisions could substantially impede the ability of public stockholders to change our management or board of directors. Our operating results and share price may be volatile, which could cause the fair value of our stockholders’ investments to decline. Securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility,as well as general economic, market or political conditions, could subject the market price of our shares to wide price fluctuations regardless of our operatingperformance. Our operating results and the trading price of our shares may fluctuate in response to various factors, including:•market conditions in the broader stockmarket;•actual or anticipated fluctuations in our quarterly financial and operatingresults;•introduction of new products or services by us or ourcompetitors;•the public’s reaction to our press releases, our other public announcements and our filings withthe SEC;•changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common stock or the stock of othercompanies in our industries;•strategic actions by us, our customers or our competitors, such as acquisitions orrestructurings;32Table of Contents•changes in accounting standards, policies, guidance, interpretations orprinciples;•issuance of new or changed securities analysts’ reports or recommendations or termination of coverage of our common stock by securitiesanalysts;•the granting or exercise of employee stockoptions;•volume of trading in our commonstock;•additions or departures of key personnel;•regulatory or political developments;•litigation and governmentalinvestigations;•changing economic conditions;•defaults on our indebtedness;and•exchange ratefluctuations.These and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for our shares tofluctuate substantially. While we believe that operating results for any particular quarter are not necessarily a meaningful indication of future results, fluctuations inour quarterly operating results could limit or prevent investors from readily selling their shares and may otherwise negatively affect the market price and liquidityof our shares. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class actionlitigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit.Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation. Item 1B. Unresolved Staff Comments None. Item 2. Properties We lease a facility for our corporate headquarters in Raleigh, North Carolina. We also lease more than 74 other offices in North America, Europe, Africa,Latin America, Australia and Asia. We do not own any real estate. We believe that our properties, taken as a whole, are in good operating condition and aresuitable for our business operations. Item 3. Legal Proceedings We are currently involved, as we are from time to time, in legal proceedings that arise in the ordinary course of our business. We believe that we haveadequately accrued for these liabilities and that there is no other litigation pending that could materially harm our results of operations and financial condition. See"Contingent Losses" under Note 3 and "Legal Proceedings" under Note 15 to our consolidated financial statements included elsewhere in this Annual Report onForm 10‑K for a further discussion of our current legal proceedings. Item 4. Mine Safety Disclosures Not applicable.33Table of ContentsPART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock trades on the NASDAQ under the symbol “PRAH.” Holders of Record On February 18, 2020, we had approximately 265 common stockholders of record. This number does not include beneficial owners for whom shares areheld by nominees in street name. Recent Sales of Unregistered Securities There were no unregistered sales of equity securities in 2019 that have not been previously reported in a quarterly report on Form 10-Q or current reporton Form 8-K. Purchases of Equity Securities by the Issuer and Affiliated Purchasers On August 30, 2019, our board of directors authorized a share repurchase program, or the Repurchase Program, pursuant to which we may repurchase upto $500 million of common stock, effective immediately and through and including December 31, 2021, when the Repurchase Program will expire. Under therepurchase program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions, secondary offerings, block trades orotherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under theExchange Act.No repurchases were made during the three months ended December 31, 2019. As of December 31, 2019, we have remaining authorization to repurchaseup to $200.0 million of common stock under the Repurchase Program.Stock Performance Graph This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of theCompany under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference into such filing. The following graph shows a comparison from November 13, 2014 (the date our common stock commenced trading on the NASDAQ) throughDecember 31, 2019 of the cumulative total return for our common stock, the Nasdaq Composite Index and the Nasdaq Health Care Index. The graph assumes that $100 was invested at the market close on November 13, 2014 in the common stock of PRA Health Sciences, Inc., the NasdaqComposite Index and the Nasdaq Health Care Index, and assumes reinvestments of dividends, if any. The stock price performance of the following graph is notnecessarily indicative of future stock price performance.34Table of Contents Item 6. Selected Financial Data The following tables set forth, for the periods and at the dates indicated, our selected historical consolidated financial data. We have derived the selectedconsolidated financial data for the years ended December 31, 2017, 2018 and 2019, and as of December 31, 2018 and 2019, from our audited consolidatedfinancial statements appearing elsewhere in this Annual Report on Form 10‑K. We have derived the selected consolidated financial data for the years endedDecember 31, 2015 and 2016, and as of December 31, 2015, 2016 and 2017 from our consolidated financial statements not appearing elsewhere in this AnnualReport on Form 10‑K. Our historical results are not necessarily indicative of the results we may achieve in any future period. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes appearing elsewhere in this Annual Reporton Form 10‑K.35Table of Contents (in thousands, except per share data)2015 2016 2017 2018 2019Consolidated statements of operations data: Revenue: Service revenue (1)$1,375,847 Reimbursement revenue (1)238,036 Total revenue (1)1,613,883 $1,811,711 $2,259,389 $2,871,922 $3,066,262Operating expenses: Direct costs (exclusive of depreciation and amortization)886,528 1,032,688 1,283,868 1,500,226 1,539,541 Reimbursable expenses (1)238,036 231,688 311,015 570,405 650,080 Selling, general and administrative expenses246,417 269,893 321,987 371,795 394,925 Transaction-related costs— 44,834 87,709 35,817 1,835 Depreciation and amortization expense77,952 69,506 78,227 112,247 114,898 Loss on disposal of fixed assets652 753 358 120 1,058 Income from operations164,298 162,349 176,225 281,312 363,925Interest expense, net(61,747) (54,913) (46,729) (57,399) (51,987)Loss on modification or extinguishment of debt— (38,178) (15,023) (952) (3,928)Foreign currency gains (losses), net14,048 24,029 (39,622) (1,043) (2,257)Other (expense) income, net(1,434) 607 (304) (371) 174Income before income taxes and equity in (losses) income of unconsolidated joint ventures115,165 93,894 74,547 221,547 305,927Provision for (benefit from) income taxes30,004 28,494 (12,623) 67,232 62,808Income before equity in (losses) income of unconsolidated joint ventures85,161 65,400 87,170 154,315 243,119Equity in (losses) income of unconsolidated joint ventures, net of tax(3,396) 2,775 123 143 —Net income81,765 68,175 87,293 154,458 243,119Net income attributable to noncontrolling interest— — (366) (553) (99)Net income attributable to PRA Health Sciences, Inc.$81,765 $68,175 $86,927 $153,905 $243,020Net income per share: Basic$1.36 $1.12 $1.39 $2.40 $3.77Diluted$1.29 $1.06 $1.32 $2.32 $3.68Cash dividends declared per common stockholders$— $— $— $— $—Weighted average common shares outstanding: Basic59,965 60,759 62,437 64,123 64,506Diluted63,207 64,452 65,773 66,341 66,004Cash flow data: Net cash provided by operating activities$152,428 $160,047 $220,408 $329,792 $253,567Net cash used in investing activities(71,686) (34,614) (687,420) (55,473) (73,183)Net cash (used in) provided by financing activities(42,444) (101,595) 507,009 (319,512) (90,707)Other financial data: Backlog (at period end) (2)$2,440,123 $2,934,823 $3,535,611 $4,224,225 $4,709,528Net new business (3)1,696,635 2,076,484 2,413,730 2,644,791 2,663,572 2015 2016 2017 2018 2019 Consolidated balance sheet data Cash and cash equivalents$121,065 $144,623 $192,229 $144,221 $236,232Accounts receivable and unbilled services, net415,077 439,053 627,003 568,099 658,517Working capital43,796 60,538 (94,592) (116,519) (31,642)Total assets (4)2,228,743 2,190,391 3,358,046 3,186,467 3,544,430Total long-term debt, net889,514 797,052 1,225,397 1,082,384 1,140,178Total liabilities (4)1,526,021 1,461,139 2,421,565 2,135,047 2,454,439Total stockholders' equity702,722 729,252 936,481 1,051,420 1,089,991Total liabilities and stockholders' equity2,228,743 2,190,391 3,358,046 3,186,467 3,544,430(1)On January 1, 2018, we adopted Accounting Standards Codification, or ASC, Topic 606, "Revenue from Contracts with Customers," or ASC 606, using the modified retrospective method for all contracts that were not completed asof January 1, 2018. Comparative prior period information continues to be accounted for under the accounting standards in effect for the period presented. The revenue captions for the years ended December 31, 2017 and 2016 havebeen recast to conform with the presentation of a single revenue total in the consolidated statements of operations as opposed to separate line items. Previously, the year ended December 31, 2017 included service revenue of $1,948.4million and reimbursement revenue of $311.0 million. The year ended December 31, 2016 included service revenue of $1,580.0 million and reimbursement revenue of $231.7 million.(2)Our backlog consists of anticipated service revenue for our Clinical Research segment from new business awards that either have not started or that have started but have not been completed. Backlog varies from period to perioddepending upon new business awards and contract increases, cancellations and the amount of service revenue recognized under existing contracts.(3)For our Strategic Solutions offering, the value of new business awards is the anticipated service revenue to be recognized in the corresponding quarter of the next fiscal year. For the remainder of our business, net new business is thevalue of services awarded during the period from projects under signed contracts, letters of intent and, in some cases, pre‑contract commitments that are supported by written communications, adjusted for contracts that weremodified or canceled during the period. New business awards are for our Clinical Research segment.(4)On January 1, 2019, we adopted ASC Topic 842, "Leases," or ASC 842, using the modified retrospective approach. Comparative prior period information continues to be accounted for under the accounting standards in effect for theperiods presented. Refer to additional discussion in Note 2, "Recent Accounting Standards", and Note 8, "Leases", in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.36Table of ContentsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our “Selected Financial Data”and the consolidated financial statements and the related notes included elsewhere in “Financial Statements and Supplementary Data.” Some of the informationcontained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for ourbusiness, includes forward‑looking statements that involve risks and uncertainties. You should read the “Risk Factors” section of this Annual Report onForm 10‑K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward‑lookingstatements contained in the following discussion and analysis.Our discussion and analysis below is focused on our financial results and liquidity and capital resources for the years ended December 31, 2019 and 2018,including year-over-year comparisons of our financial performance and condition for these years. Discussion and analysis of the year ended December 31, 2017specifically, as well as the year-over-year comparison of our financial performance and condition for the years ended December 31, 2018 and 2017, are located inPart II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year endedDecember 31, 2018, filed with the SEC on February 28, 2019. Overview We are one of the world’s leading global CROs, by revenue, providing outsourced clinical development services to the biotechnology and pharmaceuticalindustries. We believe we are one of a select group of CROs with the expertise and capability to conduct clinical trials across major therapeutic areas on a globalbasis. Our therapeutic expertise includes areas that are among the largest in pharmaceutical development, and we focus in particular on oncology, immunology,central nervous system inflammation, respiratory, cardiometabolic and infectious diseases. We believe that we further differentiate ourselves from our competitorsthrough our investments in medical informatics and clinical technologies designed to enhance efficiencies, improve study predictability and provide bettertransparency for our clients throughout their clinical development processes. Our Data Solutions segment allows us to better serve our clients across their entireproduct lifecycle by (i) improving clinical trial design, recruitment, and execution; (ii) creating real-world data solutions based on the use of medicines by actualpatients in normal situations; and (iii) increasing the efficiency of healthcare companies' commercial organizations through enhanced analytics and outsourcingservices. How We Assess the Performance of Our Business We are managed through two reportable segments, (i) Clinical Research and (ii) Data Solutions. Our chief operating decision maker uses segment profitas the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. In addition to our GAAPfinancial measures, we review various financial and operational metrics. For our Clinical Research segment we review new business awards, cancellations, andbacklog.Our gross new business awards for the years ended December 31, 2019 and 2018 were $3,024.0 million and $3,023.6 million, respectively. New businessawards arise when a client selects us to execute its trial and is documented by written or electronic correspondence or for our Strategic Solutions offering when theamount of revenue expected to be recognized is measurable. The number of new business awards can vary significantly from year to year, and awards can haveterms ranging from several months to several years. For our Strategic Solutions offering, the value of a new business award is the anticipated service revenue to berecognized in the corresponding quarter of the next fiscal year. For the remainder of our business, the value of a new award is the anticipated service revenue overthe life of the contract, which does not include reimbursement activity or investigator fees. In the normal course of business, we experience contract cancellations, which are reflected as cancellations when the client provides us with written orelectronic correspondence that the work should cease. During the years ended December 31, 2019 and 2018, we had $360.4 million and $378.8 million,respectively, of cancellations for which we received correspondence from the client. The number of cancellations can vary significantly from year to year. Thevalue of the cancellation is the remaining amount of unrecognized service revenue, less the estimated effort to transition the work back to the client. Our backlog consists of anticipated service revenue from new business awards that either have not started or are in process but have not been completed.Backlog varies from period to period depending upon new business awards and contract modifications, cancellations, and the amount of service revenue recognizedunder existing contracts. Our backlog at December 31, 2019 and 2018 was $4.7 billion and $4.2 billion, respectively. 37Table of ContentsIndustry Trends ISR estimated in its 2019 Market Report that the size of the worldwide CRO market was approximately $39 billion in 2018 and will grow at a 7.5%CAGR to $56 billion in 2023. This growth will be driven by an increase in the amount of research and development expenditures and higher levels of clinicaldevelopment outsourcing by biopharmaceutical companies. Sources of RevenueTotal revenue is comprised of revenue from the provision of our services, and revenue from reimbursable expenses and reimbursable investigator grants,that are incurred while providing our services. We do not have any material product revenue.On January 1, 2018, we adopted ASC 606 “Revenue from Contracts with Customers,” or ASC 606, using the modified retrospective method for allcontracts that were not completed as of January 1, 2018. Thus, in this Part II Item 7 and elsewhere in this report, we report 2019 and 2018 fiscal year revenue underthe modified retrospective method of ASC 606, and continue to report comparative prior period information for the 2017 fiscal year under the accounting standardsin effect for that period. See Note 3 to our audited consolidated financial statements found elsewhere in this Annual Report on Form 10-K for additional detailsregarding our sources of revenue.Costs and Expenses Our costs and expenses are comprised primarily of our direct costs, selling, general and administrative costs, depreciation and amortization and incometaxes. In addition, we monitor and measure costs as a percentage of revenue, excluding reimbursement revenue from reimbursable expenses, rather than totalrevenue, as we believe this is a more meaningful comparison and better reflects the operations of our business. Direct Costs (Exclusive of Depreciation and Amortization) For our Clinical Research segment, direct costs consist primarily of labor‑related charges. They include elements such as salaries, benefits and incentivecompensation for our employees. In addition, we utilize staffing agencies to procure primarily part time individuals to perform work on our contracts. Labor-related charges as a percentage of the Clinical Research segment's total direct costs were 96.4% and 96.0% for the years ended December 31, 2019 and 2018,respectively. The cost of labor procured through staffing agencies is included in these percentages and represents 3.1% and 4.5% of the Clinical Researchsegment's total direct costs for the years ended December 31, 2019 and 2018, respectively. Our remaining direct costs are items such as travel, meals, postage andfreight, patient costs, medical waste and supplies. The total of all these items as a percentage of the Clinical Research segment's total direct costs were 3.6% and4.0% for the years ended December 31, 2019 and 2018, respectively.For our Data Solutions segment, direct costs consist primarily of data costs. Data costs as a percentage of the Data Solutions segment's total direct costswere 73.3% and 73.0% for the years ended December 31, 2019 and 2018, respectively. Labor-related charges, such as salaries, benefits and incentive compensationfor our employees, were 20.2% and 20.3% of the Data Solutions segment's total direct costs for the years ended December 31, 2019 and 2018, respectively. Ourremaining direct costs are items such as travel, meals, and supplies and were 6.5% and 6.7% of the Data Solutions segment's total direct costs for the years endedDecember 31, 2019 and 2018, respectively.Historically, direct costs have increased with an increase in revenue. The future relationship between direct costs and revenue may vary from historicalrelationships. Direct costs as a percentage of revenue were 50.2% and 52.2%, during the years ended December 31, 2019 and 2018, respectively. Several factorswill cause direct costs to decrease as a percentage of revenue. Deployment of our billable staff in an optimally efficient manner has the greatest impact on our ratioof direct cost to revenue. The most effective deployment of our staff is when they are fully engaged in billable work and are accomplishing contract relatedactivities at a rate that meets or exceeds budgeted targets. We also seek to optimize our efficiency by performing work using the employee with the lowest cost.Generally, the following factors may cause direct costs to increase as a percentage of revenue: our staff are not fully deployed, as is the case when there areunforeseen cancellations or delays; our staff are accomplishing tasks at levels of effort that exceed budget, such as rework; and pricing pressure from increasedcompetition.38Table of ContentsReimbursable Expenses We incur out-of-pocket costs that are reimbursable by our customers. As is customary in our industry, we also routinely enter into separate agreements onbehalf of our clients with independent physician investigators in connection with clinical trials. We do not pay independent physician investigators until funds arereceived from the applicable clients. We include these out-of-pocket costs and investigator fees as reimbursable expenses in our consolidated statements ofoperations. Reimbursable expenses are not included in our backlog because they are pass-through costs to our clients. We believe that the fluctuations in reimbursable expenses are not meaningful to our economic performance given that such costs are passed through to theclient. The reimbursable expenses are included in our measure of progress for our long-term contracts.Selling, General and Administrative Expenses Selling, general and administrative expenses consist of administration payroll and benefits, marketing expenditures, and overhead costs such asinformation technology and facilities costs. These expenses also include central overhead costs that are not directly attributable to our operating business andinclude certain costs related to insurance, professional fees and property.Transaction-Related Costs Transaction-related costs include fees associated with our secondary offerings, stock-based compensation expense related to the transfer restrictions onvested options, the amendment to our accounts receivable financing agreement, costs associated with acquisition related earn-out liabilities, and expensesassociated with our acquisitions. Loss on Modification or Extinguishment of Debt Loss on modification or extinguishment of debt consists of costs incurred in connection with debt refinancing or incremental borrowings under our creditfacilities and the write-off of previously unamortized debt financing costs that were expensed as a result of voluntary debt repayments.Depreciation and Amortization Depreciation represents the depreciation charged on our fixed assets. The charge is recorded on a straight‑line method, based on estimated useful lives ofthree to seven years for computer hardware and software and five to seven years for furniture and equipment. Leasehold improvements are depreciated over thelesser of the life of the lease term or the useful life of the improvements. Amortization expense consists of amortization recorded on acquisition‑related intangibleassets. Customer relationships, backlog, databases and finite‑lived trade names are amortized on an accelerated basis, which coincides with the period of economicbenefit we expect to receive. All other finite‑lived intangibles are amortized on a straight‑line basis. In accordance with GAAP, we do not amortize goodwill andindefinite‑lived intangible assets. Income Taxes Because we conduct operations on a global basis, our effective tax rate has and will continue to depend upon the geographic distribution of our pre‑taxearnings among several different taxing jurisdictions. Our effective tax rate can also vary based on changes in the tax rates of the different jurisdictions. Oureffective tax rate is also impacted by tax credits and the establishment or release of deferred tax asset valuation allowances and tax reserves, as well as significantnon‑deductible items such as portions of transaction‑related costs.Foreign subsidiaries are taxed separately in their respective jurisdictions. We have foreign net operating loss carryforwards in some jurisdictions. Thecarryforward periods for these losses vary from four years to an indefinite carryforward period depending on the jurisdiction. Our ability to offset future taxableincome with the net operating loss carryforwards may be limited in certain instances, including changes in ownership.Business Combinations We have completed and will continue to consider strategic business combinations to enhance our capabilities and offerings in certain areas. In September2017, we acquired Symphony Health, which has enhanced our ability to serve customers throughout the clinical research process with technologies that providedata and analytics. Additionally, in May39Table of Contents2017, we acquired Parallel 6, Inc., or Parallel 6, which has allowed us to offer our customers technologies that provide improved efficiencies by reducing studydurations and costs through integrated operational management. These transactions were accounted for as business combinations and the acquired results of operations are included in our consolidated financialinformation since the acquisition date.See Note 5 to our audited consolidated financial statements found elsewhere in this Annual Report on Form 10-K for additional information with respectto these and other smaller acquisitions. Joint Ventures In June 2017, we closed on a joint venture transaction with Takeda Pharmaceutical Company Ltd., or Takeda, that enabled us to provide clinical trialdelivery and pharmacovigilance services as a strategic partner of Takeda Japan. The joint venture was effectuated through the creation of a new legal entity,Takeda PRA Development Center KK, or the TDC joint venture. The TDC joint venture is based in Japan and is owned by us (50%) and Takeda (50%). On May31, 2019, per the terms of the agreement, the TDC joint venture dissolved and the Company acquired Takeda's interest for $4.1 million.See Note 4 and Note 5 to our audited consolidated financial statements found elsewhere in this Annual Report on Form 10-K for additional informationwith respect to joint ventures. Exchange Rate Fluctuations The majority of our foreign operations transact in the Euro, or EUR, or British pound, or GBP. As a result, our revenue and expenses are subject toexchange rate fluctuations with respect to these currencies. We have translated these currencies into U.S. dollars using the following average exchange rates: Years Ended December 31, 2019 2018 2017U.S. dollars per: Euro1.12 1.18 1.13British pound1.28 1.33 1.2940Table of ContentsResults of Operations Consolidated Results of Operations for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018 Years Ended December 31, 2019 2018(in thousands) Revenue $3,066,262 $2,871,922Operating expenses: Direct costs (exclusive of depreciation and amortization) 1,539,541 1,500,226Reimbursable expenses 650,080 570,405Selling, general and administrative expenses 394,925 371,795Transaction-related costs 1,835 35,817Depreciation and amortization expense 114,898 112,247Loss on disposal of fixed assets 1,058 120 Income from operations 363,925 281,312Interest expense, net (51,987) (57,399)Loss on modification or extinguishment of debt (3,928) (952)Foreign currency losses, net (2,257) (1,043)Other income (expense), net 174 (371)Income before income taxes and equity in income of unconsolidated joint ventures 305,927 221,547Provision for income taxes 62,808 67,232Income before equity in income of unconsolidated joint ventures 243,119 154,315Equity in income of unconsolidated joint ventures, net of tax — 143Net income 243,119 154,458Net income attributable to noncontrolling interest (99) (553)Net income attributable to PRA Health Sciences, Inc. $243,020 $153,905 Revenue increased by $194.3 million, or 6.8%, from $2,871.9 million during the year ended December 31, 2018 to $3,066.3 million during the year endedDecember 31, 2019. Revenue for the year ended December 31, 2019 benefited from an increase in billable hours, an increase in the effective rate of hours billed onour studies, offset by an unfavorable impact of $30.9 million from foreign currency exchange rate fluctuations. The growth in revenue and the increase in billablehours were due largely to the increase in our backlog as we entered the year, the type of services we are providing on our active studies, which was driven by thelife cycles of projects that were active during the period, the growth in new business awards as a result of higher demand for our services across the industries weserve, more effective sales efforts and the growth in the overall CRO market. The increase in our effective rate of hours billed on our studies is attributable to thecontract pricing terms on our current mix of active studies and the mix of clients and services that we provide to those clients. Direct costs increased by $39.3 million, or 2.6%, from $1,500.2 million during the year ended December 31, 2018 to $1,539.5 million during the yearended December 31, 2019. Salaries and related benefits in our Clinical Research segment increased $69.2 million as we continue to hire billable staff to ensureappropriate staffing levels for our current studies and future growth and a favorable impact of $36.3 million from foreign currency exchange rate fluctuations.Direct costs as a percentage of revenue decreased from 52.2% during the year ended December 31, 2018 to 50.2% during the year ended December 31, 2019. Thechange in direct costs as a percentage of revenue was primarily due to the favorable impact of foreign currency exchange rate fluctuations and the increasedutilization of our staff.Reimbursable expenses increased by $79.7 million from $570.4 million during the year ended December 31, 2018 to $650.1 million during the year endedDecember 31, 2019. We believe that the fluctuations in reimbursable costs from period to period are not meaningful to our underlying performance over the fullterms of the relevant contracts.41Table of ContentsSelling, general and administrative expenses increased by $23.1 million, or 6.2%, from $371.8 million during the year ended December 31, 2018 to$394.9 million during the year ended December 31, 2019. The increase in selling, general and administrative expenses is primarily due to an increase in salariesand related benefits, including stock-based compensation expense, as we continue to hire staff. In addition, we continue to expand our infrastructure to support ourgrowing business. Selling, general and administrative expenses as a percentage of revenue remained consistent at 12.9% during the years ended December 31,2018 and December 31, 2019. During the year ended December 31, 2019, we incurred transaction-related expenses of $1.8 million. These costs consist of $0.6 million of third-partycosts incurred in connection with our September 2019 secondary offering and $1.3 million of expenses related to the acquisition of Care Innovations, Inc., whichclosed on January 7, 2020. During the year ended December 31, 2018, we incurred transaction-related expenses of $35.8 million. These costs consisted of $32.6million for changes in the estimated fair value of contingent consideration related to our prior acquisitions, $1.4 million related to Symphony Health retentionbonuses that were reimbursed by the seller, $0.5 million of third-party costs incurred in connection with our August 2018 secondary offering, $0.8 million ofstock-based compensation expense related to the release of a portion of the transfer restrictions on vested options, and $0.5 million of third-party fees associatedwith the amendment to our accounts receivable financing agreement. Depreciation and amortization expense increased by $2.7 million, or 2.4%, from $112.2 million during the year ended December 31, 2018 to $114.9million during the year ended December 31, 2019. Depreciation and amortization expense as a percentage of revenue was 3.9% during the yearended December 31, 2018 and 3.7% during the year ended December 31, 2019. The increase in depreciation and amortization expense is primarily due to increaseddepreciation expense related to an increase in fixed assets, offset by a decrease in the amortization expense of our intangible assets. Interest expense, net decreased by $5.4 million from $57.4 million during the year ended December 31, 2018 to $52.0 million during the year endedDecember 31, 2019. Interest expense on borrowings under our Senior Secured Credit Facility decreased by $6.2 million, which is primarily due to a decrease in theweighted average principal balance outstanding during the year ended December 31, 2019 as well as lower interest rates during the year. Additionally, there was adecrease of $0.9 million related to the amortization of terminated interest rate swaps and amortization of debt issuance costs. This was offset by interest expense onborrowings under our accounts receivable financing agreement, which increased by $1.6 million, primarily due to an increase in the weighted average balanceprincipal balance. Loss on modification or extinguishment of debt was $3.9 million during the year ended December 31, 2019 compared to $1.0 million during the yearended December 31, 2018. The loss on modification or extinguishment of debt during the year ended December 31, 2019 is related to previously capitalizedunamortized debt financing costs as well as new fees incurred that were expensed as a result of the refinancing of our credit facilities during the year. The loss onmodification or extinguishment of debt during the year ended December 31, 2018 is related to previously capitalized unamortized debt financing costs that wereexpensed as a result of voluntary debt repayments made during the year. Foreign currency losses, net changed by $1.2 million from $1.0 million during the year ended December 31, 2018 to $2.3 million during the year endedDecember 31, 2019. Foreign currency gains and losses are due to fluctuations in the U.S. dollar, gains or losses that arise in connection with the revaluation ofshort-term inter-company balances between our domestic and international subsidiaries, and gains or losses from foreign currency transactions, such as thoseresulting from the settlement of third-party accounts receivables and payables denominated in a currency other than the local currency of the entity