10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2017

or

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

For the transition period from                 to                .

Commission file number: 001-36732

PRA Health Sciences, Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-3640387
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

4130 ParkLake Avenue, Suite 400, Raleigh, NC 27612

(Address of principal executive offices) (Zip Code)

(919) 786-8200

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  T 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☒	Accelerated filer  ☐
Non-accelerated filer  ☐	Smaller reporting company  ☐
(Do not check if a 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 accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Number of Shares Outstanding
Common Stock $0.01 par value	63,369,729 shares outstanding as of October 23, 2017

PRA HEALTH SCIENCES, INC.

FORM 10-Q

FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017

TABLE OF CONTENTS

Item Number		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Condensed Balance Sheets as of September 30, 2017 and December 31, 2016	3
	Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2017 and 2016	4
	Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016	5
	Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2017 and 2016	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	X
SIGNATURES		42
EXHIBIT INDEX		41

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share amounts)

	September 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	193,581		$	144,623
Restricted cash	697			4,715
Accounts receivable and unbilled services, net	628,029			439,053
Other current assets	70,361			36,346
Total current assets	892,668			624,737
Fixed assets, net	131,432			87,577
Goodwill	1,535,057			971,980
Intangible assets, net	711,727			473,976
Other assets	38,749			32,121
Total assets	$	3,309,633		$	2,190,391
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	56,719		$	31,250
Accounts payable	60,438			51,335
Accrued expenses and other current liabilities	277,495			149,113
Advanced billings	493,368			332,501
Total current liabilities	888,020			564,199
Long-term debt, net	1,293,498			797,052
Deferred tax liabilities	128,366			73,703
Other long-term liabilities	63,452			26,185
Total liabilities	2,373,336			1,461,139
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	—			—
Common stock, $0.01 par value, 1,000,000,000 authorized shares at September 30, 2017 and December 31, 2016; 63,329,298 and 61,597,705 issued and outstanding at September 30, 2017 and December 31, 2016, respectively	633			616
Additional paid-in capital	898,862			879,067
Accumulated other comprehensive loss	(146,291		)	(224,686		)
Retained earnings	177,230			74,255
Equity attributable to PRA Health Sciences, Inc. stockholders	930,434			729,252
Noncontrolling interest	5,863			—
Total stockholders' equity	936,297			729,252
Total liabilities and stockholders' equity	$	3,309,633		$	2,190,391

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

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PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue:
Service revenue	$	494,550		$	399,841		1,379,572			$	1,166,410
Reimbursement revenue	87,459			53,414			223,921			172,915
Total revenue	582,009			453,255			1,603,493			1,339,325
Operating expenses:
Direct costs	326,865			259,910			914,988			758,333
Reimbursable out-of-pocket costs	87,459			53,414			223,921			172,915
Selling, general and administrative	79,307			67,190			229,770			199,648
Transaction-related costs	12,740			—			12,740			31,785
Depreciation and amortization	18,853			17,708			50,146			52,246
Loss on disposal of fixed assets, net	8			219			240			290
Income from operations	56,777			54,814			171,688			124,108
Interest expense, net	(11,557		)	(13,779		)	(31,088		)	(42,525		)
Loss on modification or extinguishment of debt	(3,089		)	—			(3,089		)	(21,485		)
Foreign currency (losses) gains, net	(12,794		)	1,182			(35,004		)	9,264
Other income (expense), net	1,004			20			724			(85		)
Income before income taxes and equity in income of unconsolidated joint ventures	30,341			42,237			103,231			69,277
(Benefit from) provision for income taxes	(18,241		)	10,821			(165		)	17,869
Income before equity in income of unconsolidated joint ventures	48,582			31,416			103,396			51,408
Equity in income of unconsolidated joint ventures, net of tax	24			33			92			2,742
Net income	48,606			31,449			103,488			54,150
Net income attributable to noncontrolling interest	(401		)	—			(513		)	—
Net income attributable to PRA Health Sciences, Inc.	$	48,205		$	31,449		$	102,975		$	54,150
Net income per share attributable to common stockholders:
Basic	$	0.77		$	0.52		$	1.66		$	0.89
Diluted	$	0.73		$	0.49		$	1.57		$	0.84
Weighted average common shares outstanding:
Basic	62,730			60,937			62,185			60,579
Diluted	65,872			64,521			65,683			64,268

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

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PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income	$	48,606		$	31,449		$	103,488		$	54,150
Other comprehensive income (loss):
Foreign currency translation adjustments	26,863			(11,211		)	75,076			(55,548		)
Unrealized income (loss) on derivative instruments, net of income tax of $(11), $0, $(11) and $0	46			127			(21		)	(2,546		)
Reclassification adjustments:
(Gain) loss on derivatives included in net income, net of income taxes of $1,926, $0, $1,926 and $0	(167		)	1,617			3,249			4,242
Comprehensive income	75,348			21,982			181,792			298
Comprehensive income attributable to noncontrolling interest	(373		)	—			(423		)	—
Comprehensive income attributable to PRA Health Sciences, Inc.	$	74,975		$	21,982		$	181,369		$	298

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

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PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	103,488		$	54,150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,146			52,246
Amortization of debt issuance costs and discount	1,480			3,514
Amortization of terminated interest rate swaps	4,931			3,334
Stock-based compensation	7,686			4,940
Non-cash transaction-related costs	5,294			29,421
Unrealized foreign currency losses (gains)	35,406			(9,380		)
Loss on modification or extinguishment of debt	3,089			21,485
Deferred income taxes	(27,340		)	(8,076		)
Equity in income of unconsolidated joint ventures	(92		)	(2,742		)
Other reconciling items	190			41
Changes in operating assets and liabilities:
Accounts receivable, unbilled services, and advanced billings	(51,883		)	(52,290		)
Other operating assets and liabilities	(14,567		)	(29,935		)
Net cash provided by operating activities	117,828			66,708
Cash flows from investing activities:
Purchase of fixed assets	(39,287		)	(25,657		)
Cash paid for interest on interest rate swap	(763		)	(913		)
Proceeds from the sale of WuXiPRA	—			3,700
Proceeds from the sale of fixed assets	55			—
Acquisition of Symphony Health Solutions Corporation, net of cash acquired	(522,581		)	—
Acquisition of Parallel 6, Inc., net of cash acquired	(39,561		)	—
Acquisition of Takeda PRA Development Center KK, net of cash acquired	2,680			—
Acquisition of Takeda Pharmaceutical Data Services, Ltd., net of cash acquired	(142		)	—
Acquisition of Nextrials, Inc., net of cash acquired	—			(4,268		)
Net cash used in investing activities	(599,599		)	(27,138		)
Cash flows from financing activities:
Borrowings on accounts receivable financing agreement	20,000			120,000
Repayments on accounts receivable financing agreement	(20,000		)	—
Proceeds from issuance of long-term debt	550,000			—
Repayments of long-term debt	(26,875		)	(133,559		)
Borrowings on line of credit	30,000			110,000
Repayments on line of credit	(30,000		)	(110,000		)
Payments for debt issuance costs	(5,512		)	—
Payment of debt prepayment and debt extinguishment costs	—			(17,824		)
Proceeds from stock option exercises	6,457			638
Payment of acquisition-related contingent consideration	(400		)	—
Net cash provided by (used in) financing activities	523,670			(30,745		)
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash	3,041			628
Change in cash, cash equivalents, and restricted cash	44,940			9,453
Cash, cash equivalents, and restricted cash, beginning of period	149,338			126,125
Cash, cash equivalents, and restricted cash, end of period	$	194,278		$	135,578

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

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PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

(1) Basis of Presentation

The Company

PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of product development and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting.

Unaudited Interim Financial Information

The interim consolidated condensed financial statements include the accounts of the Company and variable interest entities where the Company is the primary beneficiary. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interests. A VIE is required to be consolidated by its primary beneficiary, which is the entity that possesses the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to the entity. The Company consolidates VIEs when it is the primary beneficiary of the VIE, including joint ventures determined to be VIEs.

For consolidated VIEs in which the Company owns less than 100% of the ownership interest or is exposed to less than 100% of the VIE’s economic performance, the outside stockholders' interests are shown as noncontrolling interests.

Recently Implemented Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This update includes provisions intended to simplify various aspects of accounting for share-based compensation. In addition, ASU No. 2016-09 went into effect for public companies for annual periods beginning after December 15, 2016.

The Company adopted this ASU beginning with the first quarter of 2017. The adoption of this ASU had the following effects on the consolidated condensed financial statements:

Income taxes - The standard requires excess tax benefits and tax deficiencies to be recorded as income tax benefit or expense in the statement of operations. The Company applied the modified retrospective adoption approach beginning in 2017 and recorded a cumulative-effect adjustment to retained earnings and reduced its deferred tax liabilities by $12.7 million with an offsetting increase to the valuation allowance of $12.7 million. As such, the net impact to retained earnings was zero. The Company continuously evaluates its need for a valuation allowance on its net deferred tax assets based upon the weight of available evidence. If the Company is able to support the recognition of certain net deferred tax assets in the future, it is noted that an additional tax benefit from the release of this additional valuation could occur at that time. This adjustment relates to tax assets that had previously arisen from tax deductions for equity compensation expenses that were greater than the compensation recognized for financial reporting.

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Forfeitures – The standard provides an accounting policy election to account for forfeitures as they occur. The Company made this accounting policy election and the modified retrospective adoption for this component of the standard did not have a material impact on its financial statements.

Statements of Cash Flows - Cash flows related to excess tax benefits are no longer separately classified as a financing activity apart from other income tax cash flows. The Company adopted this component of the standard on a prospective basis. 

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under this method, the Company is no longer required to estimate the tax rate and apply it to the dilutive share calculation for determining the dilutive earnings per share. The Company adopted this component of the standard on a prospective basis.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments,” which clarifies existing guidance related to accounting for cash receipts and cash payments and classification on the statement of cash flows. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The guidance for both standards requires application using a retrospective transition method.

The Company early adopted both ASUs during the fourth quarter of 2016. As a result of the retrospective application of ASU No. 2016-15, $17.8 million of payments of debt prepayment and debt extinguishment costs originally recorded as operating cash outflows were reclassified to financing outflows in the consolidated condensed statement of cash flows for the nine months ended September 30, 2016. The retrospective application of ASU No. 2016-18 resulted in restricted cash being reclassified as a component of cash, cash equivalents, and restricted cash in the consolidated condensed statement of cash flows for all periods presented.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers.” The new revenue standard establishes a single revenue recognition model for recognizing contracts from customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard, including clarification on principal versus agent considerations, identifying performance obligations, and accounting for licenses of intellectual property.  The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. 

The Company plans to adopt the new revenue standard effective January 1, 2018 using the modified retrospective approach and continues to evaluate the potential impact to its consolidated financial statements. The Company’s implementation team consists of both internal resources and external advisors to assist with the adoption of the new standard. The Company completed a review of a representative sample of contracts from its contract portfolio and is continuing to evaluate key qualitative judgments associated with the adoption of the new revenue standard. The Company expects its long-term contracts currently accounted for using the proportional performance method may include additional contract value and costs used in the measure of progress as compared to its current accounting policies. The accounting for short-term contracts within the Clinical Research segment is expected to remain materially consistent with the current accounting treatment. The Company will complete its evaluation of the new standard in the fourth quarter, finalize its assessment of potential differences from its current accounting policies, and implement the necessary business processes, systems and controls required to support recognition and disclosure under the new standard. 

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The provisions of ASU No. 2016-02 are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early

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adoption is permitted. The Company is currently assessing the potential impact of ASU No. 2016-02 on the Company’s consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations: Clarifying the Definition of a business,” which clarifies that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, it should be treated as an acquisition or disposal of an asset. The amendments to ASU No. 2017-01 are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The adoption of ASU No. 2017-01 is not expected to have a material impact on the Company's consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “ Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test.  Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  The amendments to ASU No. 2017-04 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company's consolidated condensed financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation: Scope of Modification Accounting,” which provides guidance about what changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718, “Stock Compensation.” The amendments to ASU No. 2017-09 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU No. 2017-09 is not expected to have a material impact on the Company's consolidated condensed financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements 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 hedging instrument to be presented in the same income statement line as the hedged item. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. The amendments to ASU No. 2017-12 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's consolidated condensed financial statements.

Restricted cash

The Company receives cash advances from its customers to be used for the payment of investigator fees and other pass-through expenses. The terms of certain customer contracts require that such advances be maintained in separate escrow accounts; these accounts are not commingled with the Company’s cash and cash equivalents and are presented separately in the consolidated condensed balance sheets as restricted cash.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows:

	September 30,				December 31,
	2017		2016		2016		2015
Cash and cash equivalents	$	193,581	$	130,343	$	144,623	$	121,065
Restricted cash	697		5,235		4,715		5,060
Total cash, cash equivalents, and restricted cash	$	194,278	$	135,578	$	149,338	$	126,125

Secondary Offerings

In August 2017, KKR PRA Investors L.P., or KKR, and certain executive officers of the Company sold 10,000,000 shares of the Company’s common stock as part of a secondary offering, or the Secondary Offering. The Company incurred expenses in connection with the Secondary Offering of $1.0 million during the nine months ended September 30, 2017. The

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expenses are included in transaction-related costs in the accompanying consolidated condensed statement of operations. As of September 30, 2017, KKR owned 20.8% of the Company’s outstanding common stock.

(2) Business Combinations

Symphony Health Solutions, Inc.

On September 6, 2017, the Company acquired all of the outstanding equity interest of Symphony Health Solutions Corporation, or Symphony Health, a provider of data and analytics to help professionals understand the full market lifecycle of products offered for sale by companies in the pharmaceutical industry, for $540.8 million in cash and contingent consideration, which is not capped, in the form of potential earn-out payments based on a multiple of future earnings for the twelve month periods ending December 2017 and December 2018. The Company recognized a liability of approximately $108.8 million representing the estimated fair value of the earn-out on the acquisition date, $90.4 million is included in accrued expenses and other current liabilities and $18.4 million is included in other long-term liabilities in the consolidated condensed balance sheet as of September 30, 2017. The fair value was based on significant inputs not observed in the market and thus represents a Level 3 measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments, will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that provide data and analytics.

The acquisition of Symphony Health was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $500.5 million of goodwill, which was assigned to the Data Solutions segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing operations. The Company incurred $6.4 million in acquisition related costs that are included in transaction-related costs in the consolidated condensed statement of operations.

Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2017, and in any case, no later than one year from the acquisition date in accordance with GAAP.

The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	26,297
Accounts receivable	39,056
Other current assets	24,048
Fixed assets	12,340
Software and other intangibles	13,000			5 years
Database	64,600			9 years
Customer relationships	161,000			12 years
Accounts payable and accrued expenses	(42,700		)
Deferred revenue	(65,511		)
Deferred tax liabilities	(75,056		)
Other long-term liabilities	(7,940		)
Estimated fair value of net assets acquired	149,134
Purchase price, including contingent consideration	649,609
Total goodwill	$	500,475

The results of operations for Symphony Health are included in the consolidated condensed financial statements of the Company from the date of acquisition. During this period, Symphony Health's service revenues and net income totaled $19.0 million and $1.1 million, respectively.

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The following unaudited pro-forma information assumes the acquisition of Symphony Health occurred as of the beginning of 2016. This pro-forma financial information is not necessarily indicative of operating results if the acquisition had been completed at the date indicated, nor is it necessarily an indication of future operating results.

	Nine Months Ended September 30,
(in thousands, except per share amounts)	2017		2016
Total revenue	$	1,752,514	$	1,484,013
Net income attributable to PRA Health Sciences, Inc.	126,092		35,830
Net income per share:
Basic	$	2.03	$	0.59
Diluted	$	1.92	$	0.56

The unaudited pro-forma financial information for the nine months ended September 30, 2016 includes the following non-recurring adjustments:

• a $6.4 million increase to transaction-related costs incurred by the Company during the nine months ended September 30, 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 nine months ended September 30, 2017 attributable to the above transaction, with a corresponding $1.2 million increase to the benefit from income taxes.

Takeda Transactions

On June 1, 2017, the Company acquired all of the outstanding shares of Takeda Pharmaceutical Data Services, Ltd., or TDS, from Takeda Pharmaceutical Company Ltd., or Takeda, for $0.7 million in cash. The Company recorded approximately $1.0 million of goodwill, which is assigned to the Clinical Research segment and is not deductible for income tax purposes. pro-forma results of operations and a complete purchase price allocation have not been presented because the results of this acquisition did not have a material effect on the Company's consolidated condensed financial statements.

On June 1, 2017, the Company and Takeda also closed on a joint venture transaction that enables the Company to provide clinical trial delivery and pharmacovigilance services as a strategic partner of Takeda in Japan. The joint venture transaction was effected through the creation of a new legal entity, Takeda PRA Development Center KK, or TDC joint venture. The Company paid $5.4 million for a 50% equity interest in the TDC joint venture, which represents 50% of the fair value of the net assets and workforce that Takeda contributed to the joint venture. The joint venture provides services including clinical trial monitoring, project management, regulatory strategy and submissions, data management, biostatistics, drug safety reporting, and medical monitoring. The Company is required to buy-out Takeda’s 50% interest in the TDC joint venture in two years. The Company also has an early buy-out option of Takeda’s 50% interest in December 2018 if both parties agree.

The Company determined that the TDC joint venture is a VIE in which the Company is the primary beneficiary. Accordingly, the Company accounted for the $5.4 million contribution to the TDC joint venture as a business combination and consolidated the VIE in its financial statements with a noncontrolling interest for the 50% portion owned by Takeda. The assets acquired and the liabilities assumed have been recorded at their respective estimated fair values as of June 1, 2017. The Company recorded approximately $2.7 million of goodwill, which is assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is primarily attributable to assembled workforce. The Company incurred $0.6 million in acquisition related costs that are included in selling, general and administrative expenses in the consolidated condensed statement of operations.

Due to the timing of the transaction, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2017, and in any case, no later than one year from the transaction closing date in accordance with GAAP.

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The Company’s preliminary estimate of the fair value of the net assets acquired as part of the TDC joint venture transaction at the closing date of the business combination is as follows (in thousands):

	Purchase Price Allocation
Cash and cash equivalents	$	8,120
Other current assets	1,671
Other non-current assets	1,742
Accounts payable and accrued expenses	(2,380		)
Other long-term liabilities	(943		)
Estimated fair value of net assets acquired	8,210
PRA purchase price	5,440
Fair value of Takeda's noncontrolling interest	5,440
Total goodwill	$	2,670

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 material effect on the Company’s consolidated condensed financial statements.

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 improving patient enrollment, engagement, and management of clinical trials, for $39.7 million in cash and contingent consideration in the form of a potential earn-out payment 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 period following closing. The Company recognized a liability of approximately $8.4 million representing the estimated fair value of the earn-out on the acquisition date, which is included in other long-term liabilities in the consolidated condensed balance sheet as of September 30, 2017. The fair value was based on significant inputs not observed in the market and thus represented a Level 3 measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments, will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that provide improved efficiencies by reducing study durations and costs through integrated operational management.

The acquisition of Parallel 6 was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $33.1 million of goodwill, which was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing information technology operations. The Company incurred $1.3 million in acquisition related costs that are included in selling, general and administrative expenses in the consolidated condensed statement of operations.

Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2017, and in any case, no later than one year from the acquisition date in accordance with GAAP.

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The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	132
Accounts receivable	1,231
Other current assets	26
Software intangible	15,500			5 years
Other intangibles	920			5 years
Accounts payable and accrued expenses	(885		)
Deferred revenue	(994		)
Other long-term liabilities	(2,414		)
Estimated fair value of net assets acquired	13,516
Purchase price, including contingent consideration	46,652
Total goodwill	$	33,136

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 the Company’s consolidated condensed financial statements.

Nextrials

On March 18, 2016, the Company acquired all of the outstanding shares of Nextrials, Inc., or Nextrials, a developer of web-based software which integrates electronic health records with clinical trials, for $4.8 million in cash and contingent consideration in the form of potential earn-out payments of up to $3.0 million. Earn-out payments totaling $2.0 million and $1.0 million are contingent upon the achievement of project milestones and certain external software sales targets, respectively, during the 30-month period following closing. The Company recognized a liability of approximately $2.3 million as the estimated acquisition date fair value of the earn-out; the fair value was based on significant inputs not observed in the market and thus represented a Level 3 measurement. Changes in the fair value of the contingent consideration subsequent to the acquisition date are recognized in earnings in the period of the change. The fair value of the contingent consideration increased by $0.1 million for the nine months ended September 30, 2017. The Company made a payment of $0.4 million on the contingent consideration during the nine months ended September 30, 2017. As of September 30, 2017, the earn-out liability totaled $1.4 million; which is included in accrued expenses and other current liabilities in the consolidated condensed balance sheet. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that include improved efficiencies by reducing study durations and costs through integrated operational management.

The acquisition of Nextrials was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $4.3 million of goodwill, which is assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing information technology operations.

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The Company’s purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	94
Accounts receivable	211
Other current assets	96
Property, plant and equipment	111
Software intangible	5,574			5 years
Accounts payable and accrued expenses	(1,585		)
Other long-term liabilities	(1,663		)
Estimated fair value of net assets acquired	2,838
Purchase price, including contingent consideration and net of working capital settlement	7,145
Total goodwill	$	4,307

The Company has not disclosed fiscal year 2016 or pro-forma revenue and earnings attributable to Nextrials as they did not have a material effect on the Company’s consolidated condensed financial statements.

