S-1

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

S-1 1 d816854ds1.htm S-1 S-1

As filed with the Securities and Exchange Commission on January 9, 2020.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PPD, Inc.

(Exact name of registrant as specified in its charter)

Delaware

8731

45-3806427

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

929 North Front Street

Wilmington, North Carolina 28401

(910) 251-0081

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

B. Judd Hartman

Executive Vice President, General Counsel and Chief Administrative Officer

PPD, Inc.

929 North Front Street

Wilmington, North Carolina 28401

(910) 251-0081

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

William B. Brentani

Simpson Thacher & Bartlett LLP

2475 Hanover Street

Palo Alto, California 94304

Tel: (650) 251-5000

Fax: (650) 251-5002

Patrick H. Shannon

Jason M. Licht

Latham & Watkins, LLP

555 Eleventh Street, NW—Suite 1000

Washington, D.C. 20004

Tel: (202) 637-2200

Fax: (202) 637-2201

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Offering Price Per Share(1)(2)	Amount of Registration Fee
Common stock, $0.01 par value per share	$100,000,000	$12,980

(1)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)	Includes the aggregate offering price of shares of common stock that the underwriters have the option to purchase from the registrant to cover over-allotments.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy the securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated January 9, 2020

PROSPECTUS

Shares

PPD, Inc.

Common Stock

This is PPD, Inc.’s initial public offering. We are selling shares of our common stock.

We expect the initial public offering price of our common stock to be between $ and $ per share. Prior to this offering, no public market existed for our common stock. After pricing of the offering, we expect that shares of our common stock will trade on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “PPD.”

Investing in the common stock involves risks that are described in the “Risk Factors” section beginning on page 19 of this prospectus.


	Per Share	Total
Public offering price	$	$
Underwriting discount⁽¹⁾	$	$
Proceeds, before expenses, to us	$	$

(1)	See “Underwriting” for a description of the compensation payable to the underwriters.

The underwriters may also exercise their option to purchase up to an additional shares from us, at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus to cover over-allotments.

At our request, the underwriters have reserved up to shares of common stock, or % of the shares offered by this prospectus, for sale at the initial public offering price in a directed share program, to our directors, officers and employees. See “Underwriting.”

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery on or about , 2020.


Barclays		J.P. Morgan		Morgan Stanley		Goldman Sachs & Co. LLC



BofA Securities	Credit Suisse	Jefferies	UBS Investment Bank



Citigroup	Deutsche Bank Securities	Evercore ISI	HSBC	Mizuho Securities



Baird										William Blair

The date of this prospectus is , 2020.

LOGO

OUR PURPOSE

Improve Health

OUR MISSION

Help Our Customers Deliver

Life-Changing Therapies

OUR STRATEGY

Bend the Cost and Time Curve of

Drug Development and Optimize

Value for Our Customers

TABLE OF CONTENTS


	Page
Prospectus Summary		1
Risk Factors		19
Special Note Regarding Forward-Looking Statements		46
Use of Proceeds		49
Dividend Policy		50
Capitalization		51
Dilution		54
Selected Consolidated Financial Data		56
Management’s Discussion and Analysis of Financial Condition and Results of Operations		59
Business		96
Management		118
Executive Compensation		126
Certain Relationships and Related Party Transactions		164
Principal Stockholders		167
Description of Capital Stock		170
Shares Eligible for Future Sale		179
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders		181
Underwriting		184
Legal Matters		191
Experts		191
Where You Can Find Additional Information		191
Index to Consolidated Financial Statements		F-1

Through and including , 2020 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses that we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

For investors outside the United States: We and the underwriters have not done anything that would permit a public offering of the shares of our common stock or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside of the United States.

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

•

the term “Additional Holdco Notes” means the 7.75%/8.50% Senior PIK Toggle Notes due 2022 issued by Eagle II in May 2019;

•

the term “Blue Spectrum” means Blue Spectrum ZA 2015 LP, a Cayman Islands exempted limited partnership, an investment vehicle of the Abu Dhabi Investment Authority;

•

the term “Eagle II” means Eagle Holding Company II, LLC, a Delaware limited liability company that is the direct subsidiary of PPD, Inc.;

•

the term “Initial Holdco Notes” means the 7.625%/8.375% Senior PIK Toggle Notes due 2022 issued by Eagle II in May 2017;

•

the term “GIC Holder” means Clocktower Investment Pte Ltd., a Singapore private limited company, together with its successors and permitted assigns;

•

the term “Holdco Notes” means, collectively, the Initial Holdco Notes and the Additional Holdco Notes;

•

references to the “Majority Sponsors” means those certain investment funds of The Carlyle Group Inc. and its affiliates (“Carlyle”) and Hellman & Friedman LLC and its affiliates (“Hellman & Friedman”);

•

the term “Opco Notes” means the 6.375% Senior Notes due 2023 issued by Jaguar Holding Company II and Pharmaceutical Product Development, LLC in August 2015;

•

the term “Senior Notes” means, collectively, the Holdco Notes and the Opco Notes;

•

the term “Senior Secured Credit Facilities” means the term loan and revolving credit facilities under our Credit Agreement, dated as of August 18, 2015, among Jaguar Holding Company II, Pharmaceutical Product Development, LLC, Jaguar Holding Company I, LLC, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent, Collateral Agent and L/C Issuer, and each lender from time to time party thereto, as amended; and

•

the term “Sponsors” means, collectively, the Majority Sponsors, Blue Spectrum and GIC Holder.

Trademarks and Service Marks

We own or have rights to certain brand names, trademarks and service marks that we use in conjunction with the operation of our business. In addition, our name and logo are our trademarks or service marks. One of the more important trademarks that we use is PPD^®. This prospectus contains additional trademarks, trade names and service marks of other companies. We do not intend our use or display of other companies’ trademarks, trade names or service marks to imply relationships with, or endorsement or sponsorship of us by, these other companies.

Market, Industry and Other Data

This prospectus contains statistical data that we obtained from industry publications and reports. These publications generally indicate that they have obtained their information from sources believed to be reliable.

PROSPECTUS SUMMARY

This summary highlights information contained in greater detail elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus, and the information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless otherwise indicated in this prospectus, references to the “Company,” “we,” “us” and “our” refer to PPD, Inc. and its consolidated subsidiaries. References to “underwriters” refer to the firms listed on the cover page of this prospectus.

Our Company

We are a leading provider of drug development services to the biopharmaceutical industry, focused on helping our customers bring their new medicines to patients around the world. We have been in the drug development services business for more than 30 years, providing a comprehensive suite of clinical development and laboratory services to pharmaceutical, biotechnology, medical device and government organizations, as well as other industry participants. Over that time, we have developed a track record of consistent quality, delivery and continuous innovation that has enabled us to grow faster than our underlying market over the past five years and deliver strong financial results. In 2018, we served all of the top 50 biopharmaceutical companies in the world, as ranked by 2018 research and development (“R&D”) spending, and were involved in 66 drug approvals. We also participated in the development of all of 2018’s top ten selling drugs, as ranked by 2018 revenue. Since 2014, we have also worked with over 300 companies in the growing biotechnology sector through our PPD Biotech model, which was built specifically to serve the unique needs of this customer segment.

LOGO

Our customers benefit from accelerated time to market because it results in lengthened periods of market exclusivity, and our real-world evidence solutions support the superior efficacy and health economics of their novel therapies. We believe our medical, scientific and drug development expertise, along with our innovative technologies and knowledge of global regulatory requirements, help our customers accelerate the development of safe and effective therapeutics and maximize returns on their R&D investments.

Our service offerings include both clinical development and laboratory services. Our clinical development services include all phases of development (i.e., Phase I-IV), peri- and post-approval and site and patient access services. Our laboratory services offer a range of high-value, advanced testing services, including bioanalytical, biomarker, vaccine, good manufacturing practice (“GMP”) and central laboratory services. We have deep experience across a broad range of rapidly growing areas of drug development and engage with customers through a variety of commercial models, including both full-service and functional service partnerships and other offerings tailored to address the specific needs of our customers.

We have developed significant expertise in the design and execution of complex global clinical trials, a result of conducting studies on global, national, regional and local levels across a wide spectrum of therapeutic areas for more than 30 years and in over 100 countries. Our customers entrust us to design, execute and deliver results on some of the most critical aspects of the drug development process for the key assets in their pipelines. Today, we have approximately 23,000 employees worldwide, approximately 4,900 of whom hold advanced degrees, and we have 100 offices in 46 countries. Over the last five years, we have conducted more than 2,100 clinical trials, and our laboratory scientists have completed more than 57,000 pharmaceutical development projects and worked with more than 7,600 compounds.

Our deep understanding of the drug development process has allowed us to effectively invest in, and evolve our service offerings to meet, the needs of our customers. Examples of our recent investments include:

•

Innovative site and patient access. We have developed differentiated capabilities that (i) help solve the challenges of patient enrollment and site performance and (ii) allow us to participate in the economics and growth of the investigator and patient recruitment services market.

•

Purpose-built PPD Biotech offering. We have pioneered the development of a new model to better serve the biotechnology customer segment.

•

Advanced laboratory services. In response to strong customer demand for our services, we have significantly increased the size and operating capacity of our laboratories, purchased innovative equipment, expanded our test menus and invested in automation.

•

Innovative peri-and post-approval studies. We have significantly expanded our capabilities in this growing area, providing our customers with offerings in areas such as (i) market access, (ii) health economics modeling and (iii) patient-centered research.

•

Targeted geographic expansion. We maintain a strong presence in key regions and countries and have invested heavily in Japan and China to meet customer demand for in-country expertise.

We believe these investments in our businesses and our innovative solutions have enhanced the strength of our clinical development and laboratory services and further differentiated our offerings from other clinical development organizations, providing us with meaningful competitive advantages and growth opportunities. In addition to investing in our business, we have achieved strong financial results for the period 2015 through 2018 as evidenced by the following:

•

Increased direct revenue from $2,073.5 million for 2015 to $2,837.8 million for 2018, representing a compound annual growth rate (“CAGR”) of 11.0%. ⁽¹⁾

•

Increased net income attributable to common stockholders of PPD, Inc. from a net loss of $(146.6) million for 2015 to net income of $119.9 million for 2018. ⁽¹⁾

•

Increased Adjusted EBITDA from $537.2 million for 2015 to $751.8 million for 2018, representing a CAGR of 11.9%. ⁽¹⁾

•

Increased Adjusted EBITDA margin (defined as Adjusted EBITDA divided by direct revenue) from 25.9% for 2015 to 26.5% for 2018^{. (1)}

•

Increased net authorizations from $2,491.6 million for 2015 to $3,421.0 million for 2018, representing a CAGR of 11.1%.

⁽¹⁾	Amounts are presented on an ASC 605 (as defined below) basis for comparability, as described in “—Summary Consolidated Financial Data” below.

Our Markets

The drug development process involves the testing of drug candidates to demonstrate safety and efficacy in order to meet regulatory requirements. Developing new drugs for the treatment of human disease is an extremely expensive, complex, high-risk and time-consuming process. It is estimated that bringing a new drug or medical device to market can take up to 15 years and cost $2.5 billion or more. The drug development process consists of two stages: pre-clinical and clinical. The clinical stage is the most time-consuming and expensive part of the drug development process. During the clinical stage, the drug candidate undergoes a series of tests in humans, including healthy volunteers, as well as participants with the targeted disease or condition. Human trials usually start on a small scale to assess safety, efficacy and dosage (Phase I–II) and then expand to larger trials (Phase III) to test efficacy and safety in the target population. Phase IV, or post-approval trials, involve monitoring or verifying the risks and benefits of a drug product.

