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, 2019

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)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Name of exchange on which registered	Trading symbol
Common Stock $0.01 par value	Nasdaq Global Select Market	PRAH

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☐
		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	63,248,324	shares outstanding as of October 28, 2019

PRA HEALTH SCIENCES, INC.

FORM 10-Q

FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

TABLE OF CONTENTS

Item Number		Page
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Condensed Balance Sheets as of September 30, 2019 and December 31, 2018	3
	Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2019 and 2018	4
	Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018	5
	Consolidated Condensed Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018	6
	Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	8
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	39
Item 6.	Exhibits	39
SIGNATURES		40

2

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,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	181,767		$	144,221
Restricted cash	23			488
Accounts receivable and unbilled services, net	702,636			568,099
Other current assets	76,489			69,547
Total current assets	960,915			782,355
Fixed assets, net	176,745			154,764
Lease right-of-use assets, net	181,813			—
Goodwill	1,484,506			1,494,762
Intangible assets, net	649,295			704,446
Other assets	47,182			50,140
Total assets	$	3,500,456		$	3,186,467
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	58,565		$	43,734
Accrued expenses and other current liabilities	304,431			413,783
Current portion of operating lease liabilities	34,708			—
Advanced billings	474,999			441,357
Total current liabilities	872,703			898,874
Long-term debt, net	1,388,395			1,082,384
Long-term portion of operating lease liabilities	169,696			—
Deferred tax liabilities	73,522			100,712
Other long-term liabilities	49,397			53,077
Total liabilities	2,553,713			2,135,047
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock (100,000,000 authorized shares; $0.01 par value)
Issued and outstanding -- none	—			—
Common stock (1,000,000,000 authorized shares; $0.01 par value)
Issued and outstanding -- 63,240,925 and 65,394,526 at September 30, 2019 and December 31, 2018, respectively	632			654
Additional paid-in capital	975,233			960,535
Accumulated other comprehensive loss	(197,603		)	(170,659		)
Retained earnings	168,481			254,500
Equity attributable to PRA Health Sciences, Inc. stockholders	946,743			1,045,030
Noncontrolling interest	—			6,390
Total stockholders' equity	946,743			1,051,420
Total liabilities and stockholders' equity	$	3,500,456		$	3,186,467

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

3

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,
	2019			2018			2019			2018
Revenue	$	780,691		$	717,596		$	2,266,022		$	2,142,274
Operating expenses:
Direct costs (exclusive of depreciation and amortization)	389,304			371,422			1,153,441			1,134,509
Reimbursable expenses	169,965			142,717			471,682			430,892
Selling, general and administrative expenses	95,542			92,553			291,439			275,424
Transaction-related costs	572			43,837			572			32,709
Depreciation and amortization expense	29,264			28,270			85,462			84,163
Loss (gain) on disposal of fixed assets, net	256			(15		)	900			21
Income from operations	95,788			38,812			262,526			184,556
Interest expense, net	(12,974		)	(14,423		)	(37,834		)	(43,860		)
Loss on modification or extinguishment of debt	(1,855		)	(454		)	(1,855		)	(454		)
Foreign currency gains (losses), net	5,408			(1,809		)	1,864			(1,416		)
Other income (expense), net	15			(68		)	(66		)	(201		)
Income before income taxes and equity in income of unconsolidated joint ventures	86,382			22,058			224,635			138,625
Provision for income taxes	3,375			20,248			56,317			55,392
Income before equity in income of unconsolidated joint ventures	83,007			1,810			168,318			83,233
Equity in income of unconsolidated joint ventures, net of tax	—			44			—			118
Net income	83,007			1,854			168,318			83,351
Net income attributable to noncontrolling interest	—			(359		)	(99		)	(898		)
Net income attributable to PRA Health Sciences, Inc.	$	83,007		$	1,495		$	168,219		$	82,453
Net income per share attributable to common stockholders:
Basic	$	1.28		$	0.02		$	2.58		$	1.29
Diluted	$	1.25		$	0.02		$	2.53		$	1.24
Weighted average common shares outstanding:
Basic	64,771			64,261			65,096			63,891
Diluted	66,213			66,506			66,607			66,258

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

4

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,
	2019			2018			2019			2018
Net income	$	83,007		$	1,854		$	168,318		$	83,351
Other comprehensive loss:
Foreign currency translation adjustments, net of income tax of $2,183, $0, $2,447 and $0	(27,582		)	(3,996		)	(26,692		)	(23,182		)
Unrealized (losses) gains on derivative instruments, net of income tax of $(13), $381, $(1,624) and $2,004	(254		)	1,041			(4,567		)	5,613
Reclassification adjustments:
Losses on derivatives included in net income, net of income taxes of $398, $393, $1,056 and $1,314	1,213			1,070			2,972			3,666
Comprehensive income (loss)	56,384			(31		)	140,031			69,448
Comprehensive income attributable to noncontrolling interest	—			(193		)	(175		)	(823		)
Comprehensive income (loss) attributable to PRA Health Sciences, Inc.	$	56,384		$	(224	)	$	139,856		$	68,625

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

5

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

									Accumulated Other Comprehensive Loss (Note 13)			Retained Earnings			Non-controlling Interest
	Common Stock					Additional Paid-in Capital
	Shares		Amount															Total
Balance at December 31, 2018	65,395		$	654		$	960,535		$	(170,659	)	$	254,500		$	6,390		$	1,051,420
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income	—		—			—			1,419			(1,419		)	—			—
Balance at January 1, 2019	65,395		654			960,535			(169,240		)	253,081			6,390			1,051,420
Exercise of common stock options and employee stock purchase plan purchases	219		2			10,668			—			—			—			10,670
Stock-based compensation	33		—			9,247			—			—			—			9,247
Net income	—		—			—			—			44,084			172			44,256
Other comprehensive loss, net of tax	—		—			—			(384		)	—			(45		)	(429		)
Balance at March 31, 2019	65,647		656			980,450			(169,624		)	297,165			6,517			1,115,164
Exercise of common stock options and other	84		1			4,074			—			—			—			4,075
Stock-based compensation	5		—			9,916			—			—			—			9,916
Acquisition of noncontrolling interest	—		—			1,290			—			—			(6,565		)	(5,275		)
Net income (loss)	—		—			—			—			41,128			(73		)	41,055
Other comprehensive loss, net of tax	—		—			—			(1,356		)	—			121			(1,235		)
Balance at June 30, 2019	65,736		657			995,730			(170,980		)	338,293			—			1,163,700
Exercise of common stock options and employee stock purchase plan purchases	328		6			15,409			—			—			—			15,415
Stock-based compensation	257		—			11,244			—			—			—			11,244
Repurchase and retirement of common stock	(3,080	)	(31		)	(47,150		)	—			(252,819		)	—			(300,000		)
Net income	—		—			—			—			83,007			—			83,007
Other comprehensive loss, net of tax	—		—			—			(26,623		)	—			—			(26,623		)
Balance at September 30, 2019	63,241		$	632		$	975,233		$	(197,603	)	$	168,481		$	—		$	946,743

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

6

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)

							Accumulated Other Comprehensive Loss (Note 13)			Retained Earnings			Non-controlling Interest
	Common Stock			Additional Paid-in Capital
	Shares	Amount														Total
Balance at December 31, 2017	63,624	$	636	$	905,423		$	(136,470	)	$	161,182		$	5,710		$	936,481
Impact to retained earnings from adoption of ASC 606	—	—		—			—			(60,587		)	—			(60,587		)
Balance at January 1, 2018	63,624	636		905,423			(136,470		)	100,595			5,710			875,894
Exercise of common stock options	436	5		1,384			—			—			—			1,389
Stock-based compensation	—	—		6,299			—			—			—			6,299
Net income	—	—		—			—			38,981			234			39,215
Other comprehensive income, net of tax	—	—		—			21,731			—			348			22,079
Balance at March 31, 2018	64,060	641		913,106			(114,739		)	139,576			6,292			944,876
Exercise of common stock options	126	1		(1		)	—			—			—			—
Stock award distributions, net of shares for tax withholding	71	1		(5,338		)	—			—			—			(5,337		)
Stock-based compensation	—	—		6,399			—			—			—			6,399
Net income	—	—		—			—			41,977			305			42,282
Other comprehensive loss, net of tax	—	—		—			(33,840		)	—			(257		)	(34,097		)
Balance at June 30, 2018	64,257	643		914,166			(148,579		)	181,553			6,340			954,123
Exercise of common stock options and employee stock purchase plan purchases	568	5		17,735			—			—			—			17,740
Stock award distributions, net of shares for tax withholding	90	1		(1		)	—			—			—			—
Stock-based compensation	—	—		8,544			—			—			—			8,544
Net income	—	—		—			—			1,495			359			1,854
Other comprehensive loss, net of tax	—	—		—			(1,719		)	—			(166		)	(1,885		)
Balance at September 30, 2018	64,915	$	649	$	940,444		$	(150,298	)	$	183,048		$	6,533		$	980,376

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

7

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	168,318		$	83,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	85,462			84,163
Amortization of debt issuance costs	1,364			1,619
Amortization of terminated interest rate swaps	4,960			5,478
Stock-based compensation expense	30,407			20,469
Change in fair value of acquisition-related contingent consideration	—			32,868
Non-cash transaction-related costs	—			773
Unrealized foreign currency gains, net	(7,773		)	(131		)
Non-cash loss on extinguishment of debt	—			454
Deferred income tax (benefit) expense	(25,408		)	17,499
Equity in income of unconsolidated joint ventures	—			(118		)
Other reconciling items	792			52
Changes in operating assets and liabilities:
Accounts receivable, unbilled services and advanced billings	(104,589		)	(12,552		)
Other operating assets and liabilities	(4,289		)	(319		)
Payment of acquisition-related contingent consideration	(83,249		)	(35,029		)
Net cash provided by operating activities	65,995			198,577
Cash flows from investing activities:
Purchase of fixed assets	(61,210		)	(40,086		)
Proceeds received for interest on interest rate swap, net	1,076			125
Distributions from unconsolidated joint ventures	418			—
Proceeds from the sale of marketable securities	—			183
Proceeds from the sale of fixed assets	26			43
Net cash used in investing activities	(59,690		)	(39,735		)
Cash flows from financing activities:
Payment of acquisition-related contingent consideration	—			(79,663		)
Repurchase and retirement of common stock	(300,000		)	—
Borrowings on accounts receivable financing agreement	30,000			60,000
Borrowings on line of credit	40,000			—
Proceeds from issuance of long-term debt	300,000			—
Repayments on accounts receivable financing agreement	—			(10,000		)
Repayments on line of credit	(40,000		)	(91,500		)
Repayments of long-term debt	(25,000		)	(114,395		)
Taxes paid related to net shares settlement of equity awards	—			(5,337		)
Acquisition of noncontrolling interest	(4,138		)	—
Proceeds from stock issued under employee stock purchase plan and stock option exercises	30,180			19,273
Net cash provided by (used in) financing activities	31,042			(221,622		)
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash	(266		)	(2,275		)
Change in cash, cash equivalents, and restricted cash	37,081			(65,055		)
Cash, cash equivalents, and restricted cash, beginning of period	144,709			192,890
Cash, cash equivalents, and restricted cash, end of period	$	181,790		$	127,835

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

8

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, 2018.

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

Recently Implemented Accounting Pronouncements

On January 1, 2019, the Company adopted Accounting Standards Codification, or ASC, Topic 842, “Leases,” or ASC 842, using the revised modified retrospective approach provided by ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” The revised modified retrospective approach recognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in the Company's financial statements.

The adoption of ASC 842 resulted in the recognition of lease liabilities of $211.7 million (recorded as $31.9 million in short-term lease liabilities and $179.8 million in long-term lease liabilities) and $187.1 million of lease right-of-use, or ROU, assets as of January 1, 2019. Upon adoption of ASC 842, the Company had lease obligations associated with deferred rent, lease loss liabilities, above market lease liabilities, and tenant improvement allowances, totaling $25.7 million, that were reclassified to the lease right-to-use assets. The Company had prepaid rent balances, totaling $1.1 million, that were reclassified as a reduction of the current portion of operating lease liabilities. The adoption of ASC 842 did not impact the consolidated condensed statement of operations for the nine months ended September 30, 2019, consolidated condensed statement of cash flows, or earnings per share. See "Note 2 - Significant Accounting Policies" for further disclosures regarding the adoption of ASC 842.

In August 2017, the Financial Accounting Standards Board, or 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 Company adopted this standard effective January 1, 2019 and the application of ASU No. 2017-12 did not have a material impact on the Company's consolidated condensed financial statements.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects

9

resulting from the Tax Cuts and Jobs Act of 2017, or the Act. The amendments in this update also require entities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income. The Company adopted this standard effective January 1, 2019 and the application of ASU No. 2018-02 resulted in a reclassification of $1.4 million from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from the Act.

In October 2018, the FASB issued ASU No. 2018-16, "Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes," which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. The Company adopted ASU No. 2018-16 concurrent with adoption of ASU No. 2017-12, on January 1, 2019, and the application of ASU No. 2018-16 did not have a material impact on the Company’s consolidated condensed financial statements.

Recently Issued Accounting Pronouncements

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 guidance is 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 financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The guidance is effective for the reporting period beginning after December 15, 2019, and interim periods therein, with early adoption permitted. The adoption of ASU No. 2018-15 is not expected to have a material impact on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the reporting period beginning after December 15, 2019, and the interim periods therein. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s consolidated financial statements.

Cash, Cash Equivalents, and 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; thus, these accounts are not commingled with the Company’s cash and cash equivalents. These accounts 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 (in thousands):

	September 30,				December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	181,767	$	127,517	$	144,221	$	192,229
Restricted cash	23		318		488		661
Total cash, cash equivalents, and restricted cash	$	181,790	$	127,835	$	144,709	$	192,890

10

(2) Significant Accounting Policies

Significant accounting policies are detailed in "Note 2: Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to the Company's accounting policies as a result of adopting ASC 842 are discussed below:

On January 1, 2019, the Company adopted ASC 842 using the revised modified retrospective approach. The revised modified retrospective approach recognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in an entity’s financial statements. In addition, the Company elected the package of practical expedients permitted under the transition guidance within ASC 842, in which the Company need not reassess (i) the historical lease classification, (ii) whether any expired or existing contract is or contains a lease, or (iii) the initial direct costs for any existing leases.

The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining lease terms of one year to 17 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments to the base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s sublease income is immaterial.

Upon the initial application of ASC 842 on January 1, 2019, or the transition date, lease liabilities were measured by using the remaining minimum rental payments under ASC 840. The Company’s ASC 840 minimum rental payments include executory costs and rental payments that depend on an index or rate are calculated based on the rate in effect at the transition date. The lease liability is measured at the present value of future lease payments, discounted using the discount rate as of the transition date. In addition to recognizing the lease liability, the Company recognized a corresponding asset representing its right to use the underlying asset over the lease term, referred to as the lease ROU asset. The ROU asset is initially measured as the amount of lease liability, adjusted for any initial lease costs or lease payments made before or at the commencement of the lease, and reduced by any lease incentives and deferred rent. As of the transition date, the Company’s leases consisted of only operating leases and upon recognition of the lease liability and ROU assets, there was no adjustment to retained earnings.

All leases entered into after January 1, 2019 are accounted for under ASC 842. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for use by a lessee.

At the lease commencement date, a lease liability is recognized based on the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease. As the Company's leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the lease term and economic environment at the lease commencement date. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. With limited exceptions, the nature of the Company's facility leases is such that there are not economic or other conditions that would indicate that it is reasonably certain at lease commencement that the Company will exercise options to extend the term.

The Company determines if its lease obligations are operating or finance leases at the lease commencement date and considers whether the lease grants an option to purchase the underlying asset that it is reasonably certain to exercise, the remaining economic life of the underlying asset, the present value of the sum of the remaining lease payments and any residual value guaranteed, and the nature of the asset.

The initial measurement of the lease liability is determined based on the future lease payments, which may include lease payments that depend on an index or a rate (such as the consumer price index or other market index). The Company initially measures payments based on an index or rate by using the applicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as they are incurred. The Company’s contracts that include a lease component generally include additional services that are transferred to the lessee (e.g., common-area maintenance services), which are

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nonlease components. Contracts typically also include other costs and fees that do not provide a separate service to the lessee, such as costs paid by the lessee to reimburse the lessor for administrative costs or payment for the lessor’s costs for property taxes, insurance related to the leased asset, and other lessor costs. The Company elected the practical expedient to account for the lease and nonlease components as a single lease component. At the lease commencement date, the Company recognizes a ROU asset representing its right to use the underlying asset over the lease term. If significant events, changes in circumstances, or other events indicate that the lease term has changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the ROU asset. These reassessment events are typically related to the exercise of optional renewals or significant new investments in leasehold improvements. The costs of services and costs related to reimbursements of the lessor’s cost are generally variable rent obligations, which are excluded from the future lease payments included in the lease liability. For leases with a term of one year or less, or short-term leases, the Company has elected to not recognize the lease liability for these arrangements and the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term.

The total expense for the operating lease liability is recognized on a straight-line basis over the lease term, beginning on the lease commencement date. The Company classifies the lease costs within operating expenses consistent with the classification policies for all other operating costs.

The components of lease expense were as follows for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Lease cost:
Operating lease cost	$	9,788		$	28,583
Short-term lease cost	725			2,033
Variable lease cost	2,175			5,796
Lease income	(47		)	(130		)
Net lease cost	$	12,641		$	36,282

Supplemental cash flow information related to leases was as follows for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows	$	9,772	$	28,262
Right-of-use assets obtained in exchange for lease obligations	5,100		26,148

Supplemental balance sheet information related to leases was as follows as of September 30, 2019:

	As of September 30, 2019
Weighted average remaining lease term	8.0 years
Weighted average discount rate	4.3%

Maturities of operating lease liabilities were as follows as of September 30, 2019 (in thousands):

2019 (remaining)	$	9,192
2020	42,946
2021	39,210
2022	31,454
2023	25,891
Thereafter	93,864
Total lease payments	242,557
Less imputed interest	(38,153		)
Total	$	204,404

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As of September 30, 2019, the Company has an additional non-cancelable operating lease that has not yet commenced with future lease payments totaling $0.5 million. This lease will commence in October 2019 with an initial lease term of two years.

As of December 31, 2018, the Company disclosed the following future non-cancelable rent obligations as determined under ASC 840 (in thousands):

2019	$	43,675
2020	40,948
2021	37,469
2022	30,238
2023	24,235
Thereafter	90,978
Total lease payments	$	267,543

(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, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

Recurring Fair Value Measurements

The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Liabilities:
Interest rate swaps	$	—	$	3,805	$	—	$	3,805
Total	$	—	$	3,805	$	—	$	3,805

Non-recurring Fair Value Measurements

Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets that are tested for impairment when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets that are tested for impairment annually on October 1 or when a triggering event occurs.

As of September 30, 2019, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $2,133.8 million and are identified as Level 3 assets. These assets are comprised of goodwill of $1,484.5 million and identifiable intangible assets, net of $649.3 million.

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Refer to "Note 7 - Revolving Credit Facilities and 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, unbilled services, and derivatives. As of September 30, 2019, substantially all of the Company’s cash and cash equivalents and derivatives 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.

There were no individual customers for which revenue was greater than 10% of consolidated revenue in the three and nine months ended September 30, 2019 and 2018.