(3) Fair Value Measurements

The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

Recurring Fair Value Measurements

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of September 30, 2017 (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Interest rate swap	$	—	$	73	$	—	$	73
Marketable securities	366		—		—		366
Total	$	366	$	73	$	—	$	439
Liabilities:
Contingent consideration	$	—	$	—	$	118,564	$	118,564
Total	$	—	$	—	$	118,564	$	118,564

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The Company's marketable securities are included in other current assets in the consolidated condensed balance sheet. These marketable securities are recorded at fair value using quoted prices in an active market.

The interest rate swap is measured at fair value using a market approach valuation technique. The valuation is based on an estimate of net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation.

The Company values contingent consideration, related to business combinations, using a weighted probability of potential payment scenarios discounted at rates reflective of the weighted average cost of capital for the businesses acquired. Key assumptions used to estimate the fair value of contingent consideration include operational milestones and the probability of achieving the specific milestones

The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for the nine months endedSeptember 30, 2017 (in thousands):

	Contingent Consideration - Accrued expenses and other liabilities			Contingent Consideration - Other long-term liabilities
Balance at December 31, 2016	$	1,735		$	1,019
Initial estimate of Symphony Health contingent consideration	90,394			18,390
Initial estimate of Parallel 6 contingent consideration	—			8,350
Payments on Nextrials contingent consideration	(400		)	—
Reclassification adjustment	1,019			(1,019		)
Change in fair value recognized in other (income) expense, net	(924		)	—
Balance at September 30, 2017	$	91,824		$	26,740

During the nine months ended September 30, 2017, the Company released the remaining $1.0 million contingent consideration liability associated with the acquisition of Value Health Solutions, Inc. as the earn-out targets were not met.

Non-recurring Fair Value Measurements

Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets 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 September 30, 2017, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaling approximately $2,246.8 million were identified as Level 3. These assets are comprised of goodwill of $1,535.1 million and identifiable intangible assets, net of $711.7 million.

Refer to Note 7, Long-Term Debt, for additional information regarding the fair value of long-term debt balances.

(4) Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, and unbilled services. As of September 30, 2017, 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 uncollectible receivables. In management’s opinion, there is no additional material credit risk beyond amounts provided for such losses.

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Service revenue from individual customers greater than 10% of consolidated service revenue in the respective periods was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Customer A	10.1	%	11.7	%	10.6	%	10.8	%
Customer B	—		10.4	%	—		10.7	%
Customer C	—		10.2	%	—		—

Accounts receivable and unbilled receivables from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled receivables at the respective dates were as follows:

	September 30,		December 31,
	2017		2016
Customer A	10.7	%	12.0	%

(5) Accounts Receivable and Unbilled Services

Accounts receivable and unbilled services include service revenue, reimbursement revenue, and amounts associated with work performed by investigators. Accounts receivable and unbilled services were as follows (in thousands):

	September 30,			December 31,
	2017			2016
Accounts receivable	$	457,306		$	284,647
Unbilled services	172,152			155,609
	629,458			440,256
Less allowance for doubtful accounts	(1,429		)	(1,203		)
Total accounts receivable and unbilled services, net	$	628,029		$	439,053

(6) Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):

	Clinical Research		Data Solutions		Consolidated
Balance at December 31, 2016	$	971,980	$	—	$	971,980
Acquisition of Symphony Health	—		500,475		500,475
Acquisition of Parallel 6	33,136		—		33,136
Acquisition of TDC joint venture	2,670		—		2,670
Acquisition of TDS	966		—		966
Currency translation	25,830		—		25,830
Balance at September 30, 2017	$	1,034,582	$	500,475	$	1,535,057

There are no accumulated impairment charges as of September 30, 2017 and December 31, 2016.

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Intangible Assets

Intangible assets consist of the following (in thousands):

	September 30,			December 31,
	2017			2016
Customer relationships	$	535,135		$	360,328
Customer backlog	123,358			119,223
Trade names (definite-lived)	28,457			25,740
Patient list, software and other intangibles	55,574			28,974
Database	64,600			—
Non-competition agreements	2,767			2,737
Total finite-lived intangible assets, gross	809,891			537,002
Accumulated amortization	(216,174		)	(181,036		)
Total finite-lived intangible assets, net	593,717			355,966
Trade names (indefinite-lived)	118,010			118,010
Total intangible assets, net	$	711,727		$	473,976

Amortization expense was $11.3 million and $29.5 million for the three and nine months ended September 30, 2017, respectively, and $11.3 million and $34.3 million for the three and nine months ended September 30, 2016, respectively.

The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):

2017 (remaining)	$	16,368
2018	60,075
2019	54,375
2020	52,462
2021	50,331
2022 and thereafter	360,106
Total	$	593,717

The estimated fair value of the Early Development Services, or EDS, reporting unit closely approximated its carrying value when the Company performed its annual goodwill impairment test during the fourth quarter of 2014. The Company made operational improvements during 2015 and 2016 in order to improve the profitability of the EDS reporting unit. As a result of these changes, EDS saw growth in both backlog and new business awards that contributed to its improved financial performance during both years and led the Company to update its forecast for future periods. The Company considered all of these factors when it performed its most recent goodwill impairment test during the fourth quarter of 2016 and it was concluded that the estimated fair value of the EDS reporting unit exceeded its carrying value by approximately $70.0 million, or 33%. Any negative changes in assumptions on revenue, new business awards, cancellations, or the Company's ability to improve operations while maintaining a competitive cost structure could adversely affect the fair value of EDS and result in significant goodwill impairment charges in 2017 or later.

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(7) Long-Term Debt

Long-term debt consists of the following (in thousands):

	September 30,			December 31,
	2017			2016
Term loans, first lien	$	1,148,125		$	625,000
Senior notes	91,441			91,441
Accounts receivable financing agreement	120,000			120,000
	1,359,566			836,441
Less debt issuance costs and discount	(9,349		)	(8,139		)
	1,350,217			828,302
Less current portion	(56,719		)	(31,250		)
Total long-term debt, net	$	1,293,498		$	797,052

Principal payments on long-term debt are due as follows (in thousands):

2017 (remaining)	$	11,250
2018	60,625
2019	180,625
2020	76,250
2021	939,375
2022 and thereafter	91,441
Total	$	1,359,566

2016 Credit Facilities

As collateral for borrowings under the senior secured credit facilities, or 2016 Credit Facilities, the Company granted a pledge on primarily all of its assets, and the stock of wholly-owned U.S. restricted subsidiaries. The Company is subject to certain financial covenants, which require the Company to maintain certain debt-to-EBITDA and interest expense-to-EBITDA ratios. The 2016 Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to create any liens, make investments and acquisitions, incur or guarantee additional indebtedness,enter into mergers or consolidations and other fundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinated debt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensome agreements with negative pledge clauses and clauses restriction, and make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under the 2016 Credit Facilities, subject to compliance with applicable law, as of September 30, 2017 and December 31, 2016, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Company does not expect to pay dividends in the foreseeable future. The Company does not expect these covenants to restrict its liquidity, financial condition or access to capital resources in the foreseeable future. The 2016 Credit Facilities also contains customary representations, warranties, affirmative covenants, and events of default.

On September 6, 2017, the Company borrowed $550.0 million under the 2016 Credit Facilities, or the Incremental Borrowing. The proceeds were primarily used to fund the acquisition of Symphony Health. In accordance with the guidance in FASB’s Accounting Standards Codification, or ASC, 470-50, "Debt - Modifications and Extinguishments," the Incremental Borrowing was accounted for as a debt modification. The Incremental Borrowing resulted in a $3.1 million loss on modification of debt, which consists of fees associated with the transaction for the nine months ended September 30, 2017.

The 2016 Credit Facilities' first lien term loan's scheduled, fixed quarterly principal payments, including the Incremental Borrowing, are as follows:

• $11.3 million per quarter, to be made commencing September 30, 2017 and made on or prior to December 31, 2017;

• $15.2 million per quarter, to be made on or after March 31, 2018, but on or prior to December 31, 2019;

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• $19.1 million per quarter, to be made on or after March 31, 2020, but on or prior to December 31, 2020;

• $23.0 million per quarter, to be made on or after March 31, 2021, but prior to September 30, 2021; and

• the remaining principal amount of the term loan on December 6, 2021. 

The variable interest rate on the Incremental Borrowing is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR rate, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA and ranges from 1.00% to 2.00%, in the case of LIBOR rate loans, and 0.00% to 1.00%, in the case of ABR rate loans. There were no other changes to the 2016 Credit Facilities as a result of the Incremental Borrowing. For the nine months ended September 30, 2017, the weighted average interest rate on the first lien term loan was 3.45%.

Revolving Credit Facilities

The Company’s revolving credit facilities provide for $125.0 million of potential borrowings and expire on December 6, 2021. The interest rate on the revolving credit facilities is based on the LIBOR with a 0% LIBOR floor or ABR rate, at the election of the Company, plus an applicable margin, based on the leverage ratio of the Company. The Company, at its discretion, may elect interest periods of 1, 2, 3 or 6 months. The Company is required to pay to the lenders a commitment fee ranging from 0.2% to 0.4% based on the Company’s debt-to-EBITDA ratio. At September 30, 2017 and December 31, 2016, the Company had no outstanding borrowings under the revolving credit facilities. In addition, at September 30, 2017 and December 31, 2016, the Company had $4.5 million and $7.0 million, respectively, in letters of credit outstanding, which are secured by the revolving credit facilities.

Senior Notes

On March 17, 2016, the Company repaid $133.6 million aggregate principal amount of its 9.5% senior notes due 2023, or Senior Notes, as part of a cash tender offer. In accordance with the guidance in the ASC 470-50, "Debt—Modifications and Extinguishments," the debt repayment was accounted for as a partial debt extinguishment. The repayment resulted in a $21.5 million loss on extinguishment of debt, which consists of a $17.4 million early tender premium, a $3.7 million write-off of unamortized debt issuance costs and $0.4 million of fees associated with the transaction for the nine months ended September 30, 2016.

The Senior Notes agreement contains certain provisions that restrict the payment of dividends from the Company’s subsidiaries to the parent company. As a result, there are no material balances present within the parent company that are available for the payment of dividends as the parent company did not have any net income during 2016 or the nine months ended September 30, 2017, that was free of restrictions. The Company does not expect to pay dividends in the foreseeable future.

Accounts Receivable Financing Agreement

In March 2016, the Company entered into a $140.0 million accounts receivable financing agreement, of which $120.0 million was outstanding as of September 30, 2017 and December 31, 2016. The borrowings were used to repay amounts outstanding on the Company’s revolving credit facility that were used to fund the cash tender offer for the Senior Notes.

Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.6%.  The Company may prepay loans upon one business day prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice. For the nine months ended September 30, 2017, the weighted average interest rate on the accounts receivable financing agreement was 2.91%.

The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions which provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

The accounts receivable financing agreement terminates on March 22, 2019, unless terminated earlier pursuant to its terms. At September 30, 2017 and December 31, 2016, there was $20.0 million of remaining capacity available under the accounts receivable financing agreement.

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Fair Value of Debt

The estimated fair value of the Company’s debt was $1,368.8 million and $844.2 million at September 30, 2017 and December 31, 2016, respectively. The fair value of the Senior Notes, which totaled $100.7 million and $99.2 million at September 30, 2017 and December 31, 2016, respectively, was determined based on Level 2 inputs using the market approach, which is primarily based on rates at which the debt is traded among financial institutions. The fair value of the term loans, borrowings under credit facilities, and accounts receivable financing agreement which totaled $1,268.1 million and $745.0 million at September 30, 2017 and December 31, 2016, respectively, was determined based on Level 3 inputs, which is primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.

(8) Stockholders’ Equity

Authorized Shares

The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01.

Noncontrolling Interest

Below is a summary of noncontrolling interest for the nine months ended September 30 (in thousands):

	2017			2016
Balance as of January 1,	$	—		$	—
Investment by noncontrolling interest	5,440			—
Comprehensive income (loss)
Net income	513			—
Foreign currency adjustments, net of income tax	(90		)	—
Balance as of September 30,	$	5,863		$	—

(9) Stock-Based Compensation

The Company granted 1,831,000 service-based options and 131,044 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $46.0 million and $8.3 million, respectively, during the nine months ended September 30, 2017.

Aggregated information regarding the Company’s option plans is summarized below:

	Options		Wtd. Average Exercise Price		Wtd. Average Remaining Contractual Life (in years)	Intrinsic Value (millions)
Outstanding at December 31, 2016	5,507,347		$	15.38	6.7	$	218.9
Granted	1,831,000		74.93
Exercised	(1,758,846	)	9.47
Expired or forfeited	(73,072	)	26.94
Outstanding at September 30, 2017	5,506,429		$	36.91	7.7	$	216.2
Exercisable at September 30, 2017	2,557,710		$	13.70	6.3	$	159.8

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The Company’s RSAs/RSUs activity in 2017 is as follows:

	Awards		Wtd. Average Grant-Date Fair Value		Intrinsic Value (millions)
Unvested at December 31, 2016	188,590		$	32.63	$	10.4
Granted	131,044		63.05
Forfeited	(2,000	)	58.95
Vested	(5,805	)	38.81
Unvested at September 30, 2017	311,829		$	45.14	$	23.8

Stock-based compensation expense related to employee stock options and RSAs/RSUs is summarized below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Direct costs	$	956	$	438	$	2,208	$	1,319
Selling, general and administrative	2,493		1,228		5,478		3,621
Transaction-related costs	5,294		—		5,294		29,421
Total stock-based compensation expense	$	8,743	$	1,666	$	12,980	$	34,361

All stock options granted under the 2013 Stock Incentive Plan for Key Employees of PRA Health Sciences, Inc. and its Subsidiaries, or the Plan, are subject to transfer restrictions of the stock option's underlying shares once vested and exercised. This lack of marketability was included as a discount when calculating the grant date value of these options. In conjunction with secondary offerings, the transfer restrictions on a portion of such shares issuable upon exercise of vested options granted under the Plan were released. The release of the transfer restrictions is considered a modification under ASC Topic 718, “Stock Compensation.” As a result of these modifications, the Company incurred approximately $5.3 million and $4.9 million of incremental compensation expense associated with service-based options during the nine months ended September 30, 2017 and September 30, 2016, respectively, which is included in transaction-related costs in the accompanying consolidated condensed statement of operations.

In December 2013, the Company granted certain employees market-based options under the Plan that vest only upon the achievement of a specified internal rate of return from a liquidity event (“2.0x Options”). At the time of grant, no compensation expense was recorded as the 2.0x Options vest upon a liquidity event, which is not considered probable until the date it occurs. On January 20, 2016, the Compensation Committee of the Board of Directors adopted a resolution to adjust the vesting criteria for all 2.0x Options granted and still outstanding on such date.  Under the revised vesting criteria, the 2.0x Options vest upon the announcement of a secondary offering. This modification resulted in Type IV Improbable-to-Improbable modification. Since the secondary offering was deemed improbable due to the fact that it is outside of the Company’s control and cannot be considered probable until the date it occurs, no compensation expense was recognized on the January 20, 2016 modification date. On March 2, 2016, the Company announced a secondary offering of shares by KKR and certain management stockholders, and it became probable that the 2.0x Options would vest. In total, 835,5512.0x Options held by current employees were modified. As a result of this modification, and the modification associated with the transfer restrictions releases noted above, the Company incurred approximately $24.5 million of incremental compensation expense associated with the 2.0x Options during the nine months ended September 30, 2016, which is included in transaction-related costs in the accompanying consolidated condensed statement of operations.

Employee Stock Purchase Plan

In April 2017, the Board of Directors approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan (“ESPP”) which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 10% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of the offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period.

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Offering periods under the ESPP will generally be in six month increments, commencing on January 1 and July 1 of each calendar year with the compensation committee having the right to establish different offering periods.

(10) Income Taxes

The Company’s effective income tax rate was (0.2)% and 25.8% for the nine months ended September 30, 2017 and 2016, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 35% for the nine months ended September 30, 2017 is primarily due to (i) the benefit realized from the tax deduction of stock awards in excess of the amount recognized in the financial statements per the guidance under ASU No. 2016-09, and (ii) the release of the valuation allowance against the Company's federal net deferred tax assets as a result of the acquisition of Symphony Health.

GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities.

As of September 30, 2017, the Company’s liability for unrecognized tax benefits was $13.0 million. If any portion of this $13.0 million is recognized that impacts the effective tax rate, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution of audits is highly uncertain, the Company believes it is reasonably possible that approximately $4.5 million of gross unrecognized tax benefits will change in the next 12 months as a result of pending audit settlements or statute of limitations expirations.

The Company files federal, state, and foreign tax returns. For federal purposes, the Company is generally no longer subject to tax examinations for years ended December 31, 2013 and prior. For state tax returns, the Company is generally no longer subject to tax examinations for years prior to 2012. For foreign purposes, the Company is generally no longer subject to examination for tax periods 2009 and prior. Certain carryforward tax attributes generated in prior years remain subject to examination and adjustment.

(11) Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions.  Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company.

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 the Company is subject to a local tax on services. The Company has not recorded a liability associated with the claim, which totaled $5.4 million at September 30, 2017, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $5.4 million has been made to the Brazilian 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 on the consolidated condensed balance sheet. In June 2015, the Judiciary Court of Justice of the State of Sao Paulo ruled in the favor of the Company, however, the judgment was 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 from the 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 years 2011, 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 the lower court's verdict for the period November 2013 through September 2017 as the Judiciary Court of Justice of the State of Sao Paulo only reviewed the facts that pertained to the period before November 2013.

(12) Derivatives

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk. Accordingly, the Company has instituted interest rate hedging programs that are accounted for in accordance with ASC 815, “Derivatives and Hedging.” The interest rate hedging program is a cash flow hedge program designed to minimize interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.

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The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2017 and December 31, 2016 (in thousands):

		September 30, 2017				December 31, 2016
	Balance Sheet Classification	Notional amount		Asset/ (Liability)		Notional amount		Asset/ (Liability)
Derivatives in an asset position:
Interest rate swap	Other assets	$	250,000	$	73	$	—	$	—
Derivatives in a liability position:
Interest rate swap	Other long-term liabilities	$	—	$	—	$	250,000	$	(590	)

The Company records the effective portion of any change in the fair value of derivatives designated as hedging instruments under ASC 815 to other accumulated comprehensive loss in the Company's consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings when the hedged item affects earnings or is no longer expected to occur. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period.

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts)	2017			2016			2017			2016
Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) on derivatives	$	35		$	127		$	(32	)	$	(2,546	)
Amount of loss recognized in other income (expense), net on derivatives (ineffective portion)	—			—			—			—
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives	(1,758		)	(1,617		)	(5,175		)	(4,242		)

The Company expects that $6.6 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.

(13) Accumulated Other Comprehensive Loss

Below is a summary of the components of accumulated other comprehensive loss (in thousands):

	Foreign Currency Translation			Derivative Instruments, Net of Tax			Total
Balance at December 31, 2016	$	(201,091	)	$	(23,595	)	$	(224,686	)
Other comprehensive income before reclassifications	75,167			(21		)	75,146
Reclassification adjustments	—			3,249			3,249
Balance at September 30, 2017	$	(125,924	)	$	(20,367	)	$	(146,291	)

The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound and Euro exchange rates against the U.S. dollar. The U.S. dollar weakened by 8.6% and 12.0% versus the British pound and Euro, respectively, between December 31, 2016 and September 30, 2017. The movement in the British pound and Euro represented $42.1 million and $26.8 million, respectively, out of the $75.2 million foreign currency translation adjustment during the nine months ended September 30, 2017. The remaining foreign currency translation adjustment is primarily attributable to the U.S. dollar’s depreciation against other major world-wide currencies, including the Canadian dollar and the Russian ruble.

(14) Net Income Per Share

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Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicable period. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plan.

The following table reconciles the basic to diluted weighted average shares outstanding (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Basic weighted average common shares outstanding	62,730	60,937	62,185	60,579
Effect of dilutive stock options and RSAs/RSUs	3,142	3,584	3,498	3,689
Diluted weighted average common shares outstanding	65,872	64,521	65,683	64,268
Anti-dilutive shares	733	359	381	314

The anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, and unrecognized compensation expense for outstanding awards.

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(15) Segments

In conjunction with the acquisition of Symphony Health on September 6, 2017, the Company expanded its reporting segments. The Company is now managed through two reportable segments, Clinical Research and Data Solutions. Clinical Research, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services. Data Solutions provides mission critical information, technology solutions and real-world insights and services to the Company’s life science clients. Reimbursement revenue and reimbursable out-of-pocket costs are not presented, as this measure is not used by the chief operating decision maker to assess the Company's performance. The Company’s reportable segment information is presented below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Service revenue:
Clinical Research	$	475,588		$	399,841		$	1,360,610		$	1,166,410
Data Solutions	18,962			—			18,962			—
Total service revenue	494,550			399,841			1,379,572			1,166,410
Direct Costs:
Clinical Research	314,904			259,910			903,027			758,333
Data Solutions	11,961			—			11,961			—
Total direct costs	326,865			259,910			914,988			758,333
Gross Profit:
Clinical Research	160,684			139,931			457,583			408,077
Data Solutions	7,001			—			7,001			—
Total gross profit	$	167,685		$	139,931		$	464,584		$	408,077
Less expenses not allocated to segments:
Selling, general and administrative	79,307			67,190			229,770			199,648
Transaction-related costs	12,740			—			12,740			31,785
Depreciation and amortization	18,853			17,708			50,146			52,246
Loss on disposal of fixed assets, net	8			219			240			290
Consolidated income from operations	56,777			54,814			171,688			124,108
Interest expense, net	(11,557		)	(13,779		)	(31,088		)	(42,525		)
Loss on modification or extinguishment of debt	(3,089		)	—			(3,089		)	(21,485		)
Foreign currency (losses) gains, net	(12,794		)	1,182			(35,004		)	9,264
Other income (expense), net	1,004			20			724			(85		)
Consolidated income before income taxes and equity in income of unconsolidated joint ventures	$	30,341		$	42,237		$	103,231		$	69,277

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Item 2. 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 in conjunction with our consolidated condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

We use the terms “we,” “us,” “our,” or the “Company” in this report to refer to PRA Health Sciences, Inc. and its subsidiaries.