making thepayment. The increase in foreign currency losses, net during the year ended December 31, 2019 is primarily due to movement of the U.S. dollar versus the Britishpound and the Euro.Provision for income taxes decreased by $4.4 million from $67.2 million during the year ended December 31, 2018 to $62.8 million during the year endedDecember 31, 2019. Our effective tax rate was 20.5% for the year ended December 31, 2019 compared to 30.3% during the year ended December 31, 2018. Thedecrease in our effective tax rate was primarily attributable to us updating our analysis of Base Erosion and Anti-abuse Tax, which reflects revisions to contractualarrangements.42Table of ContentsSegment Results of Operations for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018Clinical Research Years Ended December 31, 2019 2018(in thousands)Revenue$2,812,969 $2,622,409Segment profit796,823 717,201Segment profit %28.3% 27.3%Revenue increased by $190.6 million, or 7.3%, from $2,622.4 million during the year ended December 31, 2018 to $2,813.0 million during the year endedDecember 31, 2019. Revenue for the year ended December 31, 2019 benefited from an increase in billable hours and an increase in the effective rate of hoursbilled on our studies. The growth in revenue and the increase in billable hours were due largely to the increase in our backlog as we entered the year, the type ofservices we are providing on our active studies, which was driven by the life cycles of projects that were active during the period, the growth in new businessawards as a result of higher demand for our services across the industries we serve, and more effective sales efforts and the growth in the overall CRO market. Theincrease in our effective rate of the hours billed on our studies is attributable to the contract pricing terms on our current mix of active studies and the mix of clientsand services that we provide to those clients.Segment profit increased by $79.6 million, or 11.1%, from $717.2 million during the year ended December 31, 2018 to $796.8 million during the yearended December 31, 2019 primarily due to an increase in revenue. Segment profit as a percentage of revenue increased from 27.3% during the year endedDecember 31, 2018 to 28.3% for the same period in 2019. The increase in segment profit is primarily due to the favorable impact of foreign currency exchange ratefluctuations and the increased utilization of our staff.Data Solutions Years Ended December 31, 2019 2018(in thousands) Revenue$253,293 $249,513Segment profit79,818 84,090Segment profit %31.5% 33.7%Revenue increased by $3.8 million, or 1.5%, from $249.5 million during the year ended December 31, 2018 to $253.3 million during the year endedDecember 31, 2019. The increase in revenue was related to an increase in the volume of data services provided during the year ended December 31, 2019 ascompared to the same period for 2018. Service in kind revenue was $20.5 million and $21.8 million for the year ended December 31, 2019 and 2018, respectively.Segment profit decreased by $4.3 million, or 5.1%, from $84.1 million during the year ended December 31, 2018 to $79.8 million during the year endedDecember 31, 2019. The decline in segment profit is attributable to higher data costs as we have expanded our sources of data and have experienced increasedcosts on the renewal of existing contracts, as well as an increase in salaries and benefits as we have increased headcount to support segment growth. Segment profitas a percentage of revenue decreased from 33.7% during the year ended December 31, 2018 to 31.5% for the same period in 2019 primarily due to the factorsnoted above.Inflation Our long‑term contracts, those in excess of one year, generally include an inflation or cost of living adjustment for the portion of the services to beperformed beyond one year from the contract date. As a result, we expect that inflation generally will not have a material adverse effect on our operations orfinancial condition. Historically our projection of inflation contained within our contracts has not significantly impacted our operating income. Should inflation bein excess of the estimates within our contracts, our operating margins would be negatively impacted if we were unable to negotiate contract modifications with ourclients.43Table of ContentsLiquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal source of liquidity isoperating cash flows. As of December 31, 2019, we had approximately $236.2 million of cash and cash equivalents of which $86.9 million was held by our foreignsubsidiaries. Our expected primary cash needs on both a short and long‑term basis are for capital expenditures, expansion of services, geographic expansion, debtrepayments, and other general corporate purposes. We have historically funded our operations and growth, including acquisitions, with cash flow from operations,borrowings, and issuances of equity securities. We expect to continue expanding our operations through internal growth and strategic acquisitions and investments.We expect these activities will be funded from existing cash, cash flow from operations and, if necessary or appropriate, borrowings under our existing or futurecredit facilities. Our sources of liquidity could be affected by our dependence on a small number of industries and clients, compliance with regulations,international risks, and personal injury, environmental or other material litigation claims.Cash Collections Cash collections from accounts receivable were $3,087.3 million during the year ended December 31, 2019, including $325.3 million of funds receivedfrom customers to pay independent physician investigators, or investigators, as compared to $2,894.4 million during the year ended December 31, 2018, including$293.6 million of funds received from customers to pay investigators. The increase in cash collections is related to our increase in revenue, driven by an increase innew business awards and backlog. Discussion of Cash Flows Cash Flow from Operating ActivitiesDuring the year ended December 31, 2019, net cash provided by operations was $253.6 million, compared to $329.8 million in 2018. Cash provided byoperating activities decreased from the prior year primarily due to an increase in cash outflows associated with acquisition related earn-out payments as well as anincrease in cash outflows from working capital. The changes in working capital were driven by changes in our accounts receivable, unbilled services and advancedbillings accounts, as a result of a slight increase in our days sales outstanding compared to the prior year. Cash Flow from Investing Activities Net cash used in investing activities was $73.2 million during the year ended December 31, 2019, compared to $55.5 million in 2018. The increase in cashoutflows is attributable to spending on capital expenditures, as we made increased investments in our information technology infrastructure and the build-out ofnew office space added to support our growing business.Cash Flow from Financing Activities Net cash used in financing activities was $90.7 million during the year ended December 31, 2019 compared to $319.5 million for the same period of 2018.During the year ended December 31, 2019, our long-term debt balance, including borrowings under our revolving line of credit, increased by $172.3 millioncompared to a $265.9 million decrease due to payments on our debt during the year ended December 31, 2018. Cash flows for the year ended December 31, 2019include a $300.0 million cash outflow for the repurchase and retirement of common stock. The year ended December 31, 2018 also included a $79.7 million cashoutflow associated with the portion of acquisition related earn-out payments being classified as a financing activity.Share Repurchase ProgramOn August 30, 2019, our board of directors approved the Repurchase Program, authorizing the repurchase of up to $500.0 million of our common stockin an open market purchase, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws andregulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Exchange Act. The Repurchase Program does not obligate us torepurchase any particular amount of our common stock, and it may be modified, suspended or terminated at any time at the board of directors' discretion. TheRepurchase Program expires on December 31, 2021.44Table of ContentsConcurrent with the September 2019 secondary offering, we repurchased from the underwriter, and subsequently retired, 3,079,765 shares at a price of$97.41 per share, for an aggregate purchase price of approximately $300.0 million.As of December 31, 2019, we have remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program.IndebtednessOn October 28, 2019, we entered into a credit agreement providing for senior secured credit facilities, or the Senior Secured Credit Facility, totaling$1,750.0 million.Senior Secured Credit FacilityThe Senior Secured Credit Facility provides senior secured financing of up to $1,750.0 million, consisting of: •the First Lien Term Loan in an aggregate principal amount of $1,000.0 million;and •the Revolver in an aggregate principal amount of up to$750.0 million.The Revolver includes borrowing capacity available for letters of credit up to $25.0 million and for up to $20.0 million of borrowings on same‑day notice,referred to as swingline loans. The Senior Secured Credit Facility provides that we have the right at any time to request incremental term loans and/or revolving commitments in anaggregate principal amount of up to (a) $500.0 million, plus (b) all voluntary prepayments and corresponding voluntary commitment reductions of the SeniorSecured Credit Facility, other than from proceeds of long-term indebtedness, prior to the date of any such incurrence, plus (c) an additional amount which, aftergiving effect to the incurrence of such amount, we would not exceed a consolidated net first lien secured leverage to consolidated EBITDA ratio of 3.0 to 1.0 proforma for such incremental facilities, minus (d) the sum of (i) the aggregate principal amount of new term loan commitments and new revolving creditcommitments incurred and (ii) the aggregate principal amount of certain other indebtedness incurred. The lenders under these facilities are not under anyobligation to provide any such incremental commitments or loans, and any such addition of or increase in commitments or loans is subject to certain customaryconditions precedent.Interest Rate and Fees Borrowings under the First Lien Term Loan and the Revolver bear interest at a rate equal to, at our option, either (a) LIBOR for the relevant interestperiod, plus an applicable margin; provided that, solely with respect to the First Lien Term Loan, LIBOR shall be deemed to be no less than 0.00% per annum or(b) an adjusted base rate, or the ABR, plus an applicable margin. The applicable margin on our First Lien Term Loan is based on our ratio of total debt to EBITDA per the table below:PricingLevel Total indebtednessto EBITDA Ratio Letter ofCreditFees ABR MarginRate Adjusted LIBORMargin Rate CommitmentFeesI > 3.25x 2.00% 1.00% 2.00% 0.35%II < 3.25x but > 2.50x 1.75% 0.75% 1.75% 0.30%III < 2.50x but > 1.75x 1.50% 0.50% 1.50% 0.25%IV < 1.75x but > 1.00x 1.25% 0.25% 1.25% 0.20%V < 1.00x 1.00% —% 1.00% 0.15% In addition to paying interest on outstanding principal under the Revolver, we are required to pay a commitment fee to the lenders under the Revolver inrespect of the unutilized commitments thereunder. The commitment fee rate will be based on the ratio of total indebtedness to EBITDA on a given date. We arealso required to pay customary letter of credit fees.As of December 31, 2019, the interest rate on the First Lien Term Loan was 3.21%. Prepayments45Table of Contents The Senior Secured Credit Facility requires us to prepay outstanding term loans, subject to certain exceptions, with: •100% of the net cash proceeds of the incurrence or issuance of certain debt;and •100% of the net cash proceeds of $5.0 million of certain non-ordinary course asset sales and casualty and condemnation events, subject to reinvestmentrights and certain other exceptions. The foregoing mandatory prepayments will be applied first to accrued interest and fees and second, to the scheduled installments of principal of theSenior Secured Credit Facility in direct order of maturity. We may voluntarily repay outstanding loans under the Senior Secured Credit Facility at any time without premium or penalty, subject to reimbursementsof the lenders’ redeployment costs actually incurred in the case of a prepayment of LIBOR borrowings other than on the last day of the relevant interest period. Amortization and Final MaturityThe First Lien Term Loan is a floating rate term loan with scheduled, fixed quarterly principal payments of $6.3 million to be made quarterly untilOctober 28, 2024. We have the option of one-, two-, three- or six-month borrowing terms under the Revolver. Principal amounts outstanding under the Revolver are due andpayable in full at maturity, on or about October 28, 2024.Guarantee and Security All obligations of the borrower under the Senior Secured Credit Facility are unconditionally guaranteed by us and all our material, wholly‑owned U.S.restricted subsidiaries with customary exceptions, including where providing such guarantees is not permitted by law, regulation or contract or would result inmaterial adverse tax consequences. All obligations of the borrower under the Senior Secured Credit Facility, and the guarantees of such obligations, are secured, subject to permitted liensand other exceptions, by substantially all of the assets of the borrower and each guarantor, including but not limited to: (i) a perfected pledge of all of the capitalstock issued by the borrower and each guarantor and (ii) perfected security interests in substantially all other tangible and intangible assets of the borrower and theguarantors (subject to certain exceptions and exclusions). Certain Covenants and Events of Default The Senior Secured Credit Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: •create any liens;•make investments and acquisitions; •incur or guarantee additional indebtedness; •enter into mergers or consolidations and other fundamental changes; •conduct sales and other dispositions of property or assets; •enter into sale-leaseback transactions or hedge agreements; •prepay subordinated debt;•pay dividends or make other payments in respect of capital stock;• change the line ofbusiness; •enter into transactions withaffiliates; •enter into burdensome agreements with negative pledge clauses and clauses restriction;and 46Table of Contents•subsidiary distributions. Our Senior Secured Credit Facility contains customary events of default (subject to exceptions, thresholds and grace periods), including, withoutlimitation: (i) nonpayment of principal or interest; (ii) failure to perform or observe covenants; (iii) inaccuracy or breaches of representations and warranties;(iv) cross‑defaults with certain other indebtedness; (v) certain bankruptcy related events; (vi) impairment of certain security interests in collateral, guarantees orinvalidity or unenforceability of certain Senior Secured Credit Facility documents; (vii) monetary judgment defaults; (viii) certain ERISA matters; and (ix) certainchange of control events. The Senior Secured Credit Facility requires us to maintain a consolidated total debt to consolidated EBITDA ratio of 4.25 to 1.0 and consolidatedEBITDA to fixed charges no less than 3.0 to 1.0 for any four consecutive fiscal quarters for which financial statements have been provided to the administrativeagent as required by the Senior Secured Credit Agreement. Following a qualified material acquisition, the Senior Secured Credit Facility allows us to increase itsConsolidated Total Debt to Consolidated EBITDA Ratio to 5.25 to 1.00; provided that (i) such ratio in respect of each quarter shall be reduced by 0.25 to 1.00,(ii) in no event shall such ratio be lower than 4.25 to 1.00 and (iii) such an increase pursuant to this shall be permitted no more than once during any period of 24consecutive months. The Senior Secured Credit Facility also contains certain customary affirmative covenants and events of default, including a change of control.Accounts Receivable Financing Agreement We entered into an accounts receivable financing agreement with PNC Bank, National Association, as administrative agent and lender on March 22,2016. On May 31, 2018, we amended our accounts receivable financing agreement. The amendment increased the agreement's borrowing capacity, decreased theapplicable margin, and extended the termination date to May 31, 2021, unless terminated earlier pursuant to its terms.We may borrow up to $200.0 million under the accounts receivable financing agreement, secured by liens on our accounts receivables and other assets.We are liable for customary representations, warranties, covenants and indemnities. In addition, we have guaranteed the performance of the obligations and willguarantee the obligations of any additional servicer that may become party to the accounts receivable financing agreement. As of December 31, 2019, theoutstanding balance was $170.0 million.The accounts receivable financing agreement matures on May 31, 2021, unless terminated earlier pursuant to its terms. Interest Rate and Fees Loans under the accounts receivable financing agreement will accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. As ofDecember 31, 2019 and 2018, the interest rate on the accounts receivable financing agreement was 3.22% and 3.72%, respectively. We may prepay loans upon onebusiness day prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice. Covenants and Events of Default The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions thatprovide for the termination and acceleration of the commitments and loans under the accounts receivable financing agreement in circumstances including, but notlimited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the securityinterest in the trade receivables, and defaults under other material indebtedness. Contractual Obligations and Commercial Commitments The following table summarizes our future minimum payments for all contractual obligations and commercial commitments for years subsequent to theyear ended December 31, 2019: 47Table of Contents Payments Due by Period Less than 1year 1 - 3 years 3 - 5 years More than 5years Total (in thousands)Principal payments on long-term debt (1)$25,000 $220,000 $1,013,800 $— $1,258,800Interest payments on long-term debt (1)40,818 64,390 53,886 — 159,094Service purchase commitments (2)129,866 88,450 6,918 67 225,301Operating leases45,162 79,580 47,759 87,454 259,955Less: sublease income(161) (242) (38) — (441)Uncertain income tax positions (3)— — — — —Total$240,685 $452,178 $1,122,325 $87,521 $1,902,709(1)Principal payments are based on the terms contained in our credit agreements. Principal payments include payments on the senior secured credit facility and the accounts receivable financing agreement. Interest payments arebased on the interest rate in effect on December 31, 2019. (2)Service purchase commitments are defined as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to bepurchased.(3)As of December 31, 2019, our liability related to uncertain income tax positions was approximately $30.4 million; the entire amount has been excluded from the table as we are unable to predict when these liabilities will be paiddue to the uncertainties in timing of the settlement of the income tax positions.Off‑Balance Sheet Arrangements We have no off‑balance sheet arrangements. The term “off‑balance sheet arrangement” generally means any transaction, agreement or other contractualarrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument orvariable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk supportfor such assets. Critical Accounting Policies and Estimates In preparing our financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Our actual results could differ from those estimates. We believe that the following are some of the more critical judgmentareas in the application of our accounting policies that affect our financial condition and results of operations. We have discussed the application of these criticalaccounting policies with our board of directors. 48Table of ContentsRevenue Recognition Revenue is generated from contracts with customers. Revenue is recognized when control of the performance obligation is transferred to the customer, inan amount that reflects the consideration we expect to be entitled to receive in exchange for those services. Our long-term arrangements for clinical researchservices are considered a single performance obligation because we provide a highly-integrated service. Revenue is recognized based on the proportion of totalcontract costs incurred to date to the estimated total contract costs through completion. We use the cost-to-cost measure of progress for these contracts because itbest depicts the transfer of control to the customer as the performance obligation is fulfilled. The accounting for these long-term contracts involves significantjudgment, particularly as it relates to the process of estimating total contract costs, which includes direct costs, reimbursable out-of-pocket expenses, reimbursableinvestigator fees, and the contract profit. The contracts provide for the right to payment for the work performed to date, which is invoiced to the customer as workprogresses, either based on units performed or the achievement of billing milestones. We review the estimated total contract costs to determine if these estimatesare still accurate and, if necessary, we adjust the total estimated costs. During our contract review process, we review each contract’s performance to date, currentcost trends, and circumstances specific to each study. The original or current cost estimates are reviewed and if necessary the estimates are adjusted and refined toreflect any changes in the anticipated performance under the study. As the work progresses, original estimates might be deemed incorrect due to, among otherthings, revisions in the scope of work or patient enrollment rate, and a contract modification might be negotiated with the customer to cover additional costs. If not,we bear the risk of costs exceeding our original estimates. We assume that actual costs incurred to date under the contract are a valid basis for estimating futurecosts. Should our assumption of future cost trends fluctuate significantly, future margins could be reduced. In the past, we have had to commit unanticipatedresources to complete projects, resulting in lower margins on those projects. Should our actual costs exceed our estimates on fixed price contracts, future marginscould be reduced, absent our ability to negotiate a contract modification. We accumulate information on each project to refine our bidding process. Historically, themajority of our estimates and assumptions have been materially correct, but these estimates might not continue to be accurate in the future. Clinical researchservices delivered under fee-for-service arrangements are recognized over time. Revenue from time and materials contracts is recognized as hours are incurred.Our Data Solutions segment provides data reports and analytics to customers based on agreed-upon specifications. If a customer requests more than onetype of data report or series of data reports within a contract, each distinct type of data report is a separate performance obligation. When multiple performanceobligations exist, the transaction price is allocated to performance obligations on a relative standalone selling price basis. In cases where we contract to provide aseries of data reports, or in some cases data, we recognize revenue over time using the ‘units delivered’ output method as the data or reports are delivered. CertainData Solutions arrangements include upfront customization or consultative services for customers. Under these arrangements, we contract with a customer to carryout a specific study, ultimately resulting in delivery of a custom report or data product. These arrangements are a single performance obligation given theintegrated nature of the service being provided. We typically recognize revenue under these contracts over time, using an output-based measure, generally timeelapsed, to measure progress and transfer of control of the performance obligation to the customer. Allowance for Doubtful Accounts Included in “Accounts receivable and unbilled services, net” on our consolidated balance sheets is an allowance for doubtful accounts. Generally, beforewe do business with a new client, we perform a credit check, as our revenue recognition policies require that we make an accurate assessment of our customers’creditworthiness. Approximately 17% of our client base is small- to mid-sized biotech companies, creating a heightened risk related to the creditworthiness for aportion of our client base. We manage and assess our exposure to bad debt on each of our contracts. We age our billed accounts receivable and assess exposure byclient type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.Historically, we have not had any write‑offs in excess of our allowance. If, at December 31, 2019, our aged accounts receivable balance greater than 90 days wereto increase by 10% (for the U.S. operations), no material adjustments to bad debt expense would be required. Income Taxes Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of our effective tax rate and, consequently, ouroperating results. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and maynot accurately anticipate actual outcomes.49Table of ContentsWe have to use estimates and judgments in calculating certain tax liabilities and determining the recoverability of certain deferred tax assets, which arisefrom net operating losses, tax credit carry forwards and temporary differences between the tax and financial statement recognition of revenue and expense. We arealso required to reduce our deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portionor all of the recorded deferred tax assets will not be realized in future periods.In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence, including our pastoperating results, the existence of cumulative losses in the most recent fiscal years and our forecast of future taxable income on a jurisdiction‑by‑jurisdiction basis.In determining future taxable income, assumptions include the amount of state, federal and international pretax operating income, international transfer pricingpolicies, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significantjudgment about the forecasts of future taxable income and are consistent with the plans and estimates we use to manage the underlying businesses. Based on ouranalysis of the above factors, we determined that a valuation allowance of $8.1 million was required as of December 31, 2019 relating to certain state net operatingloss carryforwards, foreign net operating loss carryforwards, certain foreign deferred tax assets and state tax credit carryforwards. Changes in our assumptionscould result in an adjustment to the valuation allowance, up or down, in the future.In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude ofjurisdictions. We determine our liability for uncertain tax positions globally under the provisions in the FASB's Accounting Standards Codification, or ASC, 740,“Income Taxes.” As of December 31, 2019, we had recorded a liability for uncertain tax positions of $30.4 million. If events occur such that payment of theseamounts ultimately proves to be unnecessary, the reversal of liabilities would result in tax benefits being recognized in the period when we determine the liabilitiesare no longer necessary. If our calculation of liability related to uncertain tax positions proves to be more or less than the ultimate assessment, a tax expense orbenefit to expense, respectively, would result. The total liability reversal that could affect the tax rate is $30.4 million. Stock‑Based Compensation In accordance with the ASC 718, "Stock Compensation", as modified and supplemented, we estimate the value of employee stock options on the date ofgrant using either the Black‑Scholes model for all options with a service condition or a lattice model for options with market and performance conditions. Thedetermination of fair value of stock‑based payment awards on the date of grant using an option‑pricing model is affected by the stock price of similar entities aswell as assumptions regarding a number of highly complex and subjective variables. These variables include the expected stock price volatility over the term of theawards, and actual and projected employee stock option exercise behaviors. The Black‑Scholes and lattice models require extensive actual employee exercisebehavior data and the use of a number of complex assumptions including expected volatility, risk‑free interest rate, expected dividends, and expected life. Indeveloping our assumption, we take into account the following:•Since the Company does not have sufficient history to estimate the expected volatility of its common stock price, expected volatility is based upon ablended approach that utilizes the volatility of the Company's common stock for periods in which the Company has sufficient information and thevolatility for selected reasonably similar publicly traded companies for which historical information is available.•The risk‑free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stockoptions.•The dividend yield assumption is based on the history and expectation of dividendpayouts.