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

	September 30,		December 31,
	2019		2018
Customer A	10.6	%	12.2	%
Customer B	15.5	%	11.4	%

 

(5) Accounts Receivable, Unbilled Services and Advanced Billings

Accounts receivable and unbilled services were as follows (in thousands):

	September 30,			December 31,
	2019			2018
Accounts receivable	$	557,077		$	437,001
Unbilled services	147,952			133,147
Total accounts receivable and unbilled services	705,029			570,148
Less allowance for doubtful accounts	(2,393		)	(2,049		)
Total accounts receivable and unbilled services, net	$	702,636		$	568,099

Unbilled services as of September 30, 2019 and December 31, 2018 includes $75.1 million and $66.6 million, respectively, of contract assets where the Company’s right to bill is conditioned on criteria other than the passage of time. Impairment losses on contract assets were immaterial in the three and nine months ended September 30, 2019 and 2018.

Advanced billings were as follows (in thousands):

	September 30,		December 31,
	2019		2018
Advanced billings	$	474,999	$	441,357

The $33.6 million increase in advanced billings from December 31, 2018 to September 30, 2019 was primarily due to the timing of customer payments. During the nine months ended September 30, 2019 and 2018, the Company recognized revenue of $398.4 million and $382.5 million related to advanced billings recorded as of January 1, 2019 and 2018, respectively.

Performance Obligations

Revenue recognized from reimbursable expenses and services completed in prior periods was $14.8 million and $65.2 million for the three and nine months ended September 30, 2019, respectively, and $24.4 million and $57.3 million for the three and nine months ended September 30, 2018, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and from contract modifications on long-term fixed price contracts executed in the current period, which results in changes to the transaction price.

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The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year. These contracts are short in duration and revenue recognition generally follows the delivery of the promised services. The total transaction price for the undelivered performance obligation on contracts with an original initial contract term greater than one year is $5.2 billion as of September 30, 2019. This amount includes reimbursement revenue. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from one to five years.

(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, 2018	$	1,017,903		$	476,859	$	1,494,762
Currency translation	(10,256		)	—		(10,256		)
Balance at September 30, 2019	$	1,007,647		$	476,859	$	1,484,506

There are no accumulated impairment charges as of September 30, 2019 and December 31, 2018.

Intangible Assets

Intangible assets consist of the following (in thousands):

	September 30, 2019							December 31, 2018
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer relationships	$	551,020	$	(127,070	)	$	423,950	$	555,915	$	(103,248	)	$	452,667
Trade names (finite-lived)	28,524		(15,636		)	12,888		28,505		(12,810		)	15,695
Patient list and other intangibles	44,474		(34,476		)	9,998		44,474		(30,939		)	13,535
Database	137,100		(52,651		)	84,449		137,100		(32,561		)	104,539
Total finite-lived intangible assets	761,118		(229,833		)	531,285		765,994		(179,558		)	586,436
Trade names (indefinite-lived)	118,010		—			118,010		118,010		—			118,010
Total intangible assets	$	879,128	$	(229,833	)	$	649,295	$	884,004	$	(179,558	)	$	704,446

Amortization expense was $17.1 million and $51.4 million for the three and nine months ended September 30, 2019, respectively, and $17.9 million and $54.0 million for the three and nine months ended September 30, 2018, respectively.

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

2019 (remaining)	$	17,079
2020	68,711
2021	63,619
2022	49,244
2023	37,515
2024 and thereafter	295,117
Total	$	531,285

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(7) Revolving Credit Facilities and Long-Term Debt

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

	September 30,			December 31,
	2019			2018
Term loans, first lien	$	1,191,533		$	916,533
Accounts receivable financing agreement	200,000			170,000
Total debt	1,391,533			1,086,533
Less current portion of long-term debt	—			—
Total long-term debt	1,391,533			1,086,533
Less debt issuance costs	(3,138		)	(4,149		)
Total long-term debt, net	$	1,388,395		$	1,082,384

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

Current maturities of long-term debt:
2019 (remaining)	$	—
2020	—
2021	1,391,533
2022	—
Total	$	1,391,533

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 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, 2019 and December 31, 2018, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The 2016 Credit Facilities also contain customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.00% to 2.00%, in the case of LIBOR loans, and 0.00% to 1.00%, in the case of ABR loans. The Company has the option of 1, 2, 3 or 6 month base interest rates. For the nine months ended September 30, 2019, the weighted average interest rate on the first lien term loan was 3.75%.

On September 3, 2019, the Company received the proceeds from a $300.0 million incremental term loan under the 2016 Credit Facilities, or the Incremental Borrowing. The Incremental Borrowing was used to fund the share repurchase which is discussed further in "Note 8 - Stockholders' Equity". In accordance with the guidance in ASC 470-50, "Debt - Modifications and Extinguishments," the Incremental Borrowing was accounted for as a debt modification. The Incremental Borrowing resulted in a $1.9 million loss on modification of debt, which consists of third-party fees associated with the transaction. The Company's voluntary term loan prepayments made during 2018 and 2019 fully satisfied all required quarterly principal payments through maturity.

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2016 Revolver

The revolving credit facility under the 2016 Credit Facilities, or 2016 Revolver, provides for $225.0 million of potential borrowings and expires on December 6, 2021. The interest rate on the 2016 Revolver is based on the LIBOR with a 0% LIBOR floor or ABR, 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 for unused commitments of 0.2% to 0.4% based on the Company’s debt-to-EBITDA ratio. At September 30, 2019 and December 31, 2018, the Company had no outstanding borrowings under the 2016 Revolver. In addition, at September 30, 2019 and December 31, 2018, the Company had $5.2 million and $5.4 million, respectively, in letters of credit outstanding, which are secured by the 2016 Revolver.

Accounts Receivable Financing Agreement

The Company had $200.0 million and $170.0 million outstanding on its accounts receivable financing agreement as of September 30, 2019 and December 31, 2018, respectively.

Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Company may prepay loans upon one business day's prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice. For the nine months ended September 30, 2019, the weighted average interest rate on the accounts receivable financing agreement was 3.86%.

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

At December 31, 2018, there was $30.0 million of remaining capacity available under the accounts receivable financing agreement. At September 30, 2019, there was no remaining capacity available under the accounts receivable financing agreement.

Fair Value of Debt

The estimated fair value of the Company’s debt and outstanding borrowings under its revolving credit facilities was $1,390.0 million and $1,084.2 million at September 30, 2019 and December 31, 2018, respectively. The fair values of the term loans, borrowings under credit facilities, and accounts receivable financing agreement were determined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.

(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.

Share Repurchase Program

On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing the repurchase of up to $500.0 million of the Company's common stock in open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amount of its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31, 2021.

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On September 6, 2019, KKR PRA Investors L.P., or KKR, sold 6,666,684 shares of the Company's common stock as part of a secondary offering, or the Secondary Offering, of which the Company repurchased from the underwriter, and subsequently retired, 3,079,765 shares at a price of $97.41 per share, for an aggregate purchase price of approximately $300.0 million. The Company incurred expenses in connection with the Secondary Offering of $0.6 million during the three and nine months ended September 30, 2019. The expenses are included in transaction-related costs in the accompanying consolidated condensed statement of operations.

As of September 30, 2019, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program.

Noncontrolling Interest

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

	2019			2018
Balance as of January 1,	$	6,390		$	5,710
Comprehensive income
Net income	99			898
Foreign currency adjustments, net of income tax	76			(75		)
Acquisition of noncontrolling interest	(6,565		)	—
Balance as of September 30,	$	—		$	6,533

On June 1, 2017, the Company and Takeda Pharmaceutical Company Ltd., or Takeda, 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 effectuated through the creation of a new legal entity, Takeda PRA Development Center KK, or the TDC joint venture. On May 31, 2019, per the terms of the agreement, the TDC joint venture dissolved and the Company acquired Takeda's interest for $4.1 million.

(9) Stock-Based Compensation

Stock Option and RSA/RSU Activity

The 2018 Stock Incentive Plan, or the 2018 Plan, was approved by stockholders at the annual meeting on May 31, 2018. The 2018 Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws. The 2018 Plan authorized the issuance of 2,000,000 shares of common stock plus all shares that remained available under the prior plan on May 31, 2018.

The Company granted 1,150,000 service-based options and 352,036 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $37.8 million and $34.2 million, respectively, during the nine months ended September 30, 2019.

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, 2018	4,641,600		$	62.29	7.8	$	149.7
Granted	1,150,000		98.42
Exercised	(464,564	)	33.86
Expired or forfeited	(199,550	)	82.92
Outstanding at September 30, 2019	5,127,486		$	72.17	7.7	$	144.8
Exercisable at September 30, 2019	1,975,811		$	42.71	6.0	$	112.5

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The Company’s RSAs/RSUs activity in 2019 is as follows:

	Awards		Wtd. Average Grant-Date Fair Value		Intrinsic Value (millions)
Unvested December 31, 2018	344,250		$	81.39	$	31.7
Granted	352,036		97.06
Forfeited	(40,500	)	80.72
Vested	(22,750	)	61.57
Unvested September 30, 2019	633,036		$	90.87	$	62.8

Employee Stock Purchase Plan

In April 2017, the Board approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of any offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ESPP will generally be in six month increments, with the administrator of the ESPP having the right to establish different offering periods. The Company recognized stock-based compensation expense of $3.0 million and $2.5 million associated with the ESPP during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, there have been 242,329 shares issued and 2,757,671 shares reserved for future issuance under the ESPP.

Stock-based Compensation Expense

Stock-based compensation expense related to employee stock plans are summarized below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Direct costs	$	3,685	$	2,451	$	9,780	$	6,900
Selling, general and administrative	7,559		5,319		20,627		13,569
Transaction-related costs	—		773		—		773
Total stock-based compensation expense	$	11,244	$	8,543	$	30,407	$	21,242

(10) Income Taxes

The Company’s effective income tax rate was 25.1% and 40.0% for the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate for the nine months ended September 30, 2018 included the effect of an increase in the fair value of the earn-out liability related to the stock acquisition of Symphony Health, which was not included in taxable income, but instead increased tax stock basis. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 21% for the nine months ended September 30, 2019 is primarily due to (i) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, (ii) state income taxes, and (iii) the effects of other jurisdictional and permanent differences, including excess tax benefits. Significant judgment is required related to the application of the recent U.S. tax reform, or the Act, particularly with respect to GILTI and the base erosion anti-abuse tax, or BEAT, provisions. If changes occur in the Company’s tax structure, the structure of its arrangements, interpretations, or regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision. In the quarter ended September 30, 2019, the Company updated its analysis of BEAT and its impact on the annual estimated effective tax rate for the 2019 tax year to reflect revisions to contractual arrangements.

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

19

quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities. During the nine months ended September 30, 2019, the liability for uncertain tax positions increased by $18.7 million. This increase in the liability for uncertain tax positions had no impact on income tax expense for the nine months ended September 30, 2019 as it was previously accrued. If such uncertain positions were recognized, they would impact the effective tax rate.

(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 $4.9 million at September 30, 2019, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $4.9 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. 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 favor of the Company for the years 2005 to 2012, and in the period from January to October 2013. The judge from the Superior Court of Justice of Brazil also ruled that the Company must appeal the lower court's verdict for October 2013 and the subsequent periods as the Judiciary Court of Justice of the State of Sao Paulo only reviewed the facts that pertained to the period before October 2013. The Company expects to recover the full amount of the deposit when the case is settled.

(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 arising from movement in market interest rates. Accordingly, the Company has instituted an interest rate hedging program that uses interest rate swaps designated as cash flow hedges to mitigate interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.

The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2019 and December 31, 2018 (in thousands):

		September 30, 2019					December 31, 2018
	Balance Sheet Classification	Notional amount		Asset/(Liability)			Notional amount		Asset/(Liability)
Derivatives in an asset position:	Other assets	$	—	$	—		$	625,000	$	3,318
Derivatives in a liability position:	Other long-term liabilities	625,000		(3,805		)	—		—
		$	625,000	$	(3,805	)	$	625,000	$	3,318

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

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income for the three and nine months ended September 30, 2019 and 2018 (in thousands):

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	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	2019			2018			2019			2018
Amount of pre-tax (loss) gain recognized in other comprehensive income	$	(266	)	$	1,422		$	(6,190	)	$	7,617
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net	(1,611		)	(1,463		)	(4,028		)	(4,980		)

The Company expects that $9.5 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.

The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three and nine months ended September 30, 2019 and 2018, respectively, is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest expense, net	$	(12,974	)	$	(14,423	)	$	(37,834	)	$	(43,860	)
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
Loss reclassified from accumulated other comprehensive loss into interest expense, net	(1,611		)	(1,463		)	(4,028		)	(4,980		)

(13) Accumulated Other Comprehensive Loss

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

	Foreign Currency Translation, Net of Tax			Derivative Instruments, Net of Tax			Total
Balance at December 31, 2018	$	(158,349	)	$	(12,310	)	$	(170,659	)
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income	—			1,419			1,419
Balance at January 1, 2019	(158,349		)	(10,891		)	(169,240		)
Other comprehensive loss before reclassifications	(26,768		)	(4,567		)	(31,335		)
Reclassification adjustments	—			2,972			2,972
Balance at September 30, 2019	$	(185,117	)	$	(12,486	)	$	(197,603	)

Foreign Currency Translation

The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound, Euro, Canadian dollar and Russian ruble exchange rates against the U.S. dollar. The U.S. dollar strengthened by 3.4% and 4.6% versus the British pound and Euro, respectively, and weakened by 3.0% and 7.3% versus the Canadian dollar and the Russian ruble, respectively, between December 31, 2018 and September 30, 2019. The movement in the Euro and British pound contributed to a $15.7 million and $7.4 million increase in other comprehensive loss, respectively, which was offset by decreases in other comprehensive loss of $1.6 million and $1.1 million due to movement in the Russian ruble and Canadian dollar, respectively, during the nine months ended September 30, 2019.

Derivative Instruments

See "Note 12 - Derivatives" for further information on changes to accumulated other comprehensive loss related to the derivative instruments.

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(14) Net Income Per Share

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

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Basic weighted average common shares outstanding	64,771	64,261	65,096	63,891
Effect of dilutive stock options and other awards under share-based compensation programs	1,442	2,245	1,511	2,367
Diluted weighted average common shares outstanding	66,213	66,506	66,607	66,258
Anti-dilutive shares	2,150	987	1,914	1,670

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

(15) Segments

The Company is managed through two reportable segments: (i) the Clinical Research segment and (ii) the Data Solutions segment. In accordance with the provisions of ASC 280, "Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company.

• Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services.

• Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily to the Company’s life science customers.

The Company's chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. Asset information by segment is not presented, as this measure is not used by the chief operating decision-maker to assess the Company's performance.

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

	Three Months Ended September 30, 2019							Three Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total			Clinical Research		Data Solutions		Total
Revenue	$	719,005	$	61,686	$	780,691		$	656,979	$	60,617	$	717,596
Direct costs (exclusive of depreciation and amortization)	342,695		46,609		389,304			330,037		41,385		371,422
Reimbursable expenses	169,965		—		169,965			142,717		—		142,717
Segment profit	206,345		15,077		221,422			184,225		19,232		203,457
Less expenses not allocated to segments:
Selling, general and administrative expenses					95,542							92,553
Transaction-related costs					572							43,837
Depreciation and amortization expense					29,264							28,270
Loss (gain) on disposal of fixed assets, net					256							(15		)
Income from operations					95,788							38,812
Interest expense, net					(12,974		)					(14,423		)
Loss on modification or extinguishment of debt					(1,855		)					(454		)
Foreign currency gains (losses), net					5,408							(1,809		)
Other income (expense), net					15							(68		)
Income before income taxes and equity in income of unconsolidated joint ventures					$	86,382						$	22,058

	Nine Months Ended September 30, 2019							Nine Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total			Clinical Research		Data Solutions		Total
Revenue	$	2,087,863	$	178,159	$	2,266,022		$	1,966,762	$	175,512	$	2,142,274
Direct costs (exclusive of depreciation and amortization)	1,022,329		131,112		1,153,441			1,010,915		123,594		1,134,509
Reimbursable expenses	471,682		—		471,682			430,892		—		430,892
Segment profit	593,852		47,047		640,899			524,955		51,918		576,873
Less expenses not allocated to segments:
Selling, general and administrative expenses					291,439							275,424
Transaction-related costs					572							32,709
Depreciation and amortization expense					85,462							84,163
Loss on disposal of fixed assets, net					900							21
Income from operations					262,526							184,556
Interest expense, net					(37,834		)					(43,860		)
Loss on modification or extinguishment of debt					(1,855		)					(454		)
Foreign currency gains (losses), net					1,864							(1,416		)
Other expense, net					(66		)					(201		)
Income before income taxes and equity in income of unconsolidated joint ventures					$	224,635						$	138,625

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Revenue by geographic location for each segment is as follows (in thousands):

	Three Months Ended September 30, 2019						Three Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total		Clinical Research		Data Solutions		Total
Revenue
Americas:
United States	$	467,096	$	61,686	$	528,782	$	433,050	$	60,617	$	493,667
Other	12,255		—		12,255		11,396		—		11,396
Total Americas	479,351		61,686		541,037		444,446		60,617		505,063
Europe, Africa, and Asia-Pacific
United Kingdom	191,994		—		191,994		170,252		—		170,252
Netherlands	30,144		—		30,144		28,334		—		28,334
Other	17,516		—		17,516		13,947		—		13,947
Total Europe, Africa, and Asia-Pacific	239,654		—		239,654		212,533		—		212,533
Total revenue	$	719,005	$	61,686	$	780,691	$	656,979	$	60,617	$	717,596

	Nine Months Ended September 30, 2019						Nine Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total		Clinical Research		Data Solutions		Total
Revenue
Americas:
United States	$	1,368,344	$	178,159	$	1,546,503	$	1,284,678	$	175,512	$	1,460,190
Other	37,268		—		37,268		35,346		—		35,346
Total Americas	1,405,612		178,159		1,583,771		1,320,024		175,512		1,495,536
Europe, Africa, and Asia-Pacific
United Kingdom	551,460		—		551,460		516,442		—		516,442
Netherlands	82,839		—		82,839		87,340		—		87,340
Other	47,952		—		47,952		42,956		—		42,956
Total Europe, Africa, and Asia-Pacific	682,251		—		682,251		646,738		—		646,738
Total revenue	$	2,087,863	$	178,159	$	2,266,022	$	1,966,762	$	175,512	$	2,142,274

(16) Subsequent Events

On October 28, 2019, the Company refinanced its 2016 Credit Facilities. The Company entered into a new credit agreement with a syndicate of banks for an aggregate principal amount of $1,000.0 million of first lien term debt due in 2024, or the 2019 First Lien Term Loan, and a five-year $750.0 million revolving line of credit, collectively known as the 2019 Credit Facilities. The proceeds from the 2019 Credit Facilities were primarily used to repay the 2016 First Lien Term Loan principal balance of $1,191.5 million. The 2019 Credit Facilities also contain customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to LIBOR or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.0% to 2.0%, in the case of LIBOR loans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of 1, 2, 3 or 6 month base interest rates. The 2019 First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installments beginning on March 31, 2020 through September 30, 2024, with the remaining balance due at maturity.

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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, 2018, or the Annual Report, and with the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

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 development services 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, immunology, central nervous system inflammation, respiratory, cardiometabolic and infectious diseases. We believe that we further differentiate ourselves from our competitors through our investments in medical informatics and clinical technologies designed to enhance efficiencies, improve study predictability and provide better transparency for our clients throughout their clinical development processes. Our Data Solutions segment allows us 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.  

How We Assess the Performance of Our Business

The Company is managed through two reportable segments: (i) the Clinical Research segment; and (ii) the Data Solutions segment. Our chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. In addition to our financial measures in conformity with U.S. generally accepted accounting principles, or GAAP, including revenue, costs and expenses and other measures discussed below, we review various financial and operational metrics. For our Clinical Research segment, we review new business awards, cancellations, and backlog.