Overview

We are one of the world’s leading global contract research organizations, or CROs, by revenue, providing outsourced clinical research and development services and data solutions to the biotechnology and pharmaceutical industries. 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 global basis. Our therapeutic expertise includes areas that are among the largest in pharmaceutical development, and we focus in particular on oncology, central nervous system, inflammation, respiratory, cardiometabolic and infectious diseases. We believe that we further differentiate ourselves from our competitors through our investments in data, medical informatics and clinical technologies designed to enhance efficiencies, improve study predictability and provide better transparency for our clients throughout their clinical development processes.

In September 2017, we completed the acquisition of Symphony Health Solutions Corporation, or Symphony Health, to better serve our clients across their entire product lifecycle by (i) improving clinical trial design, recruitment, and execution; (ii) creating real-world data solutions based on the use of medicines by actual patients in normal situations; and (iii) increasing the efficiency of healthcare companies commercial organizations through enhanced analytics and outsourcing services. The acquisition of Symphony Health was accounted for as a business combination and the acquired results of operations are included in our consolidated financial information since the date of the acquisition. See Note 2 to our consolidated condensed financial statements included elsewhere in this Form 10-Q for additional details regarding our business combinations.

Historically, we reported one segment focused on providing outsourced clinical research and clinical trial related services.  These operations are now being reported as the Clinical Research segment. The acquisition of Symphony Health resulted in a new segment, referred to as the Data Solutions segment, which is focused on providing mission critical information, technology solutions and real-world insights and services to the Company’s life sciences clients. 

Contracts define the relationships with our clients and establish the way we earn revenue. Three types of relationships are most common: a fixed-fee contract, a time and materials contract and fee-for-service arrangements. In cases where the contracts are fixed price, we may bear the cost of overruns for the contracted scope, or we may benefit if the costs are lower than we anticipated for the contracted scope. In cases where our contracts are fee-for-service, the contracts contain an overall budget for contracted resources. If actual resources used are lower than anticipated, the client generally keeps the savings and we may be responsible for covering the cost of the unused resource if we are unable to redeploy the resource. For time and material contracts, we bill the client only for the actual hours we spend to complete the contracted scope based upon stated hourly rates by position. The duration of our contracts range from a few months to several years. Revenue 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, we recognize revenue for the services provided on fixed-fee contracts in our Clinical Research segment based on the proportional performance methodology, which determines the proportion of outputs or performance obligations, which have been completed or delivered compared to the total contractual outputs for performance obligations. To measure performance, we compare the contract costs incurred to estimated total contract costs through completion. As part of the client proposal and contract negotiation process, we develop a detailed project budget for the direct costs based on the scope of the work, the complexity of the study, the geographical locations involved and our historical experience. We then establish the individual contract pricing based on our internal pricing guidelines, discount agreements, if any, and negotiations with the client. The estimated total contract costs are reviewed and revised periodically throughout the lives of the contracts, with adjustments to revenue resulting from such revisions being recorded on a cumulative basis in the period in which the revisions are first identified. Our costs consist of expenses necessary to carry out the clinical development project undertaken by us on behalf of the client. These costs primarily include the expense of obtaining appropriately qualified labor to administer the project, which we refer to as direct cost headcount. Other costs we incur are attributable to the expense of operating our business generally, such as leases and maintenance of information technology and equipment. We recognize revenue for services provided on fixed-fee contracts in our Data Solutions segment

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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 the period in which services are performed.

How We Assess the Performance of Our Business

In addition to our U.S. generally accepted accounting principles, or GAAP, financial measures, we review various financial and operational metrics, including new business awards, cancellations, and backlog. Many of our current contracts include clinical trials covering multiple geographic locations. We utilize the same management systems

and reporting tools to monitor and manage these activities on the same basis worldwide.

Our gross new business awards for our Clinical Research segment for the nine months ended September 30, 2017 and 2016 were $1,999.9 million and $1,686.4 million, respectively. New business awards 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 the amount of revenue expected to be recognized is measurable. The number of new business awards can vary significantly from year to year, and awards can have terms 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 be recognized 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 over the 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 or electronic correspondence that the work should cease. During the nine months ended September 30, 2017 and 2016 we had $233.4 million and $197.2 million, respectively, of cancellations for which we received correspondence from the client for our Clinical Research segment. The number of cancellations can vary significantly from year to year. The value 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 for our Clinical Research segment. Backlog varies from period to period depending upon new business awards and contract modifications, cancellations, and the amount of service revenue recognized under existing contracts. Our backlog at September 30, 2017 and 2016 was $3.4 billion and $2.8 billion, respectively.

Sources of Revenue

Total revenues are comprised of service revenue and reimbursement revenue, each of which is described below.

Service Revenue

We generally enter into contracts with customers to provide services with payments based on either fixed-fee, time and materials, or fee-for-service arrangements. Revenue 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, we recognize revenue for the services provided on fixed-fee contracts in our Clinical Research segment based on the proportional performance methodology, which determines the proportion of outputs or performance obligations which have been completed or delivered compared to the total contractual outputs for performance obligations. To measure performance, we compare the contract costs incurred to estimated total contract costs through completion. As part of the client proposal and contract negotiation process, we develop a detailed project budget for the direct costs based on the scope of the work, the complexity of the study, the geographical location involved and our historical experience. We then establish the individual contract pricing based on our internal pricing guidelines, discount agreements, if any, and negotiations with the client. The estimated total contract costs are reviewed and revised periodically throughout the lives of the contracts, with adjustments to revenue resulting from such revisions being recorded on a cumulative basis in the period in which the revisions are first identified. We recognize revenue for services provided on fixed-fee contracts in our Data Solutions segment 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. Billable hours typically fluctuate during the terms of individual contracts, as services we provide generally increase at the beginning of a study and decrease toward the end of a study. Revenues and the related costs of fee-for-service contracts are recognized in the period in which services are performed.

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A majority of our contracts undergo modifications over the contract period and our contracts provide for these modifications. During the modification process, we recognize revenue to the extent we incur costs, provided client acceptance and payment is deemed reasonably assured.

We often offer volume discounts to our large customers based on annual volume thresholds. We record an estimate of the annual volume rebate as a reduction of revenue throughout the period based on the estimated total rebate to be earned for the period.

Most of our contracts can be terminated by the client either immediately or after a specified period, typically 30 to 60 days, following notice. In the case of early termination, these contracts typically require payment to us of fees earned to date, and in some cases, a termination fee or some portion of the fees or profit that we could have earned under the contract if it had not been terminated early. Based on ethical, regulatory, and health considerations, this wind-down activity may continue for several quarters or years. Therefore, revenue recognized prior to cancellation generally does not require a significant adjustment upon cancellation.

Increases in the estimated total direct costs to complete a contract without a corresponding proportional increase to the total contract price result in a cumulative adjustment to the amount of revenue recognized in the period the change in estimate is determined.

Our service revenue was $1,379.6 million and $1,166.4 million during the nine months ended September 30, 2017 and 2016, respectively. Changes in service revenue from period to period are driven primarily by changes in backlog at the beginning of a period, as well as new business awards during such period. Additionally, service revenue and billable hours will generally be impacted by the mix of studies that are active during a period, as different studies have different staffing requirements, as well as the life cycles of projects that are active during a period.

Reimbursement Revenue and Reimbursable Out-of-Pocket Costs

We incur out-of-pocket costs, which are reimbursable by our customers. We include these out-of-pocket costs as reimbursement revenue and reimbursable out-of-pocket expenses in our consolidated condensed statement of operations.

As is customary in our industry, we also routinely enter into separate agreements on behalf of our clients with independent physician investigators in connection with clinical trials. We also receive funds from our clients for investigator fees, which are netted against the related costs, since such fees are the obligation of our clients, without risk or reward to us. We are not obligated either to perform the service or to pay the investigator in the event of default by the client. In addition, we do not pay the independent physician investigator until funds are received from the client. Accordingly, unlike reimbursable out-of-pocket costs, we do not recognize these investigator fees in revenue.

Reimbursement costs and investigator fees are not included in our backlog because they are pass-through costs to our clients.

We believe that the fluctuations in reimbursement costs and reimbursement revenue from period to period are not meaningful to our underlying performance.

Costs and Expenses

Our costs and expenses are comprised primarily of our direct costs, selling, general and administrative costs, depreciation and amortization and income taxes. In addition, we incur reimbursable out-of-pocket expenses; however, as noted above, our reimbursable out-of-pocket expenses are directly offset by our reimbursement revenue. Since reimbursement revenue is offset by our out-of-pocket reimbursable expenses, we monitor and measure costs as a percentage of service revenue rather than total revenue as we believe this is a more meaningful comparison and better reflects the operations of our business.

Direct Costs

Our direct costs consist primarily of labor-related charges. They include elements such as salaries, benefits and incentive compensation for our employees. In addition, we utilize staffing agencies to procure primarily part time individuals to perform work on our contracts. For the nine months ended September 30, 2017 and 2016, the labor-related charges were 95.5% and 96.6% of our total direct costs, respectively. The cost of labor procured through staffing agencies is included in these percentages and represented 5.6% and 5.0% of total direct costs for the nine months ended September 30, 2017 and 2016, respectively. Our remaining direct costs are items such as travel, meals, postage and freight, patient costs, medical waste and

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supplies. The total of all these items was 4.5% and 3.4% of total direct costs for the nine months ended September 30, 2017 and 2016, respectively.

Historically, direct costs have increased with an increase in service revenues. The future relationship between direct costs and service revenues may vary from historical relationships. Several factors will cause direct costs to decrease as a percentage of service revenues. Deployment of our billable staff in an optimally efficient manner has the greatest impact on our ratio of direct cost to service revenue. The most effective deployment of our staff is when they are fully engaged in billable work and are accomplishing contract related activities 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 service revenues: our staff are not fully deployed, as is the case when there are unforeseen cancellations or delays, or when our staff are accomplishing tasks at levels of effort that exceed budget, such as rework, as well as pricing pressure from increased competition.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of administration payroll and benefits, marketing expenditures, and overhead costs such as information technology and facilities costs. These expenses also include central overhead costs that are not directly attributable to our operating business and include certain costs related to insurance, professional fees and property.

Loss on Modification or Extinguishment of Debt

Loss on modification of debt for the nine months ended September 30, 2017 consists of fees associated with the incremental borrowing under the 2016 Credit Facilities, or Incremental Borrowing. Loss on extinguishment of debt for the nine months ended September 30, 2016 consists of an early tender premium, the write-off of unamortized debt issuance costs and miscellaneous costs incurred as a result of our repayment of $133.6 million of our 9.5% senior notes due 2023, or Senior Notes.

Transaction-Related Costs

Transaction-related costs for the nine months ended September 30, 2017 consists of expenses incurred with our secondary offering, acquisition of Symphony Health Solutions Corporation, or Symphony Health, and stock-based compensation expense related to the release of a portion of the transfer restrictions on vested options. Transaction-related costs for the nine months ended September 30, 2016 consists of expenses incurred with our secondary offerings, transaction-related stock-based compensation awards and the closing of our accounts receivable financing agreement.

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 of three to seven years for computer hardware and software and five to seven years for furniture and equipment. Leasehold improvements are depreciated over the lesser of the life of the lease term or the useful life of the improvements.

Amortization expense consists of amortization recorded on acquisition-related intangible assets. Customer relationships, backlog and finite-lived trade names are amortized on an accelerated basis, which coincides with the period of economic benefit 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 and indefinite-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-tax earnings among several different taxing jurisdictions. Our effective tax rate can also vary based on changes in the tax rates of the different jurisdictions. Our effective 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 significant non-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. The carryforward periods for these losses vary from five years to an indefinite carryforward period depending on the jurisdiction. Our ability to offset future taxable income with the net operating loss carryforwards may be limited in certain instances, including changes in ownership.

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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 to exchange rate fluctuations with respect to these currencies. We have translated these currencies into U.S. dollars using the following average exchange rates:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
U.S. dollars per:
Euro	1.17	1.12	1.11	1.12
British pound	1.31	1.31	1.27	1.39

Results of Operations

Consolidated Results of Operations for the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016

	Three Months Ended September 30,
	2017			2016
(in thousands)
Revenue
Service revenue	$	494,550		$	399,841
Reimbursement revenue	87,459			53,414
Total revenue	582,009			453,255
Operating expenses
Direct costs	326,865			259,910
Reimbursable out-of-pocket costs	87,459			53,414
Selling, general and administrative	79,307			67,190
Transaction-related costs	12,740			—
Depreciation and amortization	18,853			17,708
Loss on disposal of fixed assets	8			219
Income from operations	56,777			54,814
Interest expense, net	(11,557		)	(13,779		)
Loss on modification of debt	(3,089		)	—
Foreign currency (losses) gains, net	(12,794		)	1,182
Other expense, net	1,004			20
Income before income taxes and equity in income of unconsolidated joint ventures	30,341			42,237
(Benefit from) provision for income taxes	(18,241		)	10,821
Income before equity in income of unconsolidated joint ventures	48,582			31,416
Equity in income of unconsolidated joint ventures, net of tax	24			33
Net income	48,606			31,449
Net income attributable to noncontrolling interest	(401		)	—
Net income attributable to PRA Health Sciences, Inc.	$	48,205		$	31,449

Service revenue increased by $94.7 million, or 23.7%, from $399.8 million during the three months ended September 30, 2016 to $494.6 million during the three months ended September 30, 2017. Service revenue for the three months ended September 30, 2017 benefited from an increase in billable hours, an increase in the effective rate of hours billed on our studies, a favorable impact of $2.9 million from foreign currency exchange rate fluctuations, and an increase of $19.0 million due to the acquisition of Symphony Health which was completed on September 6, 2017. The growth in service revenue and the increase in billable hours 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 the life cycles of projects that were active during the period, the growth in

30

new business awards 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. New business awards arise when a client selects us to execute its trial. The number of awards can vary significantly from period to period and our studies have terms ranging from several months to several years. The increase 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 clients and services that we provide to those clients.

Direct costs increased by $67.0 million, or 25.8%, from $259.9 million during the three months ended September 30, 2016 to $326.9 million during the three months ended September 30, 2017. Direct costs as a percentage of service revenue increased from 65.0% during the three months ended September 30, 2016 to 66.1% during the three months ended September 30, 2017. The increase in direct costs as a percentage of service revenue is primarily due to an increase in salaries and related benefits of $51.3 million, as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and our future growth, an increase by $12.0 million due to the acquisition of Symphony Health, and an unfavorable impact of $3.7 million from foreign currency exchange rate fluctuations.

Selling, general and administrative expenses increased by $12.1 million, or 18.0%, from $67.2 million during the three months ended September 30, 2016 to $79.3 million during the three months ended September 30, 2017. The increase in selling, general and administrative expenses is primarily due to an increase in salaries and related benefits as we continue to hire staff to support our growing business and increased facility costs related to additional office space needed for our growth. Selling, general and administrative expenses as a percentage of service revenue decreased from 16.8% during the three months ended September 30, 2016 to 16.0% during the three months ended September 30, 2017. The decrease in selling, general and administrative expenses as a percentage of service revenue is primarily related to our continued efforts to effectively leverage our selling and administrative functions.

For the three months ended September 30, 2017, we incurred transaction-related costs of $12.7 million. These costs consist of $6.4 million of fees incurred in connection with the acquisition of Symphony Health, $5.3 million of stock-based compensation expense related to the release of a portion of the transfer restrictions on vested options, and $1.0 million of expenses incurred in connection with our August 2017 secondary offering. No transaction-related expenses were incurred for the three months ended September 30, 2016.

Depreciation and amortization expense increased by $1.1 million, or 6.5%, from $17.7 million during the three months ended September 30, 2016 to $18.9 million during the three months ended September 30, 2017. Depreciation and amortization expense as a percentage of service revenue was 4.4% during the three months ended September 30, 2016 and 3.8% during the three months ended September 30, 2017. The decrease in depreciation and amortization expense as a percentage of service revenue is primarily due to the continued amortization of our acquired intangibles which are amortized on an accelerated basis.

Interest expense, net, decreased by $2.2 million, or 16.1%, from $13.8 million during the three months ended September 30, 2016 to $11.6 million during the three months ended September 30, 2017. The refinancing of our variable rate first lien term loans in December 2016 contributed to a 1.0% decrease in the weighted average interest rate on our outstanding debt as compared to the three months ended September 30, 2016; this decrease in weighted average interest rate resulted in a $1.6 million reduction in interest expense, which was partially offset by a $1.3 million increase in interest expense due to the Incremental Borrowing during the three months ended September 30, 2017. Additionally, interest expense decreased by $0.7 million due to lower amortization of debt issuance costs, which was offset by an increase of $0.1 million related to the amortization of our terminated interest rate swaps and interest expense on our current interest rate swap. 

Loss on modification of debt was $3.1 million during the three months ended September 30, 2017 and there were no losses on modification of debt during the three months ended September 30, 2016. The loss on modification of debt incurred during the three months ended September 30, 2017 was associated with the Incremental Borrowing to fund the acquisition of Symphony Health. The $3.1 million loss consists of fees associated with the transaction for the three months ended September 30, 2017.

Foreign currency (losses) gains, net, changed by $14.0 million from gains of $1.2 million during the three months ended September 30, 2016 to losses of $12.8 million during the three months ended September 30, 2017. Foreign exchange gains and losses are due to fluctuations in the U.S. dollar, gains or losses that arise in connection with the revaluation of short-term inter-company balances between our domestic and international subsidiaries, and gains or losses from foreign currency transactions, such as those resulting from the settlement of third-party accounts receivables and payables denominated in a currency other than the local currency of the entity making the payment. During the three months ended September 30, 2017, foreign currency losses were primarily due to the U.S. dollar weakening against the GBP, EUR, Canadian dollar, or CAD, and Russian ruble, or RUB, by 3.1%, 3.3%, 4.2%, and 2.5%, respectively. During the three months ended September 30, 2016,

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foreign currency gains were primarily due the strengthening of the U.S. dollar against the GBP by 3.0%, partially offset by a weakening against the EUR by 1.3%,

Provision for income taxes decreased by $29.1 million from a provision of $10.8 million during the three months ended September 30, 2016 to a benefit of $18.2 million during the three months ended September 30, 2017. Our effective tax rate was 25.6% and (60.1)% during the three months ended September 30, 2016 and 2017, respectively. The decrease in the effective tax rate of 85.7% was primarily attributable to (i) the benefit realized from the tax deduction of stock awards in excess of the amount recognized in the financial statements per the guidance under ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” and (ii) the release of the valuation allowance against the federal net deferred tax assets as a result of the acquisition of Symphony Health.

Consolidated Results of Operations for the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

	Nine Months Ended September 30,
	2017			2016
(in thousands)
Revenue
Service revenue	$	1,379,572		$	1,166,410
Reimbursement revenue	223,921			172,915
Total revenue	1,603,493			1,339,325
Operating expenses
Direct costs	914,988			758,333
Reimbursable out-of-pocket costs	223,921			172,915
Selling, general and administrative	229,770			199,648
Transaction-related costs	12,740			31,785
Depreciation and amortization	50,146			52,246
Loss on disposal of fixed assets	240			290
Income from operations	171,688			124,108
Interest expense, net	(31,088		)	(42,525		)
Loss on modification or extinguishment of debt	(3,089		)	(21,485		)
Foreign currency (losses) gains, net	(35,004		)	9,264
Other income (expense), net	724			(85		)
Income before income taxes and equity in income of unconsolidated joint ventures	103,231			69,277
(Benefit from) provision for income taxes	(165		)	17,869
Income before equity in income of unconsolidated joint ventures	103,396			51,408
Equity in income of unconsolidated joint ventures, net of tax	92			2,742
Net income	103,488			54,150
Net income attributable to noncontrolling interests	(513		)	—
Net income attributable to PRA Health Sciences, Inc.	$	102,975		$	54,150

Service revenue increased by $213.2 million, or 18.3%, from $1,166.4 million during the nine months ended September 30, 2016 to $1,379.6 million during the nine months ended September 30, 2017. Service revenue for the nine months ended September 30, 2017 benefited from an increase in billable hours, an increase in the effective rate of hours billed on our studies, a favorable impact of $0.2 million from foreign currency exchange fluctuations, and an increase of $19.0 million due to the acquisition of Symphony Health which was completed on September 6, 2017. The growth in service revenue was 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 the life 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 we serve, and more effective sales efforts and the growth in the overall CRO market. New business awards arise when a client selects us to execute its trial. The number of awards can vary significantly from period to period and our studies have terms ranging from several months to several years. The increase 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 clients and services that we provide to those clients.

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Direct costs increased by $156.7 million, or 20.7%, from $758.3 million during the nine months ended September 30, 2016 to $915.0 million during the nine months ended September 30, 2017. Direct costs as a percentage of service revenue increased from 65.0% during the nine months ended September 30, 2016 to 66.3% during the nine months ended September 30, 2017. The increase in direct costs as a percentage of revenue is primarily due to an increase in salaries and related benefits of $140.0 million, as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and our future growth, an increase of $12.0 million due to the acquisition of Symphony Health, partially offset by a favorable impact of $1.5 million from foreign currency exchange rate fluctuations.