Today, our total addressable market is greater than $51 billion, consisting of clinical development services, including peri- and post-approval services and site and patient enrollment services, and laboratory services. In addition to competing in the clinical development services (Phase I-III), or clinical research organization (“CRO”), market, we have made strategic investments to strengthen our position in the laboratory services market and expanded our addressable market to include the markets for investigator and patient recruitment and peri- and post-approval services. A summary of our addressable market by key services areas is included below:

LOGO

We believe there are five key trends affecting our end markets that will create increasing demand for our services:

•

Growth in R&D spending. Biopharmaceutical companies must continually invest in drug development in order to create innovative new therapies or use existing drugs to treat new indications, to address unmet medical needs and to replace lost revenues when their then currently marketed drugs lose patent

protection. From 2008 to 2018, R&D spending increased approximately 3.3% annually, driven by long-term secular fundamentals including a 30% increase in active investigational new drug applications (“INDs”) and an approximately 80% increase in average annual U.S. Food and Drug Administration (“FDA”) approvals from 2008 to 2018.

•

Increased levels of outsourcing by biopharmaceutical companies. As biopharmaceutical companies continue to seek ways to reduce clinical development costs and focus resources on core competencies, we believe they will continue to increase the amount of clinical development work they outsource to CROs. Outsourcing penetration as a percentage of total development spending by biopharmaceutical companies increased from approximately 36% in 2007 to approximately 49% in 2018.

•

Increased complexity in clinical development. Clinical trials continue to increase in complexity due to a confluence of factors, which has led to more complex trial design, difficulties in enrolling protocol eligible patients, longer duration of clinical trials and greater overall clinical trial cost. As a result, we expect biopharmaceutical companies to increasingly seek partners, like us, that have the experience and expertise to conduct cost-effective clinical studies.

•

Biotechnology sector growth. The rate of biotechnology companies’ R&D spending growth has been higher than that of traditional pharmaceutical companies in recent years, fueled by a robust funding environment, both public and private. In addition, many biotechnology companies are smaller, discovery research-focused organizations that do not find it economically attractive to invest in the infrastructure and personnel necessary to conduct their clinical development programs on their own, and we believe they will continue to rely on CROs, like us, for their global drug development needs.

•

Increasing importance to prove value of new therapies. Peri- and post-approval studies transform real-world data into real-world evidence. This enables biopharmaceutical companies to develop better therapies and optimize the commercial potential of their new therapies.

Our Competitive Strengths

We believe we are well-positioned to serve the global biopharmaceutical industry in obtaining the approval for, and maximizing the market access and value of, their new medicines. We differentiate ourselves from others in our industry through our competitive strengths, which include:

Leading Drug Development Expertise with Scale and a Long Track Record of Excellence

We are one of the world’s largest providers of drug development services, with the scale to leverage investments in capabilities and innovative solutions to serve the increasingly complex and diverse needs across our extensive customer base. We have developed our scale, capabilities and track record of quality and innovation over a more than 30-year history, earning us a reputation as a leading global partner to the most sophisticated biopharmaceutical companies. We believe the combination of our scale, expertise, track record and innovative offerings positions us to continue to grow and take market share within the industry.

Differentiated Clinical Development Services

Building on our solid foundation, we have invested heavily in recent years to further strengthen our competitive position through differentiated clinical development solutions designed to address our customers’ needs and bend the time and cost curve of their clinical trials. Our key clinical development investments improve trial feasibility, shorten study start-up timelines, accelerate enrollment, improve site performance, reduce the time and cost of monitoring trial sites and establish the value of new medicines.

Comprehensive and Growing Laboratory Services

We own and operate an integrated and scaled suite of laboratory services and offer a range of high-value, advanced testing services. We believe we are differentiated from other laboratory providers by our global scale and the comprehensiveness of our service offering. We believe we are one of the leading providers in each of the GMP, bioanalytical and central laboratory services sectors as well as in the growing vaccines market.

Large and Growing Diversified Customer Base

Over the past five years, we have provided services to all of the top 50 biopharmaceutical companies in the world, as ranked by 2018 R&D spending, small and mid-size pharmaceutical companies and over 300 biotechnology customers as well as government, academic and non-profit organizations. We have long-standing relationships with our customers as demonstrated by having provided services for a decade or more to each of our top ten customers by revenue for the year ended December 31, 2018. We have also strategically positioned ourselves to benefit from the rapid growth of the biotechnology market through the formation and build-out of PPD Biotech. As a result of our diversified customer base, no one customer accounted for more than 10% of our 2018 revenue.

Experienced, Highly Technical Organization with a Culture of Excellence and Industry-Leading Retention

We are led by an experienced and talented team of individuals who collectively have extensive experience in the CRO and biopharmaceutical industries and understand the challenges our customers face. We believe the technical and therapeutic expertise of our dedicated employees provides us with a competitive advantage—of our approximately 23,000 employees, approximately 4,900 hold advanced, masters or equivalent degrees, including greater than 1,000 MDs and PhDs. In recent years, we have made significant investments to build capabilities to effectively recruit, train, develop and retain talented individuals and teams. Our consistent focus on talent and culture has contributed to both overall retention and retention in key operational roles, such as project managers, that is significantly ahead of industry averages.

Disciplined Operational and Financial Approach

We have strategically oriented our business towards the largest and highest growth areas of the drug development services market. Our operating model is focused on providing our customers with a mix of full-service and select functional service provider (“FSP”) commercial arrangements in differentiated, value-added areas. We were able to increase our direct revenues by $917.9 million and Adjusted EBITDA by $282.3 million between 2014 and 2018, representing an annual growth rate of 10.4% and 12.6%, respectively. We have also leveraged our track record of operational discipline and expertise around contract pricing and backlog policy to create a highly visible and stable revenue base. In addition, we have focused our operations on key initiatives, including optimal utilization of billable staff and prudent cost management, which has enabled us to expand our EBITDA margins every year from 2014 through 2018. As a result, we have consistently generated strong cash flow from operations, which has allowed us to deploy significant capital into our business through strategic investments and acquisitions while also returning capital to our stockholders.

Our Growth Strategy

The key elements of our growth strategy to help our customers bend the cost and time curve of drug development include:

Further Strengthen Our Offerings in Existing and New Markets

Our global footprint, scale, integrated systems and deep scientific expertise enable us to conduct complex, multi-center clinical trials simultaneously throughout the world. We have a well-established presence in all of the

major biopharmaceutical markets, including the United States, Europe and Asia, with nearly 3,800 professionals in the latter region and scale and differentiation in Japan and China, two countries of increasingly strategic importance for drug development programs. We plan to further strengthen our leadership position by investing in geographies that are critical to address the needs of our customers and their drug development pipelines.

Expand Leading Therapeutic Expertise in Existing and Novel Areas

We have amassed deep scientific expertise in the largest and fastest growing therapeutic areas. In addition, we have developed specific capabilities in disciplines that cross therapeutic areas, such as rare diseases, vaccines and a broad array of chronic conditions. We have provided a significant amount of services in the areas of hematology/oncology and chronic conditions. Such areas collectively accounted for over 75% of total R&D spend on late stage clinical trials conducted from 2015 through 2018. Over the last five years, we have been conducting significant work in growing areas of R&D innovation, such as immuno-oncology and cell and gene therapy for which the industry pipeline of drugs has more than tripled since 2014. In addition, customers are hiring us to run their programs in other areas of innovative R&D, such as antibody-drug conjugates (“ADC’s”), ribonucleic acid (“RNA”) interference, messenger RNA and others. We intend to continue investing in our scientific and operational capabilities to further strengthen our leadership position in key therapeutic areas and position ourselves to take advantage of the evolving trends in the biopharmaceutical industry.

LOGO

Build Upon Our Existing Dedicated Biotech Offering

Over the last five years, innovative biotechnology companies focused on new and complex therapies have accounted for approximately 40% of new drug approvals (an “NDA”) and have driven significant growth in

related R&D spending. Large biopharmaceutical companies have had to fill gaps in their pipelines through strategic collaborations with, and acquisitions of, biotechnology companies, further increasing growth in the number of innovative, complex and global clinical trials. We were at the forefront of anticipating these trends and formed our dedicated PPD Biotech model in 2014. We believe that our track record of serving biotechnology companies through our PPD Biotech model has earned us a reputation as the strategic partner of choice.

Increase Use of Our Innovative Site Network and Patient Enrollment Platform

Through our Accelerated Enrollment Solutions (“AES”) delivery model, we have developed an approach to directly serve our customers’ needs by addressing patient enrollment and site performance challenges, which are two of the biggest challenges our customers face in clinical development. We believe our integrated strategy of using technology and identified and consented data, our global site network and support for leading independent sites, is the ideal approach to serving our customers. To date, AES has played a critical role in completing some of the most important and complex clinical trials for our customers. In addition to providing us with a competitively advantaged asset, our AES delivery model is financially attractive as it allows us to participate in the economics and growth of the market for investigator and patient recruitment services that otherwise would represent pass-through revenues, as is the case for most other CROs.

Capitalize on our Growing Laboratory Segment

Our laboratory services offering is focused on the high-growth, innovative segment of laboratory services through its diverse range of high-value, advanced testing services. As an example, we have developed a significant number of assays to address the testing needs of gene therapy. Our laboratory services (“Laboratory Services”) segment represents approximately 17.7% of our 2018 total direct revenues and increased approximately 18.3% for the nine months ended September 30, 2019 as compared to the same period in 2018. It also affords us significant operating leverage and diversification and provides higher backlog visibility and related conversion rates. Our Laboratory Services segment allows us to provide integrated offerings to customers that need both clinical development and laboratory services.

Continue to Invest in Innovation

We have consistently been and are committed to spending our time and resources on adding to and improving on our capabilities and service offerings. We continually assess the need to add new and innovative capabilities to reduce the cost and time required to generate evidence for our customers’ product candidates. We believe that the biopharmaceutical industry is constantly evolving, and we are focused on evaluating opportunities in a disciplined manner that is both capital efficient and flexible in approach.

Risks Related to Our Business

Investing in our common stock involves a high degree of risk. You should carefully consider these risks before investing in our common stock, including the risks related to our business and industry described under “Risk Factors” elsewhere in this prospectus. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our common stock and result in a loss of all or a portion of your investment:

•

the fragmented and highly competitive nature of the drug development services industry;

•

changes in trends in the biopharmaceutical industry, including decreases in research and development spending and outsourcing;

•

our ability to keep pace with rapid technological changes that could make our services less competitive or obsolete;

•

the termination, delay or reduction in scope by our customers of our contracts with them;

•

the failure to successfully manage our business;

•

our inability to recruit, retain and motivate key personnel;

•

the significant influence of the Majority Sponsors over us;

•

our ability to generate cash flow to service our substantial debt obligations; and

•

other factors set forth under “Risk Factors” in this prospectus.

2017 Recapitalization Transaction

In May 2017, the Company and the Majority Sponsors completed a recapitalization (the “Recapitalization”) of Jaguar Holding Company I (“Jaguar I”), the then indirect parent of Pharmaceutical Product Development, LLC and now indirect wholly owned subsidiary of PPD, Inc. The Recapitalization was effected through two mergers that resulted in Jaguar I becoming an indirect wholly owned subsidiary of PPD, Inc. Prior to the Recapitalization, Jaguar I was majority owned and jointly controlled by the Majority Sponsors. Subsequent to the Recapitalization, the Company, and indirectly, Jaguar I, continue to be majority owned and jointly controlled by the Majority Sponsors, through different affiliated investment funds, by rolling over existing equity and investing new equity of the Majority Sponsors into PPD, Inc., in connection with the Recapitalization. Additionally, two investors, Blue Spectrum and the GIC Holder, both obtained direct minority ownership interests in PPD, Inc. through the Recapitalization. Prior to the Recapitalization, the controlling Majority Sponsors owned approximately 99.4% of the Company, with the remainder owned by management and the independent directors. Subsequent to the Recapitalization, the controlling Majority Sponsors owned approximately 80.6% of the Company, GIC Private Limited (“GIC”) (through the GIC Holder) and the Abu Dhabi Investment Authority (“ADIA”) (through Blue Spectrum) owned approximately 18.3% of the Company, and the remainder was owned by management and the independent directors. See “Principal Stockholders” for more information on the Sponsors’ existing ownership interest in PPD, Inc.