Our gross new business awards for our Clinical Research segment for the nine months ended September 30, 2019 and 2018 were $2,300.3 million and $2,286.7 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 revenue to be recognized in the corresponding quarter of the next fiscal year. For the remainder of our Clinical Research segment, the value of a new award is the anticipated revenue over the life of the contract, which does not include reimbursable expenses.

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, 2019 and 2018, we had $295.6 million and $309.3 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 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 revenue recognized under existing contracts. Our backlog at September 30, 2019 and 2018 was $4.6 billion and $4.1 billion, respectively.

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Sources of Revenue

Total revenues are comprised of revenues from the provision of our services and revenues from reimbursed expenses and reimbursable investigator grants that are incurred while providing our services. We do not have any material product revenues. 

Costs and Expenses

Our costs and expenses are comprised primarily of our direct costs, selling, general and administrative costs, depreciation and amortization expense and income taxes.

Direct Costs (Exclusive of Depreciation and Amortization)

For our Clinical Research segment, direct costs consist primarily of labor‑related charges. They include elements such as salaries, benefits and incentive compensation for our employees. In addition, we utilize staffing agencies to procure primarily part time individuals to perform work on our contracts. Labor-related charges as a percentage of the Clinical Research segment's total direct costs were 96.2% and 95.9% for the nine months ended September 30, 2019 and 2018, respectively. The cost of labor procured through staffing agencies is included in these percentages and represents 3.1% and 4.5% of the Clinical Research segment's total direct costs for the nine months ended September 30, 2019 and 2018, respectively. Our remaining direct costs are items such as travel, meals, postage and freight, patient costs, medical waste and supplies. The total of all these items as a percentage of the Clinical Research segment's total direct costs were 3.8% and 4.1% for the nine months ended September 30, 2019 and 2018, respectively.

Historically, direct costs have increased with an increase in revenues. The future relationship between direct costs and revenues may vary from historical relationships. Several factors will cause direct costs to decrease as a percentage of revenues. Deployment of our billable staff in an optimally efficient manner has the most impact on our ratio of direct cost to 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 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.

For our Data Solutions segment, direct costs consist primarily of data costs. Data costs as a percentage of the Data Solutions segment's total direct costs were 73.3% and 73.0% for the nine months ended September 30, 2019 and 2018, respectively. Labor-related charges, such as salaries, benefits and incentive compensation for our employees, were 20.0% and 20.2% of the Data Solutions segment's total direct costs for the nine months ended September 30, 2019 and 2018, respectively. Our remaining direct costs are items such as travel, meals, and supplies and were 6.7% and 6.8% of the Data Solutions segment's total direct costs for the nine months ended September 30, 2019 and 2018, respectively.

Reimbursable Expenses

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. 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. We include these investigator fees, as well as our out-of-pocket costs that are reimbursable by our customers, as reimbursable expenses in our consolidated condensed statements of operations.

Reimbursable expenses are not included in our backlog because they are pass-through costs to our clients.

We believe that the fluctuations in reimbursable expenses are not meaningful to the final economic performance as measured on a net basis given that such costs are passed through to the client. The reimbursable expenses are included in our measure of progress for our long-term contracts.

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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.

Transaction-related Costs

Transaction-related costs include fees associated with our secondary offerings, stock-based compensation expense related to the transfer restrictions on vested options, the amendment to our accounts receivable financing agreement, costs associated with acquisition related earn-out liabilities, and expenses associated with our acquisitions.

Loss on Modification or Extinguishment of Debt

Loss on modification or extinguishment of debt consists of costs incurred in connection with incremental borrowings under our credit facilities and the write-off of previously unamortized debt financing costs that were expensed as a result of voluntary debt repayments.

Depreciation and Amortization Expense

Depreciation expense 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 depended 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. 

In addition, our effective income tax rate is influenced by U.S. tax law which has been substantially modified by the U.S. Tax Cuts and Jobs Act of 2017, or the Act. The following provisions of the Act could have an adverse effect on our tax rate:

• global intangible low-taxed income, or GILTI;

• limitations on the U.S. deductions for net business interest;

• base erosion anti-abuse provisions, or BEAT; and

• performance-based compensation subject to $1 million limit.

Significant judgment is required related to the application of the Act, particularly with respect to GILTI and BEAT provisions. If changes occur in the Company’s tax structure, the structure of its customer arrangements, or interpretations of regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision.

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 four 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,
	2019	2018	2019	2018
U.S. dollars per:
Euro	1.11	1.16	1.12	1.19
British pound	1.23	1.30	1.27	1.35

Results of Operations

Consolidated Results of Operations for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018

	Three Months Ended September 30,
	2019			2018
(in thousands)
Revenue	$	780,691		$	717,596
Operating expenses:
Direct costs (exclusive of depreciation and amortization)	389,304			371,422
Reimbursable expenses	169,965			142,717
Selling, general and administrative expenses	95,542			92,553
Transaction-related costs	572			43,837
Depreciation and amortization expense	29,264			28,270
Loss (gain) on disposal of fixed assets	256			(15		)
Income from operations	95,788			38,812
Interest expense, net	(12,974		)	(14,423		)
Loss on modification or extinguishment of debt	(1,855		)	(454		)
Foreign currency gains (losses), net	5,408			(1,809		)
Other income (expense), net	15			(68		)
Income before income taxes and equity in income of unconsolidated joint ventures	86,382			22,058
Provision for income taxes	3,375			20,248
Income before equity in income of unconsolidated joint ventures	83,007			1,810
Equity in income of unconsolidated joint ventures, net of tax	—			44
Net income	83,007			1,854
Net income attributable to noncontrolling interest	—			(359		)
Net income attributable to PRA Health Sciences, Inc.	$	83,007		$	1,495

Revenue increased by $63.1 million, or 8.8%, from $717.6 million during the three months ended September 30, 2018 to $780.7 million during the three months ended September 30, 2019. Revenue for the three months ended September 30, 2019 benefited from an increase in billable hours and volume-related increases in clinical activities as well as an increase in the effective rate of hours billed on our studies, offset by an unfavorable impact of $6.3 million from foreign currency exchange rate fluctuations. 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, more effective sales efforts, and the growth in the overall CRO market. 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, exclusive of depreciation and amortization, increased by $17.9 million, or 4.8%, from $371.4 million during the three months ended September 30, 2018 to $389.3 million during the three months ended September 30, 2019. Salaries and related benefits in our Clinical Research segment increased $19.8 million as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and future growth. Data costs in our Data Solutions segment increased

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$4.5 million as we continue to expand our sources of data. This was offset by a favorable impact of $6.7 million from foreign currency exchange rate fluctuations. Direct costs as a percentage of revenue were 49.9% and 51.8% during the three months ended September 30, 2019 and 2018, respectively.

Reimbursable expenses increased by $27.2 million from $142.7 million during the three months ended September 30, 2018 to $170.0 million during the three months ended September 30, 2019. We believe that the fluctuations in reimbursable expenses from period to period are not meaningful to our underlying performance over the full terms of the relevant contracts.

Selling, general and administrative expenses increased by $3.0 million, or 3.2%, from $92.6 million during the three months ended September 30, 2018 to $95.5 million during the three months ended September 30, 2019. The increase in selling, general and administrative expenses is primarily related to an increase in salaries and related benefits, including stock-based compensation expense, as we continue to hire staff and add additional office space to support our growing business. Selling, general and administrative expenses as a percentage of revenue were 12.2% and 12.9% during the three months ended September 30, 2019 and 2018, respectively. The decrease in selling, general and administrative expenses as a percentage of revenue is primarily related to our continued efforts to effectively leverage our selling and administrative functions.

Transaction-related costs for the three months ended September 30, 2019, totaling $0.6 million, consisted of costs incurred in connection with the September 2019 secondary offering of common stock. For the three months ended September 30, 2018, we incurred $43.8 million of transaction-related costs. These costs consisted of $42.6 million for changes in the estimated fair value of contingent consideration related to our acquisitions, $0.8 million of stock-based compensation expense related to the release of the remaining portion of the transfer restrictions on vested options, and $0.5 million of expenses incurred in connection with our August 2018 secondary offering of common stock.

Depreciation and amortization expense was $29.3 million and $28.3 million during the three months ended September 30, 2019 and 2018, respectively. Depreciation and amortization expense as a percentage of revenue was 3.7% during the three months ended September 30, 2019 and 3.9% during the three months ended September 30, 2018.

Interest expense, net, decreased by $1.4 million, or 10.0%, from $14.4 million during the three months ended September 30, 2018 to $13.0 million during the three months ended September 30, 2019. The change is primarily due to a decrease in the weighted average interest rate on our outstanding debt as well as a decrease in the average outstanding debt balance as compared to the three months ended September 30, 2018.

The loss on modification of debt was $1.9 million for the three months ended September 30, 2019, which consisted of costs incurred associated with the incremental borrowing under the senior secured credit facilities. The loss on extinguishment of debt incurred during the three months ended September 30, 2018, totaling $0.5 million, consisted of previously capitalized unamortized debt financing costs that were expensed as a result of voluntary debt repayments made during the quarter.

Foreign currency gains (losses), net, changed by $7.2 million from foreign currency losses of $1.8 million during the three months ended September 30, 2018 to foreign currency gains of $5.4 million during the three months ended September 30, 2019. Foreign currency gains and losses are due to fluctuations in the U.S. dollar, gains or losses that arise in connection with the revaluation 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, 2019, foreign currency gains were primarily due to movement of the U.S. dollar versus the British pound, the Euro, and Brazilian real.

Provision for income taxes decreased by $16.9 million from $20.2 million during the three months ended September 30, 2018 to $3.4 million during the three months ended September 30, 2019. Our effective tax rate was 91.8% and 3.9% during the three months ended September 30, 2018 and 2019, respectively. In the quarter ended September 30, 2019, we updated our analysis of the base erosion anti-abuse tax, or BEAT, and its impact on the annual estimated effective tax rate for the 2019 tax year to reflect revisions to contractual arrangements, which reduced the effective tax rate for the quarter. For the three months ended September 30, 2019, the annual estimated effective tax rate varied from the U.S. statutory rate of 21% primarily due to (i) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, (ii) state income taxes, and (iii) the effects of other jurisdictional and permanent differences, including excess tax benefits. The effective tax rate for the three months ended September 30, 2018 was significantly impacted by the transaction costs associated with an increase in fair value of the earn-out liability related to the stock acquisition of Symphony Health, which is not

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deductible for tax but instead increases tax stock basis. These quarter events contributed to the comparative reduction in the effective tax rate in the three months ended September 30, 2019 by 87.9%.

Consolidated Results of Operations for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

	Nine Months Ended September 30,
	2019			2018
(in thousands)
Revenue	$	2,266,022		$	2,142,274
Operating expenses:
Direct costs (exclusive of depreciation and amortization)	1,153,441			1,134,509
Reimbursable expenses	471,682			430,892
Selling, general and administrative expenses	291,439			275,424
Transaction-related costs	572			32,709
Depreciation and amortization expense	85,462			84,163
Loss on disposal of fixed assets	900			21
Income from operations	262,526			184,556
Interest expense, net	(37,834		)	(43,860		)
Loss on modification or extinguishment of debt	(1,855		)	(454		)
Foreign currency gains (losses), net	1,864			(1,416		)
Other expense, net	(66		)	(201		)
Income before income taxes and equity in income of unconsolidated joint ventures	224,635			138,625
Provision for income taxes	56,317			55,392
Income before equity in income of unconsolidated joint ventures	168,318			83,233
Equity in income of unconsolidated joint ventures, net of tax	—			118
Net income	168,318			83,351
Net income attributable to noncontrolling interest	(99		)	(898		)
Net income attributable to PRA Health Sciences, Inc.	$	168,219		$	82,453

Revenue increased by $123.7 million or 5.8%, from $2,142.3 million during the nine months ended September 30, 2018 to $2,266.0 million during the nine months ended September 30, 2019. Revenue for the nine months ended September 30, 2019 benefited from an increase in billable hours and volume-related increases in clinical activities as well as an increase in the effective rate of hours billed on our studies, offset by an unfavorable impact of $27.0 million from foreign currency exchange rate fluctuations. 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, more effective sales efforts, and the growth in the overall CRO market. 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, exclusive of depreciation and amortization, increased by $18.9 million, or 1.7%, from $1,134.5 million during the nine months ended September 30, 2018 to $1,153.4 million during the nine months ended September 30, 2019. Salaries and related benefits in our Clinical Research segment increased $44.9 million as we continue to hire billable staff to ensure appropriate staffing levels for our current studies and future growth. Data costs in our Data Solutions segment increased $6.3 million as we continue to expand our sources of data. These were offset by a favorable impact of $32.4 million from foreign currency exchange rate fluctuations. Direct costs as a percentage of revenue were 50.9% and 53.0% during the nine months ended September 30, 2019 and 2018, respectively.

Reimbursable expenses increased by $40.8 million from $430.9 million during the nine months ended September 30, 2018 to $471.7 million during the nine months ended September 30, 2019. We believe that the fluctuations in reimbursable expenses from period to period are not meaningful to our underlying performance over the full terms of the relevant contracts.

Selling, general and administrative expenses increased by $16.0 million, or 5.8%, from $275.4 million during the nine months ended September 30, 2018 to $291.4 million during the nine months ended September 30, 2019. The increase in selling, general and administrative expenses is primarily due to an increase in salaries and related benefits, including stock-based

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compensation expense as we continue to hire staff and add additional office space to support our growing business. Selling, general and administrative expenses as a percentage of revenue were 12.9% during the nine months ended September 30, 2019 and 2018.

Transaction-related costs for the nine months ended September 30, 2019, totaling $0.6 million, consisted of costs incurred in connection with the September 2019 secondary offering of common stock. For the nine months ended September 30, 2018, we recorded $32.7 million of transaction-related costs. These costs consisted of $30.9 million for changes in the estimated fair value of contingent consideration related to our acquisitions, $0.8 million of stock-based compensation expense related to the release of a portion of the transfer restrictions on vested options, $0.5 million of third-party fees associated with the amendment to our accounts receivable financing agreement and $0.5 million of expenses incurred in connection with our August 2018 secondary offering of common stock.

Depreciation and amortization expense increased by $1.3 million, or 1.5%, from $84.2 million during the nine months ended September 30, 2018 to $85.5 million during the nine months ended September 30, 2019. Depreciation and amortization expense as a percentage of revenue was 3.8% during the nine months ended September 30, 2019 and 3.9% during the nine months ended September 30, 2018.

Interest expense, net, decreased by $6.0 million, or 13.7%, from $43.9 million during the nine months ended September 30, 2018 to $37.8 million during the nine months ended September 30, 2019. The change is primarily due to the voluntary principal prepayments made during 2018 and 2019 which was partially offset by interest expense incurred on the September 2019 incremental borrowing.

The loss on modification of debt was $1.9 million for the nine months ended September 30, 2019, and consisted of costs incurred associated with the incremental borrowing under the senior secured credit facilities. The loss on extinguishment of debt incurred during the nine months ended September 30, 2018, totaling $0.5 million, consisted of previously capitalized unamortized debt financing costs that were expensed as a result of voluntary debt repayments made during the period.

Foreign currency gains (losses), net, changed by $3.3 million from foreign currency losses of $1.4 million during the nine months ended September 30, 2018 to foreign currency gains of $1.9 million during the nine months ended September 30, 2019. Foreign currency gains and losses are due to fluctuations in the U.S. dollar, gains or losses that arise in connection with the revaluation 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, 2019, foreign currency gains were primarily due to movement of the U.S. dollar versus the British pound and the Euro.

Provision for income taxes increased by $0.9 million from $55.4 million during the nine months ended September 30, 2018 to $56.3 million during the nine months ended September 30, 2019. Our effective tax rate was 40.0% and 25.1% during the nine months ended September 30, 2018 and 2019, respectively. The decrease in the effective tax rate of 14.9% was primarily attributable to (i) higher levels of BEAT inclusion in the nine months ended September 30, 2018 than the nine months ended September 30, 2019; and (ii) the exclusion of the effect of an increase in the fair value of the earn-out liability related to the stock acquisition of Symphony Health during the nine months ended September 30, 2018, which is not included for taxable income but instead increases tax stock basis. During the nine months ended September 30, 2019, we updated our analysis of BEAT and its impact on the annual estimated effective tax rate for the 2019 tax year to reflect revisions to contractual arrangements.

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Segment Results of Operations for the Three Months Ended September 30, 2019 Compared to the Three Months Ended September 30, 2018

Clinical Research

	Three Months Ended September 30,
	2019			2018
(in thousands)
Revenue	$	719,005		$	656,979
Segment profit	206,345			184,225
Segment profit %	28.7		%	28.0		%

Revenue increased by $62.0 million, or 9.4%, from $657.0 million during the three months ended September 30, 2018 to $719.0 million during the three months ended September 30, 2019. Revenue for the three months ended September 30, 2019 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. 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.

Segment profit increased by $22.1 million, or 12.0%, from $184.2 million during the three months ended September 30, 2018 to $206.3 million during the three months ended September 30, 2019 primarily due to an increase in revenue. Segment profit as a percentage of revenue increased from 28.0% during the three months ended September 30, 2018 to 28.7% for the same period in 2019. Segment profit as a percentage of revenue increased primarily due to the increased utilization of our staff.

Data Solutions

	Three Months Ended September 30,
	2019			2018
(in thousands)
Revenue	$	61,686		$	60,617
Segment profit	15,077			19,232
Segment profit %	24.4		%	31.7		%

Revenue increased by $1.1 million, or 1.8%, from $60.6 million during the three months ended September 30, 2018 to $61.7 million during the three months ended September 30, 2019. The increase in revenue was related to an increase in service in kind services provided during the quarter. Service in kind revenue was $4.3 million and $3.0 million during the three months ended September 30, 2019 and 2018, respectively.

Segment profit decreased by $4.2 million, or 21.6%, from $19.2 million during the three months ended September 30, 2018 to $15.1 million during the three months ended September 30, 2019 due to an increase in direct costs (exclusive of depreciation and amortization). The increase in direct costs is attributable to higher data costs as we have expanded our sources of data and have experienced increased costs on the renewal of existing contracts, as well as an increase in salaries and benefits as we have increased headcount to support segment growth. Segment profit as a percentage of revenue decreased from 31.7% during the three months ended September 30, 2018 to 24.4% for the same period in 2019 primarily due to factors noted above.

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Segment Results of Operations for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018

Clinical Research

	Nine Months Ended September 30,
	2019			2018
(in thousands)
Revenue	$	2,087,863		$	1,966,762
Segment profit	593,852			524,955
Segment profit %	28.4		%	26.7		%

Revenue increased by $121.1 million, or 6.2%, from $1,966.8 million during the nine months ended September 30, 2018 to $2,087.9 million during the nine months ended September 30, 2019. Revenue for the nine months ended September 30, 2019 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, more effective sales efforts and the growth in the overall CRO market. 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.

Segment profit increased by $68.9 million, or 13.1%, from $525.0 million during the nine months ended September 30, 2018 to $593.9 million during the nine months ended September 30, 2019 primarily due to an increase in revenue. Segment profit as a percentage of revenue increased from 26.7% during the nine months ended September 30, 2018 to 28.4% for the same period in 2019. Segment profit as a percentage of revenue increased primarily due to the increased utilization of our staff.

Data Solutions

	Nine Months Ended September 30,
	2019			2018
(in thousands)
Revenue	$	178,159		$	175,512
Segment profit	47,047			51,918
Segment profit %	26.4		%	29.6		%

Revenue increased by $2.6 million, or 1.5%, from $175.5 million during the nine months ended September 30, 2018 to $178.2 million during the nine months ended September 30, 2019. The increase in revenue was related to an increase in the volume of data services provided during the nine month period offset by a decrease in the amount of consulting and service in kind services provided during the nine month period. Service in kind revenue was $11.9 million and $12.8 million during the nine months ended September 30, 2019 and 2018, respectively.