Selling, general and administrative expenses increased by $30.1 million, or 15.1%, from $199.6 million during the nine months ended September 30, 2016 to $229.8 million during the nine months ended September 30, 2017. The increase in selling, general and administrative expenses is primarily due to an increase in salaries and related benefits as we continue to hire staff to support our growing business and increased facility costs related to additional office space needed for our growth. Selling, general and administrative expenses as a percentage of service revenue decreased from 17.1% during the nine months ended September 30, 2016 to 16.7% during the nine months ended September 30, 2017. The decrease in selling, general and administrative expenses as a percentage of service revenue is primarily related to our continued efforts to effectively leverage our selling and administrative functions as we continue to grow revenue.

For the nine months ended September 30, 2017, we incurred transaction-related costs of $12.7 million. These costs consist of $6.4 million of fees incurred in connection with the acquisition of Symphony Health, $5.3 million of stock-based compensation expense related to the release of a portion of the transfer restrictions on vested options, and $1.0 million of third-party costs incurred in connection with our August 2017 secondary offering. During the nine months ended September 30, 2016, we incurred transaction-related expenses of $31.8 million. These costs consist of $4.9 million of stock-based compensation expense associated with the release of the transfer restrictions on a portion of shares issuable upon exercise of vested service-based options in connection with the announcement of our March and May 2016 secondary offerings. These costs also include $24.5 million of stock-based compensation expense related to the vesting and release of the transfer restrictions of certain performance-based stock options. In addition, we incurred $2.4 million of third-party fees associated with the secondary offering and the closing of our accounts receivable financing agreement.

Depreciation and amortization expense decreased by $2.1 million, or 4.0%, from $52.2 million during the nine months ended September 30, 2016 to $50.1 million during the nine months ended September 30, 2017. Depreciation and amortization expense as a percentage of service revenue was 4.5% during the nine months ended September 30, 2016 and 3.6% during the nine months ended September 30, 2017. The decrease in depreciation and amortization expense as a percentage of service revenue is primarily due to the continued amortization of our acquired intangibles which are amortized on an accelerated basis.

Interest expense, net, decreased by $11.4 million, or 26.9%, from $42.5 million during the nine months ended September 30, 2016 to $31.1 million during the nine months ended September 30, 2017. The cash tender of our Senior Notes and refinancing of our variable rate first lien term loans contributed to a 1.4% decrease in the weighted average interest rate on our outstanding debt as compared to the nine months ended September 30, 2016; this decrease in weighted average interest rate resulted in a $10.3 million reduction in interest expense. The Incremental Borrowing during the nine months ended September 30, 2017 contributed to a $1.3 million increase in interest expense. Additionally, interest expense decreased by $2.0 million due to lower amortization of debt issuance costs, which was partially offset by an increase of $0.9 million related to the amortization of our terminated interest rate swaps and interest expense on our current interest rate swap.

Loss on modification or extinguishment of debt was $3.1 million during the nine months ended September 30, 2017 compared to $21.5 million during the nine months ended September 30, 2016 . The loss on modification of debt during the nine months ended September 30, 2017 consists of $3.1 million in fees associated with the Incremental Borrowing under the 2016 Credit Facilities to fund the acquisition of Symphony Health. The loss on extinguishment of debt during the nine months ended September 30, 2016 was associated with our cash tender offer on our Senior Notes. The loss consists of the $17.4 million early tender premium, the write-off of $3.7 million of unamortized debt issuance costs, and $0.4 million of other costs associated with the transaction.

Foreign currency (losses) gains, net, changed by $44.3 million from gains of $9.3 million during the nine months ended September 30, 2016 to losses of $35.0 million during the nine months ended September 30, 2017. Foreign exchange gains and losses are due to fluctuations in the U.S. dollar, gains or losses that arise in connection with the revaluation of short-term inter-company balances between our domestic and international subsidiaries, and gains or losses from foreign currency transactions, such as those resulting from the settlement of third-party accounts receivables and payables denominated in a currency other than the local currency of the entity making the payment. During the nine months ended September 30, 2017, foreign currency losses were primarily due to the U.S. dollar weakening against the GBP, EUR, CAD, and RUB, by 8.6%, 12.0%, 7.9% and 6.0%, respectively. During the nine months ended September 30, 2016, foreign currency gains were primarily

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due to the weakening of the GBP against foreign currencies, including the U.S dollar, following Brexit. The U.S. dollar strengthened against the GBP by 12.3%, partially offset by a weakening against the EUR, CAD, and RUB, by 2.8%, 5.8%, and 15.8%, respectively.

Provision for income taxes decreased by $18.0 million from a provision of $17.9 million during the nine months ended September 30, 2016 to a benefit of $0.2 million during the nine months ended September 30, 2017. Our effective tax rate was 25.8% and (0.2)% during the nine months ended September 30, 2016 and 2017, respectively. The decrease in the effective tax rate of 26.0% was primarily attributable to (i) the benefit realized from the tax deduction of stock awards in excess of the amount recognized in the financial statements per the guidance under ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” and (ii) the release of the valuation allowance against the federal net deferred tax assets as a result of the acquisition of Symphony Health.

Segment Results of Operations for the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016

Clinical Research

	Three Months Ended September 30,
	2017		2016		Increase/(Decrease)		% Change
(in thousands)
Service Revenue	475,588		399,841		75,747		18.9	%
Gross profit	160,684		139,931		20,753		14.8	%
Gross profit %	33.8	%	35.0	%	(1.2	)%

Service revenue increased by $75.7 million, or 18.9%, from $399.8 million during the three months ended September 30, 2016 to $475.6 million during the three months ended September 30, 2017. Service revenue for the three months ended September 30, 2017 benefited from an increase in billable hours and an increase in the effective rate of hours billed 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 of services 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 business awards 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. New business awards arise when a client selects us to execute its trial. The number of awards can vary significantly from period to period and our studies have terms ranging from several months to several years. The increase 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 clients and services that we provide to those clients.

Gross profit increased by $20.8 million, or 14.8%, from $139.9 million during the three months ended September 30, 2016 to $160.7 million during the three months ended September 30, 2017 primarily due to an increase in revenue. Gross profit as a percentage of revenue decreased from 35.0% during the three months ended September 30, 2016 to 33.8% for the same period in 2017. Gross profit decreased primarily due to an increase in salaries and related benefits of $51.3 million, as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and our future growth.

Data Solutions

	Three Months Ended September 30,
	2017		2016	Increase/(Decrease)	% Change
(in thousands)
Service Revenue	18,962		—	18,962	n/a
Gross profit	7,001		—	7,001	n/a
Gross profit %	36.9	%	—	n/a

The Company acquired Symphony Health on September 6, 2017. The Company recognized $19.0 million of revenue and $12.0 million in direct costs during the period between September 6, 2017 and September 30, 2017. See Note 2 to our consolidated condensed financial statements for information about the acquisition.

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Segment Results of Operations for the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

Clinical Research

	Nine Months Ended September 30,
	2017		2016		Increase/(Decrease)		% Change
(in thousands)
Service Revenue	1,360,610		1,166,410		194,200		16.6	%
Gross profit	457,583		408,077		49,506		12.1	%
Gross profit %	33.6	%	35.0	%	(1.4	)%

Service Revenue increased by $194.2 million, or 16.6%, from $1,166.4 million during the nine months ended September 30, 2016 to $1,360.6 million during the three months ended September 30, 2017. Service revenue for the nine months ended September 30, 2017 benefited from an increase in billable hours and an increase in the effective rate of hours billed 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 of services 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 business awards 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. New business awards arise when a client selects us to execute its trial. The number of awards can vary significantly from period to period and our studies have terms ranging from several months to several years. The increase 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 clients and services that we provide to those clients.

Gross profit increased by $49.5 million, or 12.1%, from $408.1 million during the nine months ended September 30, 2016 to $457.6 million during the nine months ended September 30, 2017 primarily due to an increase in revenue. Gross profit as a percentage of revenue decreased from 35.0% during the nine months ended September 30, 2016 to 33.6% for the same period in 2017. Gross profit decreased primarily due to an increase in salaries and related benefits of $140.0 million, as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and our future growth.

Data Solutions

	Nine Months Ended September 30,
	2017		2016	Increase/(Decrease)	% Change
(in thousands)
Service Revenue	18,962		—	18,962	n/a
Gross profit	7,001		—	7,001	n/a
Gross profit %	36.9	%	—	n/a

The Company acquired Symphony Health on September 6, 2017. The Company recognized $19.0 million of revenue and $12.0 million in direct costs during the period between September 6, 2017 and September 30, 2017. See Note 2 to our consolidated condensed financial statements for information about the acquisition.

Seasonality

Although our business is not generally seasonal, we typically experience a slight decrease in our revenue growth rate during the 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 vacations during the year-end holiday period.

Liquidity 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 is operating cash flows. As of September 30, 2017, we had approximately $193.6

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million of cash and cash equivalents of which $54.8 million was held by our foreign subsidiaries. Our expected primary cash needs on both a short and long-term basis are for capital expenditures, expansion of services, geographic expansion, debt repayments, acquisitions and other strategic transactions, 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 future credit 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 $1,780.9 million during the nine months ended September 30, 2017, including $186.4 million of funds received from customers to pay independent physician investigators, or investigators, as compared to $1,513.6 million during the nine months ended September 30, 2016, including $188.1 million of funds received from customers to pay investigators. The increase in cash collections during the nine months ended September 30, 2017 is related to our increase in revenue, driven by an increase in new business awards and an increase in our backlog.

Discussion of Cash Flows

Cash Flow from Operating Activities

During the nine months ended September 30, 2017, net cash provided by operations was $117.8 million, compared to $66.7 million for the same period of 2016. Cash provided by operating activities increased over the prior year primarily due to increased cash flows from our operating performance, as well as a decrease in cash outflows from working capital.

Cash Flow from Investing Activities

Net cash used in investing activities was $599.6 million during the nine months ended September 30, 2017, compared to $27.1 million for the same period of 2016. The net cash outflows from acquisitions increased from $4.3 million during the nine months ended September 30, 2016 to $559.6 million during the same period in 2017.  Additionally, capital expenditures increased by $13.6 million compared to the prior year, which is partially offset by $3.7 million received from the sale of our ownership stake in the WuXiPRA joint venture during the nine months ended September 30, 2016.

Cash Flow from Financing Activities

Net cash provided by financing activities was $523.7 million during the nine months ended September 30, 2017 compared to net cash used by financing activities of $30.7 million for the same period of 2016. We borrowed $20.0 million under our accounts receivable financing agreement and $550.0 million in Incremental Borrowings under our 2016 Term Loan during the nine months ended September 30, 2017 compared to $120.0 million in borrowings under our accounts receivable financing agreement during the same period in the prior year. During the nine months ended September 30, 2017, we repaid $26.9 million principal amount of our term loan, $20.0 million principal on our accounts receivable financing agreement, and $5.5 million in debt issuance costs compared to $133.6 million aggregate principal amount of our Senior Notes and $17.8 million related to debt prepayment and debt extinguishment costs that were paid as part of the cash tender offer in the prior year. During the nine months ended September 30, 2017, we received $6.5 million in proceeds from stock option exercises compared to $0.6 million for the same period of 2016.

Indebtedness

As of September 30, 2017, we had $1,359.6 million of total indebtedness. Additionally, our senior secured credit agreement provides for a $125.0 million revolving credit facilities. There were no amounts drawn on this revolving credit facilities as of September 30, 2017. In addition, at September 30, 2017, we had $4.5 million in letters of credit outstanding, which are secured by the revolving credit facilities. Our long-term debt arrangements contain usual and customary restrictive covenants, and, as of September 30, 2017, we were in compliance with these covenants.

Incremental Borrowings under the 2016 Credit Facilities

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On September 6, 2017, we borrowed $550.0 million under the 2016 Credit Facilities. The proceeds were primarily used to fund the acquisition of Symphony Health. As of September 30, 2017, the weighted average interest rate on the first lien term loan was 3.45%.

The variable interest rate on the Incremental Borrowing is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR rate, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA and ranges from 1.00% to 2.00%, in the case of LIBOR rate loans, and 0.00% to 1.00%, in the case of ABR rate loans.There were no other changes to the 2016 Credit Facilities as a result of the Incremental Borrowing.

See Note 7 to our consolidated condensed financial statements included in this report, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources” and Note 9 to our audited consolidated financial statements, each included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for additional details regarding our credit arrangements.

Contractual Obligations and Commercial Commitments

In September 2017, the Company borrowed an additional $550.0 million under the 2016 Credit Facilities, or the Incremental Borrowing. See Note 7 to our consolidated condensed financial statements for information about the Incremental Borrowing. As a result of these changes, our long-term debt obligations as of September 30, 2017 are updated below. As part of the Symphony Health acquisition, the Company recognized a contingent consideration for the earn-out. As a result of this change an update of our contingent consideration as of September 30, 2017 is included below.

	Payments Due by Period
	Remaining 2017 (3 Months)		2018 to 2019		2020 to 2021		Thereafter		Total
Principal payments on long-term debt (1)	$	11,250	$	241,250	$	1,015,625	$	91,441	$	1,359,566
Interest payments on long-term debt (1)	11,113		104,283		92,720		15,203		223,319
Contingent consideration on acquisition (2)	67,789		50,775		—		—		118,564
Total	$	90,152	$	396,308	$	1,108,345	$	106,644	$	1,701,449

(1) Principal payments are based on the terms contained in our agreements. Interest payments are based on the interest rate in effect on September 30, 2017.

(2) Represents contingent payments associated with our acquisitions. These amounts are remeasured at fair value every reporting period with the change in fair value recorded in Other income (expense), net (see Note 2 to our consolidated condensed financial statements). The actual amounts ultimately paid out may be different depending on the level of achievement of certain earnings milestones.

Other than the items included above, there have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for fiscal year ended December 31, 2016.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition to historical consolidated condensed financial information, this Quarterly Report on Form 10-Q contains forward-looking statements that reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may constitute forward-looking statements. Without limiting the foregoing, words such as “anticipates,”

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“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. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.

We caution you that actual results may differ materially from our expectations due to a number of factors, including, that most of our contracts may be terminated on short notice, and we may be unable to maintain large customer contracts or to enter into new contracts; the historical indications of the relationship of our backlog to revenues may not be indicative of their future relationship; the market for our services may not grow as we expect; we may underprice our contracts, overrun our cost estimates or fail to receive approval or experience delays in documenting change orders; if we are unable to achieve operating efficiencies or grow revenues faster than expenses, operating margins will be adversely affected; we may be unable to maintain information systems or effectively update them; customer or therapeutic concentration could harm our business; our business is subject to risks associated with international operations, including economic, political and other risks, such as compliance with a myriad of laws and regulations, complications from conducting clinical trials in multiple countries simultaneously and changes in exchange rates; we are subject to a number of additional risks associated with doing business outside of the United States, including foreign currency exchange fluctuations and restrictive regulations, as well as the risks and uncertainties associated with the United Kingdom’s expected withdrawal from the European Union; government regulators or customers may limit the scope of prescription or withdraw products from the market, and government regulators may impose new regulations affecting the biopharmaceutical industry and our business; we may be unable to successfully develop and market new services or enter new markets; our failure to perform services in accordance with contractual requirements, regulatory standards and ethical considerations may subject us to significant costs or liability, damage our reputation and cause us to lose existing business or not receive new business; our services are related to treatment of human patients, and we could face liability if a patient is harmed; we may be unable to successfully identify, acquire and integrate businesses, services and technologies; the Company's reliance on third parties for data, products, services and intellectual property licenses; we have substantial indebtedness and may incur additional indebtedness in the future, which could adversely affect our financial condition; and other factors that are set forth in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed on February 23, 2017 and this Quarterly Report on Form 10-Q.

Website and Social Media Disclosure

We use our website (www.prahs.com) and our corporate Twitter account (@PRAHSciences) as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, 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 and social media channels are not, however, a part of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Item 4. Controls and Procedures

As of September 30, 2017, we carried out an evaluation under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Regulations under the Exchange 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) of the Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in reports that it files 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 that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures. There are inherent limitations to the effectiveness of any system 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. In accordance with the SEC’s published guidance, the internal control over financial reporting of Symphony Health Solutions Corporation, or Symphony Health, which was acquired on September 6, 2017 and the Takeda PRA Development Center KK joint venture, or the TDC joint venture, formed between us and Takeda Pharmaceutical Company Ltd. on June 1, 2017, were excluded from our evaluation of the effectiveness of our disclosure controls and

38

procedures as of September 30, 2017. Symphony Health and the TDC joint venture represented 25% and 1%, respectively, of our consolidated total assets, 4% and 1%, respectively, of our consolidated service revenue and 2% and 1%, respectively, of our consolidated net income as of and for the quarter ended September 30, 2017. Based upon our evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to accomplish their objective at a reasonable assurance level.

There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are in the process of reviewing the internal control structure of Symphony Health and the TDC joint venture, if necessary, will make appropriate changes as we integrate Symphony Health and the TDC joint venture into our overall internal control over financial reporting process.

39

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The information required with respect to this item can be found under “Commitments and Contingencies” in Note 11 to our consolidated condensed financial statements included elsewhere in this Form 10-Q and is incorporated by reference into this Item 1.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, or Annual Report. There have been no significant changes from the risk factors previously disclosed in our Annual Report, except as noted below.

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 or refuse 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 our operating 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 diverse scope 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 or renew 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 sell such 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 data to 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 to increase 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 to provide 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 material adverse 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 to continue 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 of drugs for patients participating in trials, suppliers of kits for use in our laboratories, suppliers of reagents for use in our testing equipment and providers of maintenance services for our equipment. The failure of any of these third parties to adequately provide the required products or services, or to do so in compliance 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 this property 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 these licenses on similar terms and conditions. Failure to renew these licenses, or renewals of these licenses on less advantageous terms, could have a material adverse effect on our business, results of operations, financial condition or cash flow.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On July 5, 2017, we issued an aggregate of 4,998 common shares at a price of $75.04 per share as remaining held back consideration for the purchase of the assets of Value Health Solutions Inc. The offer and sale of the common shares was made in reliance upon the exemption from registration under the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof, on the basis that it did not involve any public offering.

Item 3. Defaults Upon Senior Securities

Not applicable.

40

Item 4. Mine Safety Disclosures

Not applicable. 

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit
Number	Description of Exhibit
2.1	Agreement and Plan of Merger, dated as of August 3, 2017, by and among Pharmaceutical Research Associates, Inc., Symphony Health Solutions Corporation, Skyhook Merger Sub, Inc., and STG III, L.P.  (Incorporated by reference to the Form 8-K filed with the SEC on August 7, 2017).
10.1	Joinder Agreement, dated as September 6, 2017, by and among of Pharmaceutical Research Associates, Inc., PRA Health Sciences, Inc., each of the subsidiaries from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent and collateral agent and other agents and lenders party thereto. (Incorporated by reference to the Form 8-K filed with the SEC on September 11, 2017).
10.2	Supplement No. 1 to the Guarantee, by and among Symphony Health Solutions Corporation, Source Healthcare Analytics, LLC, and Parallel 6, Inc., in favor of Wells Fargo Bank, National Association, as collateral agent. (Incorporated by reference to the Form 8-K filed with the SEC on September 11, 2017).
10.3	Supplement No. 1 to the Security Agreement, by and among Symphony Health Solutions Corporation, Source Healthcare Analytics, LLC, and Parallel 6, Inc., in favor of Wells Fargo Bank, National Association, as collateral agent. (Incorporated by reference to the Form 8-K filed with the SEC on September 11, 2017).
10.4	Form of Option Grant Notice under the PRA Health Sciences, Inc. 2014 Omnibus Incentive Plan (Incorporated by reference to the Form 8-K filed with the SEC on September 5, 2017).
31.1*	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 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	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 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	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 of 2002.
32.2*	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 of 2002.
101	The following financial information from PRA Health Sciences, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in XBRL: (i) Consolidated Condensed Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (iii) Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iv) Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (v) Notes to Consolidated Condensed Financial Statements.

* Filed herewith

41

SIGNATURES

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

	PRA HEALTH SCIENCES, INC.
	/s/ Linda Baddour
	Linda Baddour
	Executive Vice President and Chief Financial Officer
	(Authorized Signatory)
Date: October 26, 2017

42

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Colin Shannon, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2017 of PRA Health Sciences, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date October 26, 2017
	/s/ Colin Shannon
	Colin Shannon
	President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Linda Baddour, certify that:

1.  I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2017 of PRA Health Sciences, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date October 26, 2017
	/s/ Linda Baddour
	Linda Baddour
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PRA Health Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Colin Shannon, President, Chief Executive Officer and Chairman of the Board of Directors 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 the periods presented therein.

Date October 26, 2017	By:	/s/ Colin Shannon
		Colin Shannon
		President, Chief Executive Officer and Chairman of the Board of Directors
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PRA Health Sciences, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Linda Baddour, Executive Vice President and Chief Financial Officer 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 the periods presented therein.