In connection with the Recapitalization, in May 2017, Eagle II, a direct subsidiary of PPD, Inc., issued $550.0 million in aggregate principal amount of Initial Holdco Notes which were used to pay, in part, the cash consideration for the Recapitalization and fees and expenses related to the Recapitalization. In May 2019, Eagle II issued $900.0 million in aggregate principal amount of Additional Holdco Notes to fund the payment of dividends and distributions to PPD, Inc., which PPD, Inc. used, together with cash on hand, to pay a special dividend of $1,086.0 million to its stockholders, as well as fees and expenses associated with the issuance of the Additional Holdco Notes.

For additional information on the Recapitalization, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

Corporate Structure

The following chart summarizes our corporate structure as of the date of this prospectus. This chart is provided for illustrative purposes only and does not represent all legal entities affiliated with, or all subsidiaries of, the Company:

LOGO

Our Sponsors

Hellman & Friedman is a leading private equity investment firm with offices in San Francisco, New York and London. Founded in 1984, Hellman & Friedman currently has $45 billion of assets under management. The firm focuses on investing in outstanding business franchises and serving as a value-added partner to management in select industries including healthcare, software, internet & media, financial services, business & information services, industrials & energy and retail & consumer.

Select Hellman & Friedman healthcare investments include Multiplan, Inc. (one of the largest third-party providers of cost-containment solutions to U.S. health plans), Change Healthcare (formerly Emdeon, a provider of revenue and payment cycle management solutions connecting payers, providers and patients in the U.S. healthcare system), Sheridan Healthcare, Inc. (a multi-specialty physician practice management company that provides outsourced physician staffing services to hospitals and ambulatory surgery centers), Sedgwick Inc. (a provider of technology-enabled risk, benefits and integrated business solutions) and Mitchell International, Inc. (a provider of medical claims software).

Founded in 1987, Carlyle is a global alternative asset manager and one of the world’s largest global private equity firms with approximately $223 billion of assets under management across 362 investment vehicles as of September 30, 2019. Carlyle invests across four segments—Corporate Private Equity, Real Assets, Global Credit, and Investment Solutions. Carlyle has expertise in various industries, including aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrials & transportation, technology & business services and telecommunications & media. Carlyle employs more than 1,775 employees, including more than 625 investment professionals, in 33 offices across six continents.

Carlyle is one of the leading private equity investors in the healthcare sector, having completed 65 total healthcare transactions representing approximately $12.3 billion in equity invested since inception. Recent transactions include Sedgwick Inc., One Medical (a technology-enabled primary care organization), Millicent Pharma Limited (a pharmaceutical company), MedRisk Holdco, LLC (a physical therapy-focused workers’ compensation solutions company), Albany Molecular Research, Inc. (a contract research and drug manufacturing organization), WellDyneRx, LLC (an independent pharmacy benefit manager), Rede D’Or São Luiz S.A. (a hospital provider in Brazil), Ortho-Clinical Diagnostics (a global provider of in vitro diagnostic solutions for screening, diagnosing, monitoring and confirming diseases), Healthscope Limited (a hospital in Australia) and PPD.

GIC is a leading global investment firm established in 1981 to manage Singapore’s foreign reserves. A disciplined long-term value investor, GIC is uniquely positioned for investments across a wide range of asset classes, including equities, fixed income, private equity, real estate and infrastructure. In private equity, GIC invests through funds as well as directly in companies, partnering with its fund managers and management teams to help world class businesses achieve their objectives. GIC has investments in over 40 countries and has been investing in emerging markets for more than two decades. Headquartered in Singapore, GIC employs over 1,500 people across 10 offices in key financial cities worldwide.

ADIA is a public institution established by the Government of the Emirate of Abu Dhabi in 1976 as an independent investment institution. ADIA manages a global investment portfolio that is diversified across more than two dozen asset classes and sub categories. With a long tradition of prudent investing, ADIA’s decisions are based solely on its economic objectives of delivering sustained, long-term financial returns.

Corporate Information

PPD, Inc. (formerly known as Eagle Holding Company I) was formed as a corporation in Delaware on April 13, 2017. Our principal executive offices are located at 929 North Front Street, Wilmington, North Carolina 28401. Our telephone number is (910) 251-0081. Our website address is www.ppdi.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus, and inclusions of our website address in this prospectus are inactive textual references only.

The Offering

Common stock offered by us

shares.

Common stock to be outstanding immediately after this offering

shares.

Option to purchase additional shares

The underwriters have been granted an option to purchase up to additional shares of common stock from us at any time within 30 days from the date of this prospectus to cover over-allotments.

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million, based on the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus.

We intend to use the net proceeds received by us from this offering, together with cash on hand, (1) to redeem $550.0 million in aggregate principal amount of Initial Holdco Notes, plus accrued and unpaid interest thereon and $ million of redemption premium and (2) to redeem $900.0 million in aggregate principal amount of Additional Holdco Notes, plus accrued and unpaid interest thereon and $ million of redemption premium. To the extent we raise more proceeds in this offering than currently estimated, the amount of cash on hand used would be reduced, and to the extent the proceeds exceed the amount required to consummate the aforementioned redemptions, we will use such excess proceeds for general corporate purposes. To the extent we raise less proceeds in this offering than currently estimated, the amount of cash on hand used to consummate the aforementioned redemptions would be increased. See “Use of Proceeds.”

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 shares from the expected number of shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) our net proceeds from this offering by $ million.

Risk factors

See “Risk Factors” and the other information included in this prospectus for a discussion of the factors you should consider carefully before deciding to invest in our common stock.

Dividend policy

We currently do not intend to declare any dividends on our common stock in the foreseeable future. Our ability to pay dividends on our common stock is limited by the covenants of the Senior Notes and the Senior Secured Credit Facilities. See “Dividend Policy.”

Directed share program

At our request, the underwriters have reserved up to shares of common stock, or up to % of the shares offered by this prospectus, for sale at the initial public offering price through a directed share program to our directors, officers and employees. The sales will be made at our direction by and its affiliates through a directed share program. The number of shares of our common stock available for sale to the general public in this offering will be reduced to the extent that such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of common stock offered by this prospectus. Participants in the directed share program will not be subject to lock-up or market standoff restrictions with the underwriters or with us with respect to any shares purchased through the directed share program, except in the case of shares purchased by any director or executive officer. For additional information, see “Underwriting.”

Nasdaq symbol

“PPD”

Except as otherwise indicated, all information in this prospectus:

•

assumes the conversion of all of our non-voting common stock into voting common stock on a one-to-one basis;

•

assumes no exercise by the underwriters of their option to purchase up to additional shares of common stock from us;

•

assumes the effectiveness, at the time of this offering, of our amended and restated certificate of incorporation and our amended and restated bylaws, the forms of which are filed as exhibits to the registration statement of which this prospectus is a part;

•

assumes an initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus;

•

does not reflect (1) 4,875,888 shares of common stock issuable upon the exercise of time-based options to purchase shares of our common stock outstanding as of September 30, 2019 with a weighted average exercise price of $28.22 per share, (2) 4,973,940 shares of common stock issuable upon the exercise of performance-based options to purchase shares of our common stock outstanding as of September 30, 2019 with a weighted average exercise price of $23.92 per share, and (3) 1,305,803 shares of common stock issuable upon the exercise of liquidity/recapitalization event-based options to purchase shares of our common stock outstanding as of September 30, 2019 with a weighted average exercise price of $20.33 per share, and which have not previously vested, will not vest upon the consummation of this offering or are eligible to vest only if and when the Majority Sponsors have achieved specified internal rates of return and a multiple on invested capital with respect to its investment in the Company; and

•

does not reflect shares of common stock available for future issuance under our 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”).

Summary Consolidated Financial Data

The following table sets forth the summary consolidated financial data of the Company and its consolidated subsidiaries for the periods and dates indicated.

On January 1, 2018 the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), which outlines a single comprehensive model for entities to use in accounting for revenue from contracts with customers. The Company adopted ASC 606 using the modified retrospective method for all contracts not completed as of the date of adoption. Our consolidated financial data for the periods beginning January 1, 2018 and thereafter are presented in accordance with ASC 606. Prior to January 1, 2018, the Company applied the accounting guidance from the application of ASC Topic 605, Revenue Recognition (“ASC 605”). Our consolidated financial data for the year ended December 31, 2018 has been presented on both an ASC 606 and ASC 605 basis to provide greater comparability of our operating results during 2018, consistent with the modified retrospective adoption approach applied.

The balance sheet data as of September 30, 2019 and the statement of operations and cash flow data for the nine months ended September 30, 2019 and 2018 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The statement of operations and cash flow data for the years ended December 31, 2018, 2017 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The statement of operations and cash flow data for the years ended December 31, 2015 and 2014 have been derived from the audited consolidated financial statements of the Company not included in this prospectus.

The summary consolidated financial data set forth below should be read in conjunction with “Risk Factors,” “Capitalization,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and audited consolidated financial statements included elsewhere in this prospectus.


	Nine Months Ended September 30,						Year Ended December 31,
	2019⁽¹⁾			2018			2018			2018			2017⁽¹⁾			2016⁽¹⁾			2015⁽¹⁾			2014
	ASC 606⁽²⁾									ASC 605⁽³⁾
	(in thousands)
Statement of operations data:
Revenue:
Revenue	$	2,984,133		$	2,770,334		$	3,748,971		$	2,837,810		$	2,767,476		$	2,467,941		$	2,073,484		$	1,919,954
Reimbursed revenue⁽⁴⁾		—			—			—			222,224			233,574			211,624			178,350			165,854

Total revenue		2,984,133			2,770,334			3,748,971			3,060,034			3,001,050			2,679,565			2,251,834			2,085,808

Operating costs and expenses:
Direct costs, exclusive of depreciation and amortization		1,112,181			989,560			1,333,812			1,327,500			1,302,983			1,175,051			965,098			888,135
Reimbursed costs		688,696			714,912			940,913			222,224			233,574			211,624			178,350			165,854
Selling, general and administrative expenses		681,431			599,563			813,035			816,659			809,333			718,139			652,900			622,043
Recapitalization costs⁽⁵⁾		—			—			—			—			114,766			—			—			—
Depreciation and amortization		197,896			195,335			258,974			258,974			279,066			260,487			262,871			249,610
Goodwill and asset impairment		—			—			29,626			29,626			43,459			28,101			13,686			1,290

Total operating costs and expenses		2,680,204			2,499,370			3,376,360			2,654,983			2,783,181			2,393,402			2,072,905			1,926,932

Income from operations		303,929			270,964			372,611			405,051			217,869			286,163			178,929			158,876
Interest expense, net		(229,147	)		(197,920	)		(263,618	)		(263,618	)		(253,891	)		(203,294	)		(228,084	)		(213,323	)
(Loss) gain on investments⁽⁶⁾		(22,716	)		47,040			15,936			15,936			92,750			61,576			19,525			65,985
Loss on extinguishment of debt		—			—			—			—			—			—			(131,755	)		—
Other (expense) income, net		(3,158	)		(7,159	)		21,701			21,701			(40,259	)		22,448			19,462			18,526


	Nine Months Ended September 30,						Year Ended December 31,
	2019⁽¹⁾			2018			2018			2018			2017⁽¹⁾			2016⁽¹⁾			2015⁽¹⁾			2014
	ASC 606⁽²⁾									ASC 605⁽³⁾
	(in thousands)
Income (loss) before provision for (benefit from) income taxes		48,908			112,925			146,630			179,070			16,469			166,893			(141,923	)		30,064