Segment profit decreased by $4.9 million, or 9.4%, from $51.9 million during the nine months ended September 30, 2018 to $47.0 million during the nine months ended September 30, 2019 due to an increase in direct costs (exclusive of depreciation and amortization). The increase in direct costs is attributable to higher data costs as we have expanded our sources of data and have experienced increased costs on the renewal of existing contracts, as well as an increase in salaries and benefits as we have increased headcount to support segment growth. Segment profit as a percentage of revenue decreased from 29.6% during the nine months ended September 30, 2018 to 26.4% for the same period in 2019 primarily due to the factors noted above.

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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, 2019, we had approximately $181.8 million of cash and cash equivalents of which $56.0 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 $2,195.2 million during the nine months ended September 30, 2019, including $261.5 million of funds received from customers to pay independent physician investigators, or investigators, as compared to $2,133.0 million during the nine months ended September 30, 2018, including $258.3 million of funds received from customers to pay investigators. The increase in cash collections during the nine months ended September 30, 2019 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, 2019, net cash provided by operations was $66.0 million compared to $198.6 million provided by operations for the same period of 2018. Cash from operating activities decreased over the prior year primarily due to an increase in cash outflows associated with acquisition related earn-out payments as well as an increase in cash outflows from working capital. The changes in working capital were driven by changes in our accounts receivable, unbilled services and advanced billings accounts, as a result of an increase in our days sales outstanding as compared to the prior year.

Cash Flow from Investing Activities

Net cash used in investing activities was $59.7 million during the nine months ended September 30, 2019 compared to $39.7 million for the same period of 2018. Cash outflows from capital expenditures increased from $40.1 million during the nine months ended September 30, 2018 to $61.2 million during the same period in 2019. The increase in capital expenditures is primarily related to leasehold improvements and furniture and fixtures associated with new office space added to support our growing business.

Cash Flow from Financing Activities

Net cash provided by financing activities was $31.0 million during the nine months ended September 30, 2019 compared to net cash used in financing activities of $221.6 million for the same period of 2018. During the nine months ended September 30, 2019 our long-term debt balances increased by $305.0 million compared to a $155.9 million decrease for the same period of 2018. Additionally, cash flows for the nine months ended September 30, 2019 include an additional $10.9 million of cash inflows from our employee stock purchase plan as compared to the same period in the prior year. The remaining change in cash flows from financing activities is primarily attributable to cash outflows for the repurchase and retirement of common stock in the current year and the portion of acquisition related earn-out payments being classified as a financing activity in the prior year.

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Indebtedness

As of September 30, 2019, we had $1,391.5 million of total indebtedness. Additionally, our 2016 Revolver provided $225.0 million of potential borrowings. At September 30, 2019, we had no outstanding borrowings under our 2016 Revolver and had $5.2 million in letters of credit outstanding, which were secured by the 2016 Revolver. We do not expect to pay dividends in the foreseeable future. Our long-term debt arrangements contain usual and customary restrictive covenants, and, as of September 30, 2019, we were in compliance with these covenants.

On October 25, 2019, we refinanced our 2016 Credit Facilities by entering into the 2019 Credit Facilities. We entered into the 2019 First Lien Term Loan, with a syndicate of banks for an aggregate principal amount of $1,000.0 million of first lien term debt due in 2024, and a five-year $750.0 million revolving line of credit. The proceeds from the 2019 Credit Facilities were used to repay the 2016 First Lien Term Loan principal balance of $1,191.5 million and approximately $4.5 million in related fees and expenses.

See Notes 7 and 16 to our consolidated condensed financial statements included in this Quarterly Report on Form 10-Q, 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, 2018, for additional details regarding our credit arrangements.

Contractual Obligations and Commercial Commitments

In September 2019, the Company borrowed an additional $300.0 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, 2019 are updated below.

	Payments due by Period
	Remaining 2019 (3 Months)		2020 to 2021		2022 to 2023		Thereafter		Total
Principal payments on long-term debt (1)	$	—	$	1,391,533	$	—	$	—	$	1,391,533
Interest payments on long-term debt (1)	11,874		87,284		—		—		99,158
Total	$	11,874	$	1,478,817	$	—	$	—	$	1,490,691

(1) Principal payments are based on the terms contained in our agreements. Interest payments are based on the interest rates in effect on September 30, 2019.

Other than the item 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, 2018.

Critical Accounting Policies and Estimates

Other than the accounting policy changes noted in "Note 2 - Significant Accounting Policies Update" of the consolidated condensed financial statements in this Quarterly Report on Form 10-Q, 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, 2018.

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,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements

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speak only as of the date hereof, and 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 that we may be unable to maintain large customer contracts or to enter into new contracts; we may underprice contracts, overrun our cost estimates, or fail to receive approval for or experience delays in documenting change orders; the historical indications of the relationship of backlog to revenues may not be indicative of their future relationship; 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 attract suitable investigators and patients for our clinical trials; we could be subject to employment liability with our embedded and functional outsourcing solutions as we place employees at the physical workplaces of our clients; we may lose key personnel or be unable to recruit experienced personnel; changes in accounting standards may adversely affect our financial statements; our effective income tax rate may fluctuate which may adversely affect our operations, earnings, and earnings per share; we may be unable to maintain information systems or effectively update them; a failure or breach of our IT systems could result in customer information being compromised or otherwise significantly disrupt our business operations; client or therapeutic concentration or competition among clients 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 our business outside the United States, including changes in tax law, 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 and the adoption of trade restrictions between the U.S. and other national governments; we may be unable to successfully develop and market new services or enter new markets; government regulators or customers may limit the scope of prescriptions or withdraw products from the market; government regulators may impose new regulations affecting our business; 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; if we do not keep pace with rapid technological changes, our services may become less competitive or obsolete; our relationships with existing or potential clients who are in competition with each other may adversely impact the degree to which other clients or potential clients use our services; we may be unable to compete effectively with other players in the biopharmaceutical services industry; we may be unable to successfully identify, acquire and integrate businesses, services and technologies or to manage joint ventures; we may not realize the full value of our goodwill and intangible assets, and may be unable to use net operating loss carry-forwards; our disposal of hazardous substances and waste could give rise to liability; we may be unable to protect our intellectual property, patent and other intellectual property litigation could be time consuming and costly; biopharmaceutical industry outsourcing trends could change and adversely affect our operations and growth rate; current and proposed laws and regulations regarding the protection of personal data could result in increased risks of liability or increased cost or could limit our service offerings; circumstances beyond our control could cause industry-wide reduction in demand for our services; 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 28, 2019.

Website and Social Media Disclosure

We use our website (www.prahs.com) as a channel of distribution of company information. The information we post through this channel may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, Securities and Exchange Commission, or SEC, filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.

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, 2018.

Item 4. Controls and Procedures

As of September 30, 2019, 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

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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. 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, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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, 2018. There have been no significant changes from the risk factors previously disclosed in such annual report.

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

(a) Not applicable.

(b) Not applicable.

(c) Purchases of Equity Securities by the Issuer

On August 30, 2019, our board of directors authorized a share repurchase program pursuant to which we may repurchase up to $500 million of common stock, effective immediately and through and including December 31, 2021, the date on which the repurchase program will expire. Under the repurchase program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Exchange Act.

On September 6, 2019, KKR PRA Investors L.P. sold 6,666,684 shares of our common stock as part of a secondary offering, of which we repurchased 3,079,765 shares for an aggregate purchase price of approximately $300.0 million. As of September 30, 2019, we have remaining authorization to repurchase up to $200.0 million of common stock under the share repurchase program.

The following table summarizes the share repurchase program activity for the three months ended September 30, 2019, and the approximate dollar value of shares that may yet be purchased pursuant to the share repurchase program.

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
	(in thousands, except share and per share data)
July 1, 2019 - July 31, 2019	—	$	—	—	$	—
August 1, 2019 - August 31, 2019	—	—		—	500,000 (1)
September 1, 2019 - September 30, 2019	3,079,765	97.41		3,079,765	200,000
	3,079,765			3,079,765

(1) All shares are covered by the program described above. The program was announced on September 3, 2019 and expires on December 31, 2021.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable. 

38

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit
Number	Description of Exhibit
10.1	Third Joinder Agreement, dated as September 3, 2019, 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 Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 4, 2019 (No. 001-36732)).
10.2	Underwriting Agreement, dated as of September 3, 2019, among PRA Health Sciences, Inc., the Selling Stockholder named therein and Goldman Sachs & Co. LLC, as Underwriter (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on September 6, 2019 (No. 001-36732)).
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, 2019 formatted in inline XBRL (iXBRL): (i) Consolidated Condensed Balance Sheets as of September 30, 2019 and December 31, 2018, (ii) Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2019 and 2018, (iii) Consolidated Condensed Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iv) Consolidated Condensed Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018, (v) Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, and (v) Notes to Consolidated Condensed Financial Statements.
104*	Cover page from PRA Health Sciences, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted iXBRL and contained in Exhibit 101.

* Filed herewith

39

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/ Michael J. Bonello
	Michael J. Bonello
	Executive Vice President and Chief Financial Officer
	(Authorized Signatory)
Date: October 31, 2019

40

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, 2019 of PRA Health Sciences, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make 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 31, 2019
	/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, Michael J. Bonello, certify that:

1.  I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2019 of PRA Health Sciences, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make 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 31, 2019
	/s/ Michael J. Bonello
	Michael J. Bonello
	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, 2019 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 31, 2019	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, 2019 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Bonello, 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 31, 2019	By:	/s/ Michael J. Bonello
		Michael J. Bonello
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

XML

Accumulated Other Comprehensive Loss - Components (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Jan. 01, 2019
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	$ 1,051,420
Other comprehensive loss before reclassifications	(31,335)
Reclassification adjustments	2,972
Balance at end of period	946,743
Total
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(170,659)
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income		$ 1,419
Balance at end of period	(197,603)
Foreign Currency Translation, Net of Tax
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(158,349)
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income		0
Other comprehensive loss before reclassifications	(26,768)
Reclassification adjustments	0
Balance at end of period	(185,117)
Derivative Instruments, Net of Tax
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at beginning of period	(12,310)
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income		$ 1,419
Other comprehensive loss before reclassifications	(4,567)
Reclassification adjustments	2,972
Balance at end of period	$ (12,486)

XML

Segments - Segment Revenue by Geographic Location (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 780,691	$ 717,596	$ 2,266,022	$ 2,142,274
Total Americas
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	541,037	505,063	1,583,771	1,495,536
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	528,782	493,667	1,546,503	1,460,190
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	12,255	11,396	37,268	35,346
Europe, Africa, and Asia-Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	239,654	212,533	682,251	646,738
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	191,994	170,252	551,460	516,442
Netherlands
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	30,144	28,334	82,839	87,340
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	17,516	13,947	47,952	42,956
Clinical Research
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	719,005	656,979	2,087,863	1,966,762
Clinical Research | Total Americas
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	479,351	444,446	1,405,612	1,320,024
Clinical Research | United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	467,096	433,050	1,368,344	1,284,678
Clinical Research | Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	12,255	11,396	37,268	35,346
Clinical Research | Europe, Africa, and Asia-Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	239,654	212,533	682,251	646,738
Clinical Research | United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	191,994	170,252	551,460	516,442
Clinical Research | Netherlands
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	30,144	28,334	82,839	87,340
Clinical Research | Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	17,516	13,947	47,952	42,956
Data Solutions
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	61,686	60,617	178,159	175,512
Data Solutions | Total Americas
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	61,686	60,617	178,159	175,512
Data Solutions | United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	61,686	60,617	178,159	175,512
Data Solutions | Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	0	0	0	0
Data Solutions | Europe, Africa, and Asia-Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	0	0	0	0
Data Solutions | United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	0	0	0	0
Data Solutions | Netherlands
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	0	0	0	0
Data Solutions | Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 0	$ 0	$ 0	$ 0

XML

Revolving Credit Facilities and Long-Term Debt - Accounts Receivable Financing Agreement and Fair Value of Debt (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 03, 2019	Dec. 31, 2018
Long-term debt
Outstanding borrowings		$ 300,000,000.0
Fair Value of Debt
Estimated fair value of long-term debt	$ 1,390,000,000.0		$ 1,084,200,000
Accounts receivable financing agreement
Long-term debt
Outstanding borrowings	$ 200,000,000.0		170,000,000.0
Notice period for prepayment of loans	1 day
Notice period required for termination of agreement	15 days
Weighted average interest rate	3.86%
Remaining borrowing capacity	$ 0		$ 30,000,000.0
Accounts receivable financing agreement | LIBOR
Long-term debt
Applicable margin on variable rate basis	1.25%

XML

Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
2019 (remaining)	$ 17,079
2020	68,711
2021	63,619
2022	49,244
2023	37,515
2024 and thereafter	295,117
Net Amount	$ 531,285	$ 586,436

XML

Accounts Receivable, Unbilled Services and Advanced Billings - Performance Obligations (Details) $ in Billions	Sep. 30, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01
Accounts, Notes, Loans and Financing Receivable [Line Items]
Remaining performance obligation, amount	$ 5.2
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01
Accounts, Notes, Loans and Financing Receivable [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	1 year
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01
Accounts, Notes, Loans and Financing Receivable [Line Items]
Remaining performance obligation, expected timing of satisfaction, period	5 years

XML

Accounts Receivable, Unbilled Services and Advanced Billings (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Schedule of accounts receivable and unbilled services

Accounts receivable and unbilled services were as follows (in thousands):

	September 30,			December 31,
	2019			2018
Accounts receivable	$	557,077		$	437,001
Unbilled services	147,952			133,147
Total accounts receivable and unbilled services	705,029			570,148
Less allowance for doubtful accounts	(2,393		)	(2,049		)
Total accounts receivable and unbilled services, net	$	702,636		$	568,099

Schedule of advanced billings

Advanced billings were as follows (in thousands):

	September 30,		December 31,
	2019		2018
Advanced billings	$	474,999	$	441,357

XML

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [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, 2018	4,641,600		$	62.29	7.8	$	149.7
Granted	1,150,000		98.42
Exercised	(464,564	)	33.86
Expired or forfeited	(199,550	)	82.92
Outstanding at September 30, 2019	5,127,486		$	72.17	7.7	$	144.8
Exercisable at September 30, 2019	1,975,811		$	42.71	6.0	$	112.5

Schedule of RSA/RSU activity

The Company’s RSAs/RSUs activity in 2019 is as follows:

	Awards		Wtd. Average Grant-Date Fair Value		Intrinsic Value (millions)
Unvested December 31, 2018	344,250		$	81.39	$	31.7
Granted	352,036		97.06
Forfeited	(40,500	)	80.72
Vested	(22,750	)	61.57
Unvested September 30, 2019	633,036		$	90.87	$	62.8

Schedule of stock-based compensation expense

Stock-based compensation expense related to employee stock plans are summarized below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Direct costs	$	3,685	$	2,451	$	9,780	$	6,900
Selling, general and administrative	7,559		5,319		20,627		13,569
Transaction-related costs	—		773		—		773
Total stock-based compensation expense	$	11,244	$	8,543	$	30,407	$	21,242

XML

Segments (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of segment reporting information

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

	Three Months Ended September 30, 2019							Three Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total			Clinical Research		Data Solutions		Total
Revenue	$	719,005	$	61,686	$	780,691		$	656,979	$	60,617	$	717,596
Direct costs (exclusive of depreciation and amortization)	342,695		46,609		389,304			330,037		41,385		371,422
Reimbursable expenses	169,965		—		169,965			142,717		—		142,717
Segment profit	206,345		15,077		221,422			184,225		19,232		203,457
Less expenses not allocated to segments:
Selling, general and administrative expenses					95,542							92,553
Transaction-related costs					572							43,837
Depreciation and amortization expense					29,264							28,270
Loss (gain) on disposal of fixed assets, net					256							(15		)
Income from operations					95,788							38,812
Interest expense, net					(12,974		)					(14,423		)
Loss on modification or extinguishment of debt					(1,855		)					(454		)
Foreign currency gains (losses), net					5,408							(1,809		)
Other income (expense), net					15							(68		)
Income before income taxes and equity in income of unconsolidated joint ventures					$	86,382						$	22,058

	Nine Months Ended September 30, 2019							Nine Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total			Clinical Research		Data Solutions		Total
Revenue	$	2,087,863	$	178,159	$	2,266,022		$	1,966,762	$	175,512	$	2,142,274
Direct costs (exclusive of depreciation and amortization)	1,022,329		131,112		1,153,441			1,010,915		123,594		1,134,509
Reimbursable expenses	471,682		—		471,682			430,892		—		430,892
Segment profit	593,852		47,047		640,899			524,955		51,918		576,873
Less expenses not allocated to segments:
Selling, general and administrative expenses					291,439							275,424
Transaction-related costs					572							32,709
Depreciation and amortization expense					85,462							84,163
Loss on disposal of fixed assets, net					900							21
Income from operations					262,526							184,556
Interest expense, net					(37,834		)					(43,860		)
Loss on modification or extinguishment of debt					(1,855		)					(454		)
Foreign currency gains (losses), net					1,864							(1,416		)
Other expense, net					(66		)					(201		)
Income before income taxes and equity in income of unconsolidated joint ventures					$	224,635						$	138,625

Schedule of segment revenue by geographic location

Revenue by geographic location for each segment is as follows (in thousands):

	Three Months Ended September 30, 2019						Three Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total		Clinical Research		Data Solutions		Total
Revenue
Americas:
United States	$	467,096	$	61,686	$	528,782	$	433,050	$	60,617	$	493,667
Other	12,255		—		12,255		11,396		—		11,396
Total Americas	479,351		61,686		541,037		444,446		60,617		505,063
Europe, Africa, and Asia-Pacific
United Kingdom	191,994		—		191,994		170,252		—		170,252
Netherlands	30,144		—		30,144		28,334		—		28,334
Other	17,516		—		17,516		13,947		—		13,947
Total Europe, Africa, and Asia-Pacific	239,654		—		239,654		212,533		—		212,533
Total revenue	$	719,005	$	61,686	$	780,691	$	656,979	$	60,617	$	717,596

	Nine Months Ended September 30, 2019						Nine Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total		Clinical Research		Data Solutions		Total
Revenue
Americas:
United States	$	1,368,344	$	178,159	$	1,546,503	$	1,284,678	$	175,512	$	1,460,190
Other	37,268		—		37,268		35,346		—		35,346
Total Americas	1,405,612		178,159		1,583,771		1,320,024		175,512		1,495,536
Europe, Africa, and Asia-Pacific
United Kingdom	551,460		—		551,460		516,442		—		516,442
Netherlands	82,839		—		82,839		87,340		—		87,340
Other	47,952		—		47,952		42,956		—		42,956
Total Europe, Africa, and Asia-Pacific	682,251		—		682,251		646,738		—		646,738
Total revenue	$	2,087,863	$	178,159	$	2,266,022	$	1,966,762	$	175,512	$	2,142,274

XML

Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Stock Option and RSA/RSU Activity

The 2018 Stock Incentive Plan, or the 2018 Plan, was approved by stockholders at the annual meeting on May 31, 2018. The 2018 Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws. The 2018 Plan authorized the issuance of 2,000,000 shares of common stock plus all shares that remained available under the prior plan on May 31, 2018.

The Company granted 1,150,000 service-based options and 352,036 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $37.8 million and $34.2 million, respectively, during the nine months ended September 30, 2019.