Date October 26, 2017	By:	/s/ Linda Baddour
		Linda Baddour
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 23, 2017
Document and Entity Information
Entity Registrant Name	PRA Health Sciences, Inc.
Entity Central Index Key	0001613859
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		63,369,729
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 193,581	$ 144,623
Restricted cash	697	4,715
Accounts receivable and unbilled services, net	628,029	439,053
Other current assets	70,361	36,346
Total current assets	892,668	624,737
Fixed assets, net	131,432	87,577
Goodwill	1,535,057	971,980
Intangible assets, net	711,727	473,976
Other assets	38,749	32,121
Total assets	3,309,633	2,190,391
Current liabilities:
Current portion of long-term debt	56,719	31,250
Accounts payable	60,438	51,335
Accrued expenses and other current liabilities	277,495	149,113
Advanced billings	493,368	332,501
Total current liabilities	888,020	564,199
Long-term debt, net	1,293,498	797,052
Deferred tax liabilities	128,366	73,703
Other long-term liabilities	63,452	26,185
Total liabilities	2,373,336	1,461,139
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	0	0
Common stock, $0.01 par value, 1,000,000,000 authorized shares at September 30, 2017 and December 31, 2016; 63,329,298 and 61,597,705 issued and outstanding at September 30, 2017 and December 31, 2016, respectively	633	616
Additional paid-in capital	898,862	879,067
Accumulated other comprehensive loss	(146,291)	(224,686)
Retained earnings	177,230	74,255
Equity attributable to PRA Health Sciences, Inc. stockholders	930,434	729,252
Noncontrolling interest	5,863	0
Total stockholders' equity	936,297	729,252
Total liabilities and stockholders' equity	$ 3,309,633	$ 2,190,391

XML

CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000,000	100,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	63,329,298	61,597,705
Common stock, shares outstanding (in shares)	63,329,298	61,597,705

XML

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenue:
Service revenue	$ 494,550	$ 399,841	$ 1,379,572	$ 1,166,410
Reimbursement revenue	87,459	53,414	223,921	172,915
Total revenue	582,009	453,255	1,603,493	1,339,325
Operating expenses:
Direct costs	326,865	259,910	914,988	758,333
Reimbursable out-of-pocket costs	87,459	53,414	223,921	172,915
Selling, general and administrative	79,307	67,190	229,770	199,648
Transaction-related costs	12,740	0	12,740	31,785
Depreciation and amortization	18,853	17,708	50,146	52,246
Loss on disposal of fixed assets, net	8	219	240	290
Income from operations	56,777	54,814	171,688	124,108
Interest expense, net	(11,557)	(13,779)	(31,088)	(42,525)
Loss on modification or extinguishment of debt	(3,089)	0	(3,089)	(21,485)
Foreign currency (losses) gains, net	(12,794)	1,182	(35,004)	9,264
Other income (expense), net	1,004	20	724	(85)
Income before income taxes and equity in income of unconsolidated joint ventures	30,341	42,237	103,231	69,277
(Benefit from) provision for income taxes	(18,241)	10,821	(165)	17,869
Income before equity in income of unconsolidated joint ventures	48,582	31,416	103,396	51,408
Equity in income of unconsolidated joint ventures, net of tax	24	33	92	2,742
Net income	48,606	31,449	103,488	54,150
Net income attributable to noncontrolling interest	(401)	0	(513)	0
Net income attributable to PRA Health Sciences, Inc.	$ 48,205	$ 31,449	$ 102,975	$ 54,150
Net income per share attributable to common stockholders:
Basic (in dollars per share)	$ 0.77	$ 0.52	$ 1.66	$ 0.89
Diluted (in dollars per share)	$ 0.73	$ 0.49	$ 1.57	$ 0.84
Weighted average common shares outstanding:
Basic (in shares)	62,730	60,937	62,185	60,579
Diluted (in shares)	65,872	64,521	65,683	64,268

XML

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 48,606	$ 31,449	$ 103,488	$ 54,150
Other comprehensive income (loss):
Foreign currency translation adjustments	26,863	(11,211)	75,076	(55,548)
Unrealized income (loss) on derivative instruments, net of income tax of $(11), $0, $(11) and $0	46	127	(21)	(2,546)
Reclassification adjustments:
(Gain) loss on derivatives included in net income, net of income taxes of $1,926, $0, $1,926 and $0	(167)	1,617	3,249	4,242
Comprehensive income	75,348	21,982	181,792	298
Comprehensive income attributable to noncontrolling interest	(373)	0	(423)	0
Comprehensive income attributable to PRA Health Sciences, Inc.	$ 74,975	$ 21,982	$ 181,369	$ 298

XML

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Unrealized losses on derivative instruments, tax (benefit)	$ (11)	$ 0	$ (11)	$ 0
Losses on derivatives included in net income, tax	$ 1,926	$ 0	$ 1,926	$ 0

XML

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income	$ 103,488	$ 54,150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	50,146	52,246
Amortization of debt issuance costs and discount	1,480	3,514
Amortization of terminated interest rate swaps	4,931	3,334
Stock-based compensation	7,686	4,940
Non-cash transaction-related costs	5,294	29,421
Unrealized foreign currency losses (gains)	35,406	(9,380)
Loss on modification or extinguishment of debt	3,089	21,485
Deferred income taxes	(27,340)	(8,076)
Equity in income of unconsolidated joint ventures	(92)	(2,742)
Other reconciling items	190	41
Changes in operating assets and liabilities:
Accounts receivable, unbilled services, and advanced billings	(51,883)	(52,290)
Other operating assets and liabilities	(14,567)	(29,935)
Net cash provided by operating activities	117,828	66,708
Cash flows from investing activities:
Purchase of fixed assets	(39,287)	(25,657)
Cash paid for interest on interest rate swap	(763)	(913)
Proceeds from the sale of WuXiPRA	0	3,700
Proceeds from the sale of fixed assets	55	0
Acquisition of Symphony Health Solutions Corporation, net of cash acquired	(522,581)	0
Acquisition of Parallel 6, Inc., net of cash acquired	(39,561)	0
Acquisition of Takeda PRA Development Center KK, net of cash acquired	2,680	0
Acquisition of Takeda Pharmaceutical Data Services, Ltd., net of cash acquired	(142)	0
Acquisition of Nextrials, Inc., net of cash acquired	0	(4,268)
Net cash used in investing activities	(599,599)	(27,138)
Cash flows from financing activities:
Borrowings on accounts receivable financing agreement	20,000	120,000
Repayments on accounts receivable financing agreement	(20,000)	0
Proceeds from issuance of long-term debt	550,000	0
Repayments of long-term debt	26,875	133,559
Borrowings on line of credit	30,000	110,000
Repayments on line of credit	(30,000)	(110,000)
Payments for debt issuance costs	(5,512)	0
Payment of debt prepayment and debt extinguishment costs	0	(17,824)
Proceeds from stock option exercises	6,457	638
Payment of acquisition-related contingent consideration	(400)	0
Net cash provided by (used in) financing activities	523,670	(30,745)
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash	3,041	628
Change in cash, cash equivalents, and restricted cash	44,940	9,453
Cash, cash equivalents, and restricted cash, beginning of period	149,338	126,125
Cash, cash equivalents, and restricted cash, end of period	$ 194,278	$ 135,578

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The Company

PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of product development and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting.

Unaudited Interim Financial Information

The interim consolidated condensed financial statements include the accounts of the Company and variable interest entities where the Company is the primary beneficiary. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Variable Interest Entities

A variable interest entity (“VIE”) is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interests. A VIE is required to be consolidated by its primary beneficiary, which is the entity that possesses the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to the entity. The Company consolidates VIEs when it is the primary beneficiary of the VIE, including joint ventures determined to be VIEs.

For consolidated VIEs in which the Company owns less than 100% of the ownership interest or is exposed to less than 100% of the VIE’s economic performance, the outside stockholders' interests are shown as noncontrolling interests.

Recently Implemented Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This update includes provisions intended to simplify various aspects of accounting for share-based compensation. In addition, ASU No. 2016-09 went into effect for public companies for annual periods beginning after December 15, 2016.

The Company adopted this ASU beginning with the first quarter of 2017. The adoption of this ASU had the following effects on the consolidated condensed financial statements:

Income taxes - The standard requires excess tax benefits and tax deficiencies to be recorded as income tax benefit or expense in the statement of operations. The Company applied the modified retrospective adoption approach beginning in 2017 and recorded a cumulative-effect adjustment to retained earnings and reduced its deferred tax liabilities by $12.7 million with an offsetting increase to the valuation allowance of $12.7 million. As such, the net impact to retained earnings was zero. The Company continuously evaluates its need for a valuation allowance on its net deferred tax assets based upon the weight of available evidence. If the Company is able to support the recognition of certain net deferred tax assets in the future, it is noted that an additional tax benefit from the release of this additional valuation could occur at that time. This adjustment relates to tax assets that had previously arisen from tax deductions for equity compensation expenses that were greater than the compensation recognized for financial reporting.

Forfeitures – The standard provides an accounting policy election to account for forfeitures as they occur. The Company made this accounting policy election and the modified retrospective adoption for this component of the standard did not have a material impact on its financial statements.

Statements of Cash Flows - Cash flows related to excess tax benefits are no longer separately classified as a financing activity apart from other income tax cash flows. The Company adopted this component of the standard on a prospective basis. 

Earnings Per Share - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under this method, the Company is no longer required to estimate the tax rate and apply it to the dilutive share calculation for determining the dilutive earnings per share. The Company adopted this component of the standard on a prospective basis.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows Classification of Certain Cash Receipts and Cash Payments,” which clarifies existing guidance related to accounting for cash receipts and cash payments and classification on the statement of cash flows. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. The guidance for both standards requires application using a retrospective transition method.

The Company early adopted both ASUs during the fourth quarter of 2016. As a result of the retrospective application of ASU No. 2016-15, $17.8 million of payments of debt prepayment and debt extinguishment costs originally recorded as operating cash outflows were reclassified to financing outflows in the consolidated condensed statement of cash flows for the nine months ended September 30, 2016. The retrospective application of ASU No. 2016-18 resulted in restricted cash being reclassified as a component of cash, cash equivalents, and restricted cash in the consolidated condensed statement of cash flows for all periods presented.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers.” The new revenue standard establishes a single revenue recognition model for recognizing contracts from customers. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard, including clarification on principal versus agent considerations, identifying performance obligations, and accounting for licenses of intellectual property.  The new standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. 

The Company plans to adopt the new revenue standard effective January 1, 2018 using the modified retrospective approach and continues to evaluate the potential impact to its consolidated financial statements. The Company’s implementation team consists of both internal resources and external advisors to assist with the adoption of the new standard. The Company completed a review of a representative sample of contracts from its contract portfolio and is continuing to evaluate key qualitative judgments associated with the adoption of the new revenue standard. The Company expects its long-term contracts currently accounted for using the proportional performance method may include additional contract value and costs used in the measure of progress as compared to its current accounting policies. The accounting for short-term contracts within the Clinical Research segment is expected to remain materially consistent with the current accounting treatment. The Company will complete its evaluation of the new standard in the fourth quarter, finalize its assessment of potential differences from its current accounting policies, and implement the necessary business processes, systems and controls required to support recognition and disclosure under the new standard. 

In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The provisions of ASU No. 2016-02 are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is currently assessing the potential impact of ASU No. 2016-02 on the Company’s consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations: Clarifying the Definition of a business,” which clarifies that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, it should be treated as an acquisition or disposal of an asset. The amendments to ASU No. 2017-01 are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The adoption of ASU No. 2017-01 is not expected to have a material impact on the Company's consolidated condensed financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “ Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test.  Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.  The amendments to ASU No. 2017-04 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of ASU No. 2017-04 is not expected to have a material impact on the Company's consolidated condensed financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation: Scope of Modification Accounting,” which provides guidance about what changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718, “Stock Compensation.” The amendments to ASU No. 2017-09 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU No. 2017-09 is not expected to have a material impact on the Company's consolidated condensed financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements 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 hedging instrument to be presented in the same income statement line as the hedged item. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. The amendments to ASU No. 2017-12 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's consolidated condensed financial statements.

Restricted cash

The Company receives cash advances from its customers to be used for the payment of investigator fees and other pass-through expenses. The terms of certain customer contracts require that such advances be maintained in separate escrow accounts; these accounts are not commingled with the Company’s cash and cash equivalents and are presented separately in the consolidated condensed balance sheets as restricted cash.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows:

	September 30,				December 31,
	2017		2016		2016		2015
Cash and cash equivalents	$	193,581	$	130,343	$	144,623	$	121,065
Restricted cash	697		5,235		4,715		5,060
Total cash, cash equivalents, and restricted cash	$	194,278	$	135,578	$	149,338	$	126,125

Secondary Offerings

In August 2017, KKR PRA Investors L.P., or KKR, and certain executive officers of the Company sold 10,000,000 shares of the Company’s common stock as part of a secondary offering, or the Secondary Offering. The Company incurred expenses in connection with the Secondary Offering of $1.0 million during the nine months ended September 30, 2017. The expenses are included in transaction-related costs in the accompanying consolidated condensed statement of operations. As of September 30, 2017, KKR owned 20.8% of the Company’s outstanding common stock.

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Business Combination

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

Symphony Health Solutions, Inc.

On September 6, 2017, the Company acquired all of the outstanding equity interest of Symphony Health Solutions Corporation, or Symphony Health, a provider of data and analytics to help professionals understand the full market lifecycle of products offered for sale by companies in the pharmaceutical industry, for $540.8 million in cash and contingent consideration, which is not capped, in the form of potential earn-out payments based on a multiple of future earnings for the twelve month periods ending December 2017 and December 2018. The Company recognized a liability of approximately $108.8 million representing the estimated fair value of the earn-out on the acquisition date, $90.4 million is included in accrued expenses and other current liabilities and $18.4 million is included in other long-term liabilities in the consolidated condensed balance sheet as of September 30, 2017. The fair value was based on significant inputs not observed in the market and thus represents a Level 3 measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments, will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that provide data and analytics.

The acquisition of Symphony Health was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $500.5 million of goodwill, which was assigned to the Data Solutions segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing operations. The Company incurred $6.4 million in acquisition related costs that are included in transaction-related costs in the consolidated condensed statement of operations.

Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2017, and in any case, no later than one year from the acquisition date in accordance with GAAP.

The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	26,297
Accounts receivable	39,056
Other current assets	24,048
Fixed assets	12,340
Software and other intangibles	13,000			5 years
Database	64,600			9 years
Customer relationships	161,000			12 years
Accounts payable and accrued expenses	(42,700		)
Deferred revenue	(65,511		)
Deferred tax liabilities	(75,056		)
Other long-term liabilities	(7,940		)
Estimated fair value of net assets acquired	149,134
Purchase price, including contingent consideration	649,609
Total goodwill	$	500,475

The results of operations for Symphony Health are included in the consolidated condensed financial statements of the Company from the date of acquisition. During this period, Symphony Health's service revenues and net income totaled $19.0 million and $1.1 million, respectively.

The following unaudited pro-forma information assumes the acquisition of Symphony Health occurred as of the beginning of 2016. This pro-forma financial information is not necessarily indicative of operating results if the acquisition had been completed at the date indicated, nor is it necessarily an indication of future operating results.

	Nine Months Ended September 30,
(in thousands, except per share amounts)	2017		2016
Total revenue	$	1,752,514	$	1,484,013
Net income attributable to PRA Health Sciences, Inc.	126,092		35,830
Net income per share:
Basic	$	2.03	$	0.59
Diluted	$	1.92	$	0.56

The unaudited pro-forma financial information for the nine months ended September 30, 2016 includes the following non-recurring adjustments:

• a $6.4 million increase to transaction-related costs incurred by the Company during the nine months ended September 30, 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 nine months ended September 30, 2017 attributable to the above transaction, with a corresponding $1.2 million increase to the benefit from income taxes.

Takeda Transactions

On June 1, 2017, the Company acquired all of the outstanding shares of Takeda Pharmaceutical Data Services, Ltd., or TDS, from Takeda Pharmaceutical Company Ltd., or Takeda, for $0.7 million in cash. The Company recorded approximately $1.0 million of goodwill, which is assigned to the Clinical Research segment and is not deductible for income tax purposes. pro-forma results of operations and a complete purchase price allocation have not been presented because the results of this acquisition did not have a material effect on the Company's consolidated condensed financial statements.

On June 1, 2017, the Company and Takeda also closed on a joint venture transaction that enables the Company to provide clinical trial delivery and pharmacovigilance services as a strategic partner of Takeda in Japan. The joint venture transaction was effected through the creation of a new legal entity, Takeda PRA Development Center KK, or TDC joint venture. The Company paid $5.4 million for a 50% equity interest in the TDC joint venture, which represents 50% of the fair value of the net assets and workforce that Takeda contributed to the joint venture. The joint venture provides services including clinical trial monitoring, project management, regulatory strategy and submissions, data management, biostatistics, drug safety reporting, and medical monitoring. The Company is required to buy-out Takeda’s 50% interest in the TDC joint venture in two years. The Company also has an early buy-out option of Takeda’s 50% interest in December 2018 if both parties agree.

The Company determined that the TDC joint venture is a VIE in which the Company is the primary beneficiary. Accordingly, the Company accounted for the $5.4 million contribution to the TDC joint venture as a business combination and consolidated the VIE in its financial statements with a noncontrolling interest for the 50% portion owned by Takeda. The assets acquired and the liabilities assumed have been recorded at their respective estimated fair values as of June 1, 2017. The Company recorded approximately $2.7 million of goodwill, which is assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is primarily attributable to assembled workforce. The Company incurred $0.6 million in acquisition related costs that are included in selling, general and administrative expenses in the consolidated condensed statement of operations.

Due to the timing of the transaction, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2017, and in any case, no later than one year from the transaction closing date in accordance with GAAP.

The Company’s preliminary estimate of the fair value of the net assets acquired as part of the TDC joint venture transaction at the closing date of the business combination is as follows (in thousands):

	Purchase Price Allocation
Cash and cash equivalents	$	8,120
Other current assets	1,671
Other non-current assets	1,742
Accounts payable and accrued expenses	(2,380		)
Other long-term liabilities	(943		)
Estimated fair value of net assets acquired	8,210
PRA purchase price	5,440
Fair value of Takeda's noncontrolling interest	5,440
Total goodwill	$	2,670

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 material effect on the Company’s consolidated condensed financial statements.

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 improving patient enrollment, engagement, and management of clinical trials, for $39.7 million in cash and contingent consideration in the form of a potential earn-out payment 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 period following closing. The Company recognized a liability of approximately $8.4 million representing the estimated fair value of the earn-out on the acquisition date, which is included in other long-term liabilities in the consolidated condensed balance sheet as of September 30, 2017. The fair value was based on significant inputs not observed in the market and thus represented a Level 3 measurement. Any change in the fair value of the contingent consideration subsequent to the acquisition date, excluding adjustments that qualify as measurement period adjustments, will be recognized in earnings in the period of any such change. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that provide improved efficiencies by reducing study durations and costs through integrated operational management.

The acquisition of Parallel 6 was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $33.1 million of goodwill, which was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing information technology operations. The Company incurred $1.3 million in acquisition related costs that are included in selling, general and administrative expenses in the consolidated condensed statement of operations.

Due to the timing of the acquisition, the valuation of net assets acquired has not been finalized and is expected to be completed by the end of December 2017, and in any case, no later than one year from the acquisition date in accordance with GAAP.

The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	132
Accounts receivable	1,231
Other current assets	26
Software intangible	15,500			5 years
Other intangibles	920			5 years
Accounts payable and accrued expenses	(885		)
Deferred revenue	(994		)
Other long-term liabilities	(2,414		)
Estimated fair value of net assets acquired	13,516
Purchase price, including contingent consideration	46,652
Total goodwill	$	33,136

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 the Company’s consolidated condensed financial statements.

Nextrials

On March 18, 2016, the Company acquired all of the outstanding shares of Nextrials, Inc., or Nextrials, a developer of web-based software which integrates electronic health records with clinical trials, for $4.8 million in cash and contingent consideration in the form of potential earn-out payments of up to $3.0 million. Earn-out payments totaling $2.0 million and $1.0 million are contingent upon the achievement of project milestones and certain external software sales targets, respectively, during the 30-month period following closing. The Company recognized a liability of approximately $2.3 million as the estimated acquisition date fair value of the earn-out; the fair value was based on significant inputs not observed in the market and thus represented a Level 3 measurement. Changes in the fair value of the contingent consideration subsequent to the acquisition date are recognized in earnings in the period of the change. The fair value of the contingent consideration increased by $0.1 million for the nine months ended September 30, 2017. The Company made a payment of $0.4 million on the contingent consideration during the nine months ended September 30, 2017. As of September 30, 2017, the earn-out liability totaled $1.4 million; which is included in accrued expenses and other current liabilities in the consolidated condensed balance sheet. With this acquisition, the Company expects to enhance its ability to serve customers throughout the clinical research process with technologies that include improved efficiencies by reducing study durations and costs through integrated operational management.

The acquisition of Nextrials was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. In connection with the acquisition, the Company recorded approximately $4.3 million of goodwill, which is assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of the acquired business and expected synergies with the Company’s existing information technology operations.

The Company’s purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	94
Accounts receivable	211
Other current assets	96
Property, plant and equipment	111
Software intangible	5,574			5 years
Accounts payable and accrued expenses	(1,585		)
Other long-term liabilities	(1,663		)
Estimated fair value of net assets acquired	2,838
Purchase price, including contingent consideration and net of working capital settlement	7,145
Total goodwill	$	4,307

The Company has not disclosed fiscal year 2016 or pro-forma revenue and earnings attributable to Nextrials as they did not have a material effect on the Company’s consolidated condensed financial statements.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying amount of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

Recurring Fair Value Measurements

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of September 30, 2017 (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Interest rate swap	$	—	$	73	$	—	$	73
Marketable securities	366		—		—		366
Total	$	366	$	73	$	—	$	439
Liabilities:
Contingent consideration	$	—	$	—	$	118,564	$	118,564
Total	$	—	$	—	$	118,564	$	118,564

The Company's marketable securities are included in other current assets in the consolidated condensed balance sheet. These marketable securities are recorded at fair value using quoted prices in an active market.