Provision for (benefit from) income taxes		12,387			20,819			39,579			48,444			(284,360	)		(15,961	)		2,173			3,250

Income (loss) before equity in losses of unconsolidated affiliates		36,521			92,106			107,051			130,626			300,829			182,854			(144,096	)		26,814
Equity in losses of unconsolidated affiliates, net of income taxes		(2,060	)		—			(186	)		(186	)		—			—			—			—

Net income (loss)		34,461			92,106			106,865			130,440			300,829			182,854			(144,096	)		26,814
Loss from discontinued operations, net of taxes		—			—			—			—			—			—			(4,139	)		(21,717	)
Net (income) loss attributable to noncontrolling interests		(3,390	)		(1,313	)		(2,679	)		(2,679	)		(4,802	)		241			1,678			587

Net income (loss) attributable to PPD, Inc.		31,071			90,793			104,186			127,761			296,027			183,095			(146,557	)		5,684
Recapitalization investment portfolio consideration⁽⁶⁾		16,830			(31,047	)		(7,849	)		(7,849	)		(97,136	)		—			—			—

Net income (loss) attributable to common stockholders of PPD, Inc.	$	47,901		$	59,746		$	96,337		$	119,912		$	198,891		$	183,095		$	(146,557	)	$	5,684


	Nine Months Ended September 30,				Year Ended December 31,
	2019⁽¹⁾		2018		2018		2017⁽¹⁾		2016⁽¹⁾		2015⁽¹⁾			2014
	ASC 606⁽²⁾						ASC 605⁽³⁾
	(shares in thousands, except per share data)
Per share data:
Earnings (loss) per share attributable to common stockholders:
Basic	$	0.31	$	0.39	$	0.62	$	1.23	$	1.06	$	(0.82	)	$	0.16
Diluted	$	0.31	$	0.38	$	0.62	$	1.22	$	1.04	$	(0.82	)	$	0.15
Weighted average common shares outstanding:
Basic		155,131		155,170		155,132		161,681		173,370		173,264			173,053
Diluted		155,587		155,204		155,176		163,237		175,863		173,264			177,239


	Nine Months Ended September 30,						Year Ended December 31,
	2019⁽¹⁾			2018			2018			2018			2017⁽¹⁾			2016⁽¹⁾			2015⁽¹⁾			2014
	ASC 606⁽²⁾									ASC 605⁽³⁾
	(dollars in thousands)
Cash flow data:
Net cash provided by (used in):
Operating activities	$	313,722		$	301,106		$	423,406		$	423,406		$	359,079		$	407,995		$	416,288		$	96,000
Investing activities		(195,548	)		(58,990	)		(90,525	)		(90,525	)		(92,743	)		(519,746	)		(253,542	)		(26,308	)
Financing activities		(253,229	)		(140,776	)		(166,942	)		(166,942	)		(249,393	)		130,465			(44,629	)		(24,477	)
Cash paid for interest		209,732			202,369			262,921			262,921			238,826			191,084			154,060			193,461
Cash paid for income taxes, net		26,319			34,877			64,714			64,714			43,438			36,807			40,077			22,040

Other financial and operating data:
Adjusted EBITDA⁽⁷⁾⁽⁸⁾	$	574,507		$	504,047		$	719,404		$	751,844		$	722,269		$	640,468		$	537,167		$	469,539
Adjusted Net Income⁽⁷⁾⁽⁸⁾	$	202,096		$	188,511		$	265,799		$	289,374		$	325,208		$	242,448		$	198,758		$	124,084
Credit Adjusted EBITDA⁽⁷⁾⁽⁸⁾	$	593,859		$	521,258		$	746,568		$	746,568		$	713,746		$	638,772		$	541,469		$	476,470
Free Cash Flow⁽⁹⁾	$	224,324		$	225,573		$	307,261		$	307,261		$	253,944		$	317,737		$	352,491		$	21,231
Backlog (at end of period)⁽¹⁰⁾	$	6,805,733		$	6,103,591		$	6,313,710		$	6,313,710		$	5,730,568		$	6,006,644		$	5,192,054		$	4,723,384
Backlog conversion⁽¹⁰⁾		11.9	%		11.7	%		11.9	%		11.9	%		11.7	%		11.4	%		10.6	%		11.2	%
Net authorizations⁽¹⁰⁾	$	2,814,437		$	2,448,924		$	3,420,954		$	3,420,954		$	2,485,419		$	3,051,596		$	2,491,584		$	2,593,409
Net book-to-bill⁽¹⁰⁾		1.2x			1.2x			1.2x			1.2x			0.9x			1.2x			1.2x			1.4x


	As of September 30, 2019⁽²⁾
	Actual			Pro Forma⁽¹¹⁾			Pro Forma as Adjusted⁽¹²⁾
	(in thousands)
Balance sheet data:
Cash and cash equivalents	$	403,398		$	243,398		$
Working capital		(87,472	)		(247,472	)
Total assets		5,589,509			5,429,509
Total debt		5,645,626			5,645,626
Total stockholders’ deficit		(2,603,879	)		(2,763,879	)

(1)

We acquired Synarc Inc. on September 3, 2019, Medimix International on July 1, 2019, Optimal Research, LLC on September 1, 2017, Evidera Holdings, Inc. on September 1, 2016, Synexus Clinical Research Topco Limited on May 31, 2016, CRA Intermediate Holdings, Inc. on May 12, 2015 and the clinical research division of Shin Nippon Biomedical Laboratories (“SNBL”), subsequently renamed PPD-SNBL, on April 1, 2015. We own 60% of PPD-SNBL. The financial results of these entities have been included as of and since the dates of each acquisition.

(2)

Financial data as of and for the year ended December 31, 2018 and as of and for the nine months ended September 30, 2019 and 2018 is reported in accordance with ASC 606, unless otherwise noted. Our consolidated financial data for the year ended December 31, 2018 has been presented on both an ASC 606 and ASC 605 basis to provide greater comparability of our operating results during 2018.

(3)

Financial data as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014 is reported in accordance with ASC 605 unless otherwise noted. Other than earnings per share data, our consolidated financial data for the year ended December 31, 2018 has been presented on both an ASC 606 and ASC 605 basis to provide greater comparability of our operating results during 2018. For more information, see Note 3 to our audited consolidated financial statements included elsewhere in this prospectus.

(4)	Represents out-of-pocket revenues and related costs reimbursed by our customers at cost when we are the principal (and not the agent) in the relationship in accordance with ASC 605 for the years ended December 31, 2018, 2017, 2016, 2015 and 2014.

(5)	Represents expenses in connection with the recapitalization of the Company in 2017. For more information, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

(6)

Represents the fair value accounting gains or losses primarily from our investments in Auven Therapeutic Holdings, L.P. (“Auven”) and venBio Global Strategic Fund, L.P. (“venBio”). The gains or losses from our investments in Auven and venBio will likely continue to fluctuate from period to period based on the changes in fair values of the net asset values of the limited partnerships and changes in the discounts applied to such investments for our lack of control and lack of marketability. This adjustment also includes changes in the contingent liability that was recorded for additional consideration estimated to be payable to certain owners in connection with the 2017 recapitalization, primarily based on changes in fair value of such investments, net of taxes and other related expenses. For more information, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

(7)

EBITDA consists of net income (loss) attributable to common stockholders of PPD, Inc. before interest expense, net, provision for (benefit from) income taxes and depreciation and amortization. Adjusted EBITDA consists of EBITDA and eliminates (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income (loss) and EBITDA that we do not consider indicative of our ongoing operating performance. Credit Adjusted EBITDA consists of Adjusted EBITDA calculated in accordance with ASC 605, in accordance with the financial definitions included in the Credit Agreement (as defined below) and the indentures governing the Senior Notes. Adjusted Net Income consists of net income attributable to common stockholders of PPD, Inc. before amortization and the elimination of (i) non-operating income or expense and (ii) impacts of certain non-cash, unusual or other items that are included in net income (loss) that we do not consider indicative of our ongoing operating performance. In the case of Adjusted EBITDA, Credit Adjusted EBITDA and Adjusted Net Income, we believe that making such adjustments provides management and investors meaningful information to understand our operating performance and ability to analyze financial and business trends on a period-to-period basis. Although we exclude amortization of acquired intangible assets from our non-GAAP (as defined below) expenses, we note that revenue generated from such intangibles is included within revenue in determining net income (loss) attributable to common stockholders of PPD, Inc.

(8)

EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA and Adjusted Net Income data are not calculated or presented in accordance with generally accepted accounting principles in the United States (“GAAP”) and other companies in our industry may calculate EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA or Adjusted Net Income differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these items in isolation, or as a substitute for analysis of our results as reported under GAAP. EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA and Adjusted Net Income should not be considered as measures of discretionary cash available to us to invest in the growth of our business. In calculating these performance financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to have been inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA and Adjusted Net Income should not be construed as an inference that our future results will be unaffected by unusual items.

(9)

Free Cash Flow represents net cash provided by operating activities minus cash paid for capital expenditures. We utilize Free Cash Flow as a measure of profitability and as an assessment of our ability to generate cash. Free Cash Flow is not calculated or presented in accordance with GAAP and the calculation of Free Cash Flow may not be comparable to other similarly titled metrics of other companies and should not be considered as an alternative to cash flow measures derived in accordance with GAAP.

(10)

Backlog represents anticipated direct revenue for work not yet completed or performed (i) under signed contracts, letters of intent and, in some cases, awards that are supported by other forms of written communication and (ii) where there is sufficient or reasonable certainty about the customer’s ability and intent to fund and commence the services within six months and net authorizations represent new business awards, net of award or contract modifications, contract cancellations, foreign currency fluctuations and other adjustments. Backlog and net authorizations exclude the impact of net authorizations from anticipated third-party pass-through and out-of-pocket revenue. Backlog conversion represents the quarterly average of direct revenue for the period divided by opening backlog for that period. Net book-to-bill represents the amount of net authorizations for the period divided by direct revenue recognized in that period.

(11)	In November 2019, the Company declared, and subsequently paid, a special cash dividend to its stockholders of $160.0 million, or $1.03 per share, with cash on hand. The special cash dividend was considered a return of capital to the Company’s stockholders. A pro forma

balance sheet is presented in our unaudited condensed consolidated financial statements included elsewhere in this prospectus to give effect to the special cash dividend as if it was paid as of September 30, 2019. The pro forma balance sheet reflects an adjustment to cash for the dividend paid, an adjustment to decrease additional paid-in-capital and an adjustment to increase accumulated deficit.

(12)

The pro forma as adjusted balance sheet data as of September 30, 2019 gives effect to (i) the pro forma adjustments described in note (11) above, (ii) the sale by us of shares of our common stock in this offering based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, after deducting assumed underwriting discounts and commissions and estimated offering expenses payable by us and (iii) the application of the estimated net proceeds from this offering, together with cash on hand, to redeem the Holdco Notes, as described in “Use of Proceeds.”

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would not significantly increase (decrease) our pro forma as adjusted cash and cash equivalents, working capital or total assets and would decrease (increase) our pro forma as adjusted total debt and total stockholders’ deficit by $ million, assuming, in each case, the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 shares from the expected number of shares to be sold by us in this offering would not significantly increase (decrease) our pro forma as adjusted cash and cash equivalents, working capital or total assets and would decrease (increase) our pro forma as adjusted total debt and total stockholders’ deficit by $ million, assuming, in each case, no change in the assumed initial public offering price per share, which is the midpoint of the price range set forth on the front cover of this prospectus.