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, 2018	4,641,600		$	62.29	7.8	$	149.7
Granted	1,150,000		98.42
Exercised	(464,564	)	33.86
Expired or forfeited	(199,550	)	82.92
Outstanding at September 30, 2019	5,127,486		$	72.17	7.7	$	144.8
Exercisable at September 30, 2019	1,975,811		$	42.71	6.0	$	112.5

The Company’s RSAs/RSUs activity in 2019 is as follows:

	Awards		Wtd. Average Grant-Date Fair Value		Intrinsic Value (millions)
Unvested December 31, 2018	344,250		$	81.39	$	31.7
Granted	352,036		97.06
Forfeited	(40,500	)	80.72
Vested	(22,750	)	61.57
Unvested September 30, 2019	633,036		$	90.87	$	62.8

Employee Stock Purchase Plan

In April 2017, the Board approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of any offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. Offering periods under the ESPP will generally be in six month increments, with the administrator of the ESPP having the right to establish different offering periods. The Company recognized stock-based compensation expense of $3.0 million and $2.5 million associated with the ESPP during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, there have been 242,329 shares issued and 2,757,671 shares reserved for future issuance under the ESPP.

Stock-based Compensation Expense

Stock-based compensation expense related to employee stock plans are summarized below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Direct costs	$	3,685	$	2,451	$	9,780	$	6,900
Selling, general and administrative	7,559		5,319		20,627		13,569
Transaction-related costs	—		773		—		773
Total stock-based compensation expense	$	11,244	$	8,543	$	30,407	$	21,242

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Accounts Receivable, Unbilled Services and Advanced Billings

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Accounts Receivable, Unbilled Services and Advanced Billings

Accounts Receivable, Unbilled Services and Advanced Billings

Accounts receivable and unbilled services were as follows (in thousands):

	September 30,			December 31,
	2019			2018
Accounts receivable	$	557,077		$	437,001
Unbilled services	147,952			133,147
Total accounts receivable and unbilled services	705,029			570,148
Less allowance for doubtful accounts	(2,393		)	(2,049		)
Total accounts receivable and unbilled services, net	$	702,636		$	568,099

Unbilled services as of September 30, 2019 and December 31, 2018 includes $75.1 million and $66.6 million, respectively, of contract assets where the Company’s right to bill is conditioned on criteria other than the passage of time. Impairment losses on contract assets were immaterial in the three and nine months ended September 30, 2019 and 2018.

Advanced billings were as follows (in thousands):

	September 30,		December 31,
	2019		2018
Advanced billings	$	474,999	$	441,357

The $33.6 million increase in advanced billings from December 31, 2018 to September 30, 2019 was primarily due to the timing of customer payments. During the nine months ended September 30, 2019 and 2018, the Company recognized revenue of $398.4 million and $382.5 million related to advanced billings recorded as of January 1, 2019 and 2018, respectively.

Performance Obligations

Revenue recognized from reimbursable expenses and services completed in prior periods was $14.8 million and $65.2 million for the three and nine months ended September 30, 2019, respectively, and $24.4 million and $57.3 million for the three and nine months ended September 30, 2018, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and from contract modifications on long-term fixed price contracts executed in the current period, which results in changes to the transaction price.

The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year. These contracts are short in duration and revenue recognition generally follows the delivery of the promised services. The total transaction price for the undelivered performance obligation on contracts with an original initial contract term greater than one year is $5.2 billion as of September 30, 2019. This amount includes reimbursement revenue. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from one to five years.

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Concentration of Credit Risk (Tables)

9 Months Ended

Sep. 30, 2019

Risks and Uncertainties [Abstract]

Schedule of concentration of risk by risk factor

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

	September 30,		December 31,
	2019		2018
Customer A	10.6	%	12.2	%
Customer B	15.5	%	11.4	%

 

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Recently Implemented and Recently Issued Accounting Pronouncements

Recently Implemented Accounting Pronouncements

On January 1, 2019, the Company adopted Accounting Standards Codification, or ASC, Topic 842, “Leases,” or ASC 842, using the revised modified retrospective approach provided by ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” The revised modified retrospective approach recognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in the Company's financial statements.

The adoption of ASC 842 resulted in the recognition of lease liabilities of $211.7 million (recorded as $31.9 million in short-term lease liabilities and $179.8 million in long-term lease liabilities) and $187.1 million of lease right-of-use, or ROU, assets as of January 1, 2019. Upon adoption of ASC 842, the Company had lease obligations associated with deferred rent, lease loss liabilities, above market lease liabilities, and tenant improvement allowances, totaling $25.7 million, that were reclassified to the lease right-to-use assets. The Company had prepaid rent balances, totaling $1.1 million, that were reclassified as a reduction of the current portion of operating lease liabilities. The adoption of ASC 842 did not impact the consolidated condensed statement of operations for the nine months ended September 30, 2019, consolidated condensed statement of cash flows, or earnings per share. See "Note 2 - Significant Accounting Policies" for further disclosures regarding the adoption of ASC 842.

In August 2017, the Financial Accounting Standards Board, or 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 Company adopted this standard effective January 1, 2019 and the application of ASU No. 2017-12 did not have a material impact on the Company's consolidated condensed financial statements.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects

resulting from the Tax Cuts and Jobs Act of 2017, or the Act. The amendments in this update also require entities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income. The Company adopted this standard effective January 1, 2019 and the application of ASU No. 2018-02 resulted in a reclassification of $1.4 million from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from the Act.

In October 2018, the FASB issued ASU No. 2018-16, "Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes," which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. The Company adopted ASU No. 2018-16 concurrent with adoption of ASU No. 2017-12, on January 1, 2019, and the application of ASU No. 2018-16 did not have a material impact on the Company’s consolidated condensed financial statements.

Recently Issued Accounting Pronouncements

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 guidance is 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 financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The guidance is effective for the reporting period beginning after December 15, 2019, and interim periods therein, with early adoption permitted. The adoption of ASU No. 2018-15 is not expected to have a material impact on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the reporting period beginning after December 15, 2019, and the interim periods therein. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s consolidated financial statements.

On January 1, 2019, the Company adopted ASC 842 using the revised modified retrospective approach. The revised modified retrospective approach recognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in an entity’s financial statements. In addition, the Company elected the package of practical expedients permitted under the transition guidance within ASC 842, in which the Company need not reassess (i) the historical lease classification, (ii) whether any expired or existing contract is or contains a lease, or (iii) the initial direct costs for any existing leases.

The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining lease terms of one year to 17 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments to the base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s sublease income is immaterial.

Upon the initial application of ASC 842 on January 1, 2019, or the transition date, lease liabilities were measured by using the remaining minimum rental payments under ASC 840. The Company’s ASC 840 minimum rental payments include executory costs and rental payments that depend on an index or rate are calculated based on the rate in effect at the transition date. The lease liability is measured at the present value of future lease payments, discounted using the discount rate as of the transition date. In addition to recognizing the lease liability, the Company recognized a corresponding asset representing its right to use the underlying asset over the lease term, referred to as the lease ROU asset. The ROU asset is initially measured as the amount of lease liability, adjusted for any initial lease costs or lease payments made before or at the commencement of the lease, and reduced by any lease incentives and deferred rent. As of the transition date, the Company’s leases consisted of only operating leases and upon recognition of the lease liability and ROU assets, there was no adjustment to retained earnings.

All leases entered into after January 1, 2019 are accounted for under ASC 842. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for use by a lessee.

At the lease commencement date, a lease liability is recognized based on the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease. As the Company's leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the lease term and economic environment at the lease commencement date. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. With limited exceptions, the nature of the Company's facility leases is such that there are not economic or other conditions that would indicate that it is reasonably certain at lease commencement that the Company will exercise options to extend the term.

The Company determines if its lease obligations are operating or finance leases at the lease commencement date and considers whether the lease grants an option to purchase the underlying asset that it is reasonably certain to exercise, the remaining economic life of the underlying asset, the present value of the sum of the remaining lease payments and any residual value guaranteed, and the nature of the asset.

The initial measurement of the lease liability is determined based on the future lease payments, which may include lease payments that depend on an index or a rate (such as the consumer price index or other market index). The Company initially measures payments based on an index or rate by using the applicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as they are incurred. The Company’s contracts that include a lease component generally include additional services that are transferred to the lessee (e.g., common-area maintenance services), which are

nonlease components. Contracts typically also include other costs and fees that do not provide a separate service to the lessee, such as costs paid by the lessee to reimburse the lessor for administrative costs or payment for the lessor’s costs for property taxes, insurance related to the leased asset, and other lessor costs. The Company elected the practical expedient to account for the lease and nonlease components as a single lease component. At the lease commencement date, the Company recognizes a ROU asset representing its right to use the underlying asset over the lease term. If significant events, changes in circumstances, or other events indicate that the lease term has changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the ROU asset. These reassessment events are typically related to the exercise of optional renewals or significant new investments in leasehold improvements. The costs of services and costs related to reimbursements of the lessor’s cost are generally variable rent obligations, which are excluded from the future lease payments included in the lease liability. For leases with a term of one year or less, or short-term leases, the Company has elected to not recognize the lease liability for these arrangements and the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term.

The total expense for the operating lease liability is recognized on a straight-line basis over the lease term, beginning on the lease commencement date. The Company classifies the lease costs within operating expenses consistent with the classification policies for all other operating costs.

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and 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; thus, these accounts are not commingled with the Company’s cash and cash equivalents. These accounts are presented separately in the consolidated condensed balance sheets as restricted cash.

Leases Liabilities

All leases entered into after January 1, 2019 are accounted for under ASC 842. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for use by a lessee.

At the lease commencement date, a lease liability is recognized based on the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease. As the Company's leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the lease term and economic environment at the lease commencement date. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. With limited exceptions, the nature of the Company's facility leases is such that there are not economic or other conditions that would indicate that it is reasonably certain at lease commencement that the Company will exercise options to extend the term.

The Company determines if its lease obligations are operating or finance leases at the lease commencement date and considers whether the lease grants an option to purchase the underlying asset that it is reasonably certain to exercise, the remaining economic life of the underlying asset, the present value of the sum of the remaining lease payments and any residual value guaranteed, and the nature of the asset.

The initial measurement of the lease liability is determined based on the future lease payments, which may include lease payments that depend on an index or a rate (such as the consumer price index or other market index). The Company initially measures payments based on an index or rate by using the applicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as they are incurred. The Company’s contracts that include a lease component generally include additional services that are transferred to the lessee (e.g., common-area maintenance services), which are

nonlease components. Contracts typically also include other costs and fees that do not provide a separate service to the lessee, such as costs paid by the lessee to reimburse the lessor for administrative costs or payment for the lessor’s costs for property taxes, insurance related to the leased asset, and other lessor costs. The Company elected the practical expedient to account for the lease and nonlease components as a single lease component. At the lease commencement date, the Company recognizes a ROU asset representing its right to use the underlying asset over the lease term. If significant events, changes in circumstances, or other events indicate that the lease term has changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the ROU asset. These reassessment events are typically related to the exercise of optional renewals or significant new investments in leasehold improvements. The costs of services and costs related to reimbursements of the lessor’s cost are generally variable rent obligations, which are excluded from the future lease payments included in the lease liability. For leases with a term of one year or less, or short-term leases, the Company has elected to not recognize the lease liability for these arrangements and the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term.

The total expense for the operating lease liability is recognized on a straight-line basis over the lease term, beginning on the lease commencement date. The Company classifies the lease costs within operating expenses consistent with the classification policies for all other operating costs.

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, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

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Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2019

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, Net of Tax			Derivative Instruments, Net of Tax			Total
Balance at December 31, 2018	$	(158,349	)	$	(12,310	)	$	(170,659	)
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income	—			1,419			1,419
Balance at January 1, 2019	(158,349		)	(10,891		)	(169,240		)
Other comprehensive loss before reclassifications	(26,768		)	(4,567		)	(31,335		)
Reclassification adjustments	—			2,972			2,972
Balance at September 30, 2019	$	(185,117	)	$	(12,486	)	$	(197,603	)

Foreign Currency Translation

The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound, Euro, Canadian dollar and Russian ruble exchange rates against the U.S. dollar. The U.S. dollar strengthened by 3.4% and 4.6% versus the British pound and Euro, respectively, and weakened by 3.0% and 7.3% versus the Canadian dollar and the Russian ruble, respectively, between December 31, 2018 and September 30, 2019. The movement in the Euro and British pound contributed to a $15.7 million and $7.4 million increase in other comprehensive loss, respectively, which was offset by decreases in other comprehensive loss of $1.6 million and $1.1 million due to movement in the Russian ruble and Canadian dollar, respectively, during the nine months ended September 30, 2019.

Derivative Instruments

See "Note 12 - Derivatives" for further information on changes to accumulated other comprehensive loss related to the derivative instruments.

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Income Taxes (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	25.10%	40.00%
U.S. statutory rate	21.00%
Increase in liability for uncertain tax positions	$ 18.7

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Stock-Based Compensation - Schedule of Stock Option Summary (Details) $ / shares in Units, $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares
Options
Outstanding at beginning of period (in shares) | shares	4,641,600
Granted (in shares) | shares	1,150,000
Exercised (in shares) | shares	(464,564)
Expired or forfeited (in shares) | shares	(199,550)
Outstanding at end of period (in shares) | shares	5,127,486	4,641,600
Exercisable (in shares) | shares	1,975,811
Wtd. Average Exercise Price
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 62.29
Granted (in dollars per share) | $ / shares	98.42
Exercised (in dollars per share) | $ / shares	33.86
Expired or forfeited (in dollars per share) | $ / shares	82.92
Outstanding at end of period (in dollars per share) | $ / shares	72.17	$ 62.29
Exercisable (in dollars per share) | $ / shares	$ 42.71
Wtd. Average Remaining Contractual Life (in years)
Outstanding	7 years 8 months 12 days	7 years 9 months 18 days
Exercisable at end of period	6 years
Intrinsic Value (millions)
Outstanding | $	$ 144.8	$ 149.7
Exercisable at end of period | $	$ 112.5

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CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss (Note 13)	Retained Earnings	Non-controlling Interest
Balance at beginning of period (in shares) at Dec. 31, 2017		63,624,000
Balance at beginning of period at Dec. 31, 2017	$ 936,481	$ 636	$ 905,423	$ (136,470)	$ 161,182	$ 5,710
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)		436,000
Exercise of common stock options and other	1,389	$ 5	1,384
Stock-based compensation	6,299		6,299
Net income (loss)	39,215				38,981	234
Other comprehensive income (loss), net of tax	22,079			21,731		348
Balance at end of period (in shares) at Mar. 31, 2018		64,060,000
Balance at end of period at Mar. 31, 2018	944,876	$ 641	913,106	(114,739)	139,576	6,292
Balance at beginning of period (in shares) at Dec. 31, 2017		63,624,000
Balance at beginning of period at Dec. 31, 2017	936,481	$ 636	905,423	(136,470)	161,182	5,710
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	83,351
Acquisition of noncontrolling interest	0
Balance at end of period (in shares) at Sep. 30, 2018		64,915,000
Balance at end of period at Sep. 30, 2018	980,376	$ 649	940,444	(150,298)	183,048	6,533
Balance at beginning of period (in shares) at Mar. 31, 2018		64,060,000
Balance at beginning of period at Mar. 31, 2018	944,876	$ 641	913,106	(114,739)	139,576	6,292
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)		126,000
Exercise of common stock options and other	0	$ 1	(1)
Stock-based compensation	6,399		6,399
Net income (loss)	42,282				41,977	305
Other comprehensive income (loss), net of tax	(34,097)			(33,840)		(257)
Stock award distributions net of shares for tax withholding (in shares)		71,000
Stock award distributions, net of shares for tax withholding	(5,337)	$ 1	(5,338)
Balance at end of period (in shares) at Jun. 30, 2018		64,257,000
Balance at end of period at Jun. 30, 2018	954,123	$ 643	914,166	(148,579)	181,553	6,340
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)		568,000
Exercise of common stock options and other	17,740	$ 5	17,735
Stock-based compensation	8,544		8,544
Net income (loss)	1,854				1,495	359
Other comprehensive income (loss), net of tax	(1,885)			(1,719)		(166)
Stock award distributions net of shares for tax withholding (in shares)		90,000
Stock award distributions, net of shares for tax withholding	0	$ 1	(1)
Balance at end of period (in shares) at Sep. 30, 2018		64,915,000
Balance at end of period at Sep. 30, 2018	980,376	$ 649	940,444	(150,298)	183,048	6,533
Balance at beginning of period (in shares) at Dec. 31, 2018		65,395,000
Balance at beginning of period at Dec. 31, 2018	1,051,420	$ 654	960,535	(170,659)	254,500	6,390
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)		219,000
Exercise of common stock options and other	10,670	$ 2	10,668
Stock-based compensation (in shares)		33,000
Stock-based compensation	9,247		9,247
Net income (loss)	44,256				44,084	172
Other comprehensive income (loss), net of tax	(429)			(384)		(45)
Balance at end of period (in shares) at Mar. 31, 2019		65,647,000
Balance at end of period at Mar. 31, 2019	1,115,164	$ 656	980,450	(169,624)	297,165	6,517
Balance at beginning of period (in shares) at Dec. 31, 2018		65,395,000
Balance at beginning of period at Dec. 31, 2018	$ 1,051,420	$ 654	960,535	(170,659)	254,500	6,390
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)	464,564
Net income (loss)	$ 168,318
Acquisition of noncontrolling interest	6,565
Balance at end of period (in shares) at Sep. 30, 2019		63,241,000
Balance at end of period at Sep. 30, 2019	946,743	$ 632	975,233	(197,603)	168,481	0
Balance at beginning of period (in shares) at Mar. 31, 2019		65,647,000
Balance at beginning of period at Mar. 31, 2019	1,115,164	$ 656	980,450	(169,624)	297,165	6,517
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)		84,000
Exercise of common stock options and other	4,075	$ 1	4,074
Stock-based compensation (in shares)		5,000
Stock-based compensation	9,916		9,916
Net income (loss)	41,055				41,128	(73)
Other comprehensive income (loss), net of tax	(1,235)			(1,356)		121
Acquisition of noncontrolling interest	(5,275)		1,290			(6,565)
Balance at end of period (in shares) at Jun. 30, 2019		65,736,000
Balance at end of period at Jun. 30, 2019	1,163,700	$ 657	995,730	(170,980)	338,293	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options and other (in shares)		328,000
Exercise of common stock options and other	15,415	$ 6	15,409
Stock-based compensation (in shares)		257,000
Stock-based compensation	11,244		11,244
Net income (loss)	83,007				83,007
Other comprehensive income (loss), net of tax	(26,623)			(26,623)
Repurchase and retirement of common stock (in shares)		(3,080,000)
Repurchase and retirement of common stock	(300,000)	$ (31)	(47,150)		(252,819)
Balance at end of period (in shares) at Sep. 30, 2019		63,241,000
Balance at end of period at Sep. 30, 2019	$ 946,743	$ 632	$ 975,233	$ (197,603)	$ 168,481	$ 0

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CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	63,240,925	65,394,526
Common stock, shares outstanding	63,240,925	65,394,526

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Basis of Presentation - Schedule of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 181,767	$ 144,221	$ 127,517	$ 192,229
Restricted cash	23	488	318	661
Total cash, cash equivalents, and restricted cash	$ 181,790	$ 144,709	$ 127,835	$ 192,890

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Significant Accounting Policies - Schedule of maturities of lease liabilities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Accounting Policies [Abstract]
2019 (remaining)	$ 9,192
2020	42,946
2021	39,210
2022	31,454
2023	25,891
Thereafter	93,864
Total lease payments	242,557
Less imputed interest	(38,153)
Total	$ 204,404

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Concentration of Credit Risk (Details) - Customer Concentration Risk - Accounts receivable and unbilled receivables	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Customer A
Concentration risk
Concentration risk percentage	10.60%	12.20%
Customer B
Concentration risk
Concentration risk percentage	15.50%	11.40%

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On October 28, 2019, the Company refinanced its 2016 Credit Facilities. The Company entered into a new credit agreement with a syndicate of banks for an aggregate principal amount of $1,000.0 million of first lien term debt due in 2024, or the 2019 First Lien Term Loan, and a five-year $750.0 million revolving line of credit, collectively known as the 2019 Credit Facilities. The proceeds from the 2019 Credit Facilities were primarily used to repay the 2016 First Lien Term Loan principal balance of $1,191.5 million. The 2019 Credit Facilities also contain customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to LIBOR or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.0% to 2.0%, in the case of LIBOR loans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of 1, 2, 3 or 6 month base interest rates. The 2019 First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installments beginning on March 31, 2020 through September 30, 2024, with the remaining balance due at maturity.