The interest rate swap is measured at fair value using a market approach valuation technique. The valuation is based on an estimate of net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation.

The Company values contingent consideration, related to business combinations, using a weighted probability of potential payment scenarios discounted at rates reflective of the weighted average cost of capital for the businesses acquired. Key assumptions used to estimate the fair value of contingent consideration include operational milestones and the probability of achieving the specific milestones

The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for the nine months endedSeptember 30, 2017 (in thousands):

	Contingent Consideration - Accrued expenses and other liabilities			Contingent Consideration - Other long-term liabilities
Balance at December 31, 2016	$	1,735		$	1,019
Initial estimate of Symphony Health contingent consideration	90,394			18,390
Initial estimate of Parallel 6 contingent consideration	—			8,350
Payments on Nextrials contingent consideration	(400		)	—
Reclassification adjustment	1,019			(1,019		)
Change in fair value recognized in other (income) expense, net	(924		)	—
Balance at September 30, 2017	$	91,824		$	26,740

During the nine months ended September 30, 2017, the Company released the remaining $1.0 million contingent consideration liability associated with the acquisition of Value Health Solutions, Inc. as the earn-out targets were not met.

Non-recurring Fair Value Measurements

Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets 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 September 30, 2017, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaling approximately $2,246.8 million were identified as Level 3. These assets are comprised of goodwill of $1,535.1 million and identifiable intangible assets, net of $711.7 million.

Refer to Note 7, Long-Term Debt, for additional information regarding the fair value of long-term debt balances.

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Concentration of Credit Risk

9 Months Ended

Sep. 30, 2017

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, and unbilled services. As of September 30, 2017, 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 uncollectible receivables. In management’s opinion, there is no additional material credit risk beyond amounts provided for such losses.

Service revenue from individual customers greater than 10% of consolidated service revenue in the respective periods was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Customer A	10.1	%	11.7	%	10.6	%	10.8	%
Customer B	—		10.4	%	—		10.7	%
Customer C	—		10.2	%	—		—

Accounts receivable and unbilled receivables from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled receivables at the respective dates were as follows:

	September 30,		December 31,
	2017		2016
Customer A	10.7	%	12.0	%

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Accounts Receivable and Unbilled Services

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Accounts Receivable and Unbilled Services

Accounts Receivable and Unbilled Services

Accounts receivable and unbilled services include service revenue, reimbursement revenue, and amounts associated with work performed by investigators. Accounts receivable and unbilled services were as follows (in thousands):

	September 30,			December 31,
	2017			2016
Accounts receivable	$	457,306		$	284,647
Unbilled services	172,152			155,609
	629,458			440,256
Less allowance for doubtful accounts	(1,429		)	(1,203		)
Total accounts receivable and unbilled services, net	$	628,029		$	439,053

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):

	Clinical Research		Data Solutions		Consolidated
Balance at December 31, 2016	$	971,980	$	—	$	971,980
Acquisition of Symphony Health	—		500,475		500,475
Acquisition of Parallel 6	33,136		—		33,136
Acquisition of TDC joint venture	2,670		—		2,670
Acquisition of TDS	966		—		966
Currency translation	25,830		—		25,830
Balance at September 30, 2017	$	1,034,582	$	500,475	$	1,535,057

There are no accumulated impairment charges as of September 30, 2017 and December 31, 2016.

Intangible Assets

Intangible assets consist of the following (in thousands):

	September 30,			December 31,
	2017			2016
Customer relationships	$	535,135		$	360,328
Customer backlog	123,358			119,223
Trade names (definite-lived)	28,457			25,740
Patient list, software and other intangibles	55,574			28,974
Database	64,600			—
Non-competition agreements	2,767			2,737
Total finite-lived intangible assets, gross	809,891			537,002
Accumulated amortization	(216,174		)	(181,036		)
Total finite-lived intangible assets, net	593,717			355,966
Trade names (indefinite-lived)	118,010			118,010
Total intangible assets, net	$	711,727		$	473,976

Amortization expense was $11.3 million and $29.5 million for the three and nine months ended September 30, 2017, respectively, and $11.3 million and $34.3 million for the three and nine months ended September 30, 2016, respectively.

The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):

2017 (remaining)	$	16,368
2018	60,075
2019	54,375
2020	52,462
2021	50,331
2022 and thereafter	360,106
Total	$	593,717

The estimated fair value of the Early Development Services, or EDS, reporting unit closely approximated its carrying value when the Company performed its annual goodwill impairment test during the fourth quarter of 2014. The Company made operational improvements during 2015 and 2016 in order to improve the profitability of the EDS reporting unit. As a result of these changes, EDS saw growth in both backlog and new business awards that contributed to its improved financial performance during both years and led the Company to update its forecast for future periods. The Company considered all of these factors when it performed its most recent goodwill impairment test during the fourth quarter of 2016 and it was concluded that the estimated fair value of the EDS reporting unit exceeded its carrying value by approximately $70.0 million, or 33%. Any negative changes in assumptions on revenue, new business awards, cancellations, or the Company's ability to improve operations while maintaining a competitive cost structure could adversely affect the fair value of EDS and result in significant goodwill impairment charges in 2017 or later.

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Long-Term Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consists of the following (in thousands):

	September 30,			December 31,
	2017			2016
Term loans, first lien	$	1,148,125		$	625,000
Senior notes	91,441			91,441
Accounts receivable financing agreement	120,000			120,000
	1,359,566			836,441
Less debt issuance costs and discount	(9,349		)	(8,139		)
	1,350,217			828,302
Less current portion	(56,719		)	(31,250		)
Total long-term debt, net	$	1,293,498		$	797,052

Principal payments on long-term debt are due as follows (in thousands):

2017 (remaining)	$	11,250
2018	60,625
2019	180,625
2020	76,250
2021	939,375
2022 and thereafter	91,441
Total	$	1,359,566

2016 Credit Facilities

As collateral for borrowings under the senior secured credit facilities, or 2016 Credit Facilities, the Company granted a pledge on primarily all of its assets, and the stock of wholly-owned U.S. restricted subsidiaries. The Company is subject to certain financial covenants, which require the Company to maintain certain debt-to-EBITDA and interest expense-to-EBITDA ratios. The 2016 Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to create any liens, make investments and acquisitions, incur or guarantee additional indebtedness,enter into mergers or consolidations and other fundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinated debt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensome agreements with negative pledge clauses and clauses restriction, and make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under the 2016 Credit Facilities, subject to compliance with applicable law, as of September 30, 2017 and December 31, 2016, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Company does not expect to pay dividends in the foreseeable future. The Company does not expect these covenants to restrict its liquidity, financial condition or access to capital resources in the foreseeable future. The 2016 Credit Facilities also contains customary representations, warranties, affirmative covenants, and events of default.

On September 6, 2017, the Company borrowed $550.0 million under the 2016 Credit Facilities, or the Incremental Borrowing. The proceeds were primarily used to fund the acquisition of Symphony Health. In accordance with the guidance in FASB’s Accounting Standards Codification, or ASC, 470-50, "Debt - Modifications and Extinguishments," the Incremental Borrowing was accounted for as a debt modification. The Incremental Borrowing resulted in a $3.1 million loss on modification of debt, which consists of fees associated with the transaction for the nine months ended September 30, 2017.

The 2016 Credit Facilities' first lien term loan's scheduled, fixed quarterly principal payments, including the Incremental Borrowing, are as follows:

• $11.3 million per quarter, to be made commencing September 30, 2017 and made on or prior to December 31, 2017;

• $15.2 million per quarter, to be made on or after March 31, 2018, but on or prior to December 31, 2019;

• $19.1 million per quarter, to be made on or after March 31, 2020, but on or prior to December 31, 2020;

• $23.0 million per quarter, to be made on or after March 31, 2021, but prior to September 30, 2021; and

• the remaining principal amount of the term loan on December 6, 2021. 

The variable interest rate on the Incremental Borrowing is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR rate, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA and ranges from 1.00% to 2.00%, in the case of LIBOR rate loans, and 0.00% to 1.00%, in the case of ABR rate loans. There were no other changes to the 2016 Credit Facilities as a result of the Incremental Borrowing. For the nine months ended September 30, 2017, the weighted average interest rate on the first lien term loan was 3.45%.

Revolving Credit Facilities

The Company’s revolving credit facilities provide for $125.0 million of potential borrowings and expire on December 6, 2021. The interest rate on the revolving credit facilities is based on the LIBOR with a 0% LIBOR floor or ABR rate, at the election of the Company, plus an applicable margin, based on the leverage ratio of the Company. The Company, at its discretion, may elect interest periods of 1, 2, 3 or 6 months. The Company is required to pay to the lenders a commitment fee ranging from 0.2% to 0.4% based on the Company’s debt-to-EBITDA ratio. At September 30, 2017 and December 31, 2016, the Company had no outstanding borrowings under the revolving credit facilities. In addition, at September 30, 2017 and December 31, 2016, the Company had $4.5 million and $7.0 million, respectively, in letters of credit outstanding, which are secured by the revolving credit facilities.

Senior Notes

On March 17, 2016, the Company repaid $133.6 million aggregate principal amount of its 9.5% senior notes due 2023, or Senior Notes, as part of a cash tender offer. In accordance with the guidance in the ASC 470-50, "Debt—Modifications and Extinguishments," the debt repayment was accounted for as a partial debt extinguishment. The repayment resulted in a $21.5 million loss on extinguishment of debt, which consists of a $17.4 million early tender premium, a $3.7 million write-off of unamortized debt issuance costs and $0.4 million of fees associated with the transaction for the nine months ended September 30, 2016.

The Senior Notes agreement contains certain provisions that restrict the payment of dividends from the Company’s subsidiaries to the parent company. As a result, there are no material balances present within the parent company that are available for the payment of dividends as the parent company did not have any net income during 2016 or the nine months ended September 30, 2017, that was free of restrictions. The Company does not expect to pay dividends in the foreseeable future.

Accounts Receivable Financing Agreement

In March 2016, the Company entered into a $140.0 million accounts receivable financing agreement, of which $120.0 million was outstanding as of September 30, 2017 and December 31, 2016. The borrowings were used to repay amounts outstanding on the Company’s revolving credit facility that were used to fund the cash tender offer for the Senior Notes.

Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.6%.  The Company may prepay loans upon one business day prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice. For the nine months ended September 30, 2017, the weighted average interest rate on the accounts receivable financing agreement was 2.91%.

The accounts receivable financing agreement contains various customary representations and warranties and covenants, and default provisions which provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

The accounts receivable financing agreement terminates on March 22, 2019, unless terminated earlier pursuant to its terms. At September 30, 2017 and December 31, 2016, there was $20.0 million of remaining capacity available under the accounts receivable financing agreement.

Fair Value of Debt

The estimated fair value of the Company’s debt was $1,368.8 million and $844.2 million at September 30, 2017 and December 31, 2016, respectively. The fair value of the Senior Notes, which totaled $100.7 million and $99.2 million at September 30, 2017 and December 31, 2016, respectively, was determined based on Level 2 inputs using the market approach, which is primarily based on rates at which the debt is traded among financial institutions. The fair value of the term loans, borrowings under credit facilities, and accounts receivable financing agreement which totaled $1,268.1 million and $745.0 million at September 30, 2017 and December 31, 2016, respectively, was determined based on Level 3 inputs, which is primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Authorized Shares

The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01.

Noncontrolling Interest

Below is a summary of noncontrolling interest for the nine months ended September 30 (in thousands):

	2017			2016
Balance as of January 1,	$	—		$	—
Investment by noncontrolling interest	5,440			—
Comprehensive income (loss)
Net income	513			—
Foreign currency adjustments, net of income tax	(90		)	—
Balance as of September 30,	$	5,863		$	—

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company granted 1,831,000 service-based options and 131,044 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $46.0 million and $8.3 million, respectively, during the nine months ended September 30, 2017.

Aggregated information regarding the Company’s option plans is summarized below:

	Options		Wtd. Average Exercise Price		Wtd. Average Remaining Contractual Life (in years)	Intrinsic Value (millions)
Outstanding at December 31, 2016	5,507,347		$	15.38	6.7	$	218.9
Granted	1,831,000		74.93
Exercised	(1,758,846	)	9.47
Expired or forfeited	(73,072	)	26.94
Outstanding at September 30, 2017	5,506,429		$	36.91	7.7	$	216.2
Exercisable at September 30, 2017	2,557,710		$	13.70	6.3	$	159.8

The Company’s RSAs/RSUs activity in 2017 is as follows:

	Awards		Wtd. Average Grant-Date Fair Value		Intrinsic Value (millions)
Unvested at December 31, 2016	188,590		$	32.63	$	10.4
Granted	131,044		63.05
Forfeited	(2,000	)	58.95
Vested	(5,805	)	38.81
Unvested at September 30, 2017	311,829		$	45.14	$	23.8

Stock-based compensation expense related to employee stock options and RSAs/RSUs is summarized below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Direct costs	$	956	$	438	$	2,208	$	1,319
Selling, general and administrative	2,493		1,228		5,478		3,621
Transaction-related costs	5,294		—		5,294		29,421
Total stock-based compensation expense	$	8,743	$	1,666	$	12,980	$	34,361

All stock options granted under the 2013 Stock Incentive Plan for Key Employees of PRA Health Sciences, Inc. and its Subsidiaries, or the Plan, are subject to transfer restrictions of the stock option's underlying shares once vested and exercised. This lack of marketability was included as a discount when calculating the grant date value of these options. In conjunction with secondary offerings, the transfer restrictions on a portion of such shares issuable upon exercise of vested options granted under the Plan were released. The release of the transfer restrictions is considered a modification under ASC Topic 718, “Stock Compensation.” As a result of these modifications, the Company incurred approximately $5.3 million and $4.9 million of incremental compensation expense associated with service-based options during the nine months ended September 30, 2017 and September 30, 2016, respectively, which is included in transaction-related costs in the accompanying consolidated condensed statement of operations.

In December 2013, the Company granted certain employees market-based options under the Plan that vest only upon the achievement of a specified internal rate of return from a liquidity event (“2.0x Options”). At the time of grant, no compensation expense was recorded as the 2.0x Options vest upon a liquidity event, which is not considered probable until the date it occurs. On January 20, 2016, the Compensation Committee of the Board of Directors adopted a resolution to adjust the vesting criteria for all 2.0x Options granted and still outstanding on such date.  Under the revised vesting criteria, the 2.0x Options vest upon the announcement of a secondary offering. This modification resulted in Type IV Improbable-to-Improbable modification. Since the secondary offering was deemed improbable due to the fact that it is outside of the Company’s control and cannot be considered probable until the date it occurs, no compensation expense was recognized on the January 20, 2016 modification date. On March 2, 2016, the Company announced a secondary offering of shares by KKR and certain management stockholders, and it became probable that the 2.0x Options would vest. In total, 835,5512.0x Options held by current employees were modified. As a result of this modification, and the modification associated with the transfer restrictions releases noted above, the Company incurred approximately $24.5 million of incremental compensation expense associated with the 2.0x Options during the nine months ended September 30, 2016, which is included in transaction-related costs in the accompanying consolidated condensed statement of operations.

Employee Stock Purchase Plan

In April 2017, the Board of Directors approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan (“ESPP”) which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 10% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of the offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ESPP will generally be in six month increments, commencing on January 1 and July 1 of each calendar year with the compensation committee having the right to establish different offering periods.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective income tax rate was (0.2)% and 25.8% for the nine months ended September 30, 2017 and 2016, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 35% for the nine months ended September 30, 2017 is primarily due to (i) the benefit realized from the tax deduction of stock awards in excess of the amount recognized in the financial statements per the guidance under ASU No. 2016-09, and (ii) the release of the valuation allowance against the Company's federal net deferred tax assets as a result of the acquisition of Symphony Health.

GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities.

As of September 30, 2017, the Company’s liability for unrecognized tax benefits was $13.0 million. If any portion of this $13.0 million is recognized that impacts the effective tax rate, the Company will then include that portion in the computation of its effective tax rate. Although the ultimate timing of the resolution of audits is highly uncertain, the Company believes it is reasonably possible that approximately $4.5 million of gross unrecognized tax benefits will change in the next 12 months as a result of pending audit settlements or statute of limitations expirations.

The Company files federal, state, and foreign tax returns. For federal purposes, the Company is generally no longer subject to tax examinations for years ended December 31, 2013 and prior. For state tax returns, the Company is generally no longer subject to tax examinations for years prior to 2012. For foreign purposes, the Company is generally no longer subject to examination for tax periods 2009 and prior. Certain carryforward tax attributes generated in prior years remain subject to examination and adjustment.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions.  Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company.

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 the Company is subject to a local tax on services. The Company has not recorded a liability associated with the claim, which totaled $5.4 million at September 30, 2017, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $5.4 million has been made to the Brazilian 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 on the consolidated condensed balance sheet. In June 2015, the Judiciary Court of Justice of the State of Sao Paulo ruled in the favor of the Company, however, the judgment was 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 from the 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 years 2011, 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 the lower court's verdict for the period November 2013 through September 2017 as the Judiciary Court of Justice of the State of Sao Paulo only reviewed the facts that pertained to the period before November 2013.

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Derivatives

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk. Accordingly, the Company has instituted interest rate hedging programs that are accounted for in accordance with ASC 815, “Derivatives and Hedging.” The interest rate hedging program is a cash flow hedge program designed to minimize interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.

The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2017 and December 31, 2016 (in thousands):

		September 30, 2017				December 31, 2016
	Balance Sheet Classification	Notional amount		Asset/ (Liability)		Notional amount		Asset/ (Liability)
Derivatives in an asset position:
Interest rate swap	Other assets	$	250,000	$	73	$	—	$	—
Derivatives in a liability position:
Interest rate swap	Other long-term liabilities	$	—	$	—	$	250,000	$	(590	)

The Company records the effective portion of any change in the fair value of derivatives designated as hedging instruments under ASC 815 to other accumulated comprehensive loss in the Company's consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings when the hedged item affects earnings or is no longer expected to occur. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period.

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts)	2017			2016			2017			2016
Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) on derivatives	$	35		$	127		$	(32	)	$	(2,546	)
Amount of loss recognized in other income (expense), net on derivatives (ineffective portion)	—			—			—			—
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives	(1,758		)	(1,617		)	(5,175		)	(4,242		)

The Company expects that $6.6 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Below is a summary of the components of accumulated other comprehensive loss (in thousands):

	Foreign Currency Translation			Derivative Instruments, Net of Tax			Total
Balance at December 31, 2016	$	(201,091	)	$	(23,595	)	$	(224,686	)
Other comprehensive income before reclassifications	75,167			(21		)	75,146
Reclassification adjustments	—			3,249			3,249
Balance at September 30, 2017	$	(125,924	)	$	(20,367	)	$	(146,291	)

The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound and Euro exchange rates against the U.S. dollar. The U.S. dollar weakened by 8.6% and 12.0% versus the British pound and Euro, respectively, between December 31, 2016 and September 30, 2017. The movement in the British pound and Euro represented $42.1 million and $26.8 million, respectively, out of the $75.2 million foreign currency translation adjustment during the nine months ended September 30, 2017. The remaining foreign currency translation adjustment is primarily attributable to the U.S. dollar’s depreciation against other major world-wide currencies, including the Canadian dollar and the Russian ruble.

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Net Income Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicable period. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plan.

The following table reconciles the basic to diluted weighted average shares outstanding (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Basic weighted average common shares outstanding	62,730	60,937	62,185	60,579
Effect of dilutive stock options and RSAs/RSUs	3,142	3,584	3,498	3,689
Diluted weighted average common shares outstanding	65,872	64,521	65,683	64,268
Anti-dilutive shares	733	359	381	314

The anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the repurchase of shares with the proceeds from the assumed exercises, and unrecognized compensation expense for outstanding awards.

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Segments

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segments

Segments

In conjunction with the acquisition of Symphony Health on September 6, 2017, the Company expanded its reporting segments. The Company is now managed through two reportable segments, Clinical Research and Data Solutions. Clinical Research, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services. Data Solutions provides mission critical information, technology solutions and real-world insights and services to the Company’s life science clients. Reimbursement revenue and reimbursable out-of-pocket costs are not presented, as this measure is not used by the chief operating decision maker to assess the Company's performance. The Company’s reportable segment information is presented below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Service revenue:
Clinical Research	$	475,588		$	399,841		$	1,360,610		$	1,166,410
Data Solutions	18,962			—			18,962			—
Total service revenue	494,550			399,841			1,379,572			1,166,410
Direct Costs:
Clinical Research	314,904			259,910			903,027			758,333
Data Solutions	11,961			—			11,961			—
Total direct costs	326,865			259,910			914,988			758,333
Gross Profit:
Clinical Research	160,684			139,931			457,583			408,077
Data Solutions	7,001			—			7,001			—
Total gross profit	$	167,685		$	139,931		$	464,584		$	408,077
Less expenses not allocated to segments:
Selling, general and administrative	79,307			67,190			229,770			199,648
Transaction-related costs	12,740			—			12,740			31,785
Depreciation and amortization	18,853			17,708			50,146			52,246
Loss on disposal of fixed assets, net	8			219			240			290
Consolidated income from operations	56,777			54,814			171,688			124,108
Interest expense, net	(11,557		)	(13,779		)	(31,088		)	(42,525		)
Loss on modification or extinguishment of debt	(3,089		)	—			(3,089		)	(21,485		)
Foreign currency (losses) gains, net	(12,794		)	1,182			(35,004		)	9,264
Other income (expense), net	1,004			20			724			(85		)
Consolidated income before income taxes and equity in income of unconsolidated joint ventures	$	30,341		$	42,237		$	103,231		$	69,277

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Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of cash, cash equivalents, and restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows:

	September 30,				December 31,
	2017		2016		2016		2015
Cash and cash equivalents	$	193,581	$	130,343	$	144,623	$	121,065
Restricted cash	697		5,235		4,715		5,060
Total cash, cash equivalents, and restricted cash	$	194,278	$	135,578	$	149,338	$	126,125

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Business Combination (Tables)

9 Months Ended

Sep. 30, 2017

Symphony Health Solutions

Business Combination

Schedule of purchase price allocation

The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	26,297
Accounts receivable	39,056
Other current assets	24,048
Fixed assets	12,340
Software and other intangibles	13,000			5 years
Database	64,600			9 years
Customer relationships	161,000			12 years
Accounts payable and accrued expenses	(42,700		)
Deferred revenue	(65,511		)
Deferred tax liabilities	(75,056		)
Other long-term liabilities	(7,940		)
Estimated fair value of net assets acquired	149,134
Purchase price, including contingent consideration	649,609
Total goodwill	$	500,475

Schedule of unudited pro-forma information

The following unaudited pro-forma information assumes the acquisition of Symphony Health occurred as of the beginning of 2016. This pro-forma financial information is not necessarily indicative of operating results if the acquisition had been completed at the date indicated, nor is it necessarily an indication of future operating results.