The following table reconciles net income (loss) attributable to common stockholders of PPD, Inc. to EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA and Adjusted Net Income. The table also reconciles cash flow from operations to Free Cash Flow:


	Nine Months Ended September 30,						Year Ended December 31,
	2019			2018			2018			2018			2017			2016			2015			2014
	ASC 606^(a)									ASC 605^(b)
	(in thousands)
EBITDA, Adjusted EBITDA and Credit Adjusted EBITDA:
Net income (loss) attributable to common stockholders of PPD, Inc.	$	47,901		$	59,746		$	96,337		$	119,912		$	198,891		$	183,095		$	(146,557	)	$	5,684
Interest expense, net		229,147			197,920			263,618			263,618			253,891			203,294			228,084			213,323
Provision for (benefit from) income taxes		12,387			20,819			39,579			48,444			(284,360	)		(15,961	)		2,173			3,250
Depreciation and amortization		197,896			195,335			258,974			258,974			279,066			260,487			262,871			249,610

EBITDA		487,331			473,820			658,508			690,948			447,488			630,915			346,571			471,867
Stock-based compensation expense		11,701			11,841			18,265			18,265			22,570			8,770			9,154			6,964
Other compensation expense^(c)		26,040			9,559			11,998			11,998			13,138			34,956			29,734			26,862
Other expense (income), net		3,158			7,159			(21,701	)		(21,701	)		40,259			(22,448	)		(19,462	)		(18,526	)
Goodwill and other asset impairments		—			—			29,626			29,626			43,459			28,101			13,686			1,290
Loss on extinguishment of debt		—			—			—			—			—			—			131,755			—
Recapitalization costs		—			—			—			—			114,766			—			—			—
Discontinued operations		—			—			—			—			—			—			4,139			21,717
Net income (loss) attributable to noncontrolling interest		3,390			1,313			2,679			2,679			4,802			(241	)		(1,678	)		(587	)
Sponsor fees and related costs^(d)		2,871			2,719			3,569			3,569			3,337			2,709			2,367			2,316
Severance and charges for other cost reduction activities^(e)		7,757			4,721			7,938			7,938			10,461			6,311			22,053			15,696
Transaction-related costs^(f)		12,991			1,582			2,938			2,938			4,078			9,197			12,237			5,419
Loss (gain) on investments, net of recapitalization portfolio consideration^(g)		5,886			(15,993	)		(8,087	)		(8,087	)		4,386			(61,576	)		(19,525	)		(65,985	)
Other adjustments^(h)		13,382			7,326			13,671			13,671			13,525			3,774			6,136			2,506

Adjusted EBITDA	$	574,507		$	504,047		$	719,404		$	751,844		$	722,269		$	640,468		$	537,167		$	469,539
Change in accounting standards⁽ⁱ⁾		25,321			20,030			32,440			—			—			—			—			—
Net (income) loss attributable to noncontrolling interest		(3,390	)		(1,313	)		(2,679	)		(2,679	)		(4,802	)		241			1,678			587
Other credit agreement adjustments^(j)		(2,579	)		(1,506	)		(2,597	)		(2,597	)		(3,721	)		(1,937	)		2,624			6,344

Credit Adjusted EBITDA	$	593,859		$	521,258		$	746,568		$	746,568		$	713,746		$	638,772		$	541,469		$	476,470

Adjusted Net Income:
Net income (loss) attributable to common stockholders of PPD, Inc.	$	47,901		$	59,746		$	96,337		$	119,912		$	198,891		$	183,095		$	(146,557	)	$	5,684
Amortization of intangible assets		121,172			127,419			168,639			168,639			183,421			171,647			182,167			171,319
Amortization of debt issuance and modification costs and debt discount		12,162			7,511			10,082			10,082			9,001			6,479			16,880			21,058
Amortization of accumulated other comprehensive income on derivative instruments		(7,157	)		(2,769	)		(5,269	)		(5,269	)		—			—			—			—
Stock-based compensation expense		11,701			11,841			18,265			18,265			22,570			8,770			9,154			6,964
Other compensation expense^(c)		26,040			9,559			11,998			11,998			13,138			34,956			29,734			26,862
Other expense (income), net		3,158			7,159			(21,701	)		(21,701	)		40,259			(22,448	)		(19,462	)		(18,526	)
Goodwill and other asset impairments		—			—			29,626			29,626			43,459			28,101			13,686			1,290
Loss on extinguishment of debt		—			—			—			—			—			—			131,755			—
Recapitalization costs		—			—			—			—			114,766			—			—			—
Discontinued operations		—			—			—			—			—			—			4,139			21,717
Net income (loss) attributable to noncontrolling interest		3,390			1,313			2,679			2,679			4,802			(241	)		(1,678	)		(587	)
Sponsor fees and related costs^(d)		2,871			2,719			3,569			3,569			3,337			2,709			2,367			2,316
Severance and charges for other cost reduction activities^(e)		7,757			4,721			7,938			7,938			10,461			6,311			22,053			15,696
Transaction-related costs^(f)		12,991			1,582			2,938			2,938			4,078			9,197			12,237			5,419
Loss (gain) on investments, net of recapitalization portfolio consideration^(g)		5,886			(15,993	)		(8,087	)		(8,087	)		4,386			(61,576	)		(19,525	)		(65,985	)
Other adjustments^(h)		13,382			7,326			13,671			13,671			13,525			3,774			6,136			2,506

Total adjustments		213,353			162,388			234,348			234,348			467,203			187,679			389,643			190,049
Tax effect of adjustments^(k)		(59,158	)		(33,623	)		(57,984	)		(57,984	)		(138,775	)		(73,382	)		(150,013	)		(71,649	)
Other tax adjustments^(k)		—			—			(6,902	)		(6,902	)		(202,111	)		(54,944	)		105,685			—

Adjusted Net Income	$	202,096		$	188,511		$	265,799		$	289,374		$	325,208		$	242,448		$	198,758		$	124,084

Free Cash Flow:
Cash flow provided by operating activities		$313,722			$301,106			$423,406			$423,406			$359,079			$407,995			$416,288			$96,000
Cash paid for capital expenditures		(89,398	)		(75,533	)		(116,145	)		(116,145	)		(105,135	)		(90,258	)		(63,797	)		(74,679	)

Free Cash Flow		$224,324			$225,573			$307,261			$307,261			$253,944			$317,737			$352,491			$21,231

(a)

(b)

Financial data as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014 is reported in accordance with ASC 605, unless otherwise noted. Our consolidated financial data for the year ended December 31, 2018 has been presented on both an ASC 606 and ASC 605 basis to provide comparability of our operating results during 2018.

(c)

Represents employee compensation costs associated with the Company’s long-term performance based incentive compensation plan and costs associated with special cash bonuses offered to option holders. For more information, see Notes 2 and 4 to our audited consolidated financial statements included elsewhere in this prospectus.

(d)

Represents management fees incurred under consulting service agreements with our Majority Sponsors. These consulting service agreements will terminate upon consummation of this offering. For more information, see Note 16 to our audited consolidated financial statements included elsewhere in this prospectus.

(e)	Represents employee separation costs, exit and disposal costs with the full or partial exit of certain leased facilities, costs associated with planned employee reorganizations and other contract termination costs from various cost-reduction activities.

(f)	Represents integration and transaction costs incurred with completed or contemplated acquisitions, costs incurred in connection with this offering and other transaction costs.

(g)

Represents the fair value accounting gains or losses primarily from our investments in Auven and in venBio. This adjustment also includes changes in the contingent liability that was recorded for additional consideration estimated to be payable to certain owners in connection with the 2017 recapitalization, primarily based on changes in the fair value of such investments, net of taxes and other related expenses. For more information, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

(h)

Other adjustments include amounts that management believes are not representative of our operating performance. These adjustments include implementation costs associated with a new enterprise resource planning (“ERP”) application, advisory costs associated with the adoption of new accounting standards, a gain on the sale of a business and other unusual charges or income. Implementation costs were $5.1 million and $2.3 million for the nine months ended September 30, 2019 and 2018, respectively, and $4.5 million, $4.9 million and $0.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. Note that these amounts exclude depreciation associated with capitalized assets. Costs associated with the adoption of new accounting standards were $0.9 million and $1.9 million for the nine months ended September 30, 2019 and 2018, respectively, and $2.9 million, $1.2 million and $0.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. The gain on the sale of a business totaled $(3.6) million and was recorded in the year ended December 31, 2018.

(i)	Represents an adjustment to conform to certain requirements under the Credit Agreement and indentures governing our Senior Notes, which differ from prevailing GAAP standards, most notably, ASC 606 whereby these agreements require us to provide these measures on a historical GAAP basis.

(j)	Represents other unusual or non-recurring charges or expenses adjusted based on the terms of the Credit Agreement.

(k)

Non-GAAP adjustments were tax effected at an estimated blended effective tax rate of between 38% and 39% for the years ended December 31, 2017, 2016, 2015 and 2014 and 26% for all periods starting January 1, 2018 and forward, excluding the change in recapitalization investment portfolio consideration. Non-recurring gains associated with the Tax Cuts and Jobs Act of 2017 were $(6.9) million and $(202.1) million for the years ending December 31, 2018 and 2017, respectively, and are reflected as adjustments as they are not representative of our operating performance. In addition, $(54.9) million and $105.7 million were reflected as adjustments for the years ending December 31, 2016 and 2015, respectively. The $(54.9) million adjustment for the year ending December 31, 2016 relates to a release of a deferred tax liability on foreign earnings previously considered not permanently reinvested, and the $105.7 million adjustment for the year ending December 31, 2015 relates primarily to a change in assertion related to certain unremitted earnings on foreign operations.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors together with other information in this prospectus, including our consolidated financial statements and related notes included elsewhere in this prospectus, before deciding whether to invest in shares of our common stock. The occurrence of any of the events described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the trading price of our common stock may decline and you may lose all or part of your investment.

Risks Related to Our Industry

The CRO industry is fragmented and highly competitive and, if we fail to compete effectively, our business could suffer.

The CRO industry is fragmented and we face intense competition from numerous competitors. We primarily compete against other global, full service CROs similar to us, mid-size and small specialty CROs, in-house departments of biopharmaceutical companies and, to a lesser extent, universities, teaching hospitals and other organizations. The larger CROs against which we compete include Covance Inc. (“Covance”), ICON plc (“ICON”), IQVIA Holdings Inc. (“IQVIA”), PAREXEL International Corporation, PRA Health Sciences, Inc. (“PRA Health Sciences”) and Syneos Health, Inc. (“Syneos Health”), among others. Some of these competitors, including the in-house departments of biopharmaceutical companies, may have greater capital, deeper expertise in selected areas and more resources than us. In recent years, IQVIA and Syneos Health have engaged in mergers to add new or ancillary services, which might be attractive to consumers. In addition, our competitors that are smaller specialized CROs might compete effectively against us based on price and other commercial terms, as well as on their concentrated size and focus.

As a result of the level of competition we face in our industry, we might not be successful in retaining our existing customers and relationships or in winning new business. For example, in recent years a number of the large biopharmaceutical companies have established strategic or preferred partnerships or other alliances with one or more CROs relating to the provision of services over extended time periods. These partnerships and alliances differ in purpose, scope and term, but they have generally resulted in fewer CROs being selected to perform work for the biopharmaceutical companies. If we are unable to continue to effectively compete in the future, we might not be able to maintain current strategic or preferred partnerships or win new ones. In addition, the level of competition among CROs has led to firms competing aggressively on price, payment terms and other commercial terms, and has and may continue to result in us agreeing to terms that are less favorable to us than we have historically agreed to. Our future success depends on our ability to compete and, if we are unable to do so effectively, our business, results of operations, financial condition and/or cash flows could be materially adversely affected.

Trends in R&D spending and the rate of outsourcing by biopharmaceutical companies could materially adversely affect our growth potential, business, results of operations, financial condition and/or cash flows.