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Derivatives

9 Months Ended

Sep. 30, 2019

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 arising from movement in market interest rates. Accordingly, the Company has instituted an interest rate hedging program that uses interest rate swaps designated as cash flow hedges to mitigate interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments.

The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2019 and December 31, 2018 (in thousands):

		September 30, 2019					December 31, 2018
	Balance Sheet Classification	Notional amount		Asset/(Liability)			Notional amount		Asset/(Liability)
Derivatives in an asset position:	Other assets	$	—	$	—		$	625,000	$	3,318
Derivatives in a liability position:	Other long-term liabilities	625,000		(3,805		)	—		—
		$	625,000	$	(3,805	)	$	625,000	$	3,318

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

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	2019			2018			2019			2018
Amount of pre-tax (loss) gain recognized in other comprehensive income	$	(266	)	$	1,422		$	(6,190	)	$	7,617
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net	(1,611		)	(1,463		)	(4,028		)	(4,980		)

The Company expects that $9.5 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months.

The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three and nine months ended September 30, 2019 and 2018, respectively, is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest expense, net	$	(12,974	)	$	(14,423	)	$	(37,834	)	$	(43,860	)
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
Loss reclassified from accumulated other comprehensive loss into interest expense, net	(1,611		)	(1,463		)	(4,028		)	(4,980		)

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

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 liabilities that are measured on a recurring basis as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Liabilities:
Interest rate swaps	$	—	$	3,805	$	—	$	3,805
Total	$	—	$	3,805	$	—	$	3,805

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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustments, tax	$ 2,183		$ 2,447
Unrealized (losses) gains on derivative instruments, tax (benefit)	(13)		(1,624)
Unrealized (losses) gains on derivative instruments, tax (benefit)		$ 381		$ 2,004
Losses on derivatives included in net income, tax	$ 398		$ 1,056
Losses on derivatives included in net income, tax		$ 393		$ 1,314

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CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 181,767	$ 144,221
Restricted cash	23	488
Accounts receivable and unbilled services, net	702,636	568,099
Other current assets	76,489	69,547
Total current assets	960,915	782,355
Fixed assets, net	176,745	154,764
Lease right-of-use assets, net	181,813	0
Goodwill	1,484,506	1,494,762
Intangible assets, net	649,295	704,446
Other assets	47,182	50,140
Total assets	3,500,456	3,186,467
Current liabilities:
Accounts payable	58,565	43,734
Accrued expenses and other current liabilities	304,431	413,783
Current portion of operating lease liabilities	34,708	0
Advanced billings	474,999	441,357
Total current liabilities	872,703	898,874
Long-term debt, net	1,388,395	1,082,384
Long-term portion of operating lease liabilities	169,696	0
Deferred tax liabilities	73,522	100,712
Other long-term liabilities	49,397	53,077
Total liabilities	2,553,713	2,135,047
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock (100,000,000 authorized shares; $0.01 par value) Issued and outstanding -- none	0	0
Common stock (1,000,000,000 authorized shares; $0.01 par value) Issued and outstanding -- 65,735,974 and 65,394,526 at June 30, 2019 and December 31, 2018, respectively	632	654
Additional paid-in capital	975,233	960,535
Accumulated other comprehensive loss	(197,603)	(170,659)
Retained earnings	168,481	254,500
Equity attributable to PRA Health Sciences, Inc. stockholders	946,743	1,045,030
Noncontrolling interest	0	6,390
Total stockholders' equity	946,743	1,051,420
Total liabilities and stockholders' equity	$ 3,500,456	$ 3,186,467

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Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stock-based compensation
Total stock-based compensation expense	$ 11,244	$ 8,543	$ 30,407	$ 21,242
Direct costs
Stock-based compensation
Total stock-based compensation expense	3,685	2,451	9,780	6,900
Selling, general and administrative
Stock-based compensation
Total stock-based compensation expense	7,559	5,319	20,627	13,569
Transaction-related costs
Stock-based compensation
Total stock-based compensation expense	$ 0	$ 773	$ 0	$ 773

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Stock-Based Compensation - Stock Option and RSA/RSU Activity (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issuance authorized (in shares)		2,000,000
Options granted (in shares)	1,150,000
Restricted Stock Awards (RSAs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards granted in period (in shares)	352,036
Total grant date fair value of awards granted	$ 34.2
Employee stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total grant date fair value of awards granted	$ 37.8

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Accounts Receivable, Unbilled Services and Advanced Billings - Schedules (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Accounts receivable	$ 557,077	$ 437,001
Unbilled services	147,952	133,147
Total accounts receivable and unbilled services	705,029	570,148
Less allowance for doubtful accounts	(2,393)	(2,049)
Total accounts receivable and unbilled services, net	702,636	568,099
Advanced billings	$ 474,999	$ 441,357

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Significant Accounting Policies - Additional Information (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease not yet commenced	$ 0.5
Operating lease not yet commenced, term of contract	2 years
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, initial term of contract	3 years
Operating lease, remaining term of contract	1 year
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, initial term of contract	20 years
Operating lease, remaining term of contract	17 years

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Significant Accounting Policies - Schedule of future non-cancelable rent obligations as determined under ASC 840 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Accounting Policies [Abstract]
2019	$ 43,675
2020	40,948
2021	37,469
2022	30,238
2023	24,235
Thereafter	90,978
Total lease payments	$ 267,543

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Accumulated Other Comprehensive Loss - Narrative (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Increase (decrease) in other comprehensive loss before reclassifications	$ 31,335
Foreign currency translation | British Pound
Accumulated Other Comprehensive Income (Loss) [Line Items]
Change in valuation of U.S. Dollar during the period	(3.40%)
Increase (decrease) in other comprehensive loss before reclassifications	$ 7,400
Foreign currency translation | Euro
Accumulated Other Comprehensive Income (Loss) [Line Items]
Change in valuation of U.S. Dollar during the period	(4.60%)
Increase (decrease) in other comprehensive loss before reclassifications	$ 15,700
Foreign currency translation | Canadian Dollar
Accumulated Other Comprehensive Income (Loss) [Line Items]
Change in valuation of U.S. Dollar during the period	3.00%
Increase (decrease) in other comprehensive loss before reclassifications	$ (1,100)
Foreign currency translation | Russian Ruble
Accumulated Other Comprehensive Income (Loss) [Line Items]
Change in valuation of U.S. Dollar during the period	7.30%
Increase (decrease) in other comprehensive loss before reclassifications	$ (1,600)

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Subsequent Events (Details) - USD ($)			9 Months Ended
	Oct. 28, 2019	Oct. 25, 2019	Sep. 30, 2019	Dec. 31, 2018
Long-term debt
Total debt			$ 1,391,533,000	$ 1,086,533,000
Credit Facilities
Long-term debt
Interest period, option one			1 month
Interest period, option two			2 months
Interest period, option three			3 months
Interest period, option four			6 months
Credit Facilities | Revolving Credit Facility
Long-term debt
Maximum borrowing capacity			$ 225,000,000.0
Interest period, option one			1 month
Interest period, option two			2 months
Interest period, option three			3 months
Interest period, option four			6 months
Credit Facilities | LIBOR | Minimum
Long-term debt
Applicable margin on variable rate basis			1.00%
Credit Facilities | LIBOR | Maximum
Long-term debt
Applicable margin on variable rate basis			2.00%
Credit Facilities | ABR | Minimum
Long-term debt
Applicable margin on variable rate basis			0.00%
Credit Facilities | ABR | Maximum
Long-term debt
Applicable margin on variable rate basis			1.00%
Term loans, first lien
Long-term debt
Total debt			$ 1,191,533,000	$ 916,533,000
Subsequent Event | Credit Facilities
Long-term debt
Interest period, option one	1 month
Interest period, option two	2 months
Interest period, option three	3 months
Interest period, option four	6 months
Subsequent Event | Credit Facilities | Term Debt
Long-term debt
Aggregate principal amount	$ 1,000,000,000.0
Periodic payment, percent of original balance	2.50%
Subsequent Event | Credit Facilities | Revolving Credit Facility
Long-term debt
Term		5 years
Maximum borrowing capacity	$ 750,000,000.0
Subsequent Event | Credit Facilities | LIBOR | Minimum
Long-term debt
Applicable margin on variable rate basis	1.00%
Subsequent Event | Credit Facilities | LIBOR | Maximum
Long-term debt
Applicable margin on variable rate basis	2.00%
Subsequent Event | Credit Facilities | ABR | Minimum
Long-term debt
Applicable margin on variable rate basis	0.00%
Subsequent Event | Credit Facilities | ABR | Maximum
Long-term debt
Applicable margin on variable rate basis	1.00%
Subsequent Event | Term loans, first lien
Long-term debt
Total debt	$ 1,191,500,000

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Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	$ 761,118	$ 765,994
Accumulated Amortization	(229,833)	(179,558)
Net Amount	531,285	586,436
Trade names (indefinite-lived)	118,010	118,010
Total intangible assets, gross	879,128	884,004
Total intangible assets, net	649,295	704,446
Customer relationships
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	551,020	555,915
Accumulated Amortization	(127,070)	(103,248)
Net Amount	423,950	452,667
Trade names (finite-lived)
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	28,524	28,505
Accumulated Amortization	(15,636)	(12,810)
Net Amount	12,888	15,695
Patient list and other intangibles
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	44,474	44,474
Accumulated Amortization	(34,476)	(30,939)
Net Amount	9,998	13,535
Database
Goodwill And Intangible Assets
Total finite-lived intangible assets, gross	137,100	137,100
Accumulated Amortization	(52,651)	(32,561)
Net Amount	$ 84,449	$ 104,539

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Accounts Receivable, Unbilled Services and Advanced Billings - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Contract with customer, asset, not past due	$ 75,100		$ 75,100		$ 66,600
Contract asset impairment losses	0	$ 0	0	$ 0
Advanced billings	474,999		474,999		$ 441,357
Revenue related to contract liabilities			398,400	382,500
Performance obligation satisfied in previous period	14,800	$ 24,400	$ 65,200	$ 57,300
Performance obligation, description of timing			The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year.
Accounting Standards Update 2014-09 | Reclassification from adoption of ASC 606
Accounts, Notes, Loans and Financing Receivable [Line Items]
Advanced billings	$ 33,600		$ 33,600

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Revolving Credit Facilities and Long-Term Debt - 2016 Credit Facilities and Revolver (Details) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 03, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Long-term debt
Outstanding borrowings	$ 300,000,000.0
Loss on modification or extinguishment of debt	$ 1,900,000	$ 1,855,000	$ 454,000	$ 1,855,000	$ 454,000
Credit Facilities
Long-term debt
Interest period, option one				1 month
Interest period, option two				2 months
Interest period, option three				3 months
Interest period, option four				6 months
Weighted average interest rate		3.75%		3.75%
Credit Facilities | LIBOR | Minimum
Long-term debt
Applicable margin on variable rate basis				1.00%
Credit Facilities | LIBOR | Maximum
Long-term debt
Applicable margin on variable rate basis				2.00%
Credit Facilities | ABR | Minimum
Long-term debt
Applicable margin on variable rate basis				0.00%
Credit Facilities | ABR | Maximum
Long-term debt
Applicable margin on variable rate basis				1.00%
Revolving Credit Facility | Credit Facilities
Long-term debt
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
Maximum borrowing capacity		225,000,000.0		225,000,000.0
Outstanding letters of credit		$ 5,200,000		$ 5,200,000		$ 5,400,000
Revolving Credit Facility | Credit Facilities | Minimum
Long-term debt
Commitment fee				0.20%
Revolving Credit Facility | Credit Facilities | Maximum
Long-term debt
Commitment fee				0.40%
Revolving Credit Facility | Credit Facilities | LIBOR | Minimum
Long-term debt
Variable base rate minimum floor				0.00%

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Basis of Presentation - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Recently Implemented Accounting Pronouncements
Operating lease liability	$ 204,404
Current lease liabilities	34,708		$ 0
Non-current lease liabilities	169,696		0
Lease right-of-use assets, net	$ 181,813		0
Accounting Standards Update 2016-02
Recently Implemented Accounting Pronouncements
Operating lease liability		$ 211,700
Current lease liabilities		31,900
Non-current lease liabilities		179,800
Lease right-of-use assets, net		187,100
Lease obligations			25,700
Prepaid rent			$ 1,100
Accounting Standards Update 2018-02
Recently Implemented Accounting Pronouncements
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income		0
Accumulated Other Comprehensive Loss (Note 13)
Recently Implemented Accounting Pronouncements
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income		1,419
Accumulated Other Comprehensive Loss (Note 13) | Accounting Standards Update 2018-02
Recently Implemented Accounting Pronouncements
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income		$ 1,419

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

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, 2018	$	1,017,903		$	476,859	$	1,494,762
Currency translation	(10,256		)	—		(10,256		)
Balance at September 30, 2019	$	1,007,647		$	476,859	$	1,484,506

Schedule of intangible assets

Intangible assets consist of the following (in thousands):

	September 30, 2019							December 31, 2018
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer relationships	$	551,020	$	(127,070	)	$	423,950	$	555,915	$	(103,248	)	$	452,667
Trade names (finite-lived)	28,524		(15,636		)	12,888		28,505		(12,810		)	15,695
Patient list and other intangibles	44,474		(34,476		)	9,998		44,474		(30,939		)	13,535
Database	137,100		(52,651		)	84,449		137,100		(32,561		)	104,539
Total finite-lived intangible assets	761,118		(229,833		)	531,285		765,994		(179,558		)	586,436
Trade names (indefinite-lived)	118,010		—			118,010		118,010		—			118,010
Total intangible assets	$	879,128	$	(229,833	)	$	649,295	$	884,004	$	(179,558	)	$	704,446

Schedule of estimated future amortization expense

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

2019 (remaining)	$	17,079
2020	68,711
2021	63,619
2022	49,244
2023	37,515
2024 and thereafter	295,117
Total	$	531,285

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2019

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, 2019 and December 31, 2018 (in thousands):

		September 30, 2019					December 31, 2018
	Balance Sheet Classification	Notional amount		Asset/(Liability)			Notional amount		Asset/(Liability)
Derivatives in an asset position:	Other assets	$	—	$	—		$	625,000	$	3,318
Derivatives in a liability position:	Other long-term liabilities	625,000		(3,805		)	—		—
		$	625,000	$	(3,805	)	$	625,000	$	3,318

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

The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three and nine months ended September 30, 2019 and 2018, respectively, is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest expense, net	$	(12,974	)	$	(14,423	)	$	(37,834	)	$	(43,860	)
Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts):
Loss reclassified from accumulated other comprehensive loss into interest expense, net	(1,611		)	(1,463		)	(4,028		)	(4,980		)

The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income for the three and nine months ended September 30, 2019 and 2018 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	2019			2018			2019			2018
Amount of pre-tax (loss) gain recognized in other comprehensive income	$	(266	)	$	1,422		$	(6,190	)	$	7,617
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net	(1,611		)	(1,463		)	(4,028		)	(4,980		)

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Stockholders' Equity

9 Months Ended

Sep. 30, 2019

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.

Share Repurchase Program

On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing the repurchase of up to $500.0 million of the Company's common stock in open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amount of its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31, 2021.

On September 6, 2019, KKR PRA Investors L.P., or KKR, sold 6,666,684 shares of the Company's common stock as part of a secondary offering, or the Secondary Offering, of which the Company repurchased from the underwriter, and subsequently retired, 3,079,765 shares at a price of $97.41 per share, for an aggregate purchase price of approximately $300.0 million. The Company incurred expenses in connection with the Secondary Offering of $0.6 million during the three and nine months ended September 30, 2019. The expenses are included in transaction-related costs in the accompanying consolidated condensed statement of operations.

As of September 30, 2019, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program.

Noncontrolling Interest

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

	2019			2018
Balance as of January 1,	$	6,390		$	5,710
Comprehensive income
Net income	99			898
Foreign currency adjustments, net of income tax	76			(75		)
Acquisition of noncontrolling interest	(6,565		)	—
Balance as of September 30,	$	—		$	6,533

On June 1, 2017, the Company and Takeda Pharmaceutical Company Ltd., or Takeda, 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 effectuated through the creation of a new legal entity, Takeda PRA Development Center KK, or the TDC joint venture. On May 31, 2019, per the terms of the agreement, the TDC joint venture dissolved and the Company acquired Takeda's interest for $4.1 million.

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Concentration of Credit Risk

9 Months Ended

Sep. 30, 2019

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, unbilled services, and derivatives. As of September 30, 2019, substantially all of the Company’s cash and cash equivalents and derivatives 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.

There were no individual customers for which revenue was greater than 10% of consolidated revenue in the three and nine months ended September 30, 2019 and 2018.

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

	September 30,		December 31,
	2019		2018
Customer A	10.6	%	12.2	%
Customer B	15.5	%	11.4	%

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Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Reconciliation of cash, cash equivalents, and restricted cash reported

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

	September 30,				December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	181,767	$	127,517	$	144,221	$	192,229
Restricted cash	23		318		488		661
Total cash, cash equivalents, and restricted cash	$	181,790	$	127,835	$	144,709	$	192,890

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Net Income Per Share

9 Months Ended

Sep. 30, 2019

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 plans.

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Basic weighted average common shares outstanding	64,771	64,261	65,096	63,891
Effect of dilutive stock options and other awards under share-based compensation programs	1,442	2,245	1,511	2,367
Diluted weighted average common shares outstanding	66,213	66,506	66,607	66,258
Anti-dilutive shares	2,150	987	1,914	1,670

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

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Significant Accounting Policies - Summary of supplemental cash flow information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Accounting Policies [Abstract]
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows	$ 9,772	$ 28,262
Right-of-use assets obtained in exchange for lease obligations	$ 5,100	$ 26,148

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Fair Value Measurements - Non-recurring Fair Value Measurements (Details) - Nonrecurring - Level 3 $ in Millions	Sep. 30, 2019 USD ($)
Assets fair value measurements
Assets fair value	$ 2,133.8
Goodwill	1,484.5
Identifiable intangible assets	$ 649.3

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Commitments and Contingencies (Details) - Tax related claim on export of services provided $ in Millions	Sep. 30, 2019 USD ($)
Commitments and Contingencies
Tax contingency, amount of claim	$ 4.9
Deposit made in tax litigation	$ 4.9

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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Revenue	$ 780,691	$ 717,596	$ 2,266,022	$ 2,142,274
Selling, general and administrative expenses	95,542	92,553	291,439	275,424
Transaction-related costs	572	43,837	572	32,709
Depreciation and amortization expense	29,264	28,270	85,462	84,163
Loss (gain) on disposal of fixed assets, net	256	(15)	900	21
Income from operations	95,788	38,812	262,526	184,556
Interest expense, net	(12,974)	(14,423)	(37,834)	(43,860)
Loss on modification or extinguishment of debt	(1,855)	(454)	(1,855)	(454)
Foreign currency gains (losses), net	5,408	(1,809)	1,864	(1,416)
Other income (expense), net	15	(68)	(66)	(201)
Income before income taxes and equity in income of unconsolidated joint ventures	86,382	22,058	224,635	138,625
Provision for income taxes	3,375	20,248	56,317	55,392
Income before equity in income of unconsolidated joint ventures	83,007	1,810	168,318	83,233
Equity in income of unconsolidated joint ventures, net of tax	0	44	0	118
Net income	83,007	1,854	168,318	83,351
Net income attributable to noncontrolling interest	0	(359)	(99)	(898)
Net income attributable to PRA Health Sciences, Inc.	$ 83,007	$ 1,495	$ 168,219	$ 82,453
Net income per share attributable to common stockholders:
Basic (in dollars per share)	$ 1.28	$ 0.02	$ 2.58	$ 1.29
Diluted (in dollars per share)	$ 1.25	$ 0.02	$ 2.53	$ 1.24
Weighted average common shares outstanding:
Basic (in shares)	64,771	64,261	65,096	63,891
Diluted (in shares)	66,213	66,506	66,607	66,258
Direct costs (exclusive of depreciation and amortization)
Cost of revenues	$ 389,304	$ 371,422	$ 1,153,441	$ 1,134,509
Reimbursable expenses
Cost of revenues	$ 169,965	$ 142,717	$ 471,682	$ 430,892

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 168,318	$ 83,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	85,462	84,163
Amortization of debt issuance costs	1,364	1,619
Amortization of terminated interest rate swaps	4,960	5,478
Stock-based compensation expense	30,407	20,469
Change in fair value of acquisition-related contingent consideration	0	32,868
Non-cash transaction-related costs	0	773
Unrealized foreign currency gains, net	(7,773)	(131)
Non-cash loss on extinguishment of debt	0	454
Deferred income tax (benefit) expense	(25,408)	17,499
Equity in income of unconsolidated joint ventures	0	(118)
Other reconciling items	792	52
Changes in operating assets and liabilities:
Accounts receivable, unbilled services and advanced billings	(104,589)	(12,552)
Other operating assets and liabilities	(4,289)	(319)
Payment of acquisition-related contingent consideration	(83,249)	(35,029)
Net cash provided by operating activities	65,995	198,577
Cash flows from investing activities:
Purchase of fixed assets	(61,210)	(40,086)
Proceeds received for interest on interest rate swap, net	1,076	125
Distributions from unconsolidated joint ventures	418	0
Proceeds from the sale of marketable securities	0	183
Proceeds from the sale of fixed assets	26	43
Net cash used in investing activities	(59,690)	(39,735)
Cash flows from financing activities:
Payment of acquisition-related contingent consideration	0	(79,663)
Repurchase and retirement of common stock	(300,000)	0
Borrowings on accounts receivable financing agreement	30,000	60,000
Borrowings on line of credit	40,000	0
Proceeds from issuance of long-term debt	300,000	0
Repayments on accounts receivable financing agreement	0	(10,000)
Repayments on line of credit	(40,000)	(91,500)
Repayments of long-term debt	(25,000)	(114,395)
Taxes paid related to net shares settlement of equity awards	0	(5,337)
Acquisition of noncontrolling interest	(4,138)	0
Proceeds from stock issued under employee stock purchase plan and stock option exercises	30,180	19,273
Net cash provided by (used in) financing activities	31,042	(221,622)
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash	(266)	(2,275)
Change in cash, cash equivalents, and restricted cash	37,081	(65,055)
Cash, cash equivalents, and restricted cash, beginning of period	144,709	192,890
Cash, cash equivalents, and restricted cash, end of period	$ 181,790	$ 127,835

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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, 2019	Dec. 31, 2018
Awards
Outstanding at beginning of period (in shares)	344,250
Granted (in shares)	352,036
Forfeited (in shares)	(40,500)
Vested (in shares)	(22,750)
Outstanding at end of period (in shares)	633,036
Wtd. Average Grant-Date Fair Value
Outstanding at beginning of period (in dollars per share)	$ 81.39
Granted (in dollars per share)	97.06
Forfeited (in dollars per share)	80.72
Vested (in dollars per share)	61.57
Outstanding at end of period (in dollars per share)	$ 90.87
Intrinsic Value
Outstanding	$ 62.8	$ 31.7

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Stockholders' Equity (Details) - USD ($)			3 Months Ended	9 Months Ended
	Sep. 06, 2019	May 31, 2019	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Aug. 30, 2019	Dec. 31, 2018
Stockholders' Equity Note [Abstract]
Common stock, shares authorized			1,000,000,000	1,000,000,000			1,000,000,000
Common stock, par value (in dollars per share)			$ 0.01	$ 0.01			$ 0.01
Preferred stock, shares authorized			100,000,000	100,000,000			100,000,000
Preferred stock, par value (in dollars per share)			$ 0.01	$ 0.01			$ 0.01
Share Repurchase Program, authorized amount						$ 500,000,000.0
Secondary public offering, number of shares issued	6,666,684
Number of common stock shares repurchased and retired	3,079,765
Purchase price (in dollars per share)	$ 97.41
Purchase price of common stock repurchased	$ 300,000,000.0			$ 300,000,000	$ 0
Secondary public offering, expenses			$ 600,000	600,000
Share Repurchase Program, remaining authorized amount			$ 200,000,000.0	200,000,000.0
Acquisition of joint venture		$ 4,100,000		$ 4,138,000	$ 0

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Revolving Credit Facilities and Long-Term Debt - Schedule of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Long-term debt
Total debt	$ 1,391,533	$ 1,086,533
Less current portion of long-term debt	0	0
Total long-term debt	1,391,533	1,086,533
Less debt issuance costs	(3,138)	(4,149)
Long-term debt, net	1,388,395	1,082,384
Term loans, first lien
Long-term debt
Total debt	1,191,533	916,533
Accounts receivable financing agreement
Long-term debt
Total debt	$ 200,000	$ 170,000

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Goodwill and Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Changes in carrying amount of goodwill
Balance at beginning of period	$ 1,494,762
Currency translation	(10,256)
Balance at end of period	1,484,506
Clinical Research
Changes in carrying amount of goodwill
Balance at beginning of period	1,017,903
Currency translation	(10,256)
Balance at end of period	1,007,647
Data Solutions
Changes in carrying amount of goodwill
Balance at beginning of period	476,859
Currency translation	0
Balance at end of period	$ 476,859

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Derivatives - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Interest rate swap | Cash flow hedging
Derivative [Line Items]
Unrealized losses expected to be reclassified out of accumulated other comprehensive loss into interest expense over the next 12 months	$ 9.5

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Segments (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 03, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)
Segment Reporting [Abstract]
Reportable segments | segment				2
Segment Reporting Information [Line Items]
Revenue		$ 780,691	$ 717,596	$ 2,266,022	$ 2,142,274
Selling, general and administrative expenses		95,542	92,553	291,439	275,424
Transaction-related costs		572	43,837	572	32,709
Depreciation and amortization expense		29,264	28,270	85,462	84,163
Loss (gain) on disposal of fixed assets, net		256	(15)	900	21
Income from operations		95,788	38,812	262,526	184,556
Interest expense, net		(12,974)	(14,423)	(37,834)	(43,860)
Loss on modification or extinguishment of debt	$ (1,900)	(1,855)	(454)	(1,855)	(454)
Foreign currency gains (losses), net		5,408	(1,809)	1,864	(1,416)
Other income (expense), net		15	(68)	(66)	(201)
Income before income taxes and equity in income of unconsolidated joint ventures		86,382	22,058	224,635	138,625
Direct costs (exclusive of depreciation and amortization)
Segment Reporting Information [Line Items]
Cost of revenues		389,304	371,422	1,153,441	1,134,509
Reimbursable expenses
Segment Reporting Information [Line Items]
Cost of revenues		169,965	142,717	471,682	430,892
Clinical Research
Segment Reporting Information [Line Items]
Revenue		719,005	656,979	2,087,863	1,966,762
Data Solutions
Segment Reporting Information [Line Items]
Revenue		61,686	60,617	178,159	175,512
Operating segments
Segment Reporting Information [Line Items]
Revenue		780,691	717,596	2,266,022	2,142,274
Segment profit		221,422	203,457	640,899	576,873
Operating segments | Direct costs (exclusive of depreciation and amortization)
Segment Reporting Information [Line Items]
Cost of revenues		389,304	371,422	1,153,441	1,134,509
Operating segments | Reimbursable expenses
Segment Reporting Information [Line Items]
Cost of revenues		169,965	142,717	471,682	430,892
Operating segments | Clinical Research
Segment Reporting Information [Line Items]
Revenue		719,005	656,979	2,087,863	1,966,762
Segment profit		206,345	184,225	593,852	524,955
Operating segments | Clinical Research | Direct costs (exclusive of depreciation and amortization)
Segment Reporting Information [Line Items]
Cost of revenues		342,695	330,037	1,022,329	1,010,915
Operating segments | Clinical Research | Reimbursable expenses
Segment Reporting Information [Line Items]
Cost of revenues		169,965	142,717	471,682	430,892
Operating segments | Data Solutions
Segment Reporting Information [Line Items]
Revenue		61,686	60,617	178,159	175,512
Segment profit		15,077	19,232	47,047	51,918
Operating segments | Data Solutions | Direct costs (exclusive of depreciation and amortization)
Segment Reporting Information [Line Items]
Cost of revenues		46,609	41,385	131,112	123,594
Operating segments | Data Solutions | Reimbursable expenses
Segment Reporting Information [Line Items]
Cost of revenues		0	0	0	0
Segment Reconciling Items
Segment Reporting Information [Line Items]
Selling, general and administrative expenses		95,542	92,553	291,439	275,424
Transaction-related costs		572	43,837	572	32,709
Depreciation and amortization expense		29,264	28,270	85,462	84,163
Loss (gain) on disposal of fixed assets, net		256	(15)	900	21
Income from operations		95,788	38,812	262,526	184,556
Interest expense, net		(12,974)	(14,423)	(37,834)	(43,860)
Loss on modification or extinguishment of debt		(1,855)	(454)	(1,855)	(454)
Foreign currency gains (losses), net		5,408	(1,809)	1,864	(1,416)
Other income (expense), net		$ 15	$ (68)	$ (66)	$ (201)

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective income tax rate was 25.1% and 40.0% for the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate for the nine months ended September 30, 2018 included the effect of an increase in the fair value of the earn-out liability related to the stock acquisition of Symphony Health, which was not included in taxable income, but instead increased tax stock basis. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 21% for the nine months ended September 30, 2019 is primarily due to (i) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, (ii) state income taxes, and (iii) the effects of other jurisdictional and permanent differences, including excess tax benefits. Significant judgment is required related to the application of the recent U.S. tax reform, or the Act, particularly with respect to GILTI and the base erosion anti-abuse tax, or BEAT, provisions. If changes occur in the Company’s tax structure, the structure of its arrangements, interpretations, or regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision. In the quarter ended September 30, 2019, the Company updated its analysis of BEAT and its impact on the annual estimated effective tax rate for the 2019 tax year to reflect revisions to contractual arrangements.

GAAP requires a two-step approach when evaluating uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence demonstrates that it is more likely than not that the position will be sustained upon audit, including resolution of any related appeals or litigation processes. The second step is to

quantify the amount of tax benefit to recognize as the amount that is cumulatively more than 50% likely to be realized upon ultimate settlement with the taxing authorities. During the nine months ended September 30, 2019, the liability for uncertain tax positions increased by $18.7 million. This increase in the liability for uncertain tax positions had no impact on income tax expense for the nine months ended September 30, 2019 as it was previously accrued. If such uncertain positions were recognized, they would impact the effective tax rate.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2019

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, 2018	$	1,017,903		$	476,859	$	1,494,762
Currency translation	(10,256		)	—		(10,256		)
Balance at September 30, 2019	$	1,007,647		$	476,859	$	1,484,506

There are no accumulated impairment charges as of September 30, 2019 and December 31, 2018.

Intangible Assets

Intangible assets consist of the following (in thousands):

	September 30, 2019							December 31, 2018
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer relationships	$	551,020	$	(127,070	)	$	423,950	$	555,915	$	(103,248	)	$	452,667
Trade names (finite-lived)	28,524		(15,636		)	12,888		28,505		(12,810		)	15,695
Patient list and other intangibles	44,474		(34,476		)	9,998		44,474		(30,939		)	13,535
Database	137,100		(52,651		)	84,449		137,100		(32,561		)	104,539
Total finite-lived intangible assets	761,118		(229,833		)	531,285		765,994		(179,558		)	586,436
Trade names (indefinite-lived)	118,010		—			118,010		118,010		—			118,010
Total intangible assets	$	879,128	$	(229,833	)	$	649,295	$	884,004	$	(179,558	)	$	704,446

Amortization expense was $17.1 million and $51.4 million for the three and nine months ended September 30, 2019, respectively, and $17.9 million and $54.0 million for the three and nine months ended September 30, 2018, respectively.

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

2019 (remaining)	$	17,079
2020	68,711
2021	63,619
2022	49,244
2023	37,515
2024 and thereafter	295,117
Total	$	531,285

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Significant accounting policies are detailed in "Note 2: Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2018. Significant changes to the Company's accounting policies as a result of adopting ASC 842 are discussed below:

On January 1, 2019, the Company adopted ASC 842 using the revised modified retrospective approach. The revised modified retrospective approach recognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in an entity’s financial statements. In addition, the Company elected the package of practical expedients permitted under the transition guidance within ASC 842, in which the Company need not reassess (i) the historical lease classification, (ii) whether any expired or existing contract is or contains a lease, or (iii) the initial direct costs for any existing leases.

The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three to 20 years and include one or more optional extensions. The Company's leases have remaining lease terms of one year to 17 years. The leases typically include rent escalation clauses and for some markets the leases frequently include periodic market adjustments to the base rent over the term of the lease. In certain instances, the Company subleases space that has been exited or is no longer required. The Company’s sublease income is immaterial.

Upon the initial application of ASC 842 on January 1, 2019, or the transition date, lease liabilities were measured by using the remaining minimum rental payments under ASC 840. The Company’s ASC 840 minimum rental payments include executory costs and rental payments that depend on an index or rate are calculated based on the rate in effect at the transition date. The lease liability is measured at the present value of future lease payments, discounted using the discount rate as of the transition date. In addition to recognizing the lease liability, the Company recognized a corresponding asset representing its right to use the underlying asset over the lease term, referred to as the lease ROU asset. The ROU asset is initially measured as the amount of lease liability, adjusted for any initial lease costs or lease payments made before or at the commencement of the lease, and reduced by any lease incentives and deferred rent. As of the transition date, the Company’s leases consisted of only operating leases and upon recognition of the lease liability and ROU assets, there was no adjustment to retained earnings.

All leases entered into after January 1, 2019 are accounted for under ASC 842. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an underlying asset available for use by a lessee.

At the lease commencement date, a lease liability is recognized based on the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease. As the Company's leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the lease term and economic environment at the lease commencement date. The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. With limited exceptions, the nature of the Company's facility leases is such that there are not economic or other conditions that would indicate that it is reasonably certain at lease commencement that the Company will exercise options to extend the term.

The Company determines if its lease obligations are operating or finance leases at the lease commencement date and considers whether the lease grants an option to purchase the underlying asset that it is reasonably certain to exercise, the remaining economic life of the underlying asset, the present value of the sum of the remaining lease payments and any residual value guaranteed, and the nature of the asset.

The initial measurement of the lease liability is determined based on the future lease payments, which may include lease payments that depend on an index or a rate (such as the consumer price index or other market index). The Company initially measures payments based on an index or rate by using the applicable rate at lease commencement and subsequent changes in such rates are recognized as variable lease costs. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as they are incurred. The Company’s contracts that include a lease component generally include additional services that are transferred to the lessee (e.g., common-area maintenance services), which are

nonlease components. Contracts typically also include other costs and fees that do not provide a separate service to the lessee, such as costs paid by the lessee to reimburse the lessor for administrative costs or payment for the lessor’s costs for property taxes, insurance related to the leased asset, and other lessor costs. The Company elected the practical expedient to account for the lease and nonlease components as a single lease component. At the lease commencement date, the Company recognizes a ROU asset representing its right to use the underlying asset over the lease term. If significant events, changes in circumstances, or other events indicate that the lease term has changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the ROU asset. These reassessment events are typically related to the exercise of optional renewals or significant new investments in leasehold improvements. The costs of services and costs related to reimbursements of the lessor’s cost are generally variable rent obligations, which are excluded from the future lease payments included in the lease liability. For leases with a term of one year or less, or short-term leases, the Company has elected to not recognize the lease liability for these arrangements and the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term.

The total expense for the operating lease liability is recognized on a straight-line basis over the lease term, beginning on the lease commencement date. The Company classifies the lease costs within operating expenses consistent with the classification policies for all other operating costs.

The components of lease expense were as follows for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Lease cost:
Operating lease cost	$	9,788		$	28,583
Short-term lease cost	725			2,033
Variable lease cost	2,175			5,796
Lease income	(47		)	(130		)
Net lease cost	$	12,641		$	36,282

Supplemental cash flow information related to leases was as follows for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows	$	9,772	$	28,262
Right-of-use assets obtained in exchange for lease obligations	5,100		26,148

Supplemental balance sheet information related to leases was as follows as of September 30, 2019:

	As of September 30, 2019
Weighted average remaining lease term	8.0 years
Weighted average discount rate	4.3%

Maturities of operating lease liabilities were as follows as of September 30, 2019 (in thousands):

2019 (remaining)	$	9,192
2020	42,946
2021	39,210
2022	31,454
2023	25,891
Thereafter	93,864
Total lease payments	242,557
Less imputed interest	(38,153		)
Total	$	204,404

As of September 30, 2019, the Company has an additional non-cancelable operating lease that has not yet commenced with future lease payments totaling $0.5 million. This lease will commence in October 2019 with an initial lease term of two years.