•For those options valued using the Black-Scholes model, the expected life is based upon the guidance provided by the FASB. For those options with amarket condition valued under the lattice model, the expected life varies depending on the target stock price that triggers vesting. •We account for forfeitures as theyoccur. Long‑Lived Assets, Goodwill and Indefinite‑Lived Intangible Assets As a result of our acquisitions we have recorded goodwill and other identifiable finite and indefinite‑lived acquired intangibles. The identification andvaluation of these intangible assets at the time of acquisition require significant management judgment and estimates.50Table of Contents We review long‑lived asset groups for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset groupmight not be recoverable. If indicators of impairment are present, we evaluate the carrying value of property and equipment in relation to estimates of futureundiscounted cash flows. As a result of our acquisitions we have recorded goodwill and other identifiable finite and indefinite‑lived acquired intangibles. Theidentification and valuation of these intangible assets at the time of acquisition require significant management judgment and estimates. In connection withacquisitions, valuations were completed and value was assigned to identifiable finite‑lived and indefinite‑lived intangible assets and goodwill, based on thepurchase price of the transactions. We test goodwill for impairment on at least an annual basis by comparing the carrying value to the estimated fair value of our reporting units. OnOctober 1, 2019, we reviewed goodwill for impairment and our analysis indicated that the fair value of goodwill exceeded the carrying value and, therefore, noimpairment exists. When evaluating for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reportingunit or indefinite-lived intangible asset is impaired. If we do not perform a qualitative assessment, or if it determines that it is not more likely than not that the fairvalue of the reporting unit or indefinite-lived intangible asset exceeds its carrying amount, we will calculate the estimated fair value of the reporting unit’s orindefinite-lived intangible asset. Our decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by anumber of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying valueat the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. During 2019, as part of ourannual impairment analysis, we performed the qualitative assessment for approximately $1.0 billion, or 68.3% of our goodwill balance of $1.5 billion, whichrelates to our EDS, PR, and SS business units, and for our indefinite-lived trade name intangible asset balances.If we do not perform a qualitative assessment, goodwill impairment is determined by comparing the fair value of each reporting unit, determined usingvarious valuation techniques, with the primary technique being a discounted cash flow analysis, to its carrying value. This process is inherently subjective anddependent upon the estimates and assumptions we make. In determining the expected future cash flows of our company, we assume that we will continue to enterinto new contracts, execute the work on these contracts profitably, collect receivables from customers, and thus generate positive cash flows. In addition, ouranalysis could be impacted by future adverse change such as future declines in our operating results, a further significant slowdown in the worldwide economy orpharmaceutical and biotechnology industry or failure to meet the performance projections included in our forecast. We performed our impairment test for the DataSolutions operating segment during the fourth quarter of 2019. It was concluded that the estimated fair value of the Data Solutions operating segment exceeded itscarrying value by approximately $185 million, or 27%. Fair Value Measurements We record certain assets and liabilities at fair value. Fair value is defined as a price that would be received to sell an asset or paid to transfer a liability inthe principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three‑levelhierarchy that prioritizes the inputs used to measure fair value is further described in Note 3 to our audited consolidated financial statements included elsewhere inthis Annual Report on Form 10‑K. Fair Value Measurements on a Recurring Basis All derivatives are measured at fair value and recognized as either assets or liabilities on the consolidated balance sheets. The fair value of our interest rateswaps, measured using Level 2 inputs, were liabilities of $3.0 million and assets of $3.3 million at December 31, 2019 and 2018, respectively. No other liabilities or assets are remeasured at fair value.Recent Accounting Standards For information on new accounting standards and the impact, if any, on our financial position or results of operations, see Note 2 to our auditedconsolidated financial statements found elsewhere in this Annual Report on Form 10-K. Dividend History We have not declared or paid dividends during 2019, 2018 and 2017.51Table of ContentsItem 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange rates, interest rates and otherrelevant market rate or price changes. In the ordinary course of business, we are exposed to various market risks, including changes in foreign currency exchangerates and interest rates, and we regularly evaluate our exposure to such changes. Our overall risk management strategy seeks to balance the magnitude of theexposure and the cost and availability of appropriate financial instruments. Interest Rate Risk In January 2018, we entered into two interest rate swaps with a notational value of $250.0 million and $375.0 million which mature in September 2020and December 2020, respectively, to hedge our variable rate debt.At December 31, 2019, we had $633.8 million outstanding under our Senior Secured Credit Facility and accounts receivable financing agreement thatwere not covered by an interest rate swap and therefore subject to variable interest rates. Each quarter percentage point increase or decrease in the variable ratewould result in our interest expense changing by approximately $1.6 million per year under our unhedged variable rate debt.Foreign Currency Exchange Risk Since we operate on a global basis, we are exposed to various foreign currency risks. First, our consolidated financial statements are denominated in U.S.dollars, but a significant portion of our revenue is generated in the local currency of our foreign subsidiaries. Accordingly, changes in exchange rates between theapplicable foreign currency and the U.S. dollar will affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reportingconsolidated financial results. A hypothetical change of 10% in average exchange rates used to translate all foreign currencies to U.S. dollars would have impactedincome before income taxes and equity in income of unconsolidated joint ventures by approximately $36.1 million for the year ended December 31, 2019. Theprocess by which each foreign subsidiary’s financial results are translated into U.S. dollars is as follows: income statement accounts are translated at averageexchange rates for the period; balance sheet asset and liability accounts are translated at end of period exchange rates; and equity accounts are translated athistorical exchange rates. Translation of the balance sheet in this manner affects the stockholders’ equity account, referred to as the cumulative translationadjustment account. This account exists only in the foreign subsidiary’s U.S. dollar balance sheet and is necessary to keep the foreign balance sheet stated in U.S.dollars in balance. Accumulated currency translation adjustments recorded as a reduction to stockholders’ equity were $149.3 million and $158.3 million atDecember 31, 2019 and 2018, respectively. We do not have significant operations in countries in which the economy is considered to be highly‑inflationary. In addition, two specific risks arise from the nature of the contracts we enter into with our clients, which from time to time are denominated in currenciesdifferent than the particular subsidiary’s local currency. These risks are generally applicable only to a portion of the contracts executed by our foreign subsidiariesproviding clinical services. The first risk occurs as revenue recognized for services rendered is denominated in a currency different from the currency in which thesubsidiary’s expenses are incurred. As a result, the subsidiary’s earnings can be affected by fluctuations in exchange rates.The second risk results from the passage of time between the invoicing of clients under these contracts and the ultimate collection of client paymentsagainst such invoices. Because the contract is denominated in a currency other than the subsidiary’s local currency, we recognize a receivable at the time ofinvoicing for the local currency equivalent of the foreign currency invoice amount. Changes in exchange rates from the time the invoice is prepared until paymentfrom the client is received will result in our receiving either more or less in local currency than the local currency equivalent of the invoice amount at the time theinvoice was prepared and the receivable established. This difference is recognized by us as a foreign currency transaction gain or loss, as applicable, and isreported in foreign currency losses, net in our consolidated statements of operations. Historically, fluctuations in exchange rates from those in effect at the timecontracts were executed have not had a material effect on our consolidated financial results.52Table of ContentsItem 8. Financial Statements and Supplementary Data Management’s Report on Internal Control Over Financial Reporting Management of PRA Health Sciences, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financialreporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation ofconsolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the Company, (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and thatreceipts and expenditures are being made only in accordance with authorizations of management and directors of the Company, and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on theconsolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements in the consolidated financialstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making these assessments,management used the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in InternalControl — Integrated Framework (2013). Based on management’s assessment and the criteria in the COSO framework, management has concluded that theCompany’s internal control over financial reporting as of December 31, 2019 was effective.The Company’s independent registered public accounting firm has issued a report on the Company’s internal control over financial reporting. This reportappears in this Annual Report on Form 10-K. /s/ Colin Shannon /s/ Michael J. Bonello Colin Shannon Michael J. BonelloPresident, Chief Executive Officer and Chairman of the Board of Directors Executive Vice President and Chief Financial Officer(Principal Executive Officer) (Principal Financial Officer)53Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the stockholders and the Board of Directors of PRA Health Sciences, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of PRA Health Sciences, Inc. and subsidiaries (the "Company") as of December 31, 2019 and2018, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows, for each of the three years inthe period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements presentfairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for eachof the three years in the period ended December 31, 2019, in conformity with the accounting principles generally accepted in the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internalcontrol over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2020, expressed an unqualified opinion on the Company'sinternal control over financial reporting.Adoption of New Accounting StandardsAs discussed in Note 2 to the financial statements, effective January 1, 2019, the Company adopted Accounting Standards Codification (ASC) Topic 842,“Leases,” using the modified retrospective approach, and as discussed in Note 3 to the financial statements, effective January 1, 2018, the Company adopted ofASC Topic 606, “Revenue from Contracts with Customers,” using the modified retrospective method.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statementsbased on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures toassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believethat our audits provide a reasonable basis for our opinion.Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to becommunicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especiallychallenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, takenas a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts ordisclosures to which it relates.Revenue Recognition - Clinical Research - Refer to Note 3 to the Financial StatementsCritical Audit Matter DescriptionThe Company recognizes long-term clinical research revenue over the contract term (“over time”) as the work progresses, due to the Company’s right to paymentfor work performed to date. The long-term arrangements for clinical research services are considered a single performance obligation because the Companyprovides a highly-integrated service. Revenue is recognized based on the proportion of total contract costs incurred to date to the estimated total contract coststhrough completion. The54Table of ContentsCompany uses the cost-to-cost measure of progress for these contracts because it best depicts the transfer of control to the customer as the performance obligationis fulfilled. The accounting for these long-term contracts involves significant judgment, particularly as it relates to the process of estimating total contract costs,which includes direct costs, reimbursable out-of-pocket expenses, reimbursable investigator fees, and profit. The contracts provide for the right to payment for thework performed to date, which is invoiced to the customer as work progresses, either based on units performed or the achievement of billing milestones.Given the judgments necessary to estimate total costs for the performance obligation used to recognize revenue for certain long-term clinical research contracts,auditing such estimates required extensive audit effort due to the volume and complexity of long-term clinical research contracts and the high degree of auditorjudgment applied when performing audit procedures and evaluating the results of those procedures.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to management’s estimates of total costs for the performance obligation used to recognize revenue for certain long-term clinicalresearch contracts included the following, among others:•We tested the effectiveness of controls over long-term contract revenue, including those over the estimates of total costs for performanceobligations.•We selected a sample of long-term clinical research contracts and performed thefollowing:•Evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the terms and conditionsof each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performanceobligation.•Compared the transaction price to the consideration expected to be received based on current rights and obligations under the contracts and anymodifications that were agreed upon with the customers.•Tested management’s identification of the distinct performanceobligation(s).•Tested the accuracy and completeness of the total costs incurred to date for the performanceobligation.•Evaluated the estimates of total cost for the performance obligationby:•Comparing costs incurred to date to the costs management estimated to be incurred todate.•Evaluating management’s ability to achieve the estimates of total cost by performing corroborating inquiries with the Company’s projectmanagers and financial analysts, and comparing the estimates to management’s work plans and cost estimates.•Tested the mathematical accuracy of management’s calculation of revenue for the performance obligation.•Performed data analytics to assess contract balances.•We evaluated management’s ability to estimate total costs accurately by comparing actual costs and margins to management’s historical estimates forperformance obligations that have been fulfilled./s/ Deloitte & Touche LLPRaleigh, North CarolinaFebruary 21, 2020We have served as the Company's auditor since 2013.55Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of PRA Health Sciences, Inc.Opinion on Internal Control over Financial ReportingWe have audited the internal control over financial reporting of PRA Health Sciences, Inc. and subsidiaries (the “Company”) as of December 31, 2019, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based oncriteria established in Internal Control - Integrated Framework (2013) issued by COSO.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financialstatements as of and for the year ended December 31, 2019, of the Company and our report dated February 21, 2020 expressed an unqualified opinion on thosefinancial statements and included an explanatory paragraph regarding the Company’s adoption of ASC, Topic 842, “Leases”.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is toexpress an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB andare required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understandingof internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our auditprovides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ Deloitte & Touche LLPRaleigh, North CarolinaFebruary 21, 202056Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(in thousands, except share amounts) December 31, 2019 2018ASSETS Current assets: Cash and cash equivalents$236,232 $144,221Restricted cash38 488Accounts receivable and unbilled services, net658,517 568,099Prepaid expenses and other current assets88,141 66,605Income taxes receivable2,639 2,942Total current assets985,567 782,355Fixed assets, net180,716 154,764Operating lease right-of-use assets186,343—Goodwill1,502,756 1,494,762Intangible assets, net638,577 704,446Deferred tax assets10,282 8,954Deferred financing fees3,377 1,373Other assets36,812 39,813Total assets$3,544,430 $3,186,467LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of borrowings under credit facilities$88,800 $—Current portion of long-term debt25,000 —Accounts payable55,293 43,734Accrued expenses and other current liabilities302,705 369,477Income taxes payable2,094 44,306Current portion of operating lease liabilities37,603—Advanced billings505,714 441,357Total current liabilities1,017,209 898,874Deferred tax liabilities78,511 100,712Long-term debt, net1,140,178 1,082,384Long-term portion of operating lease liabilities172,370—Other long-term liabilities46,171 53,077Total liabilities2,454,439 2,135,047Commitments and contingencies (Note 15) Stockholders' equity: Preferred stock (100,000,000 authorized shares; $0.01 par value) Issued and outstanding -- none— —Common stock (1,000,000,000 authorized shares; $0.01 par value) Issued and outstanding -- 63,491,550 and 65,394,526 at December 31, 2019 and 2018, respectively635 654Additional paid-in capital1,006,182 960,535Accumulated other comprehensive loss(160,108) (170,659)Retained earnings243,282 254,500Equity attributable to PRA Health Sciences, Inc. stockholders1,089,991 1,045,030Noncontrolling interest— 6,390Total stockholders' equity1,089,991 1,051,420Total liabilities and stockholders' equity$3,544,430 $3,186,467 The accompanying notes are an integral part of the consolidated financial statements.57Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts) Years Ended December 31, 2019 2018 2017Revenue$3,066,262 $2,871,922 $2,259,389Operating expenses: Direct costs (exclusive of depreciation and amortization)1,539,541 1,500,226 1,283,868Reimbursable expenses650,080 570,405 311,015Selling, general and administrative expenses394,925 371,795 321,987Transaction-related costs1,835 35,817 87,709Depreciation and amortization expense114,898 112,247 78,227Loss on disposal of fixed assets1,058 120 358 Income from operations363,925 281,312 176,225Interest expense, net(51,987) (57,399) (46,729)Loss on modification or extinguishment of debt(3,928) (952) (15,023)Foreign currency losses, net(2,257) (1,043) (39,622)Other income (expense), net174 (371) (304)Income before income taxes and equity in income of unconsolidated joint ventures305,927 221,547 74,547Provision for (benefit from) income taxes62,808 67,232 (12,623)Income before equity in income of unconsolidated joint ventures243,119 154,315 87,170Equity in income of unconsolidated joint ventures, net of tax— 143 123Net income243,119 154,458 87,293Net income attributable to noncontrolling interest(99) (553) (366)Net income attributable to PRA Health Sciences, Inc.$243,020 $153,905 $86,927Net income per share attributable to common stockholders: Basic$3.77 $2.40 $1.39Diluted$3.68 $2.32 $1.32Weighted average common shares outstanding: Basic64,506 64,123 62,437Diluted66,004 66,341 65,773 The accompanying notes are an integral part of the consolidated financial statements.58Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in thousands) Years Ended December 31, 2019 2018 2017Net income$243,119 $154,458 $87,293Other comprehensive income (loss): Foreign currency translation adjustments net of tax $(2,504), $4,670, and $09,083 (41,042) 83,814Unrealized (losses) gains on derivative instruments, net of income taxes of $(2,897), $1,007, and $96(3,031) 2,152 149Reclassification adjustments: Losses on derivatives included in net income, net of income taxes, $3,017, $1,649, and $2,6993,156 4,828 4,156Comprehensive income252,327 120,396 175,412Comprehensive income attributable to noncontrolling interest(175) (680) (269)Comprehensive income attributable to PRA Health Sciences, Inc.$252,152 $119,716 $175,143 The accompanying notes are an integral part of the consolidated financial statements.59Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(in thousands) AccumulatedOtherComprehensiveLoss(Note 18) RetainedEarnings Non-controllingInterest Common Stock AdditionalPaid-inCapital Shares Amount TotalBalance at December 31, 201661,598 $616 $879,067 $(224,686) $74,255 $— $729,252Exercise of common stock options1,904 19 8,072 — — — 8,091Issuance of common stock5 — 375 — — — 375Stock-based compensation117 1 17,909 — — — 17,910Non-controlling interest related to Takeda jointventure—————5,4415,441Net income— — — — 86,927 366 87,293Other comprehensive income, net of tax— — — 88,216 — (97) 88,119Balance at December 31, 201763,624 636 905,423 (136,470) 161,182 5,710 936,481Impact to retained earnings from adoption ofASC 606— — — — (60,587) — (60,587)Balance at January 1, 201863,624 636 905,423 (136,470) 100,595 5,710 875,894Exercise of common stock options andemployee stock purchase plan purchases1,626 16 30,535 — — — 30,551Stock award distributions net of shares for taxwithholding145 2 (5,339) — — — (5,337)Stock-based compensation— — 29,916 — — — 29,916Net income— — — — 153,905 553 154,458Other comprehensive loss, net of tax— — — (34,189) — 127 (34,062)Balance at December 31, 201865,395 654 960,535 (170,659) 254,500 6,390 1,051,420Impact from adoption of ASU 2018-02,Reclassification of certain tax effects fromaccumulated other comprehensive income— — — 1,419 (1,419) — —Balance at January 1, 201965,395 654 960,535 (169,240) 253,081 6,390 1,051,420Exercise of common stock options, employeestock purchase plan purchases and other879 9 45,790 — — — 45,799Stock award distributions net of shares for taxwithholding298 3 (117) — — — (114)Stock-based compensation— — 45,834 — — — 45,834Acquisition of non-controlling interest— — 1,290 — — (6,565) (5,275)Repurchase and retirement of common stock(3,080) (31) (47,150) — (252,819) — (300,000)Net income— — — — 243,020 99 243,119Other comprehensive income, net of tax— — — 9,132 — 76 9,208Balance at December 31, 201963,492 $635 $1,006,182 $(160,108) $243,282 $— $1,089,991 The accompanying notes are an integral part of the consolidated financial statements.60Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Years Ended December 31, 2019 2018 2017Cash flows from operating activities: Net income$243,119 $154,458 $87,293Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense114,898 112,247 78,227Amortization of debt issuance costs and discount1,814 2,111 2,108Amortization of terminated interest rate swaps6,538 7,146 6,684Stock-based compensation expense45,834 29,143 12,616Non-cash transaction related stock-based compensation expense— 773 5,294Unrealized foreign currency (gains) losses(6,467) (3,307) 39,700Loss on modification or extinguishment of debt519 952 15,023Loss on disposal of fixed assets1,058 120 358Change in acquisition-related contingent consideration— 34,538 74,969Equity in income of unconsolidated joint ventures— (143) (123)Deferred income taxes(23,907) 11,665 (75,915)Other reconciling items606 30 763Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: Accounts receivable and unbilled services(89,304) (17,017) (136,330)Prepaid expenses and other assets(13,660) (18,931) 1,762Accounts payable and other liabilities21,584 31,579 35,792Income taxes(31,029) 5,241 10,640Advanced billings65,213 14,216 61,547Payment of acquisition-related contingent consideration(83,249) (35,029) —Net cash provided by operating activities253,567 329,792 220,408Cash flows from investing activities: Purchase of fixed assets(74,294) (55,880) (61,318)Proceeds from the sale of fixed assets26 43 56Cash received (paid) for interest on interest rate swap667 181 (874)Return of joint venture capital contribution418 — —Cash received from the sale of marketable securities— 183 —Acquisition of Symphony Health Solutions Corporation, net of cash acquired— — (521,182)Payment of Symphony Health Solutions Corporation contingent consideration— — (67,781)Acquisition of Parallel 6, Inc., net of cash acquired— — (38,859)Acquisition of Takeda PRA Development Center KK, net of cash acquired— — 2,680Acquisition of Takeda Pharmaceutical Data Services, Ltd., net of cash acquired— — (142)Net cash used in investing activities(73,183) (55,473) (687,420)Cash flows from financing activities: Proceeds from issuance of long-term debt1,300,000 — 550,000Repayment of long-term debt(1,216,533) (224,394) (125,513)Proceeds from accounts receivable financing agreement30,000 60,000 20,000Repayment on accounts receivable financing agreement(30,000) (10,000) (20,000)Borrowings on line of credit233,800 — 121,500Repayments of line of credit(145,000) (91,500) (30,000)Payment of debt prepayment and debt extinguishment costs— — (9,226)Payment for debt issuance costs(4,541) — (6,588)Acquisition of noncontrolling interest(4,138) — —Proceeds from stock issued under employee stock purchase plan and stock option exercises45,819 31,382 7,236Taxes paid related to net shares settlement of equity awards(114) (5,337) —Repurchase and retirement of common stock(300,000) — —Payment of acquisition-related contingent consideration— (79,663) (400)Net cash (used in) provided by financing activities(90,707) (319,512) 507,009Effects of foreign exchange changes on cash, cash equivalents, and restricted cash1,884 (2,988) 3,555Change in cash, cash equivalents, and restricted cash91,561 (48,181) 43,552Cash, cash equivalents, and restricted cash, beginning of year144,709 192,890 149,338Cash, cash equivalents, and restricted cash, end of year$236,270 $144,709 $192,890 The accompanying notes are an integral part of the consolidated financial statements.61Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(1) Basis of Presentation Description of Business PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of productdevelopment and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include datamanagement, statistical analysis, clinical trial management, and regulatory and drug development consulting. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the UnitedStates, or GAAP. (2) Recent Accounting StandardsRecently Implemented Accounting Standards LeasesOn January 1, 2019, the Company adopted ASC Topic 842, “Leases,” or ASC 842, using the revised modified retrospective approach provided by ASUNo. 2018-11, “Leases (Topic 842): Targeted Improvements.” The revised modified retrospective approach recognizes the effects of initially applying the newleases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to theaccounting and disclosures for lease arrangements in the comparative periods in the Company's financial statements.The adoption of ASC 842 resulted in the recognition of lease liabilities of $211.7 million (recorded as $31.9 million in short-term lease liabilitiesand $179.8 million in long-term lease liabilities) and $187.1 million of lease right-of-use, or ROU, assets as of January 1, 2019. Upon adoption of ASC 842, theCompany had lease obligations associated with deferred rent, lease loss liabilities, above market lease liabilities, and tenant improvement allowances,totaling $25.7 million, that were reclassified to the lease ROU assets. The Company had prepaid rent balances, totaling $1.1 million, that were reclassified as areduction of the current portion of operating lease liabilities. The adoption of ASC 842 did not impact the consolidated statements of operations, consolidatedstatements of cash flows, or earnings per share.Financial Instruments - Targeted Improvements to Accounting for Hedging ActivitiesIn August 2017, the Financial Accounting Standards Board, or FASB, issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): TargetedImprovements to Accounting for Hedging Activities," in order to simplify certain aspects of hedge accounting and improve disclosures of hedging arrangements.ASU No. 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedginginstrument to be presented in the same income statement line as the hedged item. Entities must apply the amendments to cash flow and net investment hedgerelationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be appliedprospectively. The Company adopted this standard effective January 1, 2019 and the application of ASU No. 2017-12 did not have a material impact on theCompany's consolidated financial statements.Comprehensive Income - Reclassification of Certain Tax EffectsIn February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of CertainTax Effects from Accumulated Other Comprehensive Income." The amendments in this update allow a reclassification from accumulated other comprehensiveincome to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017, or the Act. The amendments in this update also requireentities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income. The Company adopted this standardeffective January 1, 2019 and the application of ASU No. 2018-02 resulted in a reclassification of $1.4 million from accumulated other comprehensive loss toretained earnings for the stranded tax effects resulting from the Act.62Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Recently Issued Accounting Standards Goodwill simplificationIn January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order tosimplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity shouldperform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize animpairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the totalamount of goodwill allocated to that reporting unit. The amendments to ASU No. 2017-04 are effective for fiscal years beginning after December 15, 2019. Theadoption of ASU No. 2017-04 is not expected to have a material impact on the Company's consolidated financial statements.Cloud computingIn August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing ArrangementThat Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in thisupdate require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine whichimplementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments to ASU No. 2018-15 are effective for thereporting period beginning after December 15, 2019, and interim periods therein. The adoption of ASU No. 2018-15 is not expected to have a material impact onthe Company's consolidated financial statements.Financial Instruments - Credit LossesIn June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred lossmethodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective forthe reporting period beginning after December 15, 2019, and the interim periods therein. The adoption of ASU 2016-13 is not expected to have a material impacton the Company’s consolidated financial statements.(3) Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts and operations of the Company, its subsidiaries and investments in which theCompany has control. Amounts pertaining to the non-controlling ownership interests held by third parties in the operating results and financial position of theCompany’s majority-owned subsidiaries are reported as non-controlling interests. Intercompany accounts and transactions have been eliminated in consolidation. Variable Interest Entities The accounting guidance issued by the FASB concerning a variable interest entity, or VIE, addresses the consolidation of business enterprise to which theusual condition of consolidation (ownership of a majority voting interest) does not apply. This guidance focuses on controlling financial interests that may beachieved through arrangements that do not involve voting interests. The guidance requires an assessment of who the primary beneficiary is and whether theprimary beneficiary should consolidate the VIE. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activitiesof the variable interest entity that most significantly impacts the entity’s economic performance and the obligation to absorb losses or the right to receive benefitsfrom the entity that could potentially be significant to the variable interest entity. Application of the VIE consolidation requirements may require the exercise ofsignificant judgment by management.Takeda PRA Development Center KKThe Company entered into a joint venture with Takeda Pharmaceutical Company Ltd. during 2017. The joint venture was dissolved during the secondquarter of 2019. For further discussion on the joint venture, refer to Note 5, Business Combinations. 63Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Accounts Receivable Financing Agreement On March 22, 2016, the Company entered into a receivable financing agreement, which the Company refers to as the "Accounts Receivable FinancingAgreement," to securitize certain of its accounts receivable. This agreement was subsequently amended on May 31, 2018. Under the accounts receivable financingagreement, certain of the Company’s U.S. accounts receivable and unbilled services balances are sold by certain of its consolidated subsidiaries to another of itsconsolidated subsidiaries, a wholly-owned bankruptcy-remote special purpose entity, or SPE. The SPE in turn may borrow up to $200.0 million from a third-partylender, secured by liens on the receivables and other assets of the SPE. The Company retains the servicing of the securitized accounts receivable portfolio and has a variable interest in the SPE by holding the residual equity.The Company determined that the SPE is a VIE and it is the primary beneficiary because (i) the Company’s servicing responsibilities for the securitized portfoliogives it the power to direct the activities that most significantly impact the performance of the VIE and (ii) its variable interest in the VIE gives it the obligation toabsorb losses and the right to receive residual returns that could potentially be significant. As a result, the Company has consolidated the VIE within its financialstatements. Refer to Note 11, Debt, for additional information regarding the accounts receivable financing agreement.Risks and Other Factors The Company’s revenues are dependent on research and development expenditures of the pharmaceutical and biotechnology industries. Any significantreduction in research and development expenditures by the pharmaceutical and biotechnology industries could have a material adverse effect on the Company andits results of operations. Clients of the Company generally may terminate contracts without cause upon 30 to 60 days’ notice. While the Company generally negotiates depositpayments and early termination fees up front, such terminations could significantly impact the future level of staff utilization and have a material adverse effect onthe Company and the results of future operations. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. In particular, the Company’s primary method of revenue recognition requires estimates of costs to be incurred to fulfillexisting long-term contract obligations. Actual results could differ from those estimates. Estimates are also used when accounting for certain items such asallowance for doubtful accounts, depreciation and amortization, asset impairment, certain acquisition-related assets and liabilities including contingentconsideration, income taxes, fair value determinations, and contingencies. Reportable Segments The Company is managed through two reportable segments, Clinical Research and Data Solutions. Clinical Research, which primarily servesbiopharmaceutical clients, provides outsourced clinical research and clinical trial related services. Data Solutions provides data and analytics, technology solutionsand real-world insights and services to companies in the pharmaceutical industry.The Clinical Research segment is solely focused on the execution of clinical trials on a global basis. The Company has considered whether the delivery ofthe different types of capabilities in various stages of clinical development constitute separate products or lines of service in accordance with ASC Topic 280,“Segment Reporting,” or ASC 280, and has concluded that there are substantial similarities and overlaps in the capabilities delivered at each stage of clinicaldevelopment, with the primary differences between the Early Development Services, or EDS, compared to the Product Registration, or PR, and Strategic Solutions,or SS, relating to the points during the life cycle of a clinical trial at which such capabilities are delivered. After review and analysis of the operating characteristicsof each service offering and using the aggregation characteristics under ASC 280, the Company has concluded that the services provided are similar across mostcharacteristics.64Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company's operations consist of two reportable segments. This represents management's view of the Company's operations based on its managementand internal reporting structure. The Company considered the guidance in ASC 350, “Intangibles—Goodwill and Other,” which notes that a reporting unit is anoperating segment or one level below an operating segment. PR, EDS, and SS are the business units that are one level below the Company’s Clinical Researchoperating segment and the Company determined that they meet the definition of “components,” as discrete financial information exists and this information isregularly reviewed by management. The Data Solutions operating segment does not have any material components.Business Combinations Business combinations are accounted for using the acquisition method and, accordingly, the identifiable assets acquired, the liabilities assumed, and anynon-controlling interest in the acquiree are recorded at their estimated fair values on the date of the acquisition. Goodwill represents the excess of the purchaseprice over the estimated fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. Contingent Losses The Company provides for contingent losses when (1) it is probable that an asset has been impaired or a liability has been incurred at the date of theconsolidated financial statements and (2) the amount of the loss can be reasonably estimated. Disclosure in the notes to the consolidated financial statements isrequired for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred. The Companyexpenses, as incurred, the costs of defending legal claims against the Company. Cash Equivalents The Company considers all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents. As ofDecember 31, 2019 and 2018, substantially all of the Company’s cash and cash equivalents were held in or invested with large financial institutions. Certain bankdeposits may at times be in excess of the Federal Deposit Insurance Corporation insurance limits. Restricted cash The Company receives cash advances from its customers to be used for the payment of investigator costs and other pass-through expenses. The terms ofcertain customer contracts require that such advances be maintained in separate escrow accounts; these accounts are not commingled with the Company’s cash andcash equivalents and are presented separately in the consolidated balance sheets as restricted cash. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to thetotal of the same amounts shown in the consolidated statements of cash flows (in thousands): December 31, 2019 2018 2017Cash and cash equivalents$236,232 $144,221 $192,229Restricted cash38 488 661Total cash, cash equivalents, and restricted cash$236,270 $144,709 $192,890 Accounts Receivable and Unbilled ServicesAccounts receivable represent amounts for which invoices have been sent to clients based upon contract terms. Unbilled services represent amountsearned for services that have been rendered but for which customers have not been billed. Unbilled services where the Company’s right to bill is conditioned onsomething other than the passage of time are contract assets and are separately disclosed in Note 6, Accounts Receivable, Unbilled Services, and AdvancedBillings. 65Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Allowances for Doubtful Accounts The Company maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. The Companyperforms credit reviews of each customer, monitors collections and payments from customers, and determines the allowance based upon historical experience andspecific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specificidentification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debtexpense. Advanced BillingsAdvanced billings, also referred to as contract liabilities, consist of advanced payments and billings on a contract in excess of revenue recognized. Theseamounts represent consideration received or unconditionally due from a customer prior to transferring services to the customer under the terms of the servicecontract. These balances are reported net of contract assets on a contract-by-contract basis at the end of each reporting period.In order to determine revenue recognized in the period from advanced billings liabilities, the Company first allocates revenue from the customer contractto the individual advanced billings liability balance outstanding at the beginning of the period until the revenue exceeds that balance. Fixed Assets Fixed assets and software purchased or developed for internal use are recorded at cost and are depreciated on a straight-line basis over the followingestimated useful lives:Furniture, fixtures and equipment5-7 yearsComputer hardware and software3-7 yearsLeasehold improvementsLesser of the life of the lease or useful life of the improvements Internal Use Software The Company accounts for internal use software in accordance with the guidance in ASC 350‑40, “Internal-Use Software," which requires certain directcosts and interest costs incurred during the application stage of development to be capitalized and amortized over the useful life of the software. Derivative Financial Instruments The Company utilizes interest rate swaps to manage changes in market conditions related to debt obligations. All derivatives are measured at fair valueand recognized as either assets or liabilities on the consolidated balance sheets. Derivatives that are not determined to be effective hedges are adjusted to fair valuewith a corresponding effect on earnings. Changes in the fair value of derivatives that are designated and determined to be effective as part of a hedge transactionhave no immediate effect on earnings and depending on the type of hedge, are recorded either as part of accumulated other comprehensive loss and will beincluded in earnings in the period in which earnings are affected by the hedged item, or are included in earnings as an offset to the earnings impact of the hedgeditem. Amounts previously recorded in accumulated other comprehensive loss related to these interest rate swaps will be reclassified into earnings over the term ofthe previously hedged borrowing using the swaplet method. The Company has elected the accounting policy that cash flows associated with interest rate derivativecontracts are classified as cash flows from investing activities. Contingent ConsiderationThe consideration for the Company’s acquisitions may include potential future earn-out payments that are contingent upon the occurrence of particularevents. These payments might be based on the achievement of future revenue or earnings milestones. The Company records a contingent consideration obligationfor such contingent payments at fair value on the acquisition date. The Company estimates the fair value of contingent consideration obligations through valuationmodels designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated66Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)success rates. Estimated payments are discounted using present value techniques to arrive at an estimated fair value at the balance sheet date. Changes in the fairvalue of the contingent consideration obligations, excluding adjustments that qualify as measurement period adjustments, are recognized within the Company’sconsolidated statements of operations. Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs,including adjustments to the discount rates, changes in the amount or probability of achieving certain revenue or earnings targets. These fair value measurementsare based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of theacquisition date and for each subsequent period. Accordingly, changes in assumptions or actual results could have a material impact on the amount of contingentconsideration expense the Company records in any given period.Fair Value MeasurementsThe Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfera liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Athree-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use ofobservable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:•Level 1—Quoted prices in active markets for identical assets orliabilities.•Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets;quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated byobservable market data.•Level 3—Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flowmethodologies and similar techniques that use significant unobservable inputs. The carrying amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, accounts payable and advancedbillings, approximate fair value due to the short maturities of these instruments. Recurring Fair Value Measurements The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of December 31, 2019 (inthousands): Level 1 Level 2 Level 3 TotalLiabilities: Interest rate swaps$— $2,976 $— $2,976Total$— $2,976 $— $2,976 The following table summarizes the fair value of the Company’s financial assets that are measured on a recurring basis as of December 31, 2018 (inthousands): Level 1 Level 2 Level 3 TotalAssets: Interest rate swaps$— $3,318 $— $3,318Total$— $3,318 $— $3,318 Interest rate swaps are measured at fair value using a market approach valuation technique. The valuation is based on an estimate of net present value ofthe expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation. 67Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis (in thousands): Contingent consideration - Accruedexpenses and other current liabilities Contingent consideration - Other long-term liabilitiesBalance at December 31, 2017 — 50,644Reclassification adjustment 50,644 (50,644)Change in fair value recognized in transaction-related costs 34,538 —Transfer out (85,182) —Balance at December 31, 2018 $— $— There were no Level 3 financial assets or liabilities measured on a recurring basis for the year ended December 31, 2019.The $85.2 million transfer out during the year ended December 31, 2018 represented an earn-out payment to the sellers of Symphony Health SolutionsCorporation, or Symphony Health, at the conclusion of the earn-out period. This amount was paid in April 2019. Non-recurring Fair Value Measurements Certain assets and liabilities are carried on the accompanying consolidated balance sheets at cost and are not remeasured to fair value on a recurring basis.These assets include finite-lived intangible assets, which are tested when a triggering event occurs, and goodwill and identifiable indefinite-lived intangible assets,which are tested for impairment annually on October 1 or when a triggering event occurs. As of December 31, 2019, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaling approximately $2,141.3million were identified as Level 3. These assets are comprised of goodwill of $1,502.8 million and identifiable intangible assets, net of $638.6 million. Refer to Note 11, Debt, for additional information regarding the fair value of long-term debt balances. Impairment of Long-Lived Assets The Company reviews the recoverability of its long-lived asset groups, including furniture and equipment, computer hardware and software, leaseholdimprovements, ROU assets and other finite-lived intangibles, when events or changes in circumstances occur that indicate the carrying value of the asset groupmay not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset group from theexpected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of suchasset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The Company’s primary measure of fair value is basedon discounted cash flows. The measurement of impairment requires the Company to make estimates of these cash flows related to long-lived assets, as well asother fair value determinations. Goodwill and Other Intangibles Goodwill and indefinite-lived intangible assets are tested for impairment annually or more frequently if an event or circumstance indicates that animpairment loss may have been incurred. Separate intangible assets that have finite useful lives are amortized over their estimated useful lives or over the period inwhich economic benefit is received. The Company’s primary finite-lived intangibles are customer relationships and acquired databases, which are amortized on anaccelerated basis, which coincides with the period of economic benefit received by the Company. The Company reviews the carrying value of goodwill to determine whether impairment may exist on an annual basis or whenever it has reason to believegoodwill may not be recoverable. The annual impairment test of goodwill is performed during the fourth quarter of each fiscal year. The Company did not have animpairment for any of the years presented. 68Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)When evaluating for impairment, the Company may first perform a qualitative assessment to determine whether it is more likely than not that a reportingunit or indefinite-lived intangible asset is impaired. If the Company does not perform a qualitative assessment, or if it determines that it is not more likely than notthat the fair value of the reporting unit or indefinite-lived intangible asset exceeds its carrying amount, the Company will calculate the estimated fair value of thereporting unit or indefinite-lived intangible asset. The Company’s decision to perform a qualitative impairment assessment for an individual reporting unit in agiven year is influenced by a number of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimatedfair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition.During 2019, as part of the Company’s annual impairment analysis, the Company performed the qualitative assessment for approximately $1.0 billion, or 68.3% ofits total goodwill balance, which relates to its EDS, PR and SS business units, and for its indefinite-lived trade name intangible asset balances. If the Company does not perform a qualitative assessment, goodwill impairment is determined by the Company using a two-step process. The first step ofthe goodwill impairment test is used to identify potential impairment by comparing the fair value of each reporting unit, determined using various valuationtechniques, with the primary technique being a discounted cash flow analysis, to its carrying value. If the fair value of a reporting unit exceeds its carrying amount,goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unitexceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of thegoodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of thereporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized. The Company performed its impairment test for theData Solutions operating segment during the fourth quarter of 2019. It was concluded that the estimated fair value of the Data Solutions operating segmentexceeded its carrying value by approximately $185 million, or 27%, and therefore no impairment existed. Revenue RecognitionOn January 1, 2018, the Company adopted Accounting Standards Codification, or ASC, Topic 606, "Revenue from Contracts with Customers," or ASC606, using the modified retrospective method for all contracts that were not completed as of January 1, 2018. The financial information for the year endedDecember 31, 2017 continues to be accounted for under the accounting standards in effect for the period presented. Accordingly, the Company has included itsrevenue recognition policies and disclosures for the years ended December 31, 2019 and 2018 and the policies and disclosures for the year ended December 31,2017 below.Revenue Recognition Policies for the years ended December 31, 2019 and 2018All revenue is generated from contracts with customers. Revenue is recognized when control of the performance obligation is transferred to the customer,in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those services. Revenue recognition is determinedthrough the application of the following steps:•identification of the contract, or contracts, with a customer;•identification of the performance obligations in thecontract;•determination of the transaction price;•allocation of the transaction price to the performance obligations in the contract;and•recognition of revenue when, or as, the Company satisfies a performanceobligation.Clinical ResearchThe Company generally enters into contracts with customers to provide clinical research services with payments based on either fixed‑service fee, timeand materials, or fee‑for‑service arrangements. The Company is also entitled to reimbursement for investigator fees and out-of-pocket costs associated with theseservices. At contract inception, the Company assesses the services promised in the contracts with customers to identify the performance obligations in thearrangement.The long term arrangements for clinical research services are considered a single performance obligation because the Company provides a highly-integrated service. Revenue is recognized based on the proportion of total contract costs incurred to date to the estimated total contract costs through completion.The Company uses the cost-to-cost measure of progress for these contracts because it best depicts the transfer of control to the customer as the performanceobligation is fulfilled. The accounting for these long term contracts involves significant judgment, particularly as it relates to the process of estimating69Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)total contract costs, which includes direct costs, reimbursable out-of-pocket expenses, reimbursable investigator fees, and the contract profit. The contracts providefor the right to payment for the work performed to date, which is invoiced to the customer as work progresses, either based on units performed or the achievementof billing milestones.A single performance obligation requires the inclusion of investigator fees and out-of-pocket costs in both the contract revenue value and in the cost usedto measure progress in transferring control to the customer. As part of the client proposal and contract negotiation process, the Company develops a detailed projectbudget for the direct costs and reimbursable costs based on the scope of the work, the complexity of the study, the geographical locations involved and historicalexperience. The inclusion of investigator fees and out-of-pocket costs in the measurement of progress under these long-term fixed-service fee contracts as part of asingle performance obligation can create a timing difference between amounts the Company is entitled to receive in reimbursement for costs incurred and theamount of revenue recognized related to such costs on individual projects, which is recognized as unbilled services. The magnitude of this timing differencecompared to historical accounting is dependent on the relative size and progress of the direct service portion of the arrangement compared to the progress of thereimbursable investigator fees and reimbursable out-of-pocket costs relative to their respective forecasted costs over the life of the project.The estimated total contract costs are reviewed and revised periodically throughout the life of the contract, with adjustments to revenue resulting fromsuch revisions being recorded on a cumulative basis in the period in which the revisions are identified.The Company establishes pricing based on the Company’s internal pricing guidelines, discount agreements, if any, and negotiations with the client. Thetransaction price is the contractually defined amount that includes adjustment for variable consideration such as reimbursable costs, discounts, and bonus orpenalties, which are estimable. The estimated amount of variable consideration will be included in the transaction price only to the extent that it is probable that asignificant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequentlyresolved.A majority of the Company’s long-term contracts undergo modifications over the contract period. During the modification process, the Companyrecognizes revenue to the extent it incurs costs, provided that a contractual understanding has been reached.Fixed-service fee arrangements for Phase I and Phase IIa clinical services and bio-analytical services are short-term contracts for accounting purposes asthese contracts are cancelable and the termination penalties for exiting these contracts are not substantive. The Company generally bills for services on a milestonebasis. The transaction price, representing the value of the services to be provided over the contract term inclusive of all costs for which the Company is a principal,is the contractually defined amount that includes adjustment for variable consideration, such as reimbursable expenses and discounts, which are estimable. Whenmultiple performance obligations exist, the transaction price is allocated to the performance obligations on a relative standalone selling price basis. Given thehighly integrated nature of the services provided, most contracts represent a single performance obligation. Due to the Company's right to payment for workperformed, revenue is recognized over time as services are delivered.Clinical research services delivered under fee-for-service arrangements are recognized over time. The services are accounted for as a single performanceobligation that is a series of distinct services with substantially the same pattern of transfer to the customer. Clinical research services provided in these types ofarrangements are typically linked to the delivery of resources billed at contractual rates, such rates being dependent on the role and the tenure of the resourceprovided. The fee-for-service is typically billed one month in arrears, which generally results in an unbilled services asset at period-end. In addition, out-of-pocketcosts are reimbursed by the customer. Fees are allocated to each distinct month of service using time elapsed as a measure of progress toward the satisfaction of theperformance obligation and variable consideration is allocated to the period in which it is incurred.Revenue from time and materials contracts is recognized as hours are incurred.The Company may offer volume discounts to certain of its large customers based on annual volume, which is variable consideration that is considered inthe transaction price. The Company records an estimate of the volume rebate as a reduction of the transaction price based on the estimated total rebates to be earnedby the customers for the period.70Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Data SolutionsThe Company provides data reports and analytics to customers based on agreed-upon specifications, including the timing of delivery, which is typicallyeither weekly, monthly, or quarterly. If a customer requests more than one type of data report or series of data reports within a contract, each distinct type of datareport is a separate performance obligation. The contracts provide for the Company to be compensated for the value of each deliverable. The transaction price isdetermined using list prices, discount agreements, if any, and negotiations with the customers, and generally includes any out-of-pocket expenses. Typically, theCompany bills in advance of services being provided with the amount being recorded as advanced billings.When multiple performance obligations exist, the transaction price is allocated to performance obligations on a relative standalone selling price basis. Incases where the Company contracts to provide a series of data reports, or in some cases data, the Company recognizes revenue over time using the “unitsdelivered” output method as the data or reports are delivered. Expense reimbursements are recorded to revenue as the expenses are incurred as they relate directlyto the services performed.Certain Data Solutions arrangements include upfront customization or consultative services for customers. These arrangements often include paymentsbased on the achievement of certain contractual milestones. Under these arrangements, the Company contracts with a customer to carry out a specific study,ultimately resulting in delivery of a custom report or data product. These arrangements are a single performance obligation given the integrated nature of theservice being provided. The Company typically recognizes revenue under these contracts over time, using an output-based measure, generally time elapsed, tomeasure progress and transfer of control of the performance obligation to the customer. Expense reimbursements are recorded to revenue as the expenses areincurred as they relate directly to the service performed.The Company's Data Solutions segment enters into contracts with some of its larger data suppliers that involve non-monetary terms. The Company willissue purchase credits to be used toward the data supplier's purchase of the Company's services. In exchange, the Company receives monetary discounts on the datareceived from the data suppliers. The fair value of the revenue earned from the customer purchases is determined based on similar product offerings to othercustomers and is recognized as services are delivered. At the end of the contract year, any unused customer purchase credits may be forfeited or carried over to thenext contract year based on the terms of the data supplier contract. For the years ended December 31, 2019, 2018 and 2017, the Company recognized service inkind revenue of $20.5 million, $21.8 million and $5.8 million, respectively, from these transactions, which is included in revenue in the accompanyingconsolidated statements of operations. The cost of data acquired under these arrangements is included in direct costs.Significant Judgments and EstimatesAccounting for the Company’s long term contracts requires estimates of future costs to be incurred to fulfill the contract obligations.Due to the nature of the work required to be performed by the Company to fulfill performance obligations, the estimation of total revenue and cost atcompletion is complex, subject to many variables and requires significant judgment. The Company's long-term contracts may contain incentive fees, penalties, orother provisions that can either increase or decrease the transaction price. The Company estimates variable consideration at the most likely amount to which theCompany expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal ofcumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company's estimates of variableconsideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performanceand information that is available to the Company. Judgment is also required to identify performance obligations and in determining the relative standalone sellingprice of those obligations, specifically for the Data Solutions segment. The estimates and assumptions are evaluated on an ongoing basis and adjusted, as needed,using historical experience and contract specific factors. Actual results could differ significantly from these estimates.Performance ObligationsRevenue recognized for the years ended December 31, 2019 and 2018 from reimbursable expenses and services completed in prior periods was $83.4million and $79.1 million, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and fromcontract modifications on long-term fixed price contracts executed in the current period, which result in changes to the transaction price.71Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an originalcontract term of less than one year. These contracts are short in duration and revenue recognition generally follows the delivery of the promised services. The totaltransaction price for the undelivered performance obligation on contracts with an original initial contract term greater than one year is $5.3 billion as ofDecember 31, 2019. This amount includes reimbursement revenue and investigator fees. The Company expects to recognize revenue over the remaining contractterm of the individual projects, with contract terms generally ranging from one to five years.Revenue Recognition Policies for the year ended December 31, 2017Revenue for services is recognized only after persuasive evidence of an arrangement exists, the sales price is determinable, services have been rendered,and collectability is reasonably assured.Once these criteria have been met, the Company recognizes revenue for the services provided on fixed-fee contracts in the Clinical Research segmentbased on the proportional performance methodology, which determines the proportion of outputs or performance obligations that have been completed ordelivered compared to the total contractual outputs or performance obligations. To measure performance, the Company compares the contract costs incurred toestimated total contract costs through completion. The estimated total contract costs are reviewed and revised periodically throughout the life of the contract, withadjustments to revenue resulting from such revisions being recorded on a cumulative basis in the period in which the revisions are first identified. Contract costsconsist primarily of direct labor and other project-related costs. The Company recognizes revenue for services provided on fixed-fee contracts in the Data Solutionssegment either ratably as earned over the contract period, for subscription-based services, or upon delivery, for one-time delivery of data solutions or reports.Revenue from time and materials contracts is recognized as hours are incurred. Revenues and the related costs of fee-for-service contracts are recognized in theperiod in which services are performed.In the Clinical Research segment, a majority of contracts undergo modifications over the contract period and the Company’s contracts provide for thesemodifications. During the modification process, the Company recognizes revenue to the extent it incurs costs, provided client acceptance and payment is deemedreasonably assured. The Company records an estimate of the annual volume rebate as a reduction of revenue throughout the period based on the estimated total rebate to beearned for the period.The Company incurs out-of-pocket costs that are reimbursable by its customers. The Company includes out-of-pocket costs both as reimbursementrevenue and as reimbursable out-of-pocket costs in the consolidated statements of operations.As is customary in the industry, the Company routinely enters into separate agreements on behalf of its clients with independent physician investigators inconnection with clinical trials. The funds received for investigator fees are netted against the related cost because such fees are the obligation of the Company’sclients, without risk or reward to the Company. The Company is not obligated either to perform the service or to pay the investigator in the event of default by theclient. In addition, the Company does not pay the independent physician investigator until funds are received from the client. Total payments to investigators were$250.9 million for the year ended December 31, 2017. Prior to the year ended December 31, 2018, the Company did not recognize revenue for investigator feesand recognized revenue and the related expense for reimbursable out-of-pocket costs. Upon adoption of ASC 606 on January 1, 2018, all investigator and otherreimbursable expenses are included within revenue as part of one performance obligation, as described above.Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, unbilled services, andderivatives. As of December 31, 2019, substantially all of the Company’s cash and cash equivalents were held in or invested with large financial institutions.Accounts receivable include amounts due from pharmaceutical and biotechnology companies. The Company establishes an allowance for potentially uncollectiblereceivables. In management’s opinion, there is no additional material credit risk beyond amounts provided for such losses. 72Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Revenue from individual customers greater than 10% of consolidated revenue in the respective periods was as follows: Years Ended December 31, 2019 2018 2017 (1)Customer A* * 10.3%Customer B* * *(1) As noted in the Revenue Recognition section of this Note, the Company adopted ASC 606 on January 1, 2018 using the modified retrospective method.Comparative prior period amounts were calculated using service revenue only.* Less than 10%Accounts receivable and unbilled receivables from individual customers that were equal to or greater than 10% of consolidated accounts receivable andunbilled receivables at the respective dates were as follows: December 31, 2019 2018Customer A11.2% 12.2%Customer B15.6% 11.4%* Less than 10% Foreign Currency The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect as of the end of the period.Equity activities are translated at the spot rate effective at the date of the transaction. Revenue and expense accounts and cash flows of these operations aretranslated at average exchange rates prevailing during the period the transactions occurred. Translation gains and losses are included as an adjustment to theaccumulated other comprehensive loss account in stockholders’ equity. In addition, gains or losses related to the Company’s intercompany loans payable andreceivable denominated in a foreign currency other than the subsidiary’s functional currency that are deemed to be of a long-term investment nature areremeasured to cumulative translation adjustment and recorded in accumulated other comprehensive loss in the consolidated balance sheets. Translation gains and losses from foreign currency transactions, such as those resulting from the settlement and revaluation of foreign receivables andpayables, are included in the determination of net income. These amounts are included in foreign currency (losses) gains, net in the consolidated statements ofoperations. Income TaxesThe Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized forthe estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and theirrespective tax bases. Deferred tax assets are recognized for future deductible temporary differences, along with net operating loss carryforwards and creditcarryforwards, if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria,a valuation allowance is established to reduce the deferred tax asset to the amount that is more likely than not to be realized. Deferred tax liabilities are recognizedfor future taxable temporary differences. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporarydifferences are expected to be recovered or settled.There are uncertainties related to the interpretation of tax regulations in the jurisdictions in which the Company transacts business. The judgments andestimates made at a point in time may change based on the outcome of tax audits, as well as changes to, or further interpretations of, regulations. Income taxexpense is adjusted in the period in which these events occur, and these adjustments are included in the Company’s consolidated statements of operations. If suchchanges take place, there is a risk that the Company’s effective tax rate may increase or decrease in any period. A company must recognize the tax benefit from anuncertain tax position only if it is more likely than not that the tax position will be sustained on examination by73Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured basedon the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.Stock-Based Compensation The primary types of stock-based compensation utilized by the Company are restricted share awards and restricted share units, or collectivelyRSAs/RSUs, and stock options.The Company accounts for its stock-based compensation for stock options at the grant date, based on fair value of the award, and recognizes it as expenseover the employees’ requisite service period. The fair value of each stock option issued during these periods was estimated on the date of grant using the Black-Scholes option pricing model for service condition awards with the following weighted average assumptions: Years Ended December 31, 2019 2018 2017Risk-free interest rate1.8% 2.8% 1.9%Expected life, in years6.1 6.3 6.3Dividend yieldN/A N/A N/AVolatility30.7% 28.9% 29.7% The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. The expected life represents the period oftime the grants are expected to be outstanding. Since the Company does not have sufficient history to estimate the expected volatility of its common share price,expected volatility is based on a blended approach that utilizes the volatility of the Company's common stock for periods in which the Company has sufficientinformation and the volatility for selected reasonably similar publicly traded companies for which the historical information is available. Forfeitures are accountedfor as they occur.The Company accounts for its stock-based compensation for RSAs/RSUs based on the closing market price of the Company’s common stock on the grantdate, and recognizes it as expense over the employees’ requisite service period. Net Income Per Share The calculation of net income per share, or EPS, is based on the weighted average number of common shares or common stock equivalents outstandingduring the applicable period. The dilutive effect of common stock equivalents is excluded from basic earnings per share and is included in the calculation ofdiluted earnings per share, unless the effect of inclusion would be anti-dilutive. Debt Issuance Costs Debt issuance costs relating to the Company’s long-term debt are recorded as a direct reduction of long-term debt; these costs are deferred and amortizedto interest expense using the effective interest method, over the respective terms of the related debt. Debt issuance costs relating to the Company’s revolving creditfacilities are recorded as an asset; these costs are deferred and amortized to interest expense using the straight-line method. Compensated Absences The Company accrues for the costs of compensated absences to the extent that the employee’s right to receive payment relates to service already rendered,the obligation vests or accumulates, payment is probable and the amount can be reasonably estimated. The Company’s policies related to compensated absencesvary by jurisdiction and obligations are recorded net of estimated forfeiture due to turnover when reasonably predictable.74Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Operating LeasesAs discussed further in Note 2, Recent Accounting Standards, and in Note 8, Leases, on January 1, 2019, the Company adopted ASC 842 using therevised modified retrospective approach. Comparative prior period information continues to be accounted for under the accounting standards in effect for theperiod presented. Accordingly, the Company has included its lease policies and disclosures for the year ended December 31, 2019 and the policies applicable forthe years ended December 31, 2018 and 2017 are described below.Lease Policies for the year ended December 31, 2019On January 1, 2019, the Company adopted ASC 842 using the revised modified retrospective approach. The revised modified retrospective approachrecognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under thiselection, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in an entity’s financial statements. Inaddition, the Company elected the package of practical expedients permitted under the transition guidance within ASC 842, in which the Company need notreassess (i) the historical lease classification, (ii) whether any expired or existing contract is or contains a lease, or (iii) the initial direct costs for any existingleases.Upon the initial application of ASC 842 on January 1, 2019, or the transition date, lease liabilities were measured by using the remaining minimum rentalpayments under ASC 840. The Company’s ASC 840 minimum rental payments include executory costs and rental payments that depend on an index or rate arecalculated based on the rate in effect at the transition date. The lease liability is measured at the present value of future lease payments, discounted using thediscount rate as of the transition date. In addition to recognizing the lease liability, the Company recognized a corresponding lease ROU asset. The ROU asset isinitially measured as the amount of lease liability, adjusted for any initial lease costs or lease payments made before or at the commencement of the lease, andreduced by any lease incentives and deferred rent. As of the transition date, the Company’s leases consisted of only operating leases and upon recognition of thelease liability and ROU assets, there was no adjustment to retained earnings.All leases entered into after January 1, 2019 are accounted for under ASC 842. Under ASC 842, a contract is or contains a lease when (i) explicitly orimplicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of thatunderlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its servicearrangements include the right to control the use of an asset. The Company determines if an arrangement is a lease at inception of the contract, which is the date onwhich the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that thelessor makes an underlying asset available for use by a lessee.At the lease commencement date, a lease liability is recognized based on the present value of the lease payments not yet paid, discounted using thediscount rate for the lease at lease commencement. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease.As the Company's leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the lease term and economicenvironment at the lease commencement date. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it isreasonably certain that the Company will exercise that option. With limited exceptions, the nature of the Company's facility leases is such that there are noteconomic or other conditions that would indicate that it is reasonably certain at lease commencement that the Company will exercise options to extend the term.The Company determines if its lease obligations are operating or finance leases at the lease commencement date and considers whether the lease grants anoption to purchase the underlying asset that it is reasonably certain to exercise, the remaining economic life of the underlying asset, the present value of the sum ofthe remaining lease payments and any residual value guaranteed, and the nature of the asset.The initial measurement of the lease liability is determined based on the future lease payments, which may include lease payments that depend on anindex or a rate (such as the consumer price index or other market index). The Company initially measures payments based on an index or rate by using theapplicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rateor index are not included in the lease liability and are recognized as they are incurred. The Company’s contracts that include a lease component generally includeadditional services that are transferred to the lessee (e.g., common-area maintenance services), which are75Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)nonlease components. Contracts typically also include other costs and fees that do not provide a separate service to the lessee, such as costs paid by the lessee toreimburse the lessor for administrative costs or payment for the lessor’s costs for property taxes, insurance related to the leased asset, and other lessor costs. TheCompany elected the practical expedient to account for the lease and nonlease components as a single lease component. At the lease commencement date, theCompany recognizes a ROU asset representing its right to use the underlying asset over the lease term. If significant events, changes in circumstances, or otherevents indicate that the lease term has changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of thereassessment date, and adjust the ROU asset. These reassessment events are typically related to the exercise of optional renewals or significant new investments inleasehold improvements. The costs of services and costs related to reimbursements of the lessor’s cost are generally variable rent obligations, which are excludedfrom the future lease payments included in the lease liability. For leases with a term of one year or less, or short-term leases, the Company has elected to notrecognize the lease liability for these arrangements and the lease payments are recognized in the consolidated statements of operations on a straight-line basis overthe lease term. For certain equipment leases, such as vehicles, the Company applies a portfolio approach to account for the operating lease ROU assets andliabilities.The total expense for the operating lease liability is recognized on a straight-line basis over the lease term, beginning on the lease commencement date.The Company classifies the lease costs within operating expenses consistent with the classification policies for all other operating costs.Lease Policies for the years ended December 31, 2018 and 2017 The Company records rent expense for operating leases, some of which have escalating rent over the term of the lease, on a straight-line basis over theinitial effective lease term. The Company begins recognition of rent expense on the date of initial possession, which is generally when the Company enters thespace and begins to make improvements in preparation for its intended use. Some of the Company’s facility leases provide for concessions by the landlords,including payments for leasehold improvements considered tenant assets, free rent periods, and other lease inducements. The Company reflects these concessionsas deferred rent in the accompanying consolidated financial statements. The Company accounts for the difference between rent expense and rent paid as deferredrent. For tenant allowances for improvements considered to be tenant assets, rent holidays and other lease incentives, the Company records a deferred rent liabilityat the inception of the lease term and amortizes the deferred rent over the term of the lease as a reduction to rent expense. For tenant allowances considered to beproperty owner assets, the payment is treated as a reimbursement for the cost of the lessor asset.Transaction-related CostTransaction-related costs consist primarily of: (1) the change in the fair value of acquisition-related contingent consideration; (2) costs incurred inconnection with due diligence performed in connection with acquisitions; (3) costs associated with the accounts receivable financing agreement; (4) third-partyfees incurred in connection with secondary offerings and share repurchases; and (5) stock-based compensation expense related to the release of the transferrestrictions on vested options. Prior Period ReclassificationsCertain amounts in prior periods have been reclassified to conform with current period presentation.(4) Joint Ventures The Company entered into a joint venture with Takeda Pharmaceutical Company Ltd. during 2017. The joint venture was dissolved in 2019. For furtherdiscussion on the joint venture, refer to Note 5, Business Combinations. The Company entered into a joint venture agreement with A2 Healthcare Corporation (formerly part of Asklep, Inc.) in 2013. The joint venture wasdissolved in October 2018. (5) Business Combinations Symphony Health Solutions, Inc.76Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)On September 6, 2017, the Company acquired all of the outstanding equity interest of Symphony Health, a provider of data and analytics to helpprofessionals understand the full market lifecycle of products offered for sale by companies in the pharmaceutical industry, for $686.9 million. With thisacquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that provide data andanalytics.The liability associated with the contingent consideration was valued at $147.5 million at the acquisition date. The fair value of the contingentconsideration was a Level 3 measurement and was reassessed each reporting period until the end of the earn-out period. The Company recorded $32.6 million and$85.7 million to transaction-related costs in the consolidated statements of operations during the years ended December 31, 2018 and 2017, respectively, associatedwith changes in the fair value of the earn-out liability and adjustments upon the finalization of the earn-out calculations. The Company made earn-out paymentstotaling $83.2 million, $114.7 million, and $67.8 million during the years ended December 31, 2019, 2018 and 2017, respectively. The acquisition of Symphony Health was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed havebeen recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $476.9 million ofgoodwill, which was assigned to the Data Solutions segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of theacquired business and expected synergies with the Company’s existing operations. The Company incurred $6.4 million in acquisition related costs that are includedin transaction-related costs in the consolidated statements of operations for the year ended December 31, 2017. During the year ended December 31, 2018, theCompany incurred $1.4 million of expenses associated with transaction-related retention incentives that are included in transaction-related costs in the consolidatedstatements of operations. The Company’s purchase price allocation is as follows (in thousands): Purchase PriceAllocation Weighted AmortizationPeriodCash and cash equivalents $26,297 Accounts receivable and unbilled services 39,132 Other current assets 23,726 Fixed assets 12,340 Customer relationships 190,100 10 yearsDatabase 137,100 3 yearsTradename 2,000 2 yearsAccounts payable and accrued expenses (42,222) Advanced billings (66,846) Deferred tax liabilities (104,869) Other long-term liabilities (6,740) Estimated fair value of net assets acquired 210,018 Purchase price, including contingent consideration and working capital adjustment 686,877 Total goodwill $476,859 The results of operations for Symphony Health are included in the consolidated financial statements of the Company from the date of acquisition. Duringthe year ended December 31, 2017, Symphony Health's revenue and net income totaled $90.5 million and $6.3 million, respectively.77Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The following unaudited pro-forma information assumes the acquisition of Symphony Health occurred as of the beginning of 2016. This pro-formafinancial information is not necessarily indicative of operating results if the acquisition had been completed at the date indicated, nor is it necessarily an indicationof future operating results. Year Ended(in thousands, except per share amounts)December 31, 2017Total revenue$2,408,770Net income attributable to PRA Health Sciences, Inc.104,700Net income per share: Basic$1.68 Diluted$1.59The unaudited pro-forma financial information for the year ended December 31, 2017 includes the following non-recurring adjustments:•a $6.4 million increase to transaction-related costs incurred by the Company during the year ended December 31, 2017 attributable to the transaction,with a corresponding $2.5 million increase to the benefit from income taxes.•a $3.1 million increase to loss on the modification or extinguishment of long-term debt incurred by the Company during the year ended December 31,2017 attributable to the above transaction, with a corresponding $1.2 million increase to the benefit from income taxes.Takeda TransactionsOn June 1, 2017, the Company acquired all of the outstanding shares of Takeda Pharmaceutical Data Services, Ltd., or TDS, from Takeda PharmaceuticalCompany Ltd., or Takeda, for $0.7 million in cash. The Company recorded approximately $1.0 million of goodwill, which is assigned to the Clinical Researchsegment and is not deductible for income tax purposes. Pro-forma results of operations and a complete purchase price allocation have not been presented becausethe results of this acquisition did not have a material effect on the Company's consolidated financial statements.On June 1, 2017, the Company and Takeda also closed on a joint venture transaction that enabled the Company to provide clinical trial delivery andpharmacovigilance services as a strategic partner of Takeda in Japan. The joint venture transaction was effectuated through the creation of a new legal entity,Takeda PRA Development Center KK, or the TDC joint venture. The Company paid $5.4 million for a 50% equity interest in the TDC joint venture, whichrepresented 50% of the fair value of the net assets and workforce that Takeda contributed to the joint venture. The joint venture provided services including clinicaltrial monitoring, project management, regulatory strategy and submissions, data management, biostatistics, drug safety reporting, and medical monitoring.Prior to dissolution of the joint venture, the Company determined that the TDC joint venture was a VIE in which the Company was the primarybeneficiary. Accordingly, the Company accounted for the $5.4 million contribution to the TDC joint venture as a business combination and consolidated the VIE inits financial statements with a noncontrolling interest for the 50% portion owned by Takeda. The assets acquired and the liabilities assumed have been recorded attheir respective estimated fair values as of June 1, 2017. The Company recorded approximately $2.7 million of goodwill, which is assigned to the ClinicalResearch segment and is not deductible for income tax purposes. The goodwill is primarily attributable to the assembled workforce. The Company incurred $0.6million in acquisition related costs that are included in selling, general and administrative expenses in the consolidated statements of operations for the year endedDecember 31, 2017.78Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company’s fair value of the net assets acquired as part of the TDC joint venture transaction at the closing date of the business combination is asfollows (in thousands): PurchasePriceAllocationCash and cash equivalents $8,120Other current assets 1,671Other non-current assets 799Accounts payable and accrued expenses (2,380)Estimated fair value of net assets acquired 8,210PRA purchase price 5,440Fair value of Takeda's noncontrolling interest 5,440Total goodwill $2,670 The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to the TDC joint venture as they did not have a materialeffect on the Company’s consolidated financial statements.On May 31, 2019, per the terms of the agreement, the TDC joint venture dissolved and the Company acquired Takeda’s 50% interest for $4.1 million. Parallel 6, Inc. On May 10, 2017, the Company acquired all of the outstanding equity interest of Parallel 6, Inc., or Parallel 6, a developer of technologies for improvingpatient enrollment, engagement, and management of clinical trials, for $39.0 million in cash and contingent consideration in the form of a potential earn-outpayment of up to $10.0 million. The earn-out payment is contingent upon the achievement of certain external software sales targets during the 18-month periodfollowing closing. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologiesthat provide improved efficiencies by reducing study durations and costs through integrated operational management.The fair value of the earn-out as of the acquisition date was $8.4 million, which was determined by using a Monte Carlo simulation that includessignificant unobservable inputs such as a risk-adjusted discount rate and projected external software sales of Parallel 6 over the earn-out period. As the fair valuewas based on significant inputs not observed in the market and thus represented a Level 3 measurement. During the fourth quarter of 2017, the Companydetermined that the external software sales targets likely would not be met. Therefore the Company released the $8.4 million contingent consideration liability,which is recorded within transaction-related costs in the consolidation statements of operations.The acquisition of Parallel 6 was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have beenrecorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $31.3 million ofgoodwill, which was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of theacquired business and expected synergies with the Company’s existing information technology operations. The Company incurred $1.3 million in acquisitionrelated costs that are included in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2017. 79Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company’s purchase price allocation is as follows (in thousands): Purchase PriceAllocation Weighted AmortizationPeriodCash and cash equivalents $132 Accounts receivable and unbilled services 929 Other current assets 26 Software intangible 15,500 5 yearsOther intangibles 920 5 yearsAccounts payable and accrued expenses (780) Advanced billings (692) Other long-term liabilities (31) Estimated fair value of net assets acquired 16,004 Purchase price, including contingent consideration 47,339 Total goodwill $31,335 The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Parallel 6 as they did not have a material effect on theCompany’s consolidated financial statements.(6) Accounts Receivable, Unbilled Services, and Advanced Billings Accounts receivable and unbilled services include service revenue, reimbursement revenue, and amounts associated with work performed byinvestigators. Accounts receivable and unbilled services were (in thousands): December 31, 2019 2018Accounts receivable$512,061 $437,001Unbilled services149,194 133,147Total accounts receivable and unbilled services661,255 570,148Less allowance for doubtful accounts(2,738) (2,049)Total accounts receivable and unbilled services, net$658,517 $568,099Unbilled services as of December 31, 2019 and 2018 includes $76.0 million and $66.6 million, respectively, of contract assets where the Company’s rightto bill is conditioned on criteria other than the passage of time. There were no impairment losses on contract assets during the years ended December 31, 2019 and2018. A rollforward of the allowance for doubtful accounts is as follows (in thousands): Years Ended December 31, 2019 2018 2017Beginning balance$2,049 $1,433 $1,203Charged to income from operations1,294 605 255Write-offs, recoveries and the effects of foreign currency exchange(605) 11 (25)Ending balance$2,738 $2,049 $1,433Advanced billings were as follows (in thousands): December 31, 2019 2018Advanced billings $505,714 $441,35780Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Advanced billings increased by $64.4 million during the year ended December 31, 2019 and decreased by $27.9 million during the year ended December31, 2018 primarily due to the timing of customer payments. During the years ended December 31, 2019 and 2018, the Company recognized revenue of $413.1million and $393.2 million related to advanced billings recorded as of January 1, 2019 and 2018, respectively. (7) Fixed Assets The carrying amount of fixed assets is as follows (in thousands): December 31, 2019 2018Computer hardware and software$207,931 $172,346Leasehold improvements82,482 58,300Furniture and equipment48,305 45,962Total fixed assets338,718 276,608Accumulated depreciation(158,002) (121,844)Total fixed assets, net$180,716 $154,764 All U.S. fixed assets are included as collateral for the payment and performance in full of the term loans pledged by the Company and its subsidiaries. Depreciation expense was $46.3 million, $40.6 million, and $29.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. (8) LeasesThe Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leasesgenerally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining leaseterms of one year to 20 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments tothe base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s subleaseincome is immaterial.The components of lease expense were as follows for the year ended December 31, 2019 (in thousands):Lease cost: Operating lease cost $41,573 Short-term lease cost 2,591 Variable lease cost 7,626 Sublease income (178) Net lease cost $51,612Total lease expense, net of sublease income, for the years ended December 31, 2018 and 2017 was $39.6 million and $37.0 million, respectively. Supplemental cash flow information related to leases was as follows for the year ended December 31, 2019 (in thousands):Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows $41,594Right-of-use assets obtained in exchange for lease obligations 32,423Other supplemental information related to leases was as follows as of December 31, 2019:81Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Weighted average remaining lease term 7.7 yearsWeighted average discount rate 4.3%Maturities of operating lease liabilities were as follows as of December 31, 2019 (in thousands):2020 $44,7602021 43,3692022 35,1792023 27,5542024 19,153Thereafter 77,067 Total lease payments 247,082Less imputed interest (37,109) Total $209,973As of December 31, 2019, the Company has additional non-cancelable operating leases that have not yet commenced with future lease payments totaling$12.9 million. These leases will commence in the first quarter of 2020 with initial lease terms ranging from two to twenty years. As of December 31, 2018, the Company disclosed the following future non-cancelable rent obligations as determined under ASC 840 (in thousands):2019 $43,6752020 40,9482021 37,4692022 30,2382023 24,235Thereafter 90,978 Total lease payments $267,543(9) Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill are as follows (in thousands): Clinical Research Data Solutions ConsolidatedBalance at December 31, 2017$1,036,443 $475,981 $1,512,424Adjustments to Symphony Health purchase price allocation— 878 878Adjustments to Parallel 6 purchase price allocation(1,117) — (1,117)Currency translation(17,423) — (17,423)Balance at December 31, 20181,017,903 476,859 1,494,762Currency translation7,994 — 7,994Balance at December 31, 2019$1,025,897 $476,859 $1,502,756 There are no accumulated impairment charges as of December 31, 2019 and 2018. 82Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Intangible Assets Intangible assets consist of the following (in thousands): December 31, 2019 December 31, 2018 Gross Amount AccumulatedAmortization Net Amount Gross Amount AccumulatedAmortization Net AmountCustomer relationships$559,768 $(137,728) $422,040 $555,915 $(103,248) $452,667Trade names (finite-lived)28,536 (16,582) 11,954 28,505 (12,810) 15,695Patient list and other intangibles44,474 (35,654) 8,820 44,474 (30,939) 13,535Database137,100 (59,347) 77,753 137,100 (32,561) 104,539Total finite-lived intangible assets769,878 (249,311) 520,567 765,994 (179,558) 586,436Trade names (indefinite-lived)118,010 — 118,010 118,010 — 118,010Total intangible assets$887,888 $(249,311) $638,577 $884,004 $(179,558) $704,446 The Company conducts its annual impairment test of indefinite‑lived intangibles during the fourth quarter of the fiscal year. For the periods endedDecember 31, 2019, 2018 and 2017, the Company concluded that the fair value of indefinite‑lived intangibles exceeded the carrying value and, therefore, noimpairment exists. Amortization expense was $68.6 million, $71.6 million and $49.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. Estimated amortization expense related to finite‑lived intangible assets for the next five years and thereafter is as follows (in thousands): 2020$69,194202164,081202249,689202337,943202428,7382025 and thereafter270,922Total$520,567 (10) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2019 2018Compensation, including bonuses, fringe benefits and payroll taxes$118,762 $133,758Accrued reimbursable expenses107,145 89,317Accrued data costs27,150 17,422Interest4,783 2,980Acquisition-related contingent consideration— 83,249Other44,865 42,751Total accrued expenses and other current liabilities$302,705 $369,47783Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(11) Debt The Company had the following debt outstanding as of December 31, 2019 and 2018 (in thousands): Interest rate as ofDecember 31, 2019 Principal amount Maturity Date December 31, 2019 December 31, 2018 Senior Secured Credit Facility: First Lien Term Loan 3.21% $1,000,000 $916,533 October 2024Revolver 3.21% 88,800 — October 2024Accounts receivable financing agreement 3.22% 170,000 170,000 May 2021Total debt 1,258,800 1,086,533 Less current portion of Revolver (1) (88,800) — Less current portion of long-term debt (25,000) — Total long-term debt 1,145,000 1,086,533 Less debt issuance costs (4,822) (4,149) Total long-term debt, net $1,140,178 $1,082,384 (1)The Company assesses its ability and intent to repay the outstanding borrowings on the Revolver at the end of each reporting period in order to determine the proper balance sheet classification. Outstanding borrowings on theRevolver that the Company intends to repay in less than 12 months are classified as current.As of December 31, 2019, the contractual maturities of the Company's debt obligations were as follows (in thousands):2020$25,0002021195,000202225,000202325,0002024 and thereafter$988,800Total$1,258,800The Company’s primary financing arrangements are its senior secured credit facility (the “Senior Secured Credit Facility”), which consists of a first lienterm loan (“First Lien Term Loan”) and a revolving credit facility (the “Revolver”), and its Accounts Receivable Financing Agreement.Senior Secured Credit Facility On September 3, 2019, the Company received the proceeds from a $300.0 million incremental term loan under the Senior Secured Credit Facility, or theIncremental Borrowing. The Incremental Borrowing was used to fund the share repurchase which is discussed further in "Note 12 - Stockholders' Equity." Inaccordance with the guidance in ASC 470-50, "Debt - Modifications and Extinguishments," the Incremental Borrowing was accounted for as a debt modification.The Incremental Borrowing resulted in a $1.9 million loss on modification of debt, which consisted of third-party fees associated with the transaction, and which isincluded in loss on modification or extinguishment of debt in the consolidated statements of operations for the year ended December 31, 2019.On October 28, 2019, the Company refinanced its Senior Secured Credit Facility. The refinancing increased the overall capacity of the Senior SecuredCredit Facility to $1.75 billion (consisting of a $1.0 billion First Lien Term Loan and a $750.0 million Revolver), extended the maturity date to October 2024, andre-priced at current rates. The proceeds from the Senior Secured Credit Facility were primarily used to repay the existing principal balance of the First Lien TermLoan. The Company incurred $6.6 million in fees related to this refinancing. In accordance with the guidance in ASC 470-50 the refinancing was accounted for asa partial debt extinguishment. This resulted in a $2.1 million loss on extinguishment of debt, consisting of $0.5 million write-off of unamortized debt issuance costsand $1.6 million of fees associated with the transaction, which is included in loss on modification or extinguishment of debt in the consolidated statements ofoperations for the year ended December 31, 2019.84Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Senior Secured Credit Facility also contains customary representations, warranties, affirmative covenants, and events of default. The variable interestrate is a rate equal to the London Interbank Offered Rate (“LIBOR”) or the adjusted base rate (“ABR”) at the election of the Company, plus a margin based on theratio of total indebtedness to EBITDA. The margin, which is based upon the Company's debt-to-EBITDA ratio, ranges from 1.0% to 2.0%, in the case of LIBORloans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of one-, two-, three- or six-month base interest rates. The credit agreementgoverning the Senior Secured Credit Facility includes provisions that allow the agreement to be amended to replace the LIBOR rate with a comparable orsuccessor floating rate.The First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installmentsbeginning on March 31, 2020 through September 30, 2024, with the remaining balance due at maturity. There are no voluntary prepayment penalties andprepayment is required upon the issuance of certain debt or asset sales or other events.The Revolver requires the Company to pay to lenders a commitment fee for unused commitments of 0.15% to 0.35% based on the Company’s debt-to-EBITDA ratio. Principal amounts outstanding are due and payable in full at maturity. The Revolver includes borrowing capacity available for letters of credit up to$25.0 million. As of December 31, 2019, the Company had $5.4 million in letters of credit outstanding, which are secured by the Revolver.As collateral for borrowings under the Senior Secured Credit Facility, the Company granted a pledge on primarily all of its assets, and the stock ofwholly‑owned U.S. restricted subsidiaries. The Company is also subject to certain financial covenants, which require the Company to maintain certaindebt‑to‑EBITDA and interest expense-to-EBITDA ratios. The Senior Secured Credit Facility also contain covenants that, among other things, restrict theCompany’s ability to create liens, make investments and acquisitions, incur or guarantee additional indebtedness, enter into mergers or consolidations and otherfundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinateddebt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensomeagreements with negative pledge clauses, and make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under theSenior Secured Credit Facility, subject to compliance with applicable law, as of December 31, 2019, all amounts in retained earnings were free of restriction andwere available for the payment of dividends. The Senior Secured Credit Facility also contains customary representations, warranties, affirmative covenants, andevents of default.Accounts Receivable Financing AgreementOn May 31, 2018, the Company amended its Accounts Receivable Financing Agreement. The amendment increased the agreement's borrowing capacityto $200.0 million, decreased the applicable margin from 1.60% to 1.25%, and extended the maturity date to May 31, 2021, unless terminated earlier pursuant to itsterms. As of December 31, 2019 and 2018, there was $30.0 million of remaining capacity available under the accounts receivable financing agreement.Loans under the Accounts Receivable Financing Agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Companymay prepay loans upon one business day prior notice and may terminate the Accounts Receivable Financing Agreement with 15 days’ prior notice.The Accounts Receivable Financing Agreement contains various customary representations and warranties and covenants, and default provisions whichprovide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to makepayments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables,and defaults under other material indebtedness.Fair Value of DebtThe estimated fair value of the Company’s debt was $1,255.8 million and $1,084.2 million at December 31, 2019 and 2018, respectively, and wasdetermined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company’s creditstanding and the Revolver is based on current borrowing rates.