We provide clinical development and laboratory services to companies and other participants in the biopharmaceutical industry that sponsor clinical research, and our direct revenues, growth prospects and backlog are highly dependent on R&D spending levels and outsourcing rates. As such, industry trends, economic factors, regulatory developments, patent protection and political and other events and circumstances that affect the biopharmaceutical industry, such as volatility or declines in securities markets limiting capital and liquidity, also affect us. For example, in recent years there has been significant public and private capital inflows to biotechnology companies and, while the level of fundraising in recent years has been strong, the ability of small and mid-sized biotechnology companies to attract the funding needed to sustain operations and advance clinical candidates to subsequent stages in the development process remains dependent on the overall health of the financial markets.

Thus, if for these reasons or any other reason biopharmaceutical firms reduce their R&D spending or the extent to which they outsource their work to CROs, our ability to grow our business and our results of operations, financial condition and/or cash flows could be materially adversely affected. In addition, in the past, mergers, consolidations, product withdrawals, lawsuits and other events in the biopharmaceutical industry appear to have slowed decision-making by pharmaceutical companies and resulted in delays and cancellations of drug development projects. Continuation or increases in these trends, as well as their effect on R&D spending and outsourcing penetration, could also have a material adverse effect on our business.

Our future success depends on our ability to keep pace with rapid technological changes that could make our services less competitive or obsolete.

The biopharmaceutical industry generally, and drug development services industry more specifically, is subject to increasingly rapid technological changes. Our customers, competitors and other businesses might acquire or develop technologies or services that are more effective or commercially attractive than our current or future technologies or services or that render our technologies or services less competitive or potentially obsolete. If competitors acquire or introduce superior technologies or services and we cannot procure or develop these technologies or services or enhance ours in a timely manner to remain competitive, our competitive position, and in turn our business, results of operations, financial condition and/or cash flows may be materially adversely affected.

The U.S. and international healthcare industry is subject to political, economic and/or regulatory influences and changes, such as healthcare reform, all of which could adversely affect both our customers’ business and our business.

The U.S. and international healthcare industry is subject to changing political, economic and regulatory influences that could significantly affect the drug development process, R&D costs and the pricing and reimbursement for pharmaceutical products.

Governments worldwide have increased efforts to expand healthcare coverage while at the same time curtailing and better controlling the increasing costs of healthcare. In recent years, the U.S. Congress enacted healthcare reform legislation that expanded health insurance coverage and imposed healthcare industry cost containment measures. More recently, there has been considerable discussion in the United States about repeal of or changes to current healthcare laws. At this point, it is uncertain as to what changes, new legislation or regulations will be adopted or how any such changes, new legislation or regulations would impact our business. If cost-containment efforts limit our customers’ profitability, they may decrease R&D spending, which could decrease the demand for our services and materially adversely affect our growth prospects. Likewise, if a simplified or more relaxed drug approval process is adopted, the demand for our services may decrease.

The U.S. Congress has also considered and might adopt other legislation that could put downward pressure on the prices that biopharmaceutical companies can charge for prescription drugs. In addition, government bodies may have adopted or are considering the adoption of healthcare reform to control the increasing cost of healthcare. Cost-containment measures, whether instituted by healthcare providers or imposed by governments or through new government regulations, could result in greater selectivity in the number of pharmaceutical products available for purchase, resulting in third-party payers potentially challenging the price and cost-effectiveness of certain pharmaceutical products. In addition, in many major markets outside the United States, pricing approval is required before sales may commence. As a result, significant uncertainty exists as to the reimbursement status of approved healthcare products. Any of these factors could harm our customers’ businesses, which, in turn, could materially adversely hurt our business.

In addition to healthcare reform proposals, the expansion of managed care organizations, which focus on reducing healthcare costs by limiting expenditures on pharmaceutical products and medical devices, could result in biopharmaceutical and medical device companies spending less on R&D, which could decrease the demand

for our services. If this were to occur, we would have fewer business opportunities and our revenues could decrease, potentially materially.

Government bodies may also adopt healthcare legislation or regulations that are more burdensome than existing regulations. For example, product safety concerns and recommendations from the FDA’s Drug Safety Oversight Board could change the regulatory environment for drug products, including the process for conducting clinical trials of drug and biologic product candidates, FDA product approval and post-approval safety surveillance. These and other changes in regulation could increase our expenses or limit our ability to offer some of our services. Additionally, new or heightened regulatory requirements may have a negative impact on the ability of our customers to conduct and fund clinical trials for new medicines, which could reduce the demand for our services.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. For example, certain policies of the Trump administration may impact our business and industry. Namely, the Trump administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. It is difficult to predict how these executive actions will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these executive actions impose restrictions on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our business may be harmed.

The biopharmaceutical industry has a history of patent and other intellectual property litigation, and we might be involved in costly intellectual property lawsuits.

The biopharmaceutical industry has a history of intellectual property litigation, and these lawsuits will likely continue in the future. Accordingly, we may face patent infringement suits by companies that hold patents for similar business processes or other claims alleging infringement of their intellectual property rights. As the industry employs new technologies, the risk of intellectual property litigation could rise. Legal proceedings relating to intellectual property are costly, take significant time and resources and divert management’s attention from other business concerns, regardless of the merits or the outcome of such claims. If we do not prevail in an infringement lawsuit brought against us, we might have to pay substantial damages, and we could be required to stop the infringing activity or obtain a license to continue such activity, which might not be available on favorable terms or at all, all of which could materially adversely affect our ability to provide services to our customers and our business, results of operations, financial condition and/or cash flows.

Risks Related to Our Business

Our backlog might not accurately predict our future revenue, and we might not realize all or any part of the anticipated revenue reflected in our backlog.

Our backlog represents anticipated direct revenue for work not yet completed or performed (i) under signed contracts, letters of intent and, in some cases, awards that are supported by other forms of written communication and (ii) where there is sufficient or reasonable certainty about the customer’s ability and intent to fund and commence the services within six months. Our backlog excludes anticipated third-party pass-through and out-of-pocket revenue. Once work begins, we recognize direct revenue over the life of the contract based on our performance of services under the contract. Contracts may be terminated or delayed by our customers or regulatory authorities for reasons beyond our control. To the extent projects are delayed, the anticipated timing of our direct revenue could be materially affected.

In the event a customer terminates a contract, we are generally entitled to be paid for services rendered through the termination date and for services provided in winding down the project. However, we are generally not entitled to receive the full amount of direct revenue reflected in our backlog in the event of a contract termination. The duration of the projects in our backlog, and the related revenue recognition, ranges from several months to many years. A number of factors may affect backlog and the direct revenue generated from our backlog, including:

•

the size, complexity and duration of projects;

•

the cancellation or delay of projects; and

•

changes in the scope of work during the course of a project.

Our backlog at September 30, 2019 was $6,805.7 million compared to a backlog of $6,313.7 million at December 31, 2018. Although an increase in backlog will generally result in an increase in future direct revenue to be recognized over time (depending on future contract modifications, contract cancellations and other adjustments), an increase in backlog at a particular point in time does not necessarily correspond to an increase in direct revenues during a particular period. The timing and extent to which backlog will result in direct revenue depends on many factors, including the timing of commencement of work, the rate at which we perform services, scope changes, cancellations, delays, receipt of regulatory approvals and the nature, duration, size, complexity and phase of the studies. In addition, delayed projects remain in backlog until they are canceled. As a result of these factors, our backlog is not necessarily a reliable indicator of future direct revenue and we might not realize all or any part of the direct revenue from the authorizations in backlog as of any point in time.

The majority of our customers’ contracts can be terminated, delayed or reduced in scope upon short notice or no notice.

Most of our contracts may be terminated by the customer upon 30 to 90 days’ notice. Customers terminate, delay or reduce the scope of their contracts for a variety of reasons, including but not limited to:

•

lack of available funding or financing;

•

mergers or acquisitions involving the customer;

•

a change in customer priorities;

•

products being tested fail to satisfy safety requirements or efficacy criteria;

•

products have undesirable preclinical or clinical results;

•

the customer decides to forgo a particular study;

•

inability to enroll enough patients in a particular study;

•

inability to recruit enough investigators for a particular study;

•

the customer decides to shift business to a competitor or to use internal resources;

•

manufacturing problems that cause shortages of the study drug;

•

actions by regulatory authorities; and

•

performance failures.

As a result, contract terminations, delays and reductions in scope occur regularly in the normal course of our business. However, the delay, loss or reduction in scope of a large contract or multiple smaller contracts could result in under-utilization of our personnel, a decline in revenue and profitability and adjustments to our backlog, any or all of which could have a material adverse effect on our business, results of operations, financial condition

and/or cash flows. Further, we believe the risk of termination or delay of multiple contracts may be higher where we have strategic partnership arrangements with biopharmaceutical companies and a large backlog of work for those companies.

We may be adversely affected by industry, customer or therapeutic concentration.

We provide services to biopharmaceutical, biotechnology, medical device and government organizations, as well as other industry participants that sponsor clinical trials, and our revenue is dependent upon expenditures by these customers. Accordingly, our business could be materially adversely affected by mergers, consolidations, business failures, distress in the financial markets or other factors resulting in a decrease in the number of potential customers or therapeutic products being developed through the drug development process. In the last few years, biopharmaceutical consolidation has been accelerating. If the number of our potential customers were to decline in the future, they might be able to negotiate price discounts or other terms for services that are less favorable to us than they have historically. Although we did not have any customer that represented more than 10% of our total revenue for the years ended December 31, 2018, 2017 and 2016, we have experienced customer concentration in the past and could again in the future. For example, our top 10 customers accounted for approximately 47.5% of our total revenue for the year ended December 31, 2018 and 45.2% of our total revenue for the nine months ended September 30, 2019. The loss of business from a significant customer could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.

At times, we conduct multiple clinical studies for different customers in a single therapeutic area involving drugs with similar effects or to treat the same specific condition. As a result, our business could be adversely affected if some or all of the clinical studies are canceled due to newly discovered scientific information or regulatory decisions that affect the drugs within a particular class or for the treatment of a specific condition.

Our financial results may be adversely impacted if we underprice our contracts, overrun our cost estimates or fail to receive approval for or experience delays in documenting change orders.

The majority of our service contracts are based on fixed prices or fixed unit prices for those services, and therefore have set limits on the amounts we can charge for our direct and indirect services. As a result, variations in the timing and progress of large contracts may materially adversely affect our results of operations. In addition, we bear the risk of cost overruns unless the scope of activity is revised from the contract specifications and we are able to negotiate a contract modification with the customer shifting the additional cost to the customer. If we fail to adequately price our contracts for direct and indirect services in total or at the unit level or if we experience significant cost overruns (including direct and indirect costs such as pass-through costs), or are delayed in, or fail to, execute contract modifications with customers increasing the scope of activity, our results of operations could be materially adversely affected. From time to time, we have had to commit unanticipated resources to complete projects, resulting in lower margins and profitability on those projects. We might experience similar situations in the future, which could have a material adverse impact on our results of operations and cash flows.

Our business depends on the efficient and uninterrupted operation of our information and communication systems, including systems we use to deliver services to our customers, and failures in, breach of, or unauthorized access to or use of these systems or data contained therein may materially limit our operations and result in significant harm to our business.

Our success depends on the security and efficient and uninterrupted operation of our information and communication systems, including information and communication systems maintained by third parties on our behalf, and we expect to increase our reliance on these and similar systems over time. As the breadth, complexity and reliance on information systems grows, we will be increasingly exposed to the risks inherent in the development, deployment, operation, use and reliance on these systems, including:

•

disruption, impairment or failure of data centers, telecommunications facilities or other key infrastructure platforms;

•

security breaches of, cyber-attacks on and other failures or malfunctions in our critical application systems or their associated hardware; and

•

excessive costs, delays or other deficiencies in systems development and deployment.