	Nine Months Ended September 30,
(in thousands, except per share amounts)	2017		2016
Total revenue	$	1,752,514	$	1,484,013
Net income attributable to PRA Health Sciences, Inc.	126,092		35,830
Net income per share:
Basic	$	2.03	$	0.59
Diluted	$	1.92	$	0.56

Acquisition of TDC joint venture

Business Combination

Schedule of purchase price allocation

The Company’s preliminary estimate of the fair value of the net assets acquired as part of the TDC joint venture transaction at the closing date of the business combination is as follows (in thousands):

	Purchase Price Allocation
Cash and cash equivalents	$	8,120
Other current assets	1,671
Other non-current assets	1,742
Accounts payable and accrued expenses	(2,380		)
Other long-term liabilities	(943		)
Estimated fair value of net assets acquired	8,210
PRA purchase price	5,440
Fair value of Takeda's noncontrolling interest	5,440
Total goodwill	$	2,670

Parallel 6

Business Combination

Schedule of purchase price allocation

The Company’s preliminary estimate of the purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	132
Accounts receivable	1,231
Other current assets	26
Software intangible	15,500			5 years
Other intangibles	920			5 years
Accounts payable and accrued expenses	(885		)
Deferred revenue	(994		)
Other long-term liabilities	(2,414		)
Estimated fair value of net assets acquired	13,516
Purchase price, including contingent consideration	46,652
Total goodwill	$	33,136

Nextrials

Business Combination

Schedule of purchase price allocation

The Company’s purchase price allocation is as follows (in thousands):

	Purchase Price Allocation			Weighted Amortization Period
Cash and cash equivalents	$	94
Accounts receivable	211
Other current assets	96
Property, plant and equipment	111
Software intangible	5,574			5 years
Accounts payable and accrued expenses	(1,585		)
Other long-term liabilities	(1,663		)
Estimated fair value of net assets acquired	2,838
Purchase price, including contingent consideration and net of working capital settlement	7,145
Total goodwill	$	4,307

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Summary of the fair value of financial assets and liabilities measured on a recurring basis

The following table summarizes the fair value of the Company’s financial assets and liabilities that are measured on a recurring basis as of September 30, 2017 (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Interest rate swap	$	—	$	73	$	—	$	73
Marketable securities	366		—		—		366
Total	$	366	$	73	$	—	$	439
Liabilities:
Contingent consideration	$	—	$	—	$	118,564	$	118,564
Total	$	—	$	—	$	118,564	$	118,564

Summary of the changes in Level 3 financial assets and liabilities measured on a recurring basis

The following table summarizes the changes in Level 3 financial liabilities measured on a recurring basis for the nine months endedSeptember 30, 2017 (in thousands):

	Contingent Consideration - Accrued expenses and other liabilities			Contingent Consideration - Other long-term liabilities
Balance at December 31, 2016	$	1,735		$	1,019
Initial estimate of Symphony Health contingent consideration	90,394			18,390
Initial estimate of Parallel 6 contingent consideration	—			8,350
Payments on Nextrials contingent consideration	(400		)	—
Reclassification adjustment	1,019			(1,019		)
Change in fair value recognized in other (income) expense, net	(924		)	—
Balance at September 30, 2017	$	91,824		$	26,740

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Concentration of Credit Risk (Tables)

9 Months Ended

Sep. 30, 2017

Service revenue

Concentration risk

Schedule of concentration of risk by risk factor

Service revenue from individual customers greater than 10% of consolidated service revenue in the respective periods was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Customer A	10.1	%	11.7	%	10.6	%	10.8	%
Customer B	—		10.4	%	—		10.7	%
Customer C	—		10.2	%	—		—

Accounts receivable and unbilled receivables

Concentration risk

Schedule of concentration of risk by risk factor

Accounts receivable and unbilled receivables from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled receivables at the respective dates were as follows:

	September 30,		December 31,
	2017		2016
Customer A	10.7	%	12.0	%

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Accounts Receivable and Unbilled Services (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of accounts receivable and unbilled services

Accounts receivable and unbilled services include service revenue, reimbursement revenue, and amounts associated with work performed by investigators. Accounts receivable and unbilled services were as follows (in thousands):

	September 30,			December 31,
	2017			2016
Accounts receivable	$	457,306		$	284,647
Unbilled services	172,152			155,609
	629,458			440,256
Less allowance for doubtful accounts	(1,429		)	(1,203		)
Total accounts receivable and unbilled services, net	$	628,029		$	439,053

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands):

	Clinical Research		Data Solutions		Consolidated
Balance at December 31, 2016	$	971,980	$	—	$	971,980
Acquisition of Symphony Health	—		500,475		500,475
Acquisition of Parallel 6	33,136		—		33,136
Acquisition of TDC joint venture	2,670		—		2,670
Acquisition of TDS	966		—		966
Currency translation	25,830		—		25,830
Balance at September 30, 2017	$	1,034,582	$	500,475	$	1,535,057

Schedule of intangible assets

Intangible assets consist of the following (in thousands):

	September 30,			December 31,
	2017			2016
Customer relationships	$	535,135		$	360,328
Customer backlog	123,358			119,223
Trade names (definite-lived)	28,457			25,740
Patient list, software and other intangibles	55,574			28,974
Database	64,600			—
Non-competition agreements	2,767			2,737
Total finite-lived intangible assets, gross	809,891			537,002
Accumulated amortization	(216,174		)	(181,036		)
Total finite-lived intangible assets, net	593,717			355,966
Trade names (indefinite-lived)	118,010			118,010
Total intangible assets, net	$	711,727		$	473,976

Schedule of estimated future amortization expense

The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands):

2017 (remaining)	$	16,368
2018	60,075
2019	54,375
2020	52,462
2021	50,331
2022 and thereafter	360,106
Total	$	593,717

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consists of the following (in thousands):

	September 30,			December 31,
	2017			2016
Term loans, first lien	$	1,148,125		$	625,000
Senior notes	91,441			91,441
Accounts receivable financing agreement	120,000			120,000
	1,359,566			836,441
Less debt issuance costs and discount	(9,349		)	(8,139		)
	1,350,217			828,302
Less current portion	(56,719		)	(31,250		)
Total long-term debt, net	$	1,293,498		$	797,052

Schedule of principal payments on long-term debt due

Principal payments on long-term debt are due as follows (in thousands):

2017 (remaining)	$	11,250
2018	60,625
2019	180,625
2020	76,250
2021	939,375
2022 and thereafter	91,441
Total	$	1,359,566

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Summary of noncontrolling interest

Below is a summary of noncontrolling interest for the nine months ended September 30 (in thousands):

	2017			2016
Balance as of January 1,	$	—		$	—
Investment by noncontrolling interest	5,440			—
Comprehensive income (loss)
Net income	513			—
Foreign currency adjustments, net of income tax	(90		)	—
Balance as of September 30,	$	5,863		$	—

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity

Aggregated information regarding the Company’s option plans is summarized below:

	Options		Wtd. Average Exercise Price		Wtd. Average Remaining Contractual Life (in years)	Intrinsic Value (millions)
Outstanding at December 31, 2016	5,507,347		$	15.38	6.7	$	218.9
Granted	1,831,000		74.93
Exercised	(1,758,846	)	9.47
Expired or forfeited	(73,072	)	26.94
Outstanding at September 30, 2017	5,506,429		$	36.91	7.7	$	216.2
Exercisable at September 30, 2017	2,557,710		$	13.70	6.3	$	159.8

Schedule of RSA/RSU activity

The Company’s RSAs/RSUs activity in 2017 is as follows:

	Awards		Wtd. Average Grant-Date Fair Value		Intrinsic Value (millions)
Unvested at December 31, 2016	188,590		$	32.63	$	10.4
Granted	131,044		63.05
Forfeited	(2,000	)	58.95
Vested	(5,805	)	38.81
Unvested at September 30, 2017	311,829		$	45.14	$	23.8

Schedule of stock-based compensation expense

Stock-based compensation expense related to employee stock options and RSAs/RSUs is summarized below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Direct costs	$	956	$	438	$	2,208	$	1,319
Selling, general and administrative	2,493		1,228		5,478		3,621
Transaction-related costs	5,294		—		5,294		29,421
Total stock-based compensation expense	$	8,743	$	1,666	$	12,980	$	34,361

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of notional amounts and fair values (determined using level 2 inputs) of derivatives

The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2017 and December 31, 2016 (in thousands):

		September 30, 2017				December 31, 2016
	Balance Sheet Classification	Notional amount		Asset/ (Liability)		Notional amount		Asset/ (Liability)
Derivatives in an asset position:
Interest rate swap	Other assets	$	250,000	$	73	$	—	$	—
Derivatives in a liability position:
Interest rate swap	Other long-term liabilities	$	—	$	—	$	250,000	$	(590	)

Schedule of the effect of derivatives on the condensed consolidated statements of operations and comprehensive (loss) income

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Contracts)	2017			2016			2017			2016
Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) on derivatives	$	35		$	127		$	(32	)	$	(2,546	)
Amount of loss recognized in other income (expense), net on derivatives (ineffective portion)	—			—			—			—
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives	(1,758		)	(1,617		)	(5,175		)	(4,242		)

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2017

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Summary of components of accumulated other comprehensive loss

Below is a summary of the components of accumulated other comprehensive loss (in thousands):

	Foreign Currency Translation			Derivative Instruments, Net of Tax			Total
Balance at December 31, 2016	$	(201,091	)	$	(23,595	)	$	(224,686	)
Other comprehensive income before reclassifications	75,167			(21		)	75,146
Reclassification adjustments	—			3,249			3,249
Balance at September 30, 2017	$	(125,924	)	$	(20,367	)	$	(146,291	)

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Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Schedule of weighted average basic and diluted common shares

The following table reconciles the basic to diluted weighted average shares outstanding (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Basic weighted average common shares outstanding	62,730	60,937	62,185	60,579
Effect of dilutive stock options and RSAs/RSUs	3,142	3,584	3,498	3,689
Diluted weighted average common shares outstanding	65,872	64,521	65,683	64,268
Anti-dilutive shares	733	359	381	314

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Segments (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

The Company’s reportable segment information is presented below (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Service revenue:
Clinical Research	$	475,588		$	399,841		$	1,360,610		$	1,166,410
Data Solutions	18,962			—			18,962			—
Total service revenue	494,550			399,841			1,379,572			1,166,410
Direct Costs:
Clinical Research	314,904			259,910			903,027			758,333
Data Solutions	11,961			—			11,961			—
Total direct costs	326,865			259,910			914,988			758,333
Gross Profit:
Clinical Research	160,684			139,931			457,583			408,077
Data Solutions	7,001			—			7,001			—
Total gross profit	$	167,685		$	139,931		$	464,584		$	408,077
Less expenses not allocated to segments:
Selling, general and administrative	79,307			67,190			229,770			199,648
Transaction-related costs	12,740			—			12,740			31,785
Depreciation and amortization	18,853			17,708			50,146			52,246
Loss on disposal of fixed assets, net	8			219			240			290
Consolidated income from operations	56,777			54,814			171,688			124,108
Interest expense, net	(11,557		)	(13,779		)	(31,088		)	(42,525		)
Loss on modification or extinguishment of debt	(3,089		)	—			(3,089		)	(21,485		)
Foreign currency (losses) gains, net	(12,794		)	1,182			(35,004		)	9,264
Other income (expense), net	1,004			20			724			(85		)
Consolidated income before income taxes and equity in income of unconsolidated joint ventures	$	30,341		$	42,237		$	103,231		$	69,277

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Basis of Presentation - Recently Implemented Accounting Pronouncements (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jan. 01, 2017	Dec. 31, 2016
Recently Implemented Accounting Pronouncements
Deferred tax liabilities	$ (128,366,000)			$ (73,703,000)
Operating cash flows	(117,828,000)	$ (66,708,000)
Financing cash outflows	523,670,000	$ (30,745,000)
Accounting Standards Update 2016-09
Recently Implemented Accounting Pronouncements
Deferred tax liabilities			$ 12,700,000
Valuation allowance			12,700,000
Accounting Standards Update 2016-09 | Retained Earnings
Recently Implemented Accounting Pronouncements
Retained earnings			$ 0
Accounting Standards Update 2016-15 | Effect of early adoption of ASU
Recently Implemented Accounting Pronouncements
Operating cash flows	17,800,000
Financing cash outflows	$ 17,800,000

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Basis of Presentation - Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Cash, cash equivalents, and restricted cash
Cash and cash equivalents	$ 193,581	$ 144,623	$ 130,343	$ 121,065
Restricted cash	697	4,715	5,235	5,060
Total cash, cash equivalents, and restricted cash	$ 194,278	$ 149,338	$ 135,578	$ 126,125

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Basis of Presentation Basis of Presentation - Secondary Offerings (Details) - USD ($) $ in Millions	1 Months Ended	9 Months Ended
	Aug. 31, 2017	Sep. 30, 2017
Subsidiary, Sale of Stock [Line Items]
KKR ownership of the Company's outstanding common stock (as a percentage)		20.80%
Secondary stock offering
Subsidiary, Sale of Stock [Line Items]
Shares sold in secondary offering (in shares)	10,000,000
Secondary stock offering - shares from existing shareholders (in shares)
Subsidiary, Sale of Stock [Line Items]
Professional fees for secondary offering		$ 1.0

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Business Combination - Narrative (Details) - USD ($) $ in Thousands					1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 06, 2017	Jun. 01, 2017	May 10, 2017	Mar. 18, 2016	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Combination
Benefit from income taxes						$ 18,241	$ (10,821)	$ 165	$ (17,869)
Loss on modification or extinguishment of debt						$ (3,089)	$ 0	$ (3,089)	$ (21,485)
Takeda
Business Combination
Noncontrolling interest owned by Takeda (as a percentage)					50.00%	50.00%		50.00%
Acquisition of Symphony Health
Business Combination
Cash consideration	$ 540,800
Total goodwill	500,475
Service revenue					$ 19,000
Net income					1,100
Acquisition of Symphony Health | Clinical Research
Business Combination
Total goodwill	$ 0
Acquisition of Symphony Health | Acquisition-related costs
Business Combination
Acquisition-related costs					6,400	$ 6,400		$ 6,400
Loss on modification or extinguishment of debt								3,100
Acquisition of Symphony Health | Acquisition-related transaction costs
Business Combination
Benefit from income taxes								2,500
Acquisition of Symphony Health | Acquisition-related modification or extinguishment of long-term debt
Business Combination
Benefit from income taxes								1,200
Acquisition of Symphony Health | Recurring | Level 3 | Other Current Liabilities [Member] | Contingent Earn-out Payments
Business Combination
Contingent liability recognized					108,800	108,800		108,800
Acquisition of Symphony Health | Recurring | Level 3 | Other long-term liabilities | Contingent Earn-out Payments
Business Combination
Contingent liability recognized					18,400	18,400		18,400
Acquisition of Symphony Health | Recurring | Level 3 | Contingent Consideration - Accrued expenses and other liabilities | Contingent Earn-out Payments
Business Combination
Contingent liability recognized					90,400	90,400		$ 90,400
Acquisition of TDS
Business Combination
Cash consideration		$ 700
Total goodwill		1,000
Acquisition of TDC joint venture
Business Combination
Cash consideration		5,400
Total goodwill		$ 2,670
Equity interest in VIE (as a percentage)		50.00%
Period after which buy-out of the noncontrolling interest of the Variable Interest Entity (VIE) is required		2 years
Acquisition of TDC joint venture | Maximum
Business Combination
Period to complete the final valuation of net assets acquired		1 year
Acquisition of TDC joint venture | Selling, general and administrative
Business Combination
Acquisition-related costs		$ 600
Acquisition of TDC joint venture | Takeda
Business Combination
Noncontrolling interest ownership (as a percentage)		50.00%
Required buy-out of Takeda's ownership (as a percentage)								50.00%
Early ownership buy-out option (as a percentage)								50.00%
Parallel 6
Business Combination
Cash consideration			$ 39,700
Parallel 6 | Maximum
Business Combination
Period to complete the final valuation of net assets acquired			1 year
Parallel 6 | Clinical Research
Business Combination
Total goodwill			$ 33,100
Parallel 6 | Contingent Earn-out Payments - Sales Targets
Business Combination
Potential contingent earn-out payments			$ 10,000
Earn-out period for contingent consideration			18 months
Parallel 6 | Selling, general and administrative
Business Combination
Acquisition-related costs			$ 1,300
Parallel 6 | Level 3 | Other long-term liabilities
Business Combination
Contingent liability recognized					8,400	8,400		$ 8,400
Nextrials
Business Combination
Cash consideration				$ 4,800
Nextrials | Clinical Research
Business Combination
Total goodwill				4,307
Nextrials | Contingent Earn-out Payments
Business Combination
Potential contingent earn-out payments				$ 3,000
Earn-out period for contingent consideration				30 months
Increase in fair value of contingent consideration								100
Payment of contingent consideration								400
Nextrials | Contingent Earn-out Payments - Sales Targets
Business Combination
Potential contingent earn-out payments				$ 1,000
Nextrials | Contingent Earn-out Payments - Milestones
Business Combination
Potential contingent earn-out payments				2,000
Nextrials | Contingent Consideration - Accrued expenses and other liabilities | Contingent Earn-out Payments
Business Combination
Contingent liability, current					$ 1,400	$ 1,400		$ 1,400
Nextrials | Level 3 | Contingent Earn-out Payments
Business Combination
Contingent liability recognized				$ 2,300

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Business Combination - Preliminary Estimate of the Purchase Price Allocation - SHS (Details) - Acquisition of Symphony Health $ in Thousands	Sep. 06, 2017 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 26,297
Accounts receivable	39,056
Other current assets	24,048
Fixed assets	12,340
Accounts payable and accrued expenses	(42,700)
Deferred revenue	(65,511)
Deferred tax liabilities	(75,056)
Other long-term liabilities	(7,940)
Estimated fair value of net assets acquired	149,134
Purchase price, including contingent consideration	649,609
Total goodwill	500,475
Software intangible
Business Acquisition [Line Items]
Software intangible	$ 13,000
Weighted Amortization Period	5 years
Database
Business Acquisition [Line Items]
Software intangible	$ 64,600
Weighted Amortization Period	9 years
Customer relationships
Business Acquisition [Line Items]
Software intangible	$ 161,000
Weighted Amortization Period	12 years

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Business Combination - Unaudited Pro-Forma Information (Details) - Symphony Health Solutions - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Business Acquisition [Line Items]
Acquisition-related revenue	$ 1,752,514	$ 1,484,013
Net income attributable to PRA Health Sciences, Inc.	$ 126,092	$ 35,830
Net income per share, basic (in dollars per share)	$ 2.03	$ 0.59
Net income per share, diluted (in dollars per share)	$ 1.92	$ 0.56

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Business Combination - Preliminary Estimate of Net Assets Acquired TDC Joint Venture (Details) - Acquisition of TDC joint venture $ in Thousands	Jun. 01, 2017 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 8,120
Other current assets	1,671
Other non-current assets	1,742
Accounts payable and accrued expenses	(2,380)
Other long-term liabilities	(943)
Estimated fair value of net assets acquired	8,210
Purchase price, including contingent consideration	5,440
Fair value of Takeda's noncontrolling interest	5,440
Total goodwill	$ 2,670

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Business Combination - Preliminary Estimate of the Purchase Price Allocation (Details) - Parallel 6 $ in Thousands	May 10, 2017 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 132
Accounts receivable	1,231
Other current assets	26
Accounts payable and accrued expenses	(885)
Deferred revenue	(994)
Other long-term liabilities	(2,414)
Estimated fair value of net assets acquired	13,516
Purchase price, including contingent consideration	46,652
Software intangible
Business Acquisition [Line Items]
Software intangible	$ 15,500
Weighted Amortization Period	5 years
Other intangibles
Business Acquisition [Line Items]
Software intangible	$ 920
Weighted Amortization Period	5 years
Clinical Research
Business Acquisition [Line Items]
Total goodwill	$ 33,100