(12) Stockholders’ Equity85Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Authorized Shares The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to onehundred million shares of preferred stock, with a par value of $0.01.Secondary Offerings and Share Repurchase Program During 2019, 2018 and 2017, Kohlberg Kravis Roberts & Co. L.P., or KKR, and certain executive officers of the Company sold a total of 6,666,684,6,500,000 and 10,000,000 shares, respectively, of the Company’s common stock as part of secondary offerings. The Company incurred professional fees inconnection with the secondary offerings of $0.6 million, $0.5 million, and $1.0 million during years ended December 31, 2019, 2018 and 2017, respectively. Thefees are included in transaction-related costs in the accompanying consolidated statements of operations. As of December 31, 2019, KKR did not own any of theCompany’s outstanding common stock.On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing therepurchase of up to $500.0 million of the Company's common stock in open market purchase, privately-negotiated transactions, secondary offerings, block tradesor otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under theSecurities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amountof its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31,2021.Concurrent with the 2019 secondary offering, the Company repurchased from the underwriter, and subsequently retired, 3,079,765 shares at a price of$97.41 per share, for an aggregate purchase price of approximately $300.0 million.As of December 31, 2019, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the RepurchaseProgram. (13) Stock-Based Compensation Stock Option and RSA/RSU ActivityOn September 23, 2013 and in connection with the acquisition of the Company by KKR, the Board of Directors approved the formation of the 2013 StockIncentive Plan for Key Employees of Pinnacle Holdco Parent, Inc. and its subsidiaries, or the 2013 Plan. The 2013 Plan allowed for the issuance of stock optionsand other stock-based awards as permitted by applicable laws. The number of shares available for grant under the 2013 Plan was 12.5% of the outstanding sharesat closing on a fully diluted basis. The Company rolled over 2,052,909 stock options under the 2013 Plan. The fair value of the options that were rolled overequaled the fair value of the options in the predecessor company and, therefore, there was no additional stock-based compensation expense recorded. All stock options granted under the 2013 Plan were subject to transfer restrictions of the stock option’s underlying shares once vested and exercised. Thislack of marketability was included as a discount, calculated using the Finnerty Model, when determining the grant date value of these options. In conjunction withthe secondary offerings during 2018, 2017, and 2016, the transfer restrictions on such shares issuable upon exercise of vested options granted under the 2013 Planwere released. The release of the transfer restrictions was considered a modification under ASC 718, “Stock Compensation.” As a result of these modifications, theCompany incurred approximately $0.8 million, and $5.3 million of incremental compensation expense during the years ended December 31, 2018 and 2017,respectively, which is included in transaction-related costs in the accompanying consolidated statements of operations. On November 23, 2014 and in connection with the IPO, the Board of Directors approved the formation of the 2014 Omnibus Plan for Key Employees, orthe 2014 Plan. The 2014 Plan allowed for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-basedawards, and performance compensation awards as permitted by applicable laws.86Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The 2018 Stock Incentive Plan, or the 2018 Plan, was approved by stockholders at the annual meeting on May 31, 2018. The 2018 Plan allows for theissuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awardsas permitted by applicable laws. The 2018 Plan authorized the issuance of 2,000,000 shares of common stock plus all shares that remained available under the2014 Plan on May 31, 2018 (which included shares carried over from the 2013 Plan). Generally, the Company grants stock options with exercise prices equal to the fair market value of the Company’s common stock on the date of grant. Thestock option compensation cost calculated under the fair value approach is recognized on a pro-rata basis over the vesting period of the stock options which isbetween three years and five years. Most stock option grants are subject to graded vesting as services are rendered and have a contractual life of ten years. TheBoard and the Compensation Committee have the discretion to determine different vesting schedules. Aggregated information regarding the Company’s option plans is summarized below: Number ofOptions Wtd. AverageExercise Price Wtd. AverageRemainingContractual Life(in Years) Intrinsic Value(in millions)Outstanding at December 31, 20184,641,600 $62.29 7.8 $149.7Granted1,157,500 98.44 Exercised(652,769) 39.85 Expired/forfeited(284,725) 87.23 Outstanding at December 31, 20194,861,606 $72.45 7.5 $188.3Exercisable at December 31, 20191,846,731 $42.70 5.7 $126.4The weighted average fair value of options granted during the years ended December 31, 2019, 2018 and 2017 was $32.89, $34.08 and $25.24, respectively. Thetotal fair value of options vested during the years ended December 31, 2019, 2018 and 2017 was $22.8 million, $14.6 million and $5.2 million, respectively. Selected information regarding the Company’s stock options as of December 31, 2019 is as follows: Options Outstanding Options ExercisableExercise Price Number ofOptions Wtd. AverageRemaining Life(in Years) Wtd. AverageExercise Price Number ofOptions Wtd. AverageRemaining Life(in Years) Wtd. AverageExercise Price$2.94 - 35.50 1,059,531 4.1 $13.92 1,059,531 4.1 $13.92$37.83 - 75.81 1,304,125 7.4 $71.62 455,475 7.3 $69.79$75.89 - 95.94 1,265,275 9.1 $91.87 87,150 8.0 $81.56$96.00 - 116.11 1,232,675 8.7 $103.70 244,575 8.7 $103.04The Company’s RSAs/RSUs will settle in shares of the Company’s common stock on the applicable vesting date. Most RSAs/RSUs granted to employeesvest over two or three years. RSAs/RSUs granted to the Company's non-employee directors vest over one or two years. Activity related to the Company’s RSAs/RSUs in 2019 is as follows: Awards Wtd. AverageGrant-DateFair Value IntrinsicValue(millions)Unvested at December 31, 2018344,250 $81.39 $31.7Granted357,936 97.14 Forfeited(44,500) 82.09 Vested(25,250) 60.89 Unvested at December 31, 2019632,436 $91.07 $70.387Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)As of December 31, 2019, there was $113.7 million of unrecognized compensation cost related to unvested stock-based awards, which is expected to berecognized over a weighted average period of two years.Employee Stock Purchase Plan In April 2017, the Board of Directors approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by theCompany’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to beapplied toward the purchase of shares of the Company’s common stock on the last trading day of the offering period. Participating employees will purchase sharesof the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global SelectMarket (i) on the first trading day of the offering period or (ii) the last day of any offering period. The aggregate number of shares of the Company’s commonstock that may be issued under the ESPP may not exceed 3,000,000 shares and no one employee may purchase any shares under the ESPP having a collective fairmarket value greater than $25,000 in any one calendar year. Offering periods under the ESPP will generally be in six month increments with the administrator ofthe ESPP having the right to establish different offering periods. The Company's first offering period commenced on January 1, 2018 and the Company recognizedstock-based compensation expense of $4.0 million and $3.3 million associated with the ESPP during the years ended December 31, 2019 and 2018, respectively.As of December 31, 2019, there have been 301,975 shares issued and 2,698,025 shares reserved for future issuance under the ESPP.Stock-based Compensation ExpenseStock-based compensation expense related to employee stock plans is summarized below (in thousands): Years Ended December 31, 2019 2018 2017Direct costs$14,177 $9,508 $3,552Selling, general and administrative31,657 19,635 9,064Transaction-related costs— 773 5,294Total stock-based compensation expense$45,834 $29,916 $17,910 (14) Income Taxes The components of income before income taxes and equity in income of unconsolidated joint ventures are as follows (in thousands): Years Ended December 31, 2019 2018 2017Domestic$145,863 $45,672 $(52,083)Foreign160,064 175,875 126,630 $305,927 $221,547 $74,54788Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of the provision for (benefit from) income taxes were as follows (in thousands): Years Ended December 31, 2019 2018 2017Current: Federal$38,333 $14,793 $30,084State13,216 776 2,607Foreign35,166 39,998 30,601Total current income tax expense86,715 55,567 63,292Deferred: Federal(15,999) 14,224 (70,041)State(5,073) 1,403 (1,203)Foreign(2,835) (3,962) (4,671)Total deferred income tax (benefit) expense(23,907) 11,665 (75,915)Total income tax expense (benefit)$62,808 $67,232 $(12,623) Income taxes computed at the statutory U.S. federal income tax rate are reconciled to the provision for (benefit from) income taxes as follows: Years Ended December 31, 2019 2018 2017Statutory federal income tax rate21.0 % 21.0 % 35.0 %State income taxes, net of federal benefit1.6 % 0.8 % (5.5)%Impact of the U.S. Tax Cuts and Jobs Act of 2017: Rate change— % (5.2)% (56.0)% U.S. minimum tax on foreign entities1.6 % 3.3 % — % Base erosion anti-abuse tax— % 8.4 % — %Tax on foreign earnings: Foreign rate differential1.8 % 0.8 % (20.3)%Foreign earnings taxed in the U.S.(1.1)% 7.9 % 60.7 %Foreign dividends— % — % 5.2 %Research and development credits(1.5)% (2.6)% (3.3)%Stock-based compensation(1.2)% (9.6)% (39.9)%Nondeductible contingent consideration— % 3.1 % 35.4 %Valuation allowance(0.1)% 0.4 % (28.0)%Change in liability for uncertain tax positions(1.3)% 0.4 % (3.2)%Nondeductible expenses0.3 % 1.0 % 2.2 %Other(0.6)% 0.6 % 0.8 %Effective income tax rate20.5 % 30.3 % (16.9)%89Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Components of the deferred tax assets and liabilities were as follows (in thousands): December 31, 2019 2018Net operating loss carryforwards$9,544 $15,741Accruals and reserves10,043 13,496Equity based compensation15,004 8,821Operating lease liabilities35,683 —Prepaid expenses and other9,429 15,809Deferred and unbilled revenue64,033 55,771Tax credits2,231 2,645 145,967 112,283Valuation allowance(8,072) (9,824)Total deferred tax assets (net of valuation allowance)137,895 102,459Identified intangibles(156,321) (177,845)Operating lease right-of-use assets(29,440) —Depreciable, amortizable and other property(20,363) (16,372)Deferred tax liabilities(206,124) (194,217)Net deferred tax liability$(68,229) $(91,758)Long-term deferred tax asset$10,282 $8,954Long-term deferred tax liability$(78,511) $(100,712) The Company’s foreign subsidiaries are taxed separately in their respective jurisdictions. As of December 31, 2019, the Company has cumulative foreignnet operating loss carryforwards of approximately $8.5 million. In addition, the Company has federal net operating loss carryforwards of approximately $5.2million and state net operating loss carryforwards of approximately $225.8 million. The carryforward periods for the Company’s net operating losses vary from four years to an indefinite number of years depending on the jurisdiction. TheCompany’s ability to offset future taxable income with net operating loss carryforwards may be limited in certain instances, including changes in ownership. On December 22, 2017, the U.S. Tax Cuts and Jobs Act ("the Act") was signed into U.S. law making significant changes to the Internal Revenue Code.Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition ofU.S international taxation of worldwide income to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreignearnings as of December 31, 2017. Additionally, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situationswhen a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete theaccounting for certain income tax effects of the Act.The Company calculated its best estimate of the impact of the Act in its year-end income tax provision and recorded $0.2 million as additional incometax expense in the fourth quarter of 2017, the period in which the legislation was enacted. This provisional amount related to the remeasurement of certain deferredtax assets, deferred tax liabilities, and U.S. uncertain tax positions, based on the rates at which they are expected to reverse in the future, was a benefit of $41.7million. The provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings was $77.6 million based oncumulative foreign earnings of $392.5 million. The Company also recorded a provisional tax benefit of $35.7 million related to the utilization of foreign tax creditsagainst the one-time transition tax. In addition, the Company has recorded a valuation allowance against an estimated $12.8 million of excess foreign tax creditsrelated to the transition tax inclusion.During the year ended December 31, 2018, the Company completed its analysis of the impact of the Act which resulted in an additional tax benefit of$0.6 million in the fourth quarter of 2018 and a total tax provision of $3.0 million related to the impact of the Act for the year ended December 31, 2018. The totaltax provision included a $14.5 million provision related to adjustments to the transition tax and a $11.5 million benefit related to the remeasurement of certaindeferred tax90Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)assets and liabilities. Additionally, the Company has elected to treat any potential Global Intangible Low-taxed Income ("GILTI") inclusions as a period cost.The application of the Act and the related regulations is complex and requires significant judgment, particularly with respect to the GILTI and the baseerosion and anti-abuse tax (“BEAT”) provisions. If the structure of the Company’s arrangements changes or new regulations are issued that clarify or change theapplication of these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision.The Company also has state income tax credit carryforwards available to potentially offset future state income tax of $2.2 million. The state credits beginexpiring in 2022. The Company has a $1.6 million valuation allowance against the benefits of these credits. In determining the extent to which a valuation allowance for deferred tax assets is required, the Company evaluates all available evidence includingprojections of future taxable income, carry-back opportunities, reversal of certain deferred tax liabilities, and other tax‑planning strategies. The valuationallowance at December 31, 2019 relates to certain foreign net operating losses, certain foreign deferred tax assets, certain state net operating losses and state taxcredit carryforwards.A reconciliation of the beginning and ending amount of gross unrecognized income tax benefits is presented below (in thousands): Years Ended December 31, 2019 2018 2017Beginning balance$12,891 $7,911 $12,432Additions based on tax positions related to current year1,609 764 1,641Additions for income tax positions of prior years16,704 1,065 400Impact of changes in exchange rates(9) (58) 427Impact of change in federal tax rate— 4,236 (3,536)Settlements with tax authorities(118) (180) (108)Reductions for income tax positions for prior years(356) (456) (3,174)Reductions due to lapse of applicable statute of limitations(363) (391) (171)Ending balance$30,358 $12,891 $7,911 As of December 31, 2019, 2018, and 2017, the total gross unrecognized tax benefits were $30.4 million, $12.9 million, and $7.9 million, respectively.During the year ended December 31, 2019, the liability for uncertain tax positions increased by $17.5 million of which $16.5 million had no impact on income taxexpense for the year ended December 31, 2019 as it was previously accrued. As of December 31, 2019, the total amount of gross unrecognized tax benefits which,if recognized, would impact the Company’s effective tax rate is $30.4 million. The Company anticipates changes in total unrecognized tax benefits due to theexpiration of statute of limitations within the next 12 months. Specifically, adjustments related to certain foreign tax exposures are expected to be resolved invarious jurisdictions. A reasonable estimate of the change in the total gross unrecognized tax benefit expected to be recognized as a result is $0.5 million as of thebalance sheet date. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of income taxexpense. The Company recorded an increase of $2.2 million, an increase of $0.6 million, and a decrease of $0.8 million during the years ended December 31,2019, 2018 and 2017, respectively. As of December 31, 2019, the Company has a total of $4.4 million recognized on uncertain tax positions. To the extent interestand penalties are not incurred with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction in income tax expense. The Company has analyzed filing positions in all of the significant federal, state and foreign jurisdictions where the Company is required to file incometax returns. The only periods subject to examination by the major tax jurisdictions where the Company does business are the 2010 through 2018 tax years.As of December 31, 2019, the Company has accumulated undistributed earnings generated by our foreign subsidiaries of approximately $692.2 million.Because $363.4 million of such earnings have previously been subject to the one-time91Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)transition tax on foreign earnings required by the 2017 Tax Act, 2018 and 2019 earnings were subject to GILTI inclusion, any additional taxes due with respect tosuch earnings or the excess of the amount for financial reporting over the tax basis of the Company's foreign investments would generally be limited to foreignwithholding taxes and state taxes and it is not practicable to calculate the deferred tax liability. The Company intends to indefinitely reinvest these earnings. A rollforward of the deferred tax asset valuation allowance accounts is as follows (in thousands): Years Ended December 31, 2019 2018 2017Beginning balance$9,824 $25,226 $21,689Additions - excess benefit offset to NOL change— — 12,623Additions - purchase accounting— — 219Additions - charged to expense153 1,428 12,863Additions - U.S. federal tax rate change— — 1,330Deductions - charged to expense (including translation adjustments)(1,905) (16,830) (23,498)Ending balance$8,072 $9,824 $25,226 The valuation allowance at December 31, 2019 is primarily related to state loss carryforwards, state credit carryforwards, certain foreign deferred taxassets, and loss carryforwards in various foreign jurisdictions. (15) Commitments and Contingencies Employment Agreements The Company has entered into employment and non‑compete agreements with certain management employees. In the event of termination of employmentfor certain instances, employees will receive severance payments for base salary and benefits for a specified period (six months for vice presidents, nine months forsenior vice presidents and 12 months for executive vice presidents, the president and chief executive officer). Each employment agreement also contains provisionsthat restrict the employee’s ability to compete directly with the Company for a comparable period after employment terminates. In addition, stock option grantagreements for these employees provide the Company with the right to repurchase from the employee, or the employee with the right to sell to the Company, stockowned by the employee in certain limited instances of termination. Legal Proceedings The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related toother business transactions. Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverseeffect on the financial condition or results of future operations of the Company. The Company is currently a party to litigation with the City of Sao Paulo, Brazil. The dispute relates to whether the export of services provided by theCompany is subject to a local tax on services. The Company has not recorded a liability associated with the claim, which totaled $5.2 million at December 31,2019, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $5.2 million has been made to theBrazilian court in order to annul the potential tax obligation and to avoid the accrual of additional interest and penalties. This balance is recorded in other assets onthe consolidated balance sheets. In June 2015, the Judiciary Court of Justice of the State of Sao Paulo ruled in the favor of the Company; however, the judgmentwas appealed by the City of Sao Paulo. The Company expects to recover the full amount of the deposit when the case is settled. In September 2017, a judge fromthe Superior Court of Justice of Brazil denied relief to the City of Sao Paulo's appeal and upheld the lower court's ruling in the favor of the Company for the years2005 to 2012, and in the period from January to October 2013. The judge from the Superior Court of Justice of Brazil also ruled that the Company must appeal thelower court's verdict for October 2013 and the subsequent periods as the Judiciary Court of Justice of the State of Sao Paulo only reviewed the facts that pertainedto the period before October 2013. Insurance92Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company currently maintains insurance for risks associated with the operation of its business, provision of professional services, and ownership ofproperty. These policies provide coverage for a variety of potential losses, including, without limitation, loss or damage to property, bodily injury, generalcommercial liability, professional errors and omissions, and medical malpractice. The Company’s retentions and deductibles associated with these insurance policies range up to a maximum of $1.0 million. Employee Health Insurance The Company is self‑insured for health insurance for employees within the United States. The Company maintains stop‑loss insurance on a “claimsmade” basis for expenses in excess of $0.3 million per member per year. As of December 31, 2019 and 2018, the Company maintained a reserve of approximately$5.5 million and $5.1 million, respectively, included in accrued expense and other current liabilities on the consolidated balance sheets, to cover open claims andestimated claims incurred but not reported. (16) Employee Benefit Plans Defined contribution or profit sharing style plans are offered in Australia, Belgium, Germany, Hong Kong, India, Israel, Japan, the Netherlands, NewZealand, the Philippines, South Africa, Spain, Sweden, Thailand, and the United Kingdom. In some cases, these plans are required by local laws or regulations. The Company maintains 401(k) plans in the United States, which cover substantially all employees of its U.S. subsidiaries. The Company matchesparticipant's contributions at varying amounts, subject to a maximum contribution of 6% of the participant's compensation. The employer contributions to the401(k) plans were approximately $14.3 million, $13.6 million and $11.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.As a result of the Takeda transactions during 2017, the Company maintains a defined benefit pension plan sponsored by a TDS subsidiary in Germany.The unfunded status of the plan in Germany, which covers eight employees, totaled $1.0 million and $0.9 million at December 31, 2019 and 2018, respectively,and was recorded in other long-term liabilities on the consolidated balance sheets.The TDC joint venture also maintained a defined benefit pension plan in Japan. The funded status of this plan, which covered approximately 106employees, totaled $0.8 million at December 31, 2018, and was recorded in other assets on the consolidated balance sheets. When the TDC joint venture wasdissolved on May 31, 2019, this pension plan was frozen and all assets and obligations associated with the plan were transferred to Takeda.Additional disclosures regarding these defined benefit pension plans have been excluded due to their immateriality.(17) Derivatives The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by usingderivative instruments is interest rate risk. Accordingly, the Company has instituted interest rate hedging programs that are accounted for in accordance with ASC815, “Derivatives and Hedging.” The interest rate hedging program is a cash flow hedge program designed to minimize interest rate volatility. The Company swapsthe difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. TheCompany also employed an interest rate cap that would have compensated the Company if variable interest rates had risen above a pre-determined rate. TheCompany’s interest rate contracts are designated as hedging instruments. As of December 31, 2019, the Company had two interest rate swaps outstanding. The first interest rate swap has an aggregate notional amount of $375.0million and a fixed payment rate of 2.2% offsetting a one-month LIBOR variable rate with a maturity date of December 6, 2020. The second interest rate swap hasan aggregate notional amount of $250.0 million and a fixed payment rate of 2.3% offsetting a one-month LIBOR variable rate with a maturity date of September 6,2020. 93Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The following table presents the notional amounts and fair values (determined using level 2 inputs) of the Company’s derivatives as of December 31,2019 and 2018 (in thousands): Balance SheetClassification December 31, 2019 December 31, 2018 Notional amount Asset/(Liability) Notional amount Asset/(Liability)Derivatives in an asset position:Other assets $625,000 $3,318Derivatives in a liability position:Accrued expenses and othercurrent liabilities$625,000 $(2,976) The Company records any change in the fair value of derivatives designated as hedging instruments under ASC 815 to other accumulated othercomprehensive loss in the consolidated balance sheets, net of deferred taxes, and will later reclassify into earnings when the hedged item affects earnings or is nolonger expected to occur. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives arerecognized in earnings each period. In the third quarter of 2015, the Company paid $32.9 million to terminate the interest rate swap agreements it entered into during October 2013. Amountsprevious recorded in accumulated other comprehensive loss related to these interest rate swaps, totaling $29.6 million on the termination date, are beingreclassified into earnings over the term of the previously hedged borrowing using the swaplet method. For the terminated swaps, the Company reclassified $6.5million, $6.8 million, and $6.3 million previously recorded in accumulated other comprehensive loss into interest expense during the years ended December 31,2019, 2018, and 2017, respectively. The closing of the refinancing of the Senior Secured Credit Facility in October 2019 did not impact the amortization of lossesfrozen in accumulated other comprehensive loss associated with the terminated swaps. The table below presents the effect of the Company's derivatives on the consolidated statements of operations and comprehensive income (in thousands): Years Ended December 31,Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts)2019 2018 2017Amount of pre-tax (loss) gain recognized in other comprehensive income on derivatives$(5,928) $3,159 $245Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives(6,173) (6,477) (6,855) The Company expects that $7.5 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense,net over the next 12 months.The following table presents the effect of cash flow hedge accounting on the consolidated statements of operations (in thousands): Years Ended December 31, 2019 2018 2017Interest expense, net $(51,987) $(57,399) (46,729)Loss on cash flow hedging relationships in Subtopic 815-20 (interestcontracts): Loss reclassified from accumulated other comprehensive loss intointerest expense, net (6,173) (6,477) (6,855)(18) Accumulated Other Comprehensive Loss The following table presents a summary of the components of accumulated other comprehensive loss (in thousands): 94Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ForeignCurrencyTranslation DerivativeInstruments TotalBalance at December 31, 2016$(201,091) $(23,595) $(224,686)Other comprehensive income before reclassifications, net of tax83,911 149 84,060Reclassification adjustments, net of tax— 4,156 4,156Balance at December 31, 2017(117,180) (19,290) (136,470)Other comprehensive (loss) income before reclassifications, net of tax(41,169) 2,152 (39,017)Reclassification adjustments, net of tax— 4,828 4,828Balance at December 31, 2018(158,349) (12,310) (170,659)Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated othercomprehensive income— 1,419 1,419Balance at January 1, 2019(158,349) (10,891) (169,240)Other comprehensive income (loss) before reclassifications, net of tax9,007 (3,031) 5,976Reclassification adjustments, net of tax— 3,156 3,156Balance at December 31, 2019$(149,342) $(10,766) $(160,108) Foreign Currency TranslationThe change in the foreign currency translation adjustment during the year ended December 31, 2019 was primarily due to the movements in the Britishpound, or GBP, Euro, or EUR, Canadian dollar, or CAD, and Russian ruble, or RUB, exchange rates against the U.S. dollar, or USD. The USD strengthened by3.5%, 4.7% and 12.0% versus the GBP, CAD and RUB, respectively, during the year ended December 31, 2019, and the USD depreciated by 2.0% versus theEUR, respectively, during the same period. The movement in the GBP, CAD and RUB represented $11.8 million, $1.9 million and $3.0 million, respectively, ofthe $9.0 million income recorded to accumulated other comprehensive loss during the year ended December 31, 2019. The overall change was partially offset bylosses in the EUR, representing $6.1 million of the adjustment, respectively.The change in the foreign currency translation adjustment during the year ended December 31, 2018 was primarily due to the movements in the GBP,EUR, CAD, and RUB exchange rates against the USD. The USD strengthened by 5.6%, 4.5%, 7.9% and 17.1% versus the GBP, EUR, CAD and RUB respectively,during the year ended December 31, 2018. The movement in the GBP, EUR, CAD and RUB represented $12.4 million, $15.2 million, $3.2 million and $4.6million, respectively, of the $41.2 million loss recorded to accumulated other comprehensive loss during the year ended December 31, 2018.The change in the foreign currency translation adjustment during the year ended December 31, 2017 was primarily due to the movements in the GBP,EUR, CAD, and RUB exchange rates against the USD. The USD depreciated by 9.3%, 13.7%, 7.1%, and 6.2% versus the GBP, EUR, CAD, and RUB respectively,during the year ended December 31, 2017. The movement in the GBP, EUR, CAD, and RUB represented $46.0 million, $31.0 million, $3.5 million, and $1.9million respectively, of the $83.9 million income recorded to accumulated other comprehensive loss during the year ended December 31, 2017.Accumulated earnings of the Company’s U.K. subsidiary totaling $375.4 million have been previously taxed in the U.S. or were deemed to have beenrepatriated as part of the one-time transition tax under the Act enacted December 22, 2017. The Company has deemed a corresponding amount of intercompanyaccounts between its U.S. and U.K. subsidiaries to be of a long-term investment nature; these balances have been remeasured to foreign currency translationadjustment during the year ended December 31, 2019. Derivative Instruments See Note 17 for further information on changes to accumulated other comprehensive loss related to the derivative instruments. (19) Net Income Per Share 95Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicableperiod. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentiallydilutive common shares, which in the Company’s case, includes shares issuable under the stock option and incentive award plan.The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): Years Ended December 31, 2019 2018 2017Basic weighted average common shares outstanding64,506 64,123 62,437Effect of dilutive stock options and RSAs/RSUs1,498 2,218 3,336Diluted weighted average common shares outstanding66,004 66,341 65,773Anti-dilutive shares1,998 1,620 741 The anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming theexercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, andunrecognized compensation expense for outstanding awards. (20) Supplemental Cash Flow Information The following table presents the Company’s supplemental cash flow information (in thousands): Years Ended December 31, 2019 2018 2017Cash paid during the period for: Income taxes, net of refunds$111,283 $43,127 $47,829Interest42,198 48,911 48,330Non-cash investing and financing activities: Issuance of common stock for the acquisition of Value Health Solutions, Inc.— — 369Accrued fixed assets purchases9,767 10,312 3,962Cashless exercises of stock options— 12,390 13,252The acquisition date fair value of contingent consideration liabilities recorded during the year ended December 31, 2017 totaled $155.8 million. Refer toNote 3 - Significant Accounting Polices and Note 5 - Business Combinations.Supplemental cash flow disclosures related to the adoption of ASC 842 are included in Note 8 - Leases.(21) Operations by Geographic Area The table below presents certain enterprise‑wide information about the Company’s operations by geographic area for the years ended December 31, 2019,2018 and 2017. The Company attributes revenues to geographical locations based upon where the services are performed. The Company’s operations within each geographical region are further broken down to show each country which accounts for 10% or more of the totals(in thousands):96Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Years Ended December 31, 20192018Revenue: Americas: United States$2,082,204$1,962,509Other48,67047,116Americas2,130,8742,009,625Europe, Africa, and Asia-Pacific United Kingdom758,432689,345Netherlands113,029115,778Other63,92757,174Europe, Africa, and Asia-Pacific935,388862,297Total revenue$3,066,262$2,871,922 Year Ended December 31, 2017Service Revenue (1): Americas: United States$1,310,772Other42,227Americas1,352,999Europe, Africa, and Asia-Pacific United Kingdom479,623Netherlands79,555Other36,197Europe, Africa, and Asia-Pacific595,375Total service revenue1,948,374Reimbursement revenues311,015Total revenue$2,259,389(1) As noted in Note 3, the Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. Comparative prior period amounts continue tobe reported under the accounting standards in effect for the period presented. December 31, 2019 2018Long-lived assets (2): Americas: United States$220,167 $118,860Other6,944 950Americas227,111 119,810Europe, Africa, and Asia-Pacific United Kingdom21,872 4,153Netherlands41,527 18,321Other76,549 12,480Europe, Africa, and Asia-Pacific139,948 34,954Total long-lived assets$367,059 $154,76497Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(2) As noted in Note 3, the Company adopted ASC 842 on January 1, 2019 and has elected to use the effective date as the date of initial application ontransition. Comparative prior period amounts continue to be reported under the accounting standards in effect for the period presented. (22) SegmentsThe Company is managed through two reportable segments, (i) Clinical Research and (ii) Data Solutions. In accordance with the provisions of ASC 280,"Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to makedecisions about allocating resources and assessing performance for the entire company.•Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research andclinical trial related services.•Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily tothe Company’s life science clients.The Company's chief operating decision maker uses segment profit as the primary measure of each segment's operating results in order to allocateresources and in assessing the Company's performance. Asset information by segment is not presented, as this measure is not used by the chief operating decisionmaker to assess the Company's performance. The Company’s reportable segment information is presented below (in thousands):98Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Years Ended December 31, 2019 2018 2017Revenue: Clinical Research$2,812,969 $2,622,409 $2,168,891Data Solutions253,293 249,513 90,498Total revenue3,066,262 2,871,922 2,259,389Direct costs (exclusive of depreciation and amortization): Clinical Research1,366,066 1,334,803 1,231,690Data Solutions173,475 165,423 52,178Total direct costs (exclusive of depreciation and amortization)1,539,541 1,500,226 1,283,868Reimbursable expenses: Clinical Research650,080 570,405 311,015Data Solutions— — —Total reimbursable expenses650,080 570,405 311,015Segment profit: Clinical Research796,823 717,201 626,186Data Solutions79,818 84,090 38,320Total segment profit$876,641 $801,291 $664,506Less expenses not allocated to segments: Selling, general and administrative expenses394,925 371,795 321,987Transaction-related costs1,835 35,817 87,709Depreciation and amortization expense114,898 112,247 78,227Loss on disposal of fixed assets, net1,058 120 358Consolidated income from operations363,925 281,312 176,225Interest expense, net(51,987) (57,399) (46,729)Loss on modification or extinguishment of debt(3,928) (952) (15,023)Foreign currency losses, net(2,257) (1,043) (39,622)Other income (expense), net174 (371) (304)Consolidated income before income taxes and equity in income ofunconsolidated joint ventures$305,927 $221,547 $74,54799Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(23) Quarterly Financial Data (unaudited) The following table summarizes the Company’s unaudited quarterly results of operations (in thousands, except per share data: 2019 First Quarter Second Quarter Third Quarter Fourth QuarterRevenue$722,022 $763,309 $780,691 $800,240Income from operations78,723 88,013 95,788 101,401Provision for income taxes28,138 24,804 3,375 6,491Income before equity in gains of unconsolidated joint ventures44,256 41,055 83,007 74,801Equity in income of unconsolidated joint ventures— — — —Net income44,256 41,055 83,007 74,801Net (income) loss attributable to non-controlling interests(172) 73 — —Net income attributable to PRA Health Sciences, Inc.44,084 41,128 83,007 74,801Comprehensive income43,827 39,820 56,384 112,296Comprehensive income attributable to noncontrolling interest(127) (48) — —Comprehensive income attributable to PRA Health Sciences, Inc.$43,700 $39,772 $56,384 $112,296Basic earnings per share (1)$0.68 $0.63 $1.28 $1.19Diluted earnings per share (1)$0.66 $0.62 $1.25 $1.16 2018 First Quarter Second Quarter Third Quarter Fourth QuarterRevenue$701,837 $722,841 $717,596 $729,648Income from operations (2)71,948 73,796 38,812 96,756Provision for income taxes17,654 17,490 20,248 11,840Income before equity in gains of unconsolidated joint ventures39,187 42,236 1,810 71,082Equity in income of unconsolidated joint ventures28 46 44 25Net income39,215 42,282 1,854 71,107Net (income) loss attributable to non-controlling interests(234) (305) (359) 345Net income attributable to PRA Health Sciences, Inc.38,981 41,977 1,495 71,452Comprehensive income (loss)61,294 8,185 (31) 50,948Comprehensive (income) loss attributable to noncontrolling interest(582) (48) (193) 143Comprehensive income (loss) attributable to PRA Health Sciences, Inc.$60,712 $8,137 $(224) $51,091Basic earnings per share (1)$0.61 $0.66 $0.02 $1.10Diluted earnings per share (1)$0.59 $0.64 $0.02 $1.07(1)The sum of the quarterly per share amounts may not equal per share amounts reported for year‑to‑date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for eachperiod.(2)During the three months ended September 30, 2018, the Company recorded $42.6 million of transaction-related costs associated with the change in fair value of contingent consideration. During the three months ended March 31,2018, the Company recorded an $11.6 million reduction to transaction-related costs associated with the change in fair value of contingent consideration.100Table of ContentsPRA HEALTH SCIENCES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)(24) Subsequent EventsIn January 2020, the Company acquired Care Innovations, Inc., an entity that provides digital health services, for approximately $165 million andadditional earn-out payments of up to $50 million contingent on the achievement of certain financial targets. The Company financed the initial payment from cashon hand and the Revolver.101Table of ContentsItem 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures As of December 31, 2019, we carried out an evaluation under the supervision and with the participation of our management, including our principalexecutive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Regulations under theExchange Act require public companies, including us, to maintain “disclosure controls and procedures,” which are defined in Rule 13a‑15(e) and Rule 15d‑15(e) ofthe Exchange Act to mean a company’s controls and other procedures that provide reasonable assurance that information required to be disclosed in reports that itfiles or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and thatsuch information is accumulated and communicated to management, including our principal executive officer and principal financial officer, or personsperforming similar functions, as appropriate to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness of anysystem of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon ourevaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of theperiod covered by this report to accomplish their objectives at a reasonable assurance level. Management’s Report on Internal Control Over Financial Reporting Our management’s report on internal control over financial reporting is set forth in Part II, Item 8 of this Annual Report on Form 10-K and isincorporated herein by reference. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting during the quarter ended December 31, 2019 that has materially affected, or isreasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None.PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item will be included in our definitive proxy statement (or the “2020 Proxy Statement”) to be filed with the SEC within120 days of the end of our fiscal year covered by this Annual Report and is incorporated herein by reference. Item 11. Executive Compensation The information required by this item will be included in our 2020 Proxy Statement to be filed with the SEC within 120 days of the end of our fiscal yearcovered by this Annual Report and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be included in our 2020 Proxy Statement to be filed with the SEC within 120 days of the end of our fiscal yearcovered by this Annual Report and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item will be included in our 2020 Proxy Statement to be filed with the SEC within 120 days of the end of our fiscal yearcovered by this Annual Report and is incorporated herein by reference.102Table of Contents Item 14. Principal Accountant Fees and Services The information required by this item will be included in our 2020 Proxy Statement to be filed with the SEC within 120 days of the end of our fiscal yearcovered by this Annual Report and is incorporated herein by reference. PART IV Item 15. Exhibits, Financial Statement Schedules(1) Financial Statements The following financial statements and supplementary data are included in Item 8 of this annual report: PageReports of Independent Registered Public Accounting Firm 54Consolidated Balance Sheets 57Consolidated Statements of Operations 58Consolidated Statements of Comprehensive Income 59Consolidated Statements of Changes in Stockholders’ Equity 60Consolidated Statements of Cash Flows 61Notes to Consolidated Financial Statements 62(2) Financial Statement Schedules The information required to be submitted in the Financial Statement Schedules for PRA Health Sciences, Inc. and subsidiaries has either been shown inthe financial statements or notes, or is not applicable or required under Regulation S‑X; therefore, those schedules have been omitted.(3) Exhibits The exhibits listed in the accompanying Exhibit Index following the signature page are filed or furnished as a part of this report and are incorporatedherein by reference.Item 16. Form 10-K Summary None.103Table of ContentsEXHIBIT INDEX ExhibitNumber Description of Exhibit3.1 Amended and Restated Certificate of Incorporation of PRA Health Sciences, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’sCurrent Report on Form 8‑K filed on November 18, 2014 (No. 001‑36732))3.2 Amended and Restated Bylaws of PRA Health Sciences, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report onForm 8‑K filed on November 18, 2014 (No. 001‑36732))4.1* Description of Securities Registered Pursuant to Section 12(b) of the Exchange Act10.1 ** PRA Health Sciences, Inc., Amended and Restated 2017 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to theRegistrant's Annual Report on Form 10-K for the year ended December 31, 2018)10.2** PRA Health Sciences, Inc. 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-Kfiled on May 31, 2018 (No. 001-36732))10.3** 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8‑K filed on November 18,2014 (No. 001‑36732))10.4** PRA Global Holdings, Inc. 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement onForm S‑1 (No. 333‑198644))10.5** PRA Holdings, Inc. 2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S‑1(No. 333‑198644))10.6** Form of Stock Option Agreement (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S‑1(No. 333‑198644))10.7** Form of Rollover Option Agreement (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S‑1(No. 333‑198644))10.8** Employment Agreement, effective August 16, 2018, between PRA Health Sciences, Inc. and Colin Shannon (incorporated by reference toExhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 20, 2018 (No. 001-36732))10.9** Employment Agreement, effective April 27, 2018, between PRA Health Sciences, Inc. and Michael J. Bonello (incorporated by reference toExhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 1, 2018 (No. 001-36732))10.10** Restricted Stock Grant Notice and Restricted Stock Agreement under the PRA Health Sciences, Inc. 2014 Omnibus Incentive Plan between PRAHealth Sciences, Inc. and Michael J. Bonello, dated April 27, 2018 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Reporton Form 8-K filed on May 1, 2018 (No. 001-36732)).10.11** Amendment to Employment Agreement, effective October 31, 2018, between PRA Health Sciences, Inc. and Michael J. Bonello (incorporated byreference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2018)10.12 Credit Agreement, dated as of October 28, 2019, by and among Pharmaceutical Research Associates, Inc., PRA Health Sciences, Inc., PNC Bank,National Association, as administrative agent and other agents and lenders party thereto. (incorporated by reference to Exhibit 10.1 to theRegistrant’s Current Report on Form 8-K dated October 30, 2019)10.13 Security Agreement, dated as of October 28, 2019, by and among Pharmaceutical Research Associates, Inc., PRA Health Sciences, Inc., each ofthe subsidiaries from time to time party thereto and PNC Bank, National Association (incorporated by reference to Exhibit 10.2 to theRegistrant’s Current Report on Form 8-K dated October 30, 2019)10.14 Guarantee Agreement, dated as of October 28, 2019, by and among the guarantors from time to time party thereto in favor of PNC Bank, NationalAssociation, as collateral agent (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated October 30,2019)10.15** Form of Non‑Qualified Stock Option Agreement under the PRA Holdings, Inc. 2007 Equity Incentive Plan (incorporated by reference toExhibit 10.22 to the Registrant’s Registration Statement on Form S‑1 (No. 333‑198644))10.16** Form of Non‑Qualified Stock Option Agreement (Time‑Based Vesting) under the PRA Holdings, Inc. 2007 Equity Incentive Plan (incorporatedby reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S‑1 (No. 333‑198644))10.17** Form of Non‑Qualified Stock Option Agreement (Performance‑Based Vesting) under the PRA Holdings, Inc. 2007 Equity Incentive Plan(incorporated by reference to Exhibit 10.24 to the Registrant’s Registration Statement on Form S‑1 (No. 333‑198644))104Table of Contents10.18** Form of Option Agreement of PRA International (incorporated by reference to Exhibit 10.25 to the Registrant’s Registration Statement onForm S‑1 (No. 333‑198644))10.19** Form of Restricted Stock Grant Notice under the PRA Health Sciences, Inc. 2014 Omnibus Incentive Plan (incorporated by reference toExhibit 10.27 to the Registrant’s Registration Statement on Form S‑1 (No. 333‑198644))10.20** Form of Option Grant Notice under the PRA Health Sciences, Inc. 2014 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.1 to theRegistrant's Current Report the Form 8-K filed on September 5, 2017).10.21* ** Form of Option Grant Notice and Option Agreement under the PRA Health Sciences, Inc. 2018 Stock Incentive Plan.10.22* ** Form of Restricted Stock Grant Notice and Restricted Stock Agreement under the PRA Health Sciences, Inc. 2018 Stock Incentive Plan.10.23 Receivables Financing Agreement, dated as of March 22, 2016, by and among PRA Holdings, Inc., PNC Bank, National Association, asadministrative agent, and other agents and lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report onForm 8‑K filed on March 25, 2016 (No. 001‑36732))10.24 Purchase and Sale Agreement, dated as of March 22, 2016, by and among PRA Holdings, Inc., PNC Bank, National Association, asadministrative agent, and other agents and lenders party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report onForm 8‑K filed on March 25, 2016 (No. 001‑36732))10.25 Joinder and First Amendment to the Receivables Financing Agreement between PRA Receivables LLC, PRA Holdings, Inc. the Toronto-Dominion Bank and PNC Bank, National Association, dated as of May 31, 2018. (incorporated by reference to Exhibit 10.1 to the Registrant'sCurrent Report on Form 8-K filed on June 5, 2018 (No. 001-36732))21.1* Subsidiaries of the Registrant23.1* Consent of Deloitte & Touche LLP24.1* Power of Attorney (included on the signature page to this Annual Report on Form 10-K for the year ended December 31, 201931.1* Certification of the Chief Executive Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of the Securities Exchange Act of 1934, as adopted pursuantto Section 302 of the Sarbanes‑Oxley Act of 200231.2* Certification of the Chief Financial Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of the Securities Exchange Act of 1934, as adopted pursuantto Section 302 of the Sarbanes‑Oxley Act of 200232.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of200232.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of2002101* The following financial information from PRA Health Sciences, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019formatted in XBRL: (i) Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018, (ii) Consolidated Statements ofOperations for the years ended December 31, 2019, 2018 and 2017, (iii) Consolidated Statements of Comprehensive Income for the years endedDecember 31, 2019, 2018 and 2017, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, and(v) Notes to Consolidated Financial Statements104* Cover page from PRA Health Sciences, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted iXBRL andcontained in Exhibit 101. * Filed herewith. ** This document has been identified as a management contract or compensatory plan or arrangement.SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf on February 21, 2020 by the undersigned, thereunto duly authorized. PRA Health Sciences, Inc. By:/s/ Michael J. Bonello Name:Michael J. Bonello Title:Executive Vice President and Chief Financial Officer105Table of Contents POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENT that the undersigned officers and directors of PRA Health Sciences, Inc. do hereby constitute andappoint Colin Shannon and Michael J. Bonello, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution andresubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto saidattorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done inconnection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-factand agents, or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant andin the capacities on the dates indicated. Signature Capacity Date /s/ Colin Shannon President, Chief Executive Officer and Chairman of the Board ofDirectors (Principal Executive Officer) February 21, 2020Colin Shannon /s/ Michael J. Bonello Executive Vice President and Chief Financial Officer (PrincipalFinancial and Accounting Officer) February 21, 2020Michael J. Bonello /s/ Jeffrey T. Barber Director February 21, 2020Jeffrey T. Barber /s/ James C. Momtazee Director February 21, 2020James C. Momtazee /s/ Matthew P. Young Director February 21, 2020Matthew P. Young /s/ Linda S. Grais Director February 21, 2020Linda S. Grais /s/ Alexander G. Dickinson Director February 21, 2020Alexander G. Dickinson 106DESCRIPTION OF SECURITIESREGISTERED PURSUANT TO SECTION 12 OFTHE SECURITIES EXCHANGE ACT OF 1934The following summary describes our common stock, par value $0.01 per share, of PRA Health Sciences, Inc. (“us,” “we,” “our,” andthe “Company”), which are the only securities of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934, asamended.DESCRIPTION OF COMMON STOCKThe following summary describes the material terms of our common stock and is not complete. This summary is qualified in its entiretyby reference to the General Corporation Law of the State of Delaware (the “DGCL”), our amended and restated certificate of incorporation,and our amended and restated bylaws. For a complete description of our common stock, we refer you to our amended and restated certificateof incorporation and amended and restated bylaws, which have been filed with the SEC and are incorporated by reference as exhibits to thisAnnual Report on Form 10-K.Voting Rights— Holders of our common stock are entitled to one vote for each share held of record on all matters to which stockholdersare entitled to vote generally, including the election or removal of directors. The holders of our common stock do not have cumulative votingrights in the election of directors. Dividends— The DGCL permits a corporation to declare and pay dividends out of "surplus" or, if there is no "surplus," out of its netprofits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. "Surplus" is defined as the excess of the netassets of the corporation over the amount determined to be the capital of the corporation by the board of directors. The capital of thecorporation is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assetsequals the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits if,after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference uponthe distribution of assets. Declaration and payment of any dividend will be subject to the discretion of our board of directors. The time and amount of dividendswill be dependent upon our financial condition, operations, cash requirements and availability, debt repayment obligations, capitalexpenditure needs and restrictions in our debt instruments, industry trends, the provisions of Delaware law affecting the payment of dividendsto stockholders and any other factors our board of directors may consider relevant. Liquidation— Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditorsand to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive prorata our remaining assets available for distribution. Rights and Preferences— Holders of our common stock do not have preemptive, subscription, redemption or conversion rights. Thecommon stock will not be subject to further calls or assessment by us. There will be no redemption or sinking fund provisions applicable tothe common stock. All shares of our common stock that will be outstanding at the time of the completion of the offering will be fully paidand non-assessable. The rights, powers, preferences and privileges of holders of our common stock will be subject to those of the holders ofany shares of preferred stock we may authorize and issue in the future.1OPTION GRANT NOTICE UNDER THE PRA HEALTH SCIENCES, INC. 2018 STOCK INCENTIVE PLAN(Time-Based Vesting Award for Employees)PRA Health Sciences, Inc. (the “Company”), pursuant to the PRA Health Sciences, Inc. 2018 Stock IncentivePlan (the “Plan”), hereby grants to the Participant set forth below the number of Options (each Option representing the right topurchase one share of Common Stock) set forth below, at an Exercise Price per share of Common Stock as set forth below. TheOptions are subject to all of the terms and conditions as set forth herein, in the Option Agreement (attached hereto or previouslyprovided to the Participant in connection with a prior grant), and in the Plan, all of which are incorporated herein in their entirety.Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.Participant:[•]Date of Grant:[•]Number of Options:[•]Exercise Price:$[•]Option Expiration Date:Ten years from Date of GrantType of Option:Nonqualified Stock OptionVesting Schedule:[•]* * *BY ACCEPTING THIS AWARD, PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS OPTION GRANTNOTICE, THE OPTION AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANTOF OPTIONS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS OPTION GRANT NOTICE, THEOPTION AGREEMENT AND THE PLAN. PRA HEALTH SCIENCES, INC. Colin Shannon President and Chief Executive OfficerOPTION AGREEMENT UNDER THE PRA HEALTH SCIENCES, INC. 2018 STOCK INCENTIVE PLANPursuant to the Option Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in the GrantNotice), and subject to the terms of this Option Agreement (this “Option Agreement”) and the PRA Health Sciences, Inc. 2018Stock Incentive Plan (the “Plan”), PRA Health Sciences, Inc. (the “Company”) and the Participant agree as follows. Capitalizedterms not otherwise defined herein shall have the same meaning as set forth in the Plan.1. Grant of Option. Subject to the terms and conditions set forth herein and in the Plan, the Company herebygrants to the Participant the number of Options provided in the Grant Notice (with each Option representing the right to purchaseone share of Common Stock), at an Exercise Price per share as provided in the Grant Notice. The Company may make one ormore additional grants of Options to the Participant under this Option Agreement by providing the Participant with a new GrantNotice, which may also include any terms and conditions differing from this Option Agreement to the extent provided therein.The Company reserves all rights with respect to the granting of additional Options hereunder and makes no implied promise togrant additional Options.2. Option Period and Vesting. Subject to the conditions contained herein and in the Plan, (a) the Option Periodof an Option shall be the period from the Date of Grant through the Option Expiration Date, as set forth in the Grant Notice, and(b) the Option shall vest as provided in the Grant Notice.3. Exercise of Options Following Termination. The provisions of Section 7(c)(iii) of the Plan are incorporatedherein by reference and made a part hereof.4. Method of Exercising Options. The Options may be exercised by the delivery of notice of the number ofOptions that are being exercised accompanied by payment in full of the Exercise Price applicable to the Options so exercised.Such notice shall be delivered either (x) in writing to the Company at its principal office or at such other address as may beestablished by the Committee, to the attention of the General Counsel; or (y) to a third-party plan administrator as may bearranged for by the Company or the Committee from time to time for purposes of the administration of outstanding Optionsunder the Plan, in the case of either (x) or (y), as communicated to the Participant by the Company from time to time. Payment ofthe aggregate Exercise Price may be made using any of the methods described in Section 7(d)(i) or (ii) of the Plan; provided,that the Participant shall obtain written consent from the Committee prior to (a) the use of the method described in Section 7(d)(ii)(A) or, (b) to the extent that the “net exercise” procedure described in Section 7(d)(ii)(C) of the Plan is used, prior to havingsuch net exercise apply to applicable withholding taxes.5. Issuance of Shares. Following the exercise of an Option hereunder, as promptly as practical after receipt ofsuch notification and full payment of such Exercise Price and any required income or other tax withholding amount (as providedin Section 9 hereof), the Company shall issue or transfer, or cause such issue or transfer, to the Participant the number of shareswith respect to which the Options have been so exercised, and shall either (a) deliver, or cause to be delivered, to the Participanta certificate or certificates therefor, registered in the Participant’s name or (b) cause such shares to be credited to theParticipant’s account at the third-party plan administrator.6. Company; Participant.(a) The term “Company” as used in this Option Agreement with reference to employment shall include theCompany and its Subsidiaries.(b) Whenever the word “Participant” is used in any provision of this Option Agreement under circumstanceswhere the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whomthe Options may be transferred by will or by the laws of descent and distribution, the word “Participant” shall be deemed toinclude such person or persons.7. Non-Transferability. The Options are not transferable by the Participant other than (i) by will or the laws ofdescent and distribution or (ii) to Permitted Transferees, as specifically approved in writing by the Committee following writtennotice to the Committee, in accordance with Section 13(b) of the Plan. Except as otherwise provided herein, no assignment ortransfer of the Options, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise,shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transferthe Options shall terminate and become of no further effect.8. Rights as Stockholder. The Participant or a Permitted Transferee of the Options shall have no rights as astockholder with respect to any share of Common Stock covered by an Option until the Participant shall have become the holderof record or the beneficial owner of such Common Stock, and no adjustment shall be made for dividends or distributions or otherrights in respect of such share of Common Stock for which the record date is prior to the date upon which the Participant shallbecome the holder of record or the beneficial owner thereof.9. Tax Withholding. The provisions of Section 13(d) of the Plan are incorporated herein by reference and madea part hereof.10. Notice. Every notice or other communication relating to this Option Agreement between the Company andthe Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as mayfrom time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that,unless and until some other address be so designated, all notices or communications by the Participant to the Company shall bemailed or delivered to the Company at its principal executive office, to the attention of the Company’s General Counsel, and allnotices or communications by the Company to the Participant may be given to the Participant personally (through email orotherwise) or may be mailed to the Participant at the Participant’s last known address, as reflected in the Company’s records.Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shallbe mailed, delivered, transmitted or sent in accordance with the procedures established by such third-party plan administratorand communicated to the Participant from time to time.11. No Right to Continued Service. This Option Agreement does not confer upon the Participant any right tocontinue as an employee or service provider of the Company.12. Binding Effect. This Option Agreement shall be binding upon the heirs, executors, administrators andsuccessors of the parties hereto.13. Waiver and Amendments. Except as otherwise set forth in Section 12 of the Plan, any waiver, alteration,amendment or modification of any of the terms of this Option Agreement shall be valid only if made in writing and signed bythe parties hereto. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute a waiver withrespect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to be construed asa continuing waiver.14. Clawback/Forfeiture. Notwithstanding anything to the contrary contained herein or in the Plan, if theParticipant has engaged in or engages in any Detrimental Activity, then the Committee may, in its sole discretion, take actionspermitted under the Plan, including: (i) cancel the Options, or (ii) require that the Participant forfeit any gain realized on theexercise of the Options, and repay such gain to the Company. In addition, if the Participant receives any amount in excess ofwhat the Participant should have received under the terms of this Option Agreement for any reason (including without limitationby reason of a financial restatement, mistake in calculations or other administrative error), then the Participant shall be requiredto repay any such excess amount to the Company. Without limiting the foregoing, all Options shall be subject to reduction,cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policyadopted by the Board or the Committee and as in effect from time to time, and (ii) applicable law.15. Governing Law. This Option Agreement shall be construed and interpreted in accordance with the laws ofthe State of Delaware, without regard to the principles of conflicts of law thereof. NOTWITHSTANDING ANYTHINGCONTAINED IN THIS OPTION AGREEMENT, THE GRANT NOTICE OR THE PLAN TO THE CONTRARY, BYACCEPTING THIS AWARD, THE PARTICIPANT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO AJURY TRIAL AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF AND VENUE IN THE COURTS OFDELAWARE, IF ANY SUIT OR CLAIM IS INSTITUTED BY THE PARTICIPANT OR THE COMPANY RELATING TOTHIS OPTION AGREEMENT.16. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict orinconsistency between the terms and provisions of the Plan and the provisions of this Option Agreement, the Plan shall governand control.17. Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of thebusinesses of the Company and its Affiliates and accordingly agrees to the following provisions:Non-Compete:During the Participant’s term of employment with the Company or any of its Affiliates (the “EmploymentPeriod”) and the Non-competition Period (as defined below), the Participant may not within (i) the country in which theParticipant’s office with the Company or any of its Affiliates was located at the Participant’s Termination, or (ii) fifty (50) milesof the location of the Participant’s office with the Company or any of its Affiliates at the Participant’s Termination, be engagedor employed by a Competing Company (as defined below), whether as owner, manager, officer, director, employee, consultantor otherwise, to (a) provide products or services that are the same or substantially similar to the products and services providedby the Company or any of its Affiliates, or (b) perform duties and responsibilities that are the same or substantially related to theduties and responsibilities that the Participant performed for the Company or any of its Affiliates at any time during the twenty-four (24) months prior to the Participant’s Termination.For the purposes of this Section 17, the term “Non-competition Period” means the period of twelve (12) monthsafter the Participant’s Termination for whatever reason.For the purposes of this Section 17, the term “Competing Company” means any entity (and its respectiveaffiliates and successors) that competes with the Company or any of its Affiliates in the provision of Customer Services (asdefined below), including, without limitation, the following entities and their affiliates and successors to the extent that and forso long as those said entities, affiliates, and successors compete with the Company or any of its Affiliates in the provision ofCustomer Services: Celerion Inc., Charles River Laboratories International, Inc., Cognizant Technology Solutions Corporation,ICON plc, IQVIA Holdings Inc., Laboratory Corporation of America Holdings (including Covance Inc., Chiltern InternationalLtd. and Theorem Clinical Research), Mapi Developpement SAS, Medidata Solutions, Inc., Medpace, Inc., PAREXELInternational Corporation, Pharm-Olam International, Pharmaceutical Product Development, Inc., Premier Research Group Ltd.,PSI CRO AG, Syneos Health, Inc., Synteract, Inc., United BioSource Corporation, UnitedHealth Group Incorporated (includingOptumHealth), Veeva Systems Inc., WorldWide Clinical Trials, Inc and ZS Associates, Inc.For the purposes of this Section 17, the term “Customer Services” means any product or service provided by theCompany or any of its Affiliates to a third party for remuneration, (i) during the Employment Period or (ii) about which theParticipant has material knowledge and that the Participant knows the Company or any of its Affiliates will provide or hascontracted to provide to third parties during the twelve (12) months following the Employment Period.Ownership by the Participant of not more than one percent (1%) of the shares of any corporation having a class ofequity securities actively traded on a national securities exchange shall not be deemed, in and of itself, to violate the prohibitionsset forth in this Section 17.Non-Solicitation of Clients:The Participant may not, during the Employment Period and for a period of twelve (12) months after theParticipant’s Termination, directly or indirectly, whether as owner, manager, officer, director, employee, consultant orotherwise, solicit the business of, or accept business from, any Customer (as defined below) of the Company or any of itsAffiliates at the Participant’s Termination, unless the business being solicited or accepted is not in competition with orsubstantially similar to the business of the Company or any of its Affiliates. For the purposes of this paragraph, “Customer”means any person or legal entity (and its subsidiaries, agents, employees and representatives) about whom the Participant hasacquired material information based on employment with the Company or any of its Affiliates and as to whom the Participanthas been informed that the Company or any of its Affiliates provides or will provide services.Non-Solicitation of Employees:The Participant may not, during the Employment Period and for a period of twelve (12) months after theParticipant’s Termination, directly or indirectly, solicit or induce (or attempt to solicit or induce) to leave the employ of theCompany or any of its Affiliates, for any reason whatsoever, any person employed by the Company or any of its Affiliates at thetime of the act of solicitation or inducement, including by (i) identifying for any third party employees of the Company or any ofits Affiliates who have special knowledge concerning the Company’s or any of its Affiliates’ processes, methods or confidentialaffairs or (ii) commenting about the quality of work, special knowledge, compensation, skills or personal characteristics of anyemployee of the Company or any of its Affiliates to any third party.Miscellaneous:The Participant specifically acknowledges and agrees that the provisions of this Section 17 are reasonable andnecessary to protect the legitimate interests of the Company and its Affiliates and that the Participant desires to agree to theprovisions of this Section 17. In the event that any of the provisions of this Section 17 should ever be held to exceed the time,scope or geographic limitations permitted by applicable law, it is the intention of the parties that such provision be reformed toreflect the maximum time, scope and geographic limitations that are permitted by law.The Participant acknowledges and agrees that, owing to the special, unique and extraordinary nature of thematters covered by this Section 17, in the event of any breach or threatened breach by the Participant of any of the provisionshereof, the Company or any of its Affiliates would suffer substantial and irreparable injury, which could not be fullycompensated by monetary award alone, and the Company and its Affiliates would not have adequate remedy at law. Therefore,the Participant agrees that, in such event, the Company or any of its Affiliates will be entitled to seek temporary and/orpermanent injunctive relief against the Participant, without the necessity of proving actual damages or of posting bond to enforceany of the provisions of this Section 17, and the Participant hereby waives the defenses, claims, or arguments that the mattersare not special, unique, and extraordinary, that the Company or any such Affiliate must prove actual damages, and that theCompany or such Affiliate has an adequate remedy at law. In addition, the Participant shall pay to the Company or such Affiliateand the Company or such Affiliate shall be awarded the reasonable attorney’s fees and costs incurred by such entity as a result ofthe Participant’s breach of the Participant’s obligations in this Section 17.The rights and remedies described in this Section 17 are cumulative and are in addition to, and not in lieu of, anyother rights and remedies otherwise available under the Option Grant Notice and the Option Agreement, or at law or in equity,including, but not limited to, monetary damages.Notwithstanding any other provision of the Option Grant Notice and the Option Agreement, in the event of anybreach by the Participant of any of the provisions of this Section 17, all obligations and liabilities of the Company under theOption Grant Notice and the Option Agreement shall immediately terminate and be extinguished. Further, in the event of anybreach by the Participant of any of the provisions of this Section 17, the restrictive time periods set forth herein do not includeany period of violation or period of time required for litigation to enforce the Option Grant Notice and the Option Agreement.In the event the Company has a reasonable basis to believe that the Participant may be in breach of any of theprovisions of this Section 17, the Company may suspend its obligations to the Participant under the Option Grant Notice and theOption Agreement until such time as the Participant provides the Company with (i) an undertaking to comply with the provisionsof this Section 17 and (ii) an affidavit of compliance with the provisions of this Section 17, both in a form reasonably specifiedby the Company.The Participant agrees to inform the Company of the name and address of any employer(s), as well as theParticipant’s job title and duties with each employer that the Participant may have or any business with which the Participantmay be involved, directly or indirectly, within the Non-competition Period.The Company shall have the right to disclose the Option Grant Notice and the Option Agreement or its contentsto any of the Participant’s future employers for the purpose of providing notice of the post-employment restrictions containedherein. The Company will provide the Participant with written notice if and when the Company discloses the existence of theOption Grant Notice and the Option Agreement to any future employer. RESTRICTED STOCK GRANT NOTICE UNDER THE PRA HEALTH SCIENCES, INC. 2018 STOCK INCENTIVE PLAN (Time-Based Vesting Award for Employees)PRA Health Sciences, Inc. (the “Company”), pursuant to the PRA Health Sciences, Inc. 2018 Stock IncentivePlan (the “Plan”), hereby grants to the Participant set forth below the number of shares of Restricted Stock set forth below. Theshares of Restricted Stock are subject to all of the terms and conditions as set forth herein, in the Restricted Stock Agreement(attached hereto or previously provided to the Participant in connection with a prior grant), and in the Plan, all of which areincorporated herein in their entirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.Participant:[•]Date of Grant:[•]Number of Shares ofRestricted Stock:[•]Vesting Schedule:[•] Additional Terms:The Participant may make an election under Section 83(b) of the Code in connection with thegrant of Restricted Stock hereunder, provided the Participant notifies the Company within ten(10) days of such election and provides the Company with a copy of the same.BY ACCEPTING THIS AWARD, PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCKGRANT NOTICE, THE RESTRICTED STOCK AGREEMENT AND THE PLAN, AND, AS AN EXPRESSCONDITION TO THE GRANT OF SHARES OF RESTRICTED STOCK HEREUNDER, AGREES TO BE BOUNDBY THE TERMS OF THIS RESTRICTED STOCK GRANT NOTICE, THE RESTRICTED STOCK AGREEMENTAND THE PLAN. PRA HEALTH SCIENCES, INC. Colin Shannon President and Chief Executive OfficerRESTRICTED STOCK AGREEMENT UNDER THE PRA HEALTH SCIENCES, INC. 2018 STOCK INCENTIVE PLANPursuant to the Restricted Stock Grant Notice (the “Grant Notice”) delivered to the Participant (as defined in theGrant Notice), and subject to the terms of this Restricted Stock Agreement (this “Restricted Stock Agreement”) and the PRAHealth Sciences, Inc. 2018 Stock Incentive Plan (the “Plan”), PRA Health Sciences, Inc. (the “Company”) and the Participantagree as follows. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.1. Grant of Shares of Restricted Stock. Subject to the terms and conditions set forth herein and in the Plan, theCompany hereby grants to the Participant the number of shares of Restricted Stock provided in the Grant Notice. The Companymay make one or more additional grants of shares of Restricted Stock to the Participant under this Restricted Stock Agreementby providing the Participant with a new Grant Notice, which may also include any terms and conditions differing from thisRestricted Stock Agreement to the extent provided therein. The Company reserves all rights with respect to the granting ofadditional shares of Restricted Stock hereunder and makes no implied promise to grant additional shares of Restricted Stock.2. Vesting. Subject to the conditions contained herein and in the Plan, the shares of Restricted Stock shall vestand the restrictions on such shares of Restricted Stock shall lapse as provided in the Grant Notice. With respect to any share ofRestricted Stock, the period of time that such share of Restricted Stock remains subject to vesting shall be its Restricted Period.3. Issuance of Shares of Restricted Stock. The provisions of Section 8(d)(i) of the Plan are incorporated hereinby reference and made a part hereof.4. Treatment of Shares of Restricted Stock Upon Termination. Except as otherwise provided in the GrantNotice, in the event of the Participant’s Termination for any reason prior to the date that all of the shares of the Participant’sRestricted Stock have vested, (x) all vesting with respect to the Participant’s Restricted Stock shall cease and (y) all unvestedshares of Restricted Stock shall be forfeited to the Company by the Participant for no consideration as of the date of suchTermination.5. Company; Participant.(a) The term “Company” as used in this Restricted Stock Agreement with reference to employment shall includethe Company and its Subsidiaries.(b) Whenever the word “Participant” is used in any provision of this Restricted Stock Agreement undercircumstances where the provision should logically be construed to apply to the executors, the administrators, or the person orpersons to whom the shares of Restricted Stock may be transferred by will or by the laws of descent and distribution, the word“Participant” shall be deemed to include such person or persons.6. Non-Transferability. The shares of Restricted Stock are not transferable by the Participant other than (i) bywill or the laws of descent and distribution or (ii) to Permitted Transferees, as specifically approved in writing by the Committeefollowing written notice to the Committee, in accordance with Section 13(b) of the Plan. Except as otherwise provided herein, noassignment or transfer of the shares of Restricted Stock, or of the rights represented thereby, whether voluntary or involuntary,by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever, but immediatelyupon such assignment or transfer the shares of Restricted Stock shall terminate and become of no further effect.7. Rights as Stockholder; Legend. The provisions of Sections 8(b) and 8(e) of the Plan are incorporated hereinby reference and made a part hereof.8. Tax Withholding. The provisions of Section 13(d) of the Plan are incorporated herein by reference and madea part hereof.9. Notice. Every notice or other communication relating to this Restricted Stock Agreement between theCompany and the Participant shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at suchaddress as may from time to time be designated by such party in a notice mailed or delivered to the other party as hereinprovided; provided that, unless and until some other address be so designated, all notices or communications by the Participantto the Company shall be mailed or delivered to the Company at its principal executive office, to the attention of the Company’sGeneral Counsel, and all notices or communications by the Company to the Participant may be given to the Participantpersonally (through email or otherwise) or may be mailed to the Participant at the Participant’s last known address, as reflectedin the Company’s records. Notwithstanding the above, all notices and communications between the Participant and any third-party plan administrator shall be mailed, delivered, transmitted or sent in accordance with the procedures established by suchthird-party plan administrator and communicated to the Participant from time to time.10. No Right to Continued Service. This Restricted Stock Agreement does not confer upon the Participant anyright to continue as an employee or service provider of the Company.11. Binding Effect. This Restricted Stock Agreement shall be binding upon the heirs, executors, administratorsand successors of the parties hereto.12. Waiver and Amendments. Except as otherwise set forth in Section 12 of the Plan, any waiver, alteration,amendment or modification of any of the terms of this Restricted Stock Agreement shall be valid only if made in writing andsigned by the parties hereto. No waiver by either of the parties hereto of their rights hereunder shall be deemed to constitute awaiver with respect to any subsequent occurrences or transactions hereunder unless such waiver specifically states that it is to beconstrued as a continuing waiver.13. Clawback/Forfeiture. Notwithstanding anything to the contrary contained herein or in the Plan, if theParticipant has engaged in or engages in any Detrimental Activity, then the Committee may, in its sole discretion, take actionspermitted under the Plan, including: (i) cancel the shares of Restricted Stock or (ii) require that the Participant forfeit any gainrealized on the vesting of the Restricted Stock, and repay such gain to the Company. In addition, if the Participant receives anyamount in excess of what the Participant should have received under the terms of this Restricted Stock Agreement for any reason(including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), then theParticipant shall be required to repay any such excess amount to the Company. Without limiting the foregoing, all shares ofRestricted Stock shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i)any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time, and(ii) applicable law.14. Governing Law. This Restricted Stock Agreement shall be construed and interpreted in accordance with thelaws of the State of Delaware, without regard to the principles of conflicts of law thereof. NOTWITHSTANDING ANYTHINGCONTAINED IN THIS RESTRICTED STOCK AGREEMENT, THE GRANT NOTICE OR THE PLAN TO THECONTRARY, BY ACCEPTING THIS AWARD, THE PARTICIPANT HEREBY IRREVOCABLY WAIVES ANY ANDALL RIGHTS TO A JURY TRIAL AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF AND VENUE IN THECOURTS OF DELAWARE, IF ANY SUIT OR CLAIM IS INSTITUTED BY THE PARTICIPANT OR THE COMPANYRELATING TO THIS RESTRICTED STOCK AGREEMENT.15. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict orinconsistency between the terms and provisions of the Plan and the provisions of this Restricted Stock Agreement, the Plan shallgovern and control.16. Restrictive Covenants. The Participant acknowledges and recognizes the highly competitive nature of thebusinesses of the Company and its Affiliates and accordingly agrees to the following provisions:Non-Compete:During the Participant’s term of employment with the Company or any of its Affiliates (the “EmploymentPeriod”) and the Non-competition Period (as defined below), the Participant may not within (i) the country in which theParticipant’s office with the Company or any of its Affiliates was located at the Participant’s Termination or (ii) fifty (50) milesof the location of the Participant’s office with the Company or any of its Affiliates at the Participant’s Termination, be engagedor employed by a Competing Company (as defined below), whether as owner, manager, officer, director, employee, consultantor otherwise, to (a) provide products or services that are the same or substantially similar to the products and services providedby the Company or any of its Affiliates, or (b) perform duties and responsibilities that are the same or substantially related to theduties and responsibilities that the Participant performed for the Company or any of its Affiliates at any time during the twenty-four (24) months prior to the Participant’s Termination.For the purposes of this Section 16, the term “Non-competition Period” means the period of twelve (12) monthsafter the Participant’s Termination for whatever reason.For the purposes of this Section 16, the term “Competing Company” means any entity (and its respectiveaffiliates and successors) that competes with the Company or any of its Affiliates in the provision of Customer Services (asdefined below), including, without limitation, the following entities and their affiliates and successors to the extent that and forso long as those said entities, affiliates, and successors compete with the Company or any of its Affiliates in the provision ofCustomer Services: Celerion Inc., Charles River Laboratories International, Inc., Cognizant Technology Solutions Corporation,ICON plc, IQVIA Holdings Inc., Laboratory Corporation of America Holdings (including Covance Inc., Chiltern InternationalLtd. and Theorem Clinical Research), Mapi Developpement SAS, Medidata Solutions, Inc., Medpace, Inc., PAREXELInternational Corporation, Pharm-Olam International, Pharmaceutical Product Development, Inc., Premier Research Group Ltd.,PSI CRO AG, Syneos Health, Inc., Synteract, Inc., United BioSource Corporation, UnitedHealth Group Incorporated (includingOptumHealth), Veeva Systems Inc., WorldWide Clinical Trials, Inc and ZS Associates, Inc.For the purposes of this Section 16, the term “Customer Services” means any product or service provided by theCompany or any of its Affiliates to a third party for remuneration, (i) during the Employment Period or (ii) about which theParticipant has material knowledge and that the Participant knows the Company or any of its Affiliates will provide or hascontracted to provide to third parties during the twelve (12) months following the Employment Period.Ownership by the Participant of not more than one percent (1%) of the shares of any corporation having a class ofequity securities actively traded on a national securities exchange shall not be deemed, in and of itself, to violate the prohibitionsset forth in this Section 16.Non-Solicitation of Clients:The Participant may not, during the Employment Period and for a period of twelve (12) months after theParticipant’s Termination, directly or indirectly, whether as owner, manager, officer, director, employee, consultant orotherwise, solicit the business of, or accept business from, any Customer (as defined below) of the Company or any of itsAffiliates at the Participant’s Termination, unless the business being solicited or accepted is not in competition with orsubstantially similar to the business of the Company or any of its Affiliates. For the purposes of this paragraph, “Customer”means any person or legal entity (and its subsidiaries, agents, employees and representatives) about whom the Participant hasacquired material information based on employment with the Company or any of its Affiliates and as to whom the Participanthas been informed that the Company or any of its Affiliates provides or will provide services.Non-Solicitation of Employees:The Participant may not, during the Employment Period and for a period of twelve (12) months after theParticipant’s Termination, directly or indirectly, solicit or induce (or attempt to solicit or induce) to leave the employ of theCompany or any of its Affiliates, for any reason whatsoever, any person employed by the Company or any of its Affiliates at thetime of the act of solicitation or inducement, including by (i) identifying for any third party employees of the Company or any ofits Affiliates who have special knowledge concerning the Company’s or any of its Affiliates’ processes, methods or confidentialaffairs or (ii) commenting about the quality of work, special knowledge, compensation, skills or personal characteristics of anyemployee of the Company or any of its Affiliates to any third party.Miscellaneous:The Participant specifically acknowledges and agrees that the provisions of this Section 16 are reasonable andnecessary to protect the legitimate interests of the Company and its Affiliates and that the Participant desires to agree to theprovisions of this Section 16. In the event that any of the provisions of this Section 16 should ever be held to exceed the time,scope or geographic limitations permitted by applicable law, it is the intention of the parties that such provision be reformed toreflect the maximum time, scope and geographic limitations that are permitted by law.The Participant acknowledges and agrees that, owing to the special, unique and extraordinary nature of thematters covered by this Section 16, in the event of any breach or threatened breach by the Participant of any of the provisionshereof, the Company or any of its Affiliates would suffer substantial and irreparable injury, which could not be fullycompensated by monetary award alone, and the Company and its Affiliates would not have adequate remedy at law. Therefore,the Participant agrees that, in such event, the Company or any of its Affiliates will be entitled to seek temporary and/orpermanent injunctive relief against the Participant, without the necessity of proving actual damages or of posting bond to enforceany of the provisions of this Section 16, and the Participant hereby waives the defenses, claims, or arguments that the mattersare not special, unique, and extraordinary, that the Company or any such Affiliate must prove actual damages, and that theCompany or such Affiliate has an adequate remedy at law. In addition, the Participant shall pay to the Company or such Affiliateand the Company or such Affiliate shall be awarded the reasonable attorney’s fees and costs incurred by such entity as a result ofthe Participant’s breach of the Participant’s obligations in this Section 16.The rights and remedies described in this Section 16 are cumulative and are in addition to, and not in lieu of, anyother rights and remedies otherwise available under the Restricted Stock Grant Notice and this Restricted Stock Agreement, or atlaw or in equity, including, but not limited to, monetary damages.Notwithstanding any other provision of the Restricted Stock Grant Notice and this Restricted Stock Agreement, inthe event of any breach by the Participant of any of the provisions of this Section 16, all obligations and liabilities of theCompany under the Restricted Stock Grant Notice and this Restricted Stock Agreement shall immediately terminate and beextinguished. Further, in the event of any breach by the Participant of any of the provisions of this Section 16, the restrictivetime periods set forth herein do not include any period of violation or period of time required for litigation to enforce theRestricted Stock Grant Notice and this Restricted Stock Agreement.In the event the Company has a reasonable basis to believe that the Participant may be in breach of any of theprovisions of this Section 16, the Company may suspend its obligations to the Participant under the Restricted Stock GrantNotice and this Restricted Stock Agreement until such time as the Participant provides the Company with (i) an undertaking tocomply with the provisions of this Section 16 and (ii) an affidavit of compliance with the provisions of this Section 16, both in aform reasonably specified by the Company.The Participant agrees to inform the Company of the name and address of any employer(s), as well as theParticipant’s job title and duties with each employer that the Participant may have or any business with which the Participantmay be involved, directly or indirectly, within the Non-competition Period.The Company shall have the right to disclose the Restricted Stock Grant Notice and this Restricted StockAgreement or its contents to any of the Participant’s future employers for the purpose of providing notice of the post-employment restrictions contained herein. The Company will provide the Participant with written notice if and when theCompany discloses the existence of the Restricted Stock Grant Notice and this Restricted Stock Agreement to any futureemployer.EXHIBIT 21.1Jurisdiction of Organization Entity NameArgentina Pharmaceutical Research Associates Ltda Suc. ArgentinaArgentina RPS Research S.A.Australia Pharmaceutical Research Associates Pty LimitedAustria RPS Research Austria GmbHBelarus IOOO IMP-Logistics BelBelarus Pharmaceutical Research Associates CIS, LLC, Minsk Rep OfficeBelgium Pharmaceutical Research Associates Belgium BVBABermuda RPS Bermuda, Ltd.Brazil Pharmaceutical Research Associates Ltda.Brazil RPS do Brasil Serviços de Pesquisas LTDA.British Virgin Islands RPS China Inc.Bulgaria Pharmaceutical Research Associates Bulgaria EOODCanada 3065613 Nova Scotia CompanyCanada Pharmaceutical Research Associates ULCCanada (Québec) Services de Recherche Pharmaceutique SrlChile Pharmaceutical Research Associates Chile SpAChile RPS Chile LTDA.China PRA Health Sciences China, Inc.China PRA Health Sciences China, Inc., Shanghai BranchChina (branch office of RPS Beijing) PRA Health Sciences, Inc., Dalian BranchColombia Pharmaceutical Research Associates Colombia SASColombia RPS Colombia LTDA.Costa Rica Research Pharmaceutical Services Costa Rica, LTDA.Croatia Pharm Research Associates d.o.o. Ltd. for clinical trialsCzech Republic Pharmaceutical Research Associates CZ, s.r.o.Denmark Pharmaceutical Research Associates Denmark ApSEgypt RPS Egypt (Limited Liability Company)Estonia RPS Estonia OÜFinland Pharmaceutical Research Associates Finland OyFrance Pharmaceutical Research Associates SarlFrance ReSearch Pharmaceutical Services France S.A.S.Georgia Pharmaceutical Research Associates Georgia LLCGermany Pharmaceutical Research Associates GmbHGermany RPS Research Italy GmbHGhana Pharm Research Associates (UK) Limited, Ghana BranchGreece Pharmaceutical Research Associates Greece A.E.Guatemala RPS Guatemala, S.A.Hong Kong PRA Health Sciences (Hong Kong) LimitedHong Kong RPS Hong Kong LimitedHungary Pharmaceutical Research Associates, Hungary Research and Development Ltd.Iceland RPS Iceland ehf.India Pharmaceutical Research Associates India Private LimitedIreland Research Pharmaceutical Services (Outsourcing Ireland) LimitedIsrael Pharmaceutical Research Associates Israel Ltd.Italy Pharmaceutical Research Associates Italy S.r.l.Italy (branch of PRA Germany) Pharmaceutical Research Associates GmbH sede secondariaJurisdiction of Organization Entity NameJapan PRA Health Sciences KKJapan PRA Development Center KKKenya PRA Health Sciences Kenya Ltd.Latvia RPS Latvia SIALithuania UAB RPS LithuaniaMalaysia RPS Malaysia Sdn. Bhd.Mexico Pharmaceutical Research Associates Mexico S. de R.L. de C. V.México RPS Research México, S. de R.L. de C.V.México RPS Research Servicios, S. de R.L. de C.V.The Netherlands Pharmaceutical Research Associates C.V.The Netherlands Pharmaceutical Research Associates Group B.V.The Netherlands Pharmaceutical Research Associates Holdings B.V.The Netherlands Pharmaceutical Research Associates Metaholdings B.V.The Netherlands PRA International B.V.The Netherlands PRA International Operations B.V.The Netherlands ReSearch Pharmaceutical Services Netherlands B.V.The Netherlands ReSearch Pharmaceutical Services Netherlands C.V.New Zealand Pharmaceutical Research Associates New Zealand LimitedNorway RPS Research Norway ASPanama RPS Panama Inc.Peru Pharmaceutical Research Associates Peru Sociedad Anonima Cerrada (aka PRA Peru SAC)Perú RPS Perú S.A.C.Philippines RPS Research Philippines, Inc.Poland Pharmaceutical Research Associates Sp. z o.o.Poland RPS Polska sp. z o.o.Portugal PRA International Portugal, Unipessoal Lda.Puerto Rico Research Pharmaceutical Services Puerto Rico, Inc.Romania Pharmaceutical Research Associates Romania SrlRussia Pharmaceutical Research Associates CIS, LLC, Moscow BranchRussia Pharmaceutical Research Associates CIS, LLC, St. Petersburg BranchRussia IMP Logistics Joint Stock CompanyRussia LLC RPS ResearchSerbia Pharmaceutical Research Associates doo Belgrade, Dragise Basovana 10/1Serbia Research Pharmaceutical Services d.o.o. Beograd-Stari grad u likvidacijiSingapore Pharmaceutical Research Associates Singapore Pte. Ltd.Singapore RPS Research Singapore Pte. Ltd.Slovakia Pharmaceutical Research Associates SK s.r.o.South Africa PRA Pharmaceutical SA (Proprietary) LimitedSouth Africa RPS Research South Africa (Proprietary) LimitedSouth Korea Pharmaceutical Research Associates Korea LimitedSpain Pharmaceutical Research Associates Espana, S.A.U.Spain RPS ReSearch Ibérica, S.L.Spain RPS Spain S.L.Sweden PRA International Sweden ABSweden RPS Sweden AB I likvidationSwitzerland PRA Switzerland AGSwitzerland RPS ReSearch Switzerland GmbH in liquidationTaiwan Pharmaceutical Research Associates Taiwan, Inc.Jurisdiction of Organization Entity NameTaiwan RPS Taiwan Ltd.Thailand RPS Research (Thailand) Co., Ltd.Turkey PRA Clinical Research & Development Turkey AEUkraine Pharmaceutical Research Associates Ukraine, LLCUkraine OOO IMP-Logistics UkraineUkraine RPS Ukraine, LLCUnited Kingdom Care Innovations (UK) LimitedUnited Kingdom IMP Logistics UK LimitedUnited Kingdom Pharm Research Associates (UK) LimitedUnited Kingdom Pharm Research Associates Russia LimitedUnited Kingdom Sterling Synergy Systems LimitedUnited States (California) ClinStar LLCUnited States (California) Nextrials, Inc.United States (California) Pharmaceutical Research Associates CIS, LLCUnited States (California) Pharmaceutical Research Associates Eastern Europe, LLCUnited States (Delaware) CRI NewCo, Inc.United States (Delaware) CRI Worldwide, LLCUnited States (Delaware) International Medical Technical Consultants, LLCUnited States (Delaware) Parallel 6, Inc.United States (Delaware) PRA Early Development Research, Inc.United States (Delaware) PRA Holdings, Inc.United States (Delaware) PRA Receivables, LLCUnited States (Delaware) PRA International, LLCUnited States (Delaware) Sunset Hills, LLCUnited States (Delaware) ReSearch Pharmaceutical Services, Inc.United States (Delaware) ReSearch Pharmaceutical Services, LLCUnited States (Delaware) Roy RPS Holdings LLCUnited States (Delaware) RPS Parent Holding LLCUnited States (Delaware) RPS Global Holdings, LLCUnited States (Delaware) Source Healthcare Analytics, LLCUnited States (Delaware) Symphony Health Solutions CorporationUnited States (Delaware) Care Innovations, Inc.United States (Delaware) Care Innovations, LLCUnited States (New Jersey) CRI International, LLCUnited States (Utah) Lifetree Clinical Research, LCUnited States (Virginia) Pharmaceutical Research Associates, Inc.Uruguay RPS Global S.A.Uruguay RPS Latin America S.AEXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement Nos. 333-225313, 333-200160, and 333-221259 on Form S-8 and Registration StatementNo. 333-230102 on Form S-3 of our reports dated February 21, 2020, relating to the consolidated financial statements of PRA Health Sciences, Inc. andsubsidiaries (which report expressed an unqualified opinion and includes an explanatory paragraph relating to the adoption of new accounting standards), and theeffectiveness of PRA Health Sciences, Inc.'s internal control over financial reporting, appearing in this Annual Report on Form 10-K of PRA Health Sciences, Inc.for the year ended December 31, 2019./s/ Deloitte & Touche LLPRaleigh, North CarolinaFebruary 21, 2020Exhibit 31.1CERTIFICATION I, Colin Shannon, certify that:1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2019 of PRA Health Sciences, Inc. (the“registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 21, 2020 /s/ Colin Shannon Colin Shannon President, Chief Executive Officer andChairman of the Board of Directors(Principal Executive Officer)Exhibit 31.2CERTIFICATION I, Michael J. Bonello, certify that:1.I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2019 of PRA Health Sciences, Inc. (the“registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 21, 2020 /s/ Michael J. Bonello Michael J. Bonello Executive Vice President and ChiefFinancial Officer(Principal Financial Officer) EXHIBIT 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of PRA Health Sciences, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2019 filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Colin Shannon, President, Chief Executive Officer and Chairman of the Board ofDirectors of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:•The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and•The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for theperiods presented therein. Date: February 21, 2020 By:/s/ Colin Shannon Colin Shannon President, Chief Executive Officer and Chairman of the Board of Directors(Principal Executive Officer) EXHIBIT 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of PRA Health Sciences, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2019 filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Bonello, Executive Vice President and Chief Financial Officer of theCompany, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: •The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and•The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for theperiods presented therein. Date: February 21, 2020 By:/s/ Michael J. Bonello Michael J. Bonello Executive Vice President and Chief Financial Officer(Principal Financial Officer) 

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