The occurrence of these risks could impede the processing of data, the delivery of services to our customers and the day-to-day management and operation of our business and could result in the corruption, loss, disclosure or unauthorized access to proprietary, confidential or other data, which in turn could result in diminished internal and external reporting capabilities, impaired ability to process transactions, harm to our control environment, diminished employee productivity and unanticipated increases in costs.

While we maintain disaster recovery plans, they might not adequately protect us. Despite any precautions we take, damage from cybersecurity attacks, computer viruses, fire, floods, hurricanes, power loss, telecommunications failures, break-ins and similar events at our facilities or those of our suppliers could result in interruptions in the flow of data to our servers and from our servers to our customers. Corruption or loss of data could result in the need to repeat a trial at no cost to our customer, but at significant cost to us, and may result in the termination of a contract and/or damage to our reputation. Additionally, significant delays in system enhancements and improvements, or inadequate performance of the systems once they are completed, could damage our reputation and harm our business. Although we carry insurance, our coverage might not respond or be adequate to compensate us for all losses that may occur.

Unauthorized disclosure of or access to sensitive or confidential data, including confidential information of our customers, whether through third-party attack, system failure, employee negligence, fraud or misappropriation, could significantly damage our business. We have been, and expect we will continue to be, subject to attempts to gain unauthorized access to or through our information systems, whether by our employees or third parties, including by cyber-attack from computer programmers or hackers who deploy viruses, worms or other malicious software programs. To date, these attacks have not had a material impact on our operations or financial results. However, attacks in the future could result in fines, negative publicity, significant remediation costs, liability and/or damage to our reputation, and could have a material adverse effect on our business, results of operations, financial condition and/or cash flows. In addition, any insurance coverage we have might not respond or be sufficient to cover us against claims or penalties imposed by the federal government or state governments related to security breaches, cyber-attacks and other related breaches.

We are in the process of upgrading our existing human capital management, financial management and general ledger systems to an integrated enterprise resource planning system. We expect this upgrade to be complete in 2020. Our ability to serve customers effectively depends on the reliability of our technology network. We depend on information systems to perform many critical business needs. Any disruption to these information systems could adversely impact our business. Despite extensive planning, we could experience disruptions in our business operations because of the project’s complexity. The potential consequences could include project and other delays, loss of information, diminished internal and external reporting capabilities, impaired ability to process transactions, harm to our control environment, diminished employee productivity and unanticipated increases in costs, all of which could result in material adverse effects on our business, results of operations, financial condition and/or cash flows.

If we fail to perform our services in accordance with contractual requirements, regulatory standards and ethical considerations, we could be liable for significant costs or penalties and our reputation could be harmed.

The clinical development and laboratory services we provide to biopharmaceutical companies and other entities are complex and subject to contractual requirements, regulatory standards and ethical considerations. For example, we must adhere to regulatory requirements from the FDA governing our activities relating to preclinical studies and clinical trials, including Good Clinical Practices (“GCP”), Good Laboratory Practice (“GLP”) and

GMP requirements. We are accredited by certain professional bodies, such as the College of American Pathologists (“CAP”). We are also subject to regulation by the U.S. Drug Enforcement Administration (the “DEA”) which regulates the distribution, recordkeeping, handling, security and disposal of controlled substances. If we fail to perform our services in accordance with these requirements, regulatory agencies have in the past and may in the future take action against us or our customers for failure to comply with applicable regulations governing clinical trials and the development and testing of therapeutic products. Such actions may include sanctions, such as warning or untitled letters, injunctions or failure of such regulatory authorities to grant marketing approval of products, delay, suspension or withdrawal of approvals, license revocation, loss of accreditation, product seizures or recalls, operational restrictions, civil or criminal penalties or prosecutions, damages or fines. Customers may also bring claims against us for breach of our contractual obligations in clinical trials, may terminate their contracts with us and/or may choose not to award further work to us, and patients involved in the clinical trials or taking drugs approved on the basis of those trials may bring personal injury claims against us. Any such action could have a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows.

Such consequences could arise if, among other things, the following occur:

Failure or inadequate performance of our services. The performance of clinical development and laboratory services is complex and time-consuming. For example, we might make mistakes in conducting a clinical trial or providing laboratory services that could negatively impact or obviate the usefulness of the trial or the data generated from it or cause the results of the trial to be reported improperly. If the trial results are compromised, we could be subject to significant costs or liability, which could have a material adverse impact on our business, reputation and ability to perform our services. Examples include:

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non-compliance generally could result in the termination of ongoing clinical trials or the disqualification of data for submission to regulatory authorities, or enforcement action from regulators;

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compromise of data from a particular trial, such as our failure to verify that informed consents were obtained from patients, could require us to repeat the trial under the terms of our contract at no further cost to our customer, but at a substantial cost to us;

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improperly conducting or reporting laboratory results could affect medical decisions for the patient in the trial as well as the clinical trial data and create liability for personal injury and breach of contract for us; and

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breach of a contractual term could result in liability for damages and/or termination of the contract.

Large clinical trials can cost hundreds of millions of dollars and, while we endeavor to contractually limit our exposure to such risks and maintain insurance coverage, improper performance of our services could have a material adverse effect on our financial condition, damage our reputation and result in the cancellation of current contracts by or failure to obtain future contracts from the affected customer and other customers.

Interactive Response Technology (“IRT”) malfunction. Our IRT is critical because it enables the randomization of patients in a given clinical trial to different treatment arms and regulates the supply of an investigational drug, all by means of interactive voice response and interactive web response systems. If these systems malfunction or our personnel make mistakes in the provision of these services and, as a result, patients are incorrectly randomized or misdosed during the course of the clinical trial, then we could be subject to claims for significant damages for any resulting personal injury or death and/or breach of contract claims by our customers, as well as face potential regulatory enforcement. Furthermore, we could suffer from negative publicity associated with any such malfunctions or failures that could have a material adverse effect on our business and reputation. Additionally, errors in randomization may require us to repeat the trial at no further cost to our customer, but a substantial cost to us.

Inspections/Investigations of customers. From time to time, our customers are inspected or investigated by regulatory authorities or enforcement agencies with respect to regulatory compliance of their clinical trials. In

these situations, we have often provided services to our customers with respect to the clinical trials being inspected or investigated, and we are called upon to respond to requests for information by the authorities and agencies. There is a risk that either our customers or regulatory authorities could claim that we performed our services improperly or that we were responsible for clinical trial non-compliance. If our customers or regulatory authorities make such claims against us, we could be subject to material damages, fines, penalties or other liabilities. In addition, negative publicity regarding compliance of our customers’ clinical trials, programs or drugs could have an adverse effect on our business and reputation.

If we encounter difficulties or delays in attracting suitable investigators and enrolling a sufficient number of patients for our customers’ clinical trials, our clinical development segment may be adversely affected.

The recruitment of investigators and patients is essential for the clinical research studies we run for our customers. Investigators are typically located at hospitals, clinics or other sites, including sites we own, and supervise administration of the study drug to patients during the course of a clinical trial. Patients generally are people from the communities in which clinical trials are conducted and may be difficult to locate and enroll in trials, particularly for rare or acute indications, or if the trial protocol requires patients who have not taken other treatments or have failed other treatments for the relevant condition. If we are unable to attract suitable and willing investigators or recruit, enroll and retain patients for clinical trials, our clinical development segment could be materially adversely affected. For example, if we are unable to recruit sufficient investigators to conduct clinical trials as planned or enroll the required number of patients, we may need to incur additional costs to meet the recruitment or enrollment targets or cause a delay or modification to the clinical trial plans. Delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to fulfill our obligations to our customers. Any such difficulties or delays could result in additional costs to us and materially adversely affect our business, results of operations, financial condition and/or cash flows and reputation in the industry.

We are subject to numerous privacy and data security laws and our failure to comply with those laws could cause us significant harm.

In the normal course of our business, we collect, process, use and disclose individual personal data, including patient-specific medical and other clinical trial data, as well as personal data relating to health professionals and our employees. The collection, processing, use, disclosure, disposal and protection of this information and personal data is highly regulated both in the United States and other jurisdictions we are subject to, including but not limited to, applicable regulations arising from the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and the Privacy, Security and Breach Notification Rules, 45 C.F.R. Parts 160-164, that implement those laws; U.S. state privacy, security and breach notification and healthcare information laws; the E.U. General Data Protection Directive (the “GDPR”); other European privacy laws and other privacy laws that are increasingly being adopted in other regions globally. These laws and regulations include varied and sometimes inconsistent requirements, increasing legal risk and the costs and risks of compliance.

These regulations often govern the use, handling and disclosure of personally identifiable medical information and require the use of standard transactions, privacy and security standards and other administrative simplification provisions by covered entities, which include many healthcare providers, health plans, and healthcare clearinghouses. Although certain aspects of our businesses are subject to HIPAA, we do not consider our service offerings generally to cause us to be subject to HIPAA as a directly covered entity; however, there are extremely limited circumstances where we enter into business associate agreements. However, we endeavor to embrace sound identity protection practices and have implemented processes and systems in order to comply with these laws and continue to monitor and enhance them. If we improperly process personal information, fail to protect the confidentiality and security of this information or otherwise breach applicable privacy laws, regulations or duties relating to the use, privacy or security of personal data, we could be subject to civil liability

or criminal prosecution, be forced to alter our business practices and we could suffer significant financial, reputational and other harm and our business, results of operations, financial condition and/or cash flows could be materially adversely affected.

The GDPR became enforceable on May 25, 2018. The GDPR includes sanctions for violations up to the greater of €20 million or 4.0% of worldwide gross annual revenue and applies to services providers such as us. Other privacy laws, including HIPAA and HITECH, provide for potentially large fines for violations. Were we to be subject to any such sanction, it could result in a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows.

In connection with some clinical trials that we conduct in the European Union on behalf of our customers, we serve as the customer’s E.U. data privacy representative under the GDPR. As the customer’s representative, we could in certain circumstances be liable for the customer’s failure to comply with the GDPR. We believe we maintain adequate processes and systems to ensure our and our customers’ compliance with the requirements of the GDPR, but it is possible that we could fail to comply or that we could incur liability due to the acts or omissions of our customers. Our contracts for these services include indemnification provisions intended to protect us from a customers’ failure to comply with the GDPR, but it might not cover all our losses in the event of a failure to comply. In the event we are not able to secure indemnification or the indemnification and any insurance coverage is inadequate to cover our losses, we could suffer significant financial, operational, reputational and other harm and our business, results of operations, financial condition and/or cash flows could be materially adversely affected.

The United States, the European Union, and other jurisdictions where we operate continue to issue new, and enhance existing, privacy and data security protection regulations related to the collection, use, disclosure, disposal and protection of personal data and medical information, such as the recently enacted California Consumer Protection Act. Privacy and data security laws are rapidly evolving both in the United States and internationally, and the future interpretation of those laws is somewhat uncertain. For example, we do not know how E.U. regulators will interpret or enforce many aspects of the GDPR and some regulators may do so in an inconsistent manner. In the United States, privacy and data security is an area of emphasis for some but not all state regulators, and new legislation has been and likely will continue to be introduced at the state and/or federal level. Additional legislation or regulation might, among other things, require us to implement new security measures and processes or bring within the legislation or regulation de-identified health or other personal data, each of which may require substantial expenditures or limit our ability to offer some of our services.

Our business could be harmed if we are unable to effectively manage our growth.