As of December 31, 2018, the Company disclosed the following future non-cancelable rent obligations as determined under ASC 840 (in thousands):

2019	$	43,675
2020	40,948
2021	37,469
2022	30,238
2023	24,235
Thereafter	90,978
Total lease payments	$	267,543

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Label	Element	Value
Additional Paid-in Capital [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	$ 905,423,000
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	960,535,000
AOCI Attributable to Parent [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	(136,470,000)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	(169,240,000)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	(158,349,000)
Common Stock [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	636,000
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	$ 654,000
Shares, Outstanding	us-gaap_SharesOutstanding	63,624,000
Shares, Outstanding	us-gaap_SharesOutstanding	65,395,000
Noncontrolling Interest [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	$ 5,710,000
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	6,390,000
Retained Earnings [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	100,595,000
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	253,081,000
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest	(10,891,000)
Accounting Standards Update 2018-02 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(1,419,000)
Accounting Standards Update 2014-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(60,587,000)
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (60,587,000)

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Summary of noncontrolling interest

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

	2019			2018
Balance as of January 1,	$	6,390		$	5,710
Comprehensive income
Net income	99			898
Foreign currency adjustments, net of income tax	76			(75		)
Acquisition of noncontrolling interest	(6,565		)	—
Balance as of September 30,	$	—		$	6,533

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Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2019

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,
	2019	2018	2019	2018
Basic weighted average common shares outstanding	64,771	64,261	65,096	63,891
Effect of dilutive stock options and other awards under share-based compensation programs	1,442	2,245	1,511	2,367
Diluted weighted average common shares outstanding	66,213	66,506	66,607	66,258
Anti-dilutive shares	2,150	987	1,914	1,670

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Revolving Credit Facilities and Long-Term Debt - Schedule of Future Principal Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current maturities of long-term debt:
2019 (remaining)	$ 0
2020	0
2021	1,391,533
2022	0
Total debt	$ 1,391,533	$ 1,086,533

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Goodwill and Intangible Assets - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Accumulated impairment charges	$ 0		$ 0		$ 0
Amortization expense	$ 17,100,000	$ 17,900,000	$ 51,400,000	$ 54,000,000.0

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Derivatives - Cash Flow Hedging Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss)
Interest expense, net	$ (12,974)	$ (14,423)	$ (37,834)	$ (43,860)
Cash flow hedging | Interest rate swap
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss)
Amount of pre-tax (loss) gain recognized in other comprehensive income	(266)		(6,190)
Amount of pre-tax (loss) gain recognized in other comprehensive income		1,422		7,617
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net	$ (1,611)		$ (4,028)
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net		$ (1,463)		$ (4,980)

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Net Income Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Reconciliation of basic to diluted weighted average shares outstanding
Basic weighted average common shares outstanding	64,771	64,261	65,096	63,891
Effect of dilutive stock options and other awards under share-based compensation programs (in shares)	1,442	2,245	1,511	2,367
Diluted weighted average common shares outstanding	66,213	66,506	66,607	66,258
Anti-dilutive shares	2,150	987	1,914	1,670

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Revolving Credit Facilities and Long-Term Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Revolving Credit Facilities and Long-Term Debt

Revolving Credit Facilities and Long-Term Debt

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

	September 30,			December 31,
	2019			2018
Term loans, first lien	$	1,191,533		$	916,533
Accounts receivable financing agreement	200,000			170,000
Total debt	1,391,533			1,086,533
Less current portion of long-term debt	—			—
Total long-term debt	1,391,533			1,086,533
Less debt issuance costs	(3,138		)	(4,149		)
Total long-term debt, net	$	1,388,395		$	1,082,384

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

Current maturities of long-term debt:
2019 (remaining)	$	—
2020	—
2021	1,391,533
2022	—
Total	$	1,391,533

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 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, 2019 and December 31, 2018, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The 2016 Credit Facilities also contain customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.00% to 2.00%, in the case of LIBOR loans, and 0.00% to 1.00%, in the case of ABR loans. The Company has the option of 1, 2, 3 or 6 month base interest rates. For the nine months ended September 30, 2019, the weighted average interest rate on the first lien term loan was 3.75%.

On September 3, 2019, the Company received the proceeds from a $300.0 million incremental term loan under the 2016 Credit Facilities, or the Incremental Borrowing. The Incremental Borrowing was used to fund the share repurchase which is discussed further in "Note 8 - Stockholders' Equity". In accordance with the guidance in ASC 470-50, "Debt - Modifications and Extinguishments," the Incremental Borrowing was accounted for as a debt modification. The Incremental Borrowing resulted in a $1.9 million loss on modification of debt, which consists of third-party fees associated with the transaction. The Company's voluntary term loan prepayments made during 2018 and 2019 fully satisfied all required quarterly principal payments through maturity.

2016 Revolver

The revolving credit facility under the 2016 Credit Facilities, or 2016 Revolver, provides for $225.0 million of potential borrowings and expires on December 6, 2021. The interest rate on the 2016 Revolver is based on the LIBOR with a 0% LIBOR floor or ABR, 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 for unused commitments of 0.2% to 0.4% based on the Company’s debt-to-EBITDA ratio. At September 30, 2019 and December 31, 2018, the Company had no outstanding borrowings under the 2016 Revolver. In addition, at September 30, 2019 and December 31, 2018, the Company had $5.2 million and $5.4 million, respectively, in letters of credit outstanding, which are secured by the 2016 Revolver.

Accounts Receivable Financing Agreement

The Company had $200.0 million and $170.0 million outstanding on its accounts receivable financing agreement as of September 30, 2019 and December 31, 2018, respectively.

Loans under the accounts receivable financing agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Company may prepay loans upon one business day's prior notice and may terminate the accounts receivable financing agreement with 15 days’ prior notice. For the nine months ended September 30, 2019, the weighted average interest rate on the accounts receivable financing agreement was 3.86%.

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

At December 31, 2018, there was $30.0 million of remaining capacity available under the accounts receivable financing agreement. At September 30, 2019, there was no remaining capacity available under the accounts receivable financing agreement.

Fair Value of Debt

The estimated fair value of the Company’s debt and outstanding borrowings under its revolving credit facilities was $1,390.0 million and $1,084.2 million at September 30, 2019 and December 31, 2018, respectively. The fair values of the term loans, borrowings under credit facilities, and accounts receivable financing agreement were determined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

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, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments.

Recurring Fair Value Measurements

The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of September 30, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Liabilities:
Interest rate swaps	$	—	$	3,805	$	—	$	3,805
Total	$	—	$	3,805	$	—	$	3,805

Non-recurring Fair Value Measurements

Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets that are tested for impairment when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets that are tested for impairment annually on October 1 or when a triggering event occurs.

As of September 30, 2019, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $2,133.8 million and are identified as Level 3 assets. These assets are comprised of goodwill of $1,484.5 million and identifiable intangible assets, net of $649.3 million.

Refer to "Note 7 - Revolving Credit Facilities and Long-Term Debt" for additional information regarding the fair value of long-term debt balances.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

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 $4.9 million at September 30, 2019, given that it is not deemed probable the Company will incur a loss related to this case. However, a deposit totaling $4.9 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. 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 favor of the Company for the years 2005 to 2012, and in the period from January to October 2013. The judge from the Superior Court of Justice of Brazil also ruled that the Company must appeal the lower court's verdict for October 2013 and the subsequent periods as the Judiciary Court of Justice of the State of Sao Paulo only reviewed the facts that pertained to the period before October 2013. The Company expects to recover the full amount of the deposit when the case is settled.

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Revolving Credit Facilities and Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of long-term debt

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

	September 30,			December 31,
	2019			2018
Term loans, first lien	$	1,191,533		$	916,533
Accounts receivable financing agreement	200,000			170,000
Total debt	1,391,533			1,086,533
Less current portion of long-term debt	—			—
Total long-term debt	1,391,533			1,086,533
Less debt issuance costs	(3,138		)	(4,149		)
Total long-term debt, net	$	1,388,395		$	1,082,384

Schedule of principal payments on long-term debt due

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

Current maturities of long-term debt:
2019 (remaining)	$	—
2020	—
2021	1,391,533
2022	—
Total	$	1,391,533

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2019

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, Net of Tax			Derivative Instruments, Net of Tax			Total
Balance at December 31, 2018	$	(158,349	)	$	(12,310	)	$	(170,659	)
Impact from adoption of ASU 2018-02, Reclassification of certain tax effects from accumulated other comprehensive income	—			1,419			1,419
Balance at January 1, 2019	(158,349		)	(10,891		)	(169,240		)
Other comprehensive loss before reclassifications	(26,768		)	(4,567		)	(31,335		)
Reclassification adjustments	—			2,972			2,972
Balance at September 30, 2019	$	(185,117	)	$	(12,486	)	$	(197,603	)

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Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Components of lease expense

Supplemental balance sheet information related to leases was as follows as of September 30, 2019:

	As of September 30, 2019
Weighted average remaining lease term	8.0 years
Weighted average discount rate	4.3%

The components of lease expense were as follows for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Lease cost:
Operating lease cost	$	9,788		$	28,583
Short-term lease cost	725			2,033
Variable lease cost	2,175			5,796
Lease income	(47		)	(130		)
Net lease cost	$	12,641		$	36,282

Summary of supplemental cash flow information

Supplemental cash flow information related to leases was as follows for the three and nine months ended September 30, 2019 (in thousands):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows	$	9,772	$	28,262
Right-of-use assets obtained in exchange for lease obligations	5,100		26,148

Schedule of maturities of lease liabilities

Maturities of operating lease liabilities were as follows as of September 30, 2019 (in thousands):

2019 (remaining)	$	9,192
2020	42,946
2021	39,210
2022	31,454
2023	25,891
Thereafter	93,864
Total lease payments	242,557
Less imputed interest	(38,153		)
Total	$	204,404

Schedule of future non-cancelable rent obligations as determined under ASC 840

As of December 31, 2018, the Company disclosed the following future non-cancelable rent obligations as determined under ASC 840 (in thousands):

2019	$	43,675
2020	40,948
2021	37,469
2022	30,238
2023	24,235
Thereafter	90,978
Total lease payments	$	267,543

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Segments

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segments

Segments

The Company is managed through two reportable segments: (i) the Clinical Research segment and (ii) the Data Solutions segment. In accordance with the provisions of ASC 280, "Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company.

• Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services.

• Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily to the Company’s life science customers.

The Company's chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. Asset information by segment is not presented, as this measure is not used by the chief operating decision-maker to assess the Company's performance.

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

	Three Months Ended September 30, 2019							Three Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total			Clinical Research		Data Solutions		Total
Revenue	$	719,005	$	61,686	$	780,691		$	656,979	$	60,617	$	717,596
Direct costs (exclusive of depreciation and amortization)	342,695		46,609		389,304			330,037		41,385		371,422
Reimbursable expenses	169,965		—		169,965			142,717		—		142,717
Segment profit	206,345		15,077		221,422			184,225		19,232		203,457
Less expenses not allocated to segments:
Selling, general and administrative expenses					95,542							92,553
Transaction-related costs					572							43,837
Depreciation and amortization expense					29,264							28,270
Loss (gain) on disposal of fixed assets, net					256							(15		)
Income from operations					95,788							38,812
Interest expense, net					(12,974		)					(14,423		)
Loss on modification or extinguishment of debt					(1,855		)					(454		)
Foreign currency gains (losses), net					5,408							(1,809		)
Other income (expense), net					15							(68		)
Income before income taxes and equity in income of unconsolidated joint ventures					$	86,382						$	22,058

	Nine Months Ended September 30, 2019							Nine Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total			Clinical Research		Data Solutions		Total
Revenue	$	2,087,863	$	178,159	$	2,266,022		$	1,966,762	$	175,512	$	2,142,274
Direct costs (exclusive of depreciation and amortization)	1,022,329		131,112		1,153,441			1,010,915		123,594		1,134,509
Reimbursable expenses	471,682		—		471,682			430,892		—		430,892
Segment profit	593,852		47,047		640,899			524,955		51,918		576,873
Less expenses not allocated to segments:
Selling, general and administrative expenses					291,439							275,424
Transaction-related costs					572							32,709
Depreciation and amortization expense					85,462							84,163
Loss on disposal of fixed assets, net					900							21
Income from operations					262,526							184,556
Interest expense, net					(37,834		)					(43,860		)
Loss on modification or extinguishment of debt					(1,855		)					(454		)
Foreign currency gains (losses), net					1,864							(1,416		)
Other expense, net					(66		)					(201		)
Income before income taxes and equity in income of unconsolidated joint ventures					$	224,635						$	138,625

Revenue by geographic location for each segment is as follows (in thousands):

	Three Months Ended September 30, 2019						Three Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total		Clinical Research		Data Solutions		Total
Revenue
Americas:
United States	$	467,096	$	61,686	$	528,782	$	433,050	$	60,617	$	493,667
Other	12,255		—		12,255		11,396		—		11,396
Total Americas	479,351		61,686		541,037		444,446		60,617		505,063
Europe, Africa, and Asia-Pacific
United Kingdom	191,994		—		191,994		170,252		—		170,252
Netherlands	30,144		—		30,144		28,334		—		28,334
Other	17,516		—		17,516		13,947		—		13,947
Total Europe, Africa, and Asia-Pacific	239,654		—		239,654		212,533		—		212,533
Total revenue	$	719,005	$	61,686	$	780,691	$	656,979	$	60,617	$	717,596

	Nine Months Ended September 30, 2019						Nine Months Ended September 30, 2018
	Clinical Research		Data Solutions		Total		Clinical Research		Data Solutions		Total
Revenue
Americas:
United States	$	1,368,344	$	178,159	$	1,546,503	$	1,284,678	$	175,512	$	1,460,190
Other	37,268		—		37,268		35,346		—		35,346
Total Americas	1,405,612		178,159		1,583,771		1,320,024		175,512		1,495,536
Europe, Africa, and Asia-Pacific
United Kingdom	551,460		—		551,460		516,442		—		516,442
Netherlands	82,839		—		82,839		87,340		—		87,340
Other	47,952		—		47,952		42,956		—		42,956
Total Europe, Africa, and Asia-Pacific	682,251		—		682,251		646,738		—		646,738
Total revenue	$	2,087,863	$	178,159	$	2,266,022	$	1,966,762	$	175,512	$	2,142,274

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Significant Accounting Policies - Components of lease (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Lease cost:
Operating lease cost	$ 9,788	$ 28,583
Short-term lease cost	725	2,033
Variable lease cost	2,175	5,796
Lease income	(47)	(130)
Net lease cost	$ 12,641	$ 36,282
Weighted average remaining lease term	8 years	8 years
Weighted average discount rate	4.30%	4.30%

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Fair Value Measurements - Summary of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - Recurring $ in Thousands	Sep. 30, 2019 USD ($)
Liabilities:
Liabilities fair value	$ 3,805
Interest rate swap
Liabilities:
Liabilities fair value	3,805
Level 1
Liabilities:
Liabilities fair value	0
Level 1 | Interest rate swap
Liabilities:
Liabilities fair value	0
Level 2
Liabilities:
Liabilities fair value	3,805
Level 2 | Interest rate swap
Liabilities:
Liabilities fair value	3,805
Level 3
Liabilities:
Liabilities fair value	0
Level 3 | Interest rate swap
Liabilities:
Liabilities fair value	$ 0

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

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, 2018.

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

Recently Implemented Accounting Pronouncements

On January 1, 2019, the Company adopted Accounting Standards Codification, or ASC, Topic 842, “Leases,” or ASC 842, using the revised modified retrospective approach provided by ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements.” The revised modified retrospective approach recognizes the effects of initially applying the new leases standard as a cumulative effect adjustment to retained earnings as of the adoption date. Under this election, the provisions of ASC 840 apply to the accounting and disclosures for lease arrangements in the comparative periods in the Company's financial statements.

The adoption of ASC 842 resulted in the recognition of lease liabilities of $211.7 million (recorded as $31.9 million in short-term lease liabilities and $179.8 million in long-term lease liabilities) and $187.1 million of lease right-of-use, or ROU, assets as of January 1, 2019. Upon adoption of ASC 842, the Company had lease obligations associated with deferred rent, lease loss liabilities, above market lease liabilities, and tenant improvement allowances, totaling $25.7 million, that were reclassified to the lease right-to-use assets. The Company had prepaid rent balances, totaling $1.1 million, that were reclassified as a reduction of the current portion of operating lease liabilities. The adoption of ASC 842 did not impact the consolidated condensed statement of operations for the nine months ended September 30, 2019, consolidated condensed statement of cash flows, or earnings per share. See "Note 2 - Significant Accounting Policies" for further disclosures regarding the adoption of ASC 842.

In August 2017, the Financial Accounting Standards Board, or 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 Company adopted this standard effective January 1, 2019 and the application of ASU No. 2017-12 did not have a material impact on the Company's consolidated condensed financial statements.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects

resulting from the Tax Cuts and Jobs Act of 2017, or the Act. The amendments in this update also require entities to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income. The Company adopted this standard effective January 1, 2019 and the application of ASU No. 2018-02 resulted in a reclassification of $1.4 million from accumulated other comprehensive loss to retained earnings for the stranded tax effects resulting from the Act.

In October 2018, the FASB issued ASU No. 2018-16, "Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes," which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. The Company adopted ASU No. 2018-16 concurrent with adoption of ASU No. 2017-12, on January 1, 2019, and the application of ASU No. 2018-16 did not have a material impact on the Company’s consolidated condensed financial statements.

Recently Issued Accounting Pronouncements

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 guidance is 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 financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The guidance is effective for the reporting period beginning after December 15, 2019, and interim periods therein, with early adoption permitted. The adoption of ASU No. 2018-15 is not expected to have a material impact on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the reporting period beginning after December 15, 2019, and the interim periods therein. The adoption of ASU 2016-13 is not expected to have a material impact on the Company’s consolidated financial statements.

Cash, Cash Equivalents, and 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; thus, these accounts are not commingled with the Company’s cash and cash equivalents. These accounts 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 (in thousands):

	September 30,				December 31,
	2019		2018		2018		2017
Cash and cash equivalents	$	181,767	$	127,517	$	144,221	$	192,229
Restricted cash	23		318		488		661
Total cash, cash equivalents, and restricted cash	$	181,790	$	127,835	$	144,709	$	192,890

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Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Employee Stock Purchase Plan
Compensation expense	$ 11,244	$ 8,543	$ 30,407	$ 21,242
Employee Stock Purchase Plan
Employee Stock Purchase Plan
Offering period increments under the ESPP			6 months
Compensation expense			$ 3,000	$ 2,500
Shares issued			242,329
Shares reserved	2,757,671		2,757,671
Employee Stock Purchase Plan | 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			15.00%
Percentage of discount on the purchase price of common stock during the offering period under the ESPP			15.00%

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Stockholders' Equity - Noncontrolling Interest (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Balance, beginning of period				$ 6,390	$ 5,710
Comprehensive income
Net income	$ 0		$ 359	99	898
Foreign currency adjustments, net of income tax				76	(75)
Acquisition of noncontrolling interest		$ 5,275		(6,565)	0
Balance, end of period	$ 0		$ 6,533	$ 0	$ 6,533

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Derivatives - Hedging Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Derivatives in an asset position:
Notional amount	$ 625,000	$ 625,000
Asset/(Liability)	(3,805)	3,318
Interest rate swap | Designated as hedging instruments | Level 2 | Other assets
Derivatives in an asset position:
Notional amount	0	625,000
Asset/(Liability)	0	3,318
Interest rate swap | Designated as hedging instruments | Level 2 | Other long-term liabilities
Derivatives in an asset position:
Notional amount	625,000	0
Asset/(Liability)	$ (3,805)	$ 0

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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 83,007	$ 1,854	$ 168,318	$ 83,351
Other comprehensive loss:
Foreign currency translation adjustments, net of income tax of $2,183, $0, $2,447 and $0	(27,582)	(3,996)	(26,692)	(23,182)
Unrealized (losses) gains on derivative instruments, net of income tax of $(13), $381, $(1,624) and $2,004	(254)		(4,567)
Unrealized (losses) gains on derivative instruments, net of income tax of $(13), $381, $(1,624) and $2,004		1,041		5,613
Reclassification adjustments:
Losses on derivatives included in net income, net of income taxes of $398, $393, $1,056 and $1,314	1,213		2,972
Losses on derivatives included in net income, net of income taxes of $398, $393, $1,056 and $1,314		1,070		3,666
Comprehensive income (loss)	56,384	(31)	140,031	69,448
Comprehensive income attributable to noncontrolling interest	0	(193)	(175)	(823)
Comprehensive income (loss) attributable to PRA Health Sciences, Inc.	$ 56,384	$ (224)	$ 139,856	$ 68,625

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Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Oct. 28, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	001-36732
Entity Registrant Name	PRA Health Sciences, Inc.
Entity Central Index Key	0001613859
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-3640387
Entity Address, Address Line One	4130 ParkLake Avenue
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Raleigh
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27612
City Area Code	919
Local Phone Number	786-8200
Title of 12(b) Security	Common Stock $0.01 par value
Security Exchange Name	NASDAQ
Trading Symbol	PRAH
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		63,248,324