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Business Combination - Company's Purchase Price Allocation (Details) - Nextrials $ in Thousands	Mar. 18, 2016 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 94
Accounts receivable	211
Other current assets	96
Property, plant and equipment	111
Accounts payable and accrued expenses	(1,585)
Other long-term liabilities	(1,663)
Estimated fair value of net assets acquired	2,838
Purchase price, including contingent consideration	7,145
Software intangible
Business Acquisition [Line Items]
Software intangible	$ 5,574
Weighted Amortization Period	5 years
Clinical Research
Business Acquisition [Line Items]
Total goodwill	$ 4,307

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Fair Value Measurements - Summary of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - Recurring $ in Thousands	Sep. 30, 2017 USD ($)
Assets:
Assets fair value	$ 439
Liabilities:
Liabilities fair value	118,564
Interest rate swap
Assets:
Assets fair value	73
Contingent consideration
Liabilities:
Liabilities fair value	118,564
Marketable securities
Assets:
Assets fair value	366
Level 1
Assets:
Assets fair value	366
Liabilities:
Liabilities fair value	0
Level 1 | Interest rate swap
Assets:
Assets fair value	0
Level 1 | Contingent consideration
Liabilities:
Liabilities fair value	0
Level 1 | Marketable securities
Assets:
Assets fair value	366
Level 2
Assets:
Assets fair value	73
Liabilities:
Liabilities fair value	0
Level 2 | Interest rate swap
Assets:
Assets fair value	73
Level 2 | Contingent consideration
Liabilities:
Liabilities fair value	0
Level 2 | Marketable securities
Assets:
Assets fair value	0
Level 3
Assets:
Assets fair value	0
Liabilities:
Liabilities fair value	118,564
Level 3 | Interest rate swap
Assets:
Assets fair value	0
Level 3 | Contingent consideration
Liabilities:
Liabilities fair value	118,564
Level 3 | Marketable securities
Assets:
Assets fair value	$ 0

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Fair Value Measurements - Level 3 (Details) - Recurring - Level 3 $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Contingent consideration | Value Heath Solutions, Inc.
Changes in the fair value of the Company's Level 3 financial liabilities
Initial estimate of contingent consideration	$ 1,000
Contingent Consideration - Accrued expenses and other liabilities
Changes in the fair value of the Company's Level 3 financial liabilities
December 31, 2016	1,735
Change in fair value recognized in other (income) expense, net	(924)
September 30, 2017	91,824
Contingent Consideration - Accrued expenses and other liabilities | Symphony Health Solutions
Changes in the fair value of the Company's Level 3 financial liabilities
Initial estimate of contingent consideration	90,394
Contingent Consideration - Accrued expenses and other liabilities | Parallel 6
Changes in the fair value of the Company's Level 3 financial liabilities
Initial estimate of contingent consideration	0
Contingent Consideration - Accrued expenses and other liabilities | Nextrials
Changes in the fair value of the Company's Level 3 financial liabilities
Payments on Nextrials contingent consideration	(400)
Reclassification adjustment	1,019
Contingent Consideration - Other long-term liabilities
Changes in the fair value of the Company's Level 3 financial liabilities
December 31, 2016	1,019
Change in fair value recognized in other (income) expense, net	0
September 30, 2017	26,740
Contingent Consideration - Other long-term liabilities | Symphony Health Solutions
Changes in the fair value of the Company's Level 3 financial liabilities
Initial estimate of contingent consideration	18,390
Contingent Consideration - Other long-term liabilities | Parallel 6
Changes in the fair value of the Company's Level 3 financial liabilities
Initial estimate of contingent consideration	8,350
Contingent Consideration - Other long-term liabilities | Nextrials
Changes in the fair value of the Company's Level 3 financial liabilities
Payments on Nextrials contingent consideration	0
Reclassification adjustment	$ (1,019)

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Fair Value Measurements - Non-recurring Fair Value Measurements (Details) - Nonrecurring - Level 3 $ in Millions	Sep. 30, 2017 USD ($)
Assets fair value measurements
Assets fair value	$ 2,246.8
Goodwill	1,535.1
Identifiable intangible assets	$ 711.7

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Concentration of Credit Risk (Details) - Customer Concentration Risk	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Service revenue | Customer A
Concentration risk
Concentration risk percentage	10.10%	11.70%	10.60%	10.80%
Service revenue | Customer B
Concentration risk
Concentration risk percentage	0.00%	10.40%	0.00%	10.70%
Service revenue | Customer C
Concentration risk
Concentration risk percentage	0.00%	10.20%	0.00%	0.00%
Accounts receivable and unbilled receivables | Customer A
Concentration risk
Concentration risk percentage			10.70%		12.00%

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Accounts Receivable and Unbilled Services (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Accounts receivable	$ 457,306	$ 284,647
Unbilled services	172,152	155,609
Total accounts receivable, gross	629,458	440,256
Less allowance for doubtful accounts	(1,429)	(1,203)
Total accounts receivable and unbilled services, net	$ 628,029	$ 439,053

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Goodwill and Intangible Assets - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 11,300,000	$ 11,300,000	$ 29,500,000	$ 34,300,000
Accumulated impairment charges					$ 0	$ 0
EDS
Finite-Lived Intangible Assets [Line Items]
Fair value of reporting unit in excess of carrying amount						$ 70,000,000
Percent of fair value of reporting unit in excess of carrying amount						33.00%

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Goodwill and Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 06, 2017	Jun. 01, 2017	May 10, 2017
Changes in carrying amount of goodwill
December 31, 2016	$ 971,980
Currency translation	25,830
September 30, 2017	1,535,057
Acquisition of Symphony Health
Changes in carrying amount of goodwill
Total goodwill		$ 500,475
Acquisition of Parallel 6
Changes in carrying amount of goodwill
Acquisition	33,136
Acquisition of TDC joint venture
Changes in carrying amount of goodwill
Total goodwill			$ 2,670
Acquisition	2,670
Acquisition of TDS
Changes in carrying amount of goodwill
Total goodwill			$ 1,000
Acquisition	966
Clinical Research
Changes in carrying amount of goodwill
December 31, 2016	971,980
Currency translation	25,830
September 30, 2017	1,034,582
Clinical Research | Acquisition of Symphony Health
Changes in carrying amount of goodwill
Total goodwill		0
Clinical Research | Acquisition of Parallel 6
Changes in carrying amount of goodwill
Total goodwill				$ 33,100
Acquisition	33,136
Clinical Research | Acquisition of TDC joint venture
Changes in carrying amount of goodwill
Acquisition	2,670
Clinical Research | Acquisition of TDS
Changes in carrying amount of goodwill
Acquisition	966
Data Solutions
Changes in carrying amount of goodwill
December 31, 2016	0
Currency translation	0
September 30, 2017	500,475
Data Solutions | Acquisition of Symphony Health
Changes in carrying amount of goodwill
Total goodwill		$ 500,475
Data Solutions | Acquisition of Parallel 6
Changes in carrying amount of goodwill
Acquisition	0
Data Solutions | Acquisition of TDC joint venture
Changes in carrying amount of goodwill
Acquisition	0
Data Solutions | Acquisition of TDS
Changes in carrying amount of goodwill
Acquisition	$ 0

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Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	$ 809,891	$ 537,002
Accumulated amortization	(216,174)	(181,036)
Total finite-lived intangible assets, net	593,717	355,966
Trade names (indefinite-lived)	118,010	118,010
Total intangible assets, net	711,727	473,976
Customer relationships
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	535,135	360,328
Customer backlog
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	123,358	119,223
Trade names (definite-lived)
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	28,457	25,740
Patient list, software and other intangibles
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	55,574	28,974
Database
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	64,600	0
Non-competition agreements
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	$ 2,767	$ 2,737

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Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
2017 (remaining)	$ 16,368
2018	60,075
2019	54,375
2020	52,462
2021	50,331
2022 and thereafter	360,106
Total finite-lived intangible assets, net	$ 593,717	$ 355,966

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Long-Term Debt - Summary (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Long-term debt
Long-term debt, gross	$ 1,359,566	$ 836,441
Less debt issuance costs and discount	(9,349)	(8,139)
Total	1,350,217	828,302
Less current portion	(56,719)	(31,250)
Total long-term debt, net	1,293,498	797,052
Term loans, first lien
Long-term debt
Long-term debt, gross	1,148,125	625,000
Senior notes
Long-term debt
Long-term debt, gross	91,441	91,441
Accounts receivable financing agreement
Long-term debt
Long-term debt, gross	$ 120,000	$ 120,000

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Long-Term Debt - Future Principal Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Principal payments on long-term debt
2017 (remaining)	$ 11,250
2018	60,625
2019	180,625
2020	76,250
2021	939,375
2022 and thereafter	91,441
Total	$ 1,359,566	$ 836,441

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Long-Term Debt - Credit Facilities (Details) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 06, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Long-term debt
Current borrowing capacity				$ 550,000,000	$ 0
Loss on modification or extinguishment of debt		$ 3,089,000	$ 0	$ 3,089,000	$ 21,485,000
Term loans, first lien
Long-term debt
Debt, Weighted Average Interest Rate		3.45%		3.45%
Credit Facilities 2016 | LIBOR | Minimum
Long-term debt
Applicable margin on variable rate basis (as a percent)				1.00%
Credit Facilities 2016 | LIBOR | Maximum
Long-term debt
Applicable margin on variable rate basis (as a percent)				2.00%
Credit Facilities 2016 | ABR | Minimum
Long-term debt
Applicable margin on variable rate basis (as a percent)				0.00%
Credit Facilities 2016 | ABR | Maximum
Long-term debt
Applicable margin on variable rate basis (as a percent)				1.00%
Credit Facilities 2016
Long-term debt
Current borrowing capacity	$ 550,000,000
Loss on modification or extinguishment of debt				$ 3,100,000
Credit Facilities 2016 | Term loans, first lien | Quarterly payments - March 31, 2017 to December 31, 2017
Long-term debt
Quarterly term loan amortization payments				11,300,000
Credit Facilities 2016 | Term loans, first lien | Quarterly payments - March 31, 2018 to December 31, 2019
Long-term debt
Quarterly term loan amortization payments				15,200,000
Credit Facilities 2016 | Term loans, first lien | Quarterly payments - March 31, 2020 to December 31, 2020
Long-term debt
Quarterly term loan amortization payments				19,100,000
Credit Facilities 2016 | Term loans, first lien | Quarterly payments - March 31, 2021 to December 31, 2021
Long-term debt
Quarterly term loan amortization payments				23,000,000
Credit Facilities 2016 | Revolving Credit Facility
Long-term debt
Maximum borrowing capacity		$ 125,000,000.0		$ 125,000,000.0
Interest period, option one				1 month
Interest period, option two				2 months
Interest period, option three				3 months
Interest period, option four				6 months
Outstanding borrowings		0		$ 0		$ 0
Outstanding letters of credit		$ 4,500,000		$ 4,500,000		$ 7,000,000
Credit Facilities 2016 | Revolving Credit Facility | Minimum
Long-term debt
Commitment fee (as a percent)				0.20%
Credit Facilities 2016 | Revolving Credit Facility | Maximum
Long-term debt
Commitment fee (as a percent)				0.40%
Credit Facilities 2016 | Revolving Credit Facility | LIBOR | Minimum
Long-term debt
Variable base rate minimum floor (as a percent)				0.00%
Credit Facilities 2016 | Revolving Credit Facility | ABR
Long-term debt
Variable rate basis				ABR

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Long-Term Debt - Senior Notes and AR Financing Agreement (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Mar. 17, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Mar. 31, 2016
Long-term debt
Loss on extinguishment of debt		$ 3,089	$ 0	$ 3,089	$ 21,485
Fair Value of Debt
Estimated fair value of long-term debt		1,368,800		1,368,800		$ 844,200
Level 3
Fair Value of Debt
Fair value of the term loans, borrowings under credit facilities, and accounts receivable financing agreement		1,268,100		1,268,100		745,000
Senior notes
Long-term debt
Repayment of principal	$ 133,600
Interest rate (as a percent)	9.50%
Loss on extinguishment of debt		21,500
Prepayment penalty				17,400
Write-off of unamortized debt issuance costs				3,700
Fees associated with extinguishment of debt				400
Senior notes | Level 2
Fair Value of Debt
Fair value of Senior Notes		100,700		100,700		99,200
Accounts receivable financing agreement
Long-term debt
Maximum borrowing capacity							$ 140,000
Outstanding borrowings		120,000		$ 120,000		120,000
Notice period for prepayment of loans				1 day
Notice period required for termination of agreement				15 days
Weighted average interest rate (as a percent)				2.91%
Remaining borrowing capacity		$ 20,000		$ 20,000		$ 20,000
Accounts receivable financing agreement | LIBOR
Long-term debt
Applicable margin on variable rate basis (as a percent)				1.60%

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Stockholders' Equity (Details) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Stockholders' Equity Note [Abstract]
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000,000	100,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01

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Stockholders' Equity - Noncontrolling Interest (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Summary of noncontrolling interest
Balance as of January 1,			$ 0	$ 0
Investment by noncontrolling interest			5,440	0
Comprehensive income (loss)
Net income	$ 401	$ 0	513	0
Foreign currency adjustments, net of income tax			(90)	0
September 30,	$ 5,863	$ 0	$ 5,863	$ 0

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Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Restricted Stock Awards (RSAs)
Awards
Restricted stock awards granted in period	131,044
Total grant date fair value of awards granted	$ 8.3
Employee stock options
Options
Outstanding at beginning of period (in shares)	5,507,347
Granted (in shares)	1,831,000
Exercised (in shares)	(1,758,846)
Expired or forfeited (in shares)	(73,072)
Outstanding at end of period (in shares)	5,506,429	5,507,347
Exercisable (in shares)	2,557,710
Wtd. Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 15.38
Granted (in dollars per share)	74.93
Exercised (in dollars per share)	9.47
Expired or forfeited (in dollars per share)	26.94
Outstanding at end of period (in dollars per share)	36.91	$ 15.38
Exercisable (in dollars per share)	$ 13.70
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining contractual life, Outstanding	7 years 8 months 12 days	6 years 8 months 12 days
Weighted average remaining contractual life, Exercisable	6 years 3 months 18 days
Intrinsic value, Outstanding	$ 216.2	$ 218.9
Intrinsic value, Exercisable	159.8
Service-based options | Employee stock options
Awards
Total grant date fair value of awards granted	$ 46.0
Options
Granted (in shares)	1,831,000

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Stock-Based Compensation - Restricted Stock Awards and Units (Details) - RSAs and RSUs - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Awards
Outstanding at beginning of period (in shares)	188,590
Granted (in shares)	131,044
Forfeited (in shares)	(2,000)
Vested (in shares)	(5,805)
Outstanding at end of period (in shares)	311,829
Wtd. Average Grant-Date Fair Value
Outstanding at beginning of period (in dollars per share)	$ 32.63
Granted (in dollars per share)	63.05
Forfeited (in dollars per share)	58.95
Vested (in dollars per share)	38.81
Outstanding at end of period (in dollars per share)	$ 45.14
Intrinsic Value
Outstanding at end of period	$ 23.8	$ 10.4

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Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($)			1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 02, 2016	Jan. 20, 2016	Dec. 31, 2013	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock options, RSAs and RSUs
Stock-based compensation
Compensation expense				$ 8,743,000	$ 1,666,000	$ 12,980,000	$ 34,361,000
Direct costs | Stock options, RSAs and RSUs
Stock-based compensation
Compensation expense				956,000	438,000	2,208,000	1,319,000
Selling, general and administrative | Stock options, RSAs and RSUs
Stock-based compensation
Compensation expense				2,493,000	1,228,000	5,478,000	3,621,000
Transaction-related costs | Stock options, RSAs and RSUs
Stock-based compensation
Compensation expense				$ 5,294,000	$ 0	5,294,000	29,421,000
Transaction-related costs | 2013 Plan | Stock options, RSAs and RSUs
Stock-based compensation
Compensation expense						5,300,000	$ 4,900,000
Vesting based on market conditions rate one | 2013 Plan | Employee stock options
Stock-based compensation
Compensation expense		$ 0	$ 0
Number of stock options modified	835,551
Vesting based on market conditions rate one | Transaction-related costs | 2013 Plan | Employee stock options
Stock-based compensation
Incremental compensation expense						$ 24,500,000

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Stock-Based Compensation - Employee Stock Purchase Plan (Details) - 2017 Employee Stock Purchase Plan	9 Months Ended
	Sep. 30, 2017
Employee Stock Purchase Plan
Offering period increments under the ESPP	6 months
Maximum
Employee Stock Purchase Plan
Payroll deduction, as a percentage of base wages, an employee may authorize to be applied toward the purchase of common stock under the ESPP	10.00%
Percentage of discount on the purchase price of common stock during the offering period under the ESPP	15.00%

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Income Taxes (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Effective income tax rate (as a percent)	(0.20%)	25.80%
U.S. statutory rate (as a percent)	35.00%
Liability for unrecognized tax benefits	$ 13.0
Amount of gross unrecognized tax benefits that will change in the next 12 months as a result of pending audit settlements or statute of limitations expirations	$ 4.5

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Commitments and Contingencies (Details) - Tax related claim on export of services provided $ in Millions	Sep. 30, 2017 USD ($)
Commitments and Contingencies
Amount of tax claimed to be due in litigation	$ 5.4
Other assets
Commitments and Contingencies
Deposit made to Brazilian court in tax litigation	$ 5.4

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Derivatives - Hedging Instruments (Details) - Interest rate swap - Designated as hedging instruments - Level 2 - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Other assets
Derivatives in an asset position:
Notional amount	$ 250,000,000	$ 0
Asset/ (Liability)	73,000	0
Other long-term liabilities
Derivatives in a liability position:
Notional amount	0	250,000,000
Asset/ (Liability)	$ 0	$ (590,000)

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Derivatives - Cash Flow Hedging Instruments (Details) - Cash flow hedging - Interest rate contracts - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss)
Amount of pre-tax gain (loss) recognized in other comprehensive income (loss) on derivatives	$ 35,000	$ 127,000	$ (32,000)	$ (2,546,000)
Amount of loss recognized in other income (expense), net on derivatives (ineffective portion)	0	0	0	0
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net on derivatives	$ (1,758,000)	$ (1,617,000)	(5,175,000)	$ (4,242,000)
Unrealized losses expected to be reclassified out of accumulated other comprehensive loss into interest expense over the next 12 months			$ 6,600,000

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Accumulated Other Comprehensive Loss - Components (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss)	$ 936,297	$ 729,252
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss)	(125,924)	(201,091)
Other comprehensive income before reclassifications	75,167
Reclassification adjustments	0
Derivative Instruments, Net of Tax
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss)	(20,367)	(23,595)
Other comprehensive income before reclassifications	(21)
Reclassification adjustments	3,249
Total
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss)	(146,291)	$ (224,686)
Other comprehensive income before reclassifications	75,146
Reclassification adjustments	3,249
Foreign currency translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income before reclassifications	$ 75,167
British Pound, GBP | Foreign currency translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Increase (Decrease) In Currency Valuation, Percent	(8.60%)
Other comprehensive income before reclassifications	$ 42,100
Euro, EUR | Foreign currency translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Increase (Decrease) In Currency Valuation, Percent	(12.00%)
Other comprehensive income before reclassifications	$ 26,800

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Net Income Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reconciliation of basic to diluted weighted average shares outstanding
Basic weighted average common shares outstanding (in shares)	62,730	60,937	62,185	60,579
Effect of dilutive stock options and RSAs/RSUs (in shares)	3,142	3,584	3,498	3,689
Diluted weighted average common shares outstanding (in shares)	65,872	64,521	65,683	64,268
Anti-dilutive shares (in shares)	733	359	381	314

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Segments (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) reportable_segments	Sep. 30, 2016 USD ($)
Segment Reporting Information [Line Items]
Reportable segments | reportable_segments			2
Service revenue	$ 494,550	$ 399,841	$ 1,379,572	$ 1,166,410
Direct costs	326,865	259,910	914,988	758,333
Gross profit	167,685	139,931	464,584	408,077
Selling, general and administrative	79,307	67,190	229,770	199,648
Transaction-related costs	12,740	0	12,740	31,785
Depreciation and amortization	18,853	17,708	50,146	52,246
Loss on disposal of fixed assets, net	8	219	240	290
Consolidated income from operations	56,777	54,814	171,688	124,108
Interest expense, net	(11,557)	(13,779)	(31,088)	(42,525)
Loss on modification or extinguishment of debt	(3,089)	0	(3,089)	(21,485)
Foreign currency (losses) gains, net	(12,794)	1,182	(35,004)	9,264
Other income (expense), net	1,004	20	724	(85)
Consolidated income before income taxes and equity in income of unconsolidated joint ventures	30,341	42,237	103,231	69,277
Operating segments | Clinical Research
Segment Reporting Information [Line Items]
Service revenue	475,588	399,841	1,360,610	1,166,410
Direct costs	314,904	259,910	903,027	758,333
Gross profit	160,684	139,931	457,583	408,077
Operating segments | Data Solutions
Segment Reporting Information [Line Items]
Service revenue	18,962	0	18,962	0
Direct costs	11,961	0	11,961	0
Gross profit	7,001	0	7,001	0
Segment Reconciling Items
Segment Reporting Information [Line Items]
Selling, general and administrative	79,307	67,190	229,770	199,648
Transaction-related costs	12,740	0	12,740	31,785
Depreciation and amortization	18,853	17,708	50,146	52,246
Loss on disposal of fixed assets, net	8	219	240	290
Interest expense, net	(11,557)	(13,779)	(31,088)	(42,525)
Loss on modification or extinguishment of debt	(3,089)	0	(3,089)	(21,485)
Foreign currency (losses) gains, net	(12,794)	1,182	(35,004)	9,264
Other income (expense), net	$ 1,004	$ 20	$ 724	$ (85)