We believe that sustained growth places a strain on human, operational and financial resources. To manage our organic and inorganic growth and increasing complexity of our business, we must continue to attract and retain qualified management, professional, scientific, technical and business development personnel and improve our operating and administrative systems. We believe that maintaining and enhancing both personnel and our systems at reasonable cost are instrumental to our success. We cannot assure you that we will be able to enhance our current technology or obtain new technology that will enable our systems to keep pace with industry developments and the sophisticated needs of our customers. The nature and pace of our organic and inorganic growth introduces risks associated with quality control and customer dissatisfaction due to delays in performance or other problems. In addition, non-U.S. operations involve the additional risks of assimilating differences in non-U.S. business practices, hiring and retaining qualified personnel and overcoming language barriers. If we are unable to manage our growth effectively, we could incur losses.

If we are unable to recruit, retain and motivate key personnel, our business could be adversely affected.

Our success depends on the collective performance, contribution and expertise of our senior management team and other key personnel throughout our businesses, including qualified management, professional,

operational, scientific, technical and business development personnel. There is significant competition for qualified personnel in the biopharmaceutical and related services industries, particularly personnel with advanced degrees and those with significant experience and expertise. The loss of any key executive, or our inability to continue to recruit, retain and motivate key personnel and replace departed personnel in a timely fashion, may adversely impact our ability to compete effectively and grow our business and negatively affect our ability to meet our short and long-term financial and operational objectives.

Changes in accounting standards issued by the Financial Accounting Standards Board (“FASB”), including ASC 606, or other standard-setting bodies may adversely affect trends and comparability of our financial results.

We are required to prepare our financial statements in accordance with GAAP, which is periodically revised and/or expanded. From time to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the FASB and the Securities and Exchange Commission (the “SEC”). It is possible that future accounting standards we are required to adopt may require additional changes to the current accounting treatment that we apply to our financial statements and may result in significant changes to our results, disclosures and supporting reporting systems. Such changes could result in a material adverse impact on our results of operations and financial condition.

For example, effective January 1, 2018, we were required to adopt ASC 606, which outlines a single comprehensive model for entities to use in accounting for revenue from contracts with customers. Under ASC 606, third-party pass-through costs and reimbursed costs are included in our measurement of progress. This change in revenue recognition requires significant estimates of project costs that will need to be updated and adjusted on a regular basis. These updates and adjustments are likely to result in variability in our revenue recognition from period to period that may cause unexpected variability in our operating results. Additionally, effective January 1, 2019, we were required to adopt ASC Topic 842 (“ASC 842”), which required us to recognize certain operating leases in our consolidated balance sheet. See Note 1 and Note 3 to our audited consolidated financial statements included elsewhere in this prospectus for more information regarding ASC 606 and Note 1 and Note 5 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for more information regarding ASC 842.

We depend on third parties for critical goods and support services.

We depend on third parties for a variety of goods and support services that are critical to us. These third-party service providers include, but are not limited to, software and other technology providers, third-party transportation and travel providers, suppliers of study drugs for clinical trials, couriers, customs brokers, drug depots and distributors, suppliers of licensing agreements, investigator meeting planners, suppliers of kits, reagents, contractors and other supplies used by our laboratory segments and equipment maintenance providers. The failure of any of these third parties to adequately provide goods or services to us or to comply with relevant laws and regulations could have a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows.

We operate in many different countries and are subject to the FCPA, the Bribery Act and anti-corruption laws and regulations in other countries, as well as laws and regulations relating to trade compliance and economic sanctions. Violations of these laws and regulations could harm our reputation and business, or materially adversely affect our business, results of operations, financial condition and/or cash flows.

We are subject to various U.S. and non-U.S. anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) and the U.K. Bribery Act 2010 (the “Bribery Act”). The FCPA and the Bribery Act prohibit us and our officers, directors, employees and third parties acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA further requires us to make and keep books, records and accounts that accurately reflect transactions

and dispositions of assets and to maintain a system of adequate internal accounting controls. The Bribery Act also prohibits “commercial” bribery and accepting bribes.

Our global business operations also must be conducted in compliance with applicable export controls and economic sanctions laws and regulations, including those administered by the U.S. Department of the Treasury’s (the “U.S. Treasury”) Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, the European Union, Her Majesty’s Treasury and other relevant sanctions authorities.

Our internal policies and procedures require strict compliance with these anti-corruption and economic sanctions laws. Despite our training and compliance efforts, we cannot assure that our policies and procedures will protect us from liability for violations of anti-corruption or economic sanctions laws committed by persons associated with us, including our employees or third parties acting on our behalf. Our continued expansion outside the United States, including in countries that are known to have an increased prevalence of corruption, could increase such risks in the future. Violations of these anti-corruption laws or economic sanctions, or even allegations of such violations, could disrupt our business and result in a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows. For example, violations may result in criminal or civil penalties, disgorgement of profits, related stockholder lawsuits and other remedial measures, and companies that violate these laws can be debarred by the U.S. government and lose U.S. export privileges. Future changes in anti-corruption or economic sanctions laws and enforcement could also result in increased compliance requirements and related costs which could materially adversely affect our business, results of operations, financial condition and/or cash flows.

The competition between our existing and potential customers may adversely impact the extent to which those customers use our services, which may materially adversely affect our business, results of operations, financial condition and/or cash flows.

We regularly provide services to biopharmaceutical companies that compete against each other and we sometimes provide services to customers that are developing competing drugs. Therefore, the existing or future business we receive from a customer might discourage a competing customer or potential customer from requesting our services. Also, in connection with the negotiation of a contract, a customer might require that we agree to limit the scope of services we provide to other customers or other restrictive covenants that might limit our ability to provide services to others. The loss of, or reduction in, business we receive from a customer or limits on our ability to service other customers may have a material adverse effect on our business, results of operations, financial condition and/or cash flows.

We face risks associated with business restructurings and the integration of new businesses, which, if not properly managed, could materially affect our business.

In the past few years, we have adopted and implemented restructuring plans and cost-saving initiatives designed to, among other things, improve our operating efficiencies, match our capacity with market demand and reduce costs. At the same time, we have made strategic investments by acquiring businesses that we believe complement our existing portfolio of services. Restructurings and the integration of new businesses present potential risks that could materially adversely affect our business. Restructurings could result in a decline in employee morale, an increase in employment claims, the failure to achieve the stated operational objectives and/or targeted costs savings and the failure to meet customer requirements. Conversely, the success of any acquisition will depend upon, among other things, our ability to effectively integrate the acquired business operations, personnel, services and technologies into our organization, retain and motivate personnel key to the future success of the acquired business and retain customers. If we fail to identify and effectively manage these potential risks, our reputation, business, results of operations, financial condition and/or cash flows could be materially adversely affected.

Our business exposes us to potential liability that could affect our reputation, business, results of operations, financial condition and/or cash flows.

Our business involves the testing of new drugs on humans participating in clinical trials and, if marketing approval is received, the availability of these drugs to be prescribed to patients. Our provision of clinical trial services and involvement in the drug development process exposes us to the risk of liability for personal injury or death from, among other things, improper administration of a drug during testing and adverse reactions to the drug administered during testing and after the drug has been approved for sale by regulatory authorities. For example, we have in the past been sued by individuals alleging personal injury due to their participation in a clinical trial. In addition, we have also been sued by individuals alleging personal injury and death caused by the ingestion of drugs approved for sale by regulatory authorities due to our participation in a clinical trial of the drug prior to its approval. In each of these suits, the individuals were seeking monetary damages under a variety of legal theories. If we are required to pay damages or incur defense costs in connection with any personal injury claim that is outside the scope of indemnification agreements we have with customers, if any indemnification agreement is not performed in accordance with its terms or if our liability exceeds the amount of any applicable indemnification limits or available insurance coverage, our reputation, business, results of operations, financial condition and/or cash flows could be materially adversely impacted. We also might not be able to procure adequate insurance for these risks in the future upon terms acceptable to us, if at all.

In the normal course of providing clinical trial services for our customers, we contract with physicians who serve as investigators to administer the protocols and conduct the trials. In addition, we currently own and operate a global site network and employ physicians who serve as investigators on clinical trials. In either case, if an investigator errs during a clinical trial resulting in harm to a patient, claims for personal injury or product liability damages may result. Additionally, trial data may be compromised and our customer may seek damages from us or require us to repeat the trial at our cost. If we were liable for claims related to a physician’s conduct, such liability could have a material adverse impact on our business, results of operations, financial condition and/or cash flows.

From time to time we act as legal representative, importer of record or in a similar capacity on behalf of our customers in certain countries or regions, either as a result of being directly engaged to do so or being deemed to take on such role by virtue of providing associated services. Acting in this capacity exposes us to increased risk, including potential liability to patients and regulatory authorities for the action and/or inaction of the customer. As a condition to providing such services, we generally require specific indemnification and insurance from the customer, however any such insurance coverage might not respond or be sufficient to cover us against claims or penalties imposed, and in the event that we seek to enforce an indemnification provision, the indemnifying party may not have sufficient resources to fully satisfy its indemnification obligations or may otherwise not comply with its contractual obligations. In these circumstances, we could suffer significant financial, operational, reputational and other harm and our business, results of operations, financial condition and/or cash flows could be materially adversely affected.

The operation of our early development Phase I clinics and our AES offering involves direct interaction with clinical trial volunteers, and exposes us to potential liability for personal injury or death that could materially adversely affect our reputation and business.

We operate early development clinics, which involve direct interaction by us with clinical trial volunteers, and we also have strategic alliances with other early development clinics that serve as subcontractors for us. We also own and operate a global site network, which involves direct interaction with clinical trial volunteers. As a part of our early development and our AES operations, we employ and contract with physicians, nurses and other trained health care professionals who conduct the protocol and testing directly on individuals, which may involve administration of the investigational drug, drawing of blood and other medical procedures required under the protocol. Any personal injury to, or death of, a person participating in a clinical trial caused by the medical malpractice or negligence of our physicians, nurses or other staff, or those of our subcontractors, may result in

liability to us and have a material adverse effect on our reputation, business, results of operations, financial condition and/or cash flows.

Our insurance might not cover all of our liabilities, including indemnification obligations, associated with the operation of our business and provision of services.

We procure and maintain insurance for ordinary risks associated with the operation of our business, including our indemnification obligations. This insurance coverage under the policies we procure might not be sufficient to cover all of our liabilities or may be contested by our carriers. If our insurance is not adequate or available to cover our liabilities, including our indemnification obligations, or if insurance is not available in the future upon terms acceptable to us, if at all, or if the cost of our insurance is far in excess of historical amounts, our business, results of operations, financial condition and/or cash flows may be materially adversely harmed.

Our business uses biological and hazardous materials, which are regulated by various laws. As such, we are exposed to liabilities for violations of those laws and claims for personal injury or death that could materially adversely affect our business.

Our drug development activities involve the use of biological materials, hazardous materials, chemicals and various radioactive compounds. We are subject to various laws and regulations governing the use, storage, handling and disposal of these materials. In the event we violate these laws, we could be liable for costs and expenses for cleanup and remediation, statutory fines and penalties and other civil and criminal penalties. In addition, if there are changes in these laws or regulations or new laws or regulations are enacted, we might be required to incur significant costs to bring our operations into compliance with any new requirements. Furthermore, in the event of an incident involving these materials, we may be subject to claims for personal injury, death or property damage, all of which could materially adversely impact our business, results of operations, financial condition and/or cash flows.

Our business is subject to international and U.S. economic, currency, political and other risks that could negatively affect our business, results of operations, financial condition and/or cash flows.

We provide services globally and have business operations in numerous countries throughout the world. Because we provide our services worldwide, our business is subject to risks associated with doing business internationally. Our revenue from our non-U.S. operations represented approximately 47.7% of our total revenue for the year ended December 31, 2018 and 48.0% of our total revenue for the nine months ended September 30, 2019. We anticipate that we will continue to perform a significant portion of our services through our international operations. Our U.S. and international operations are subject to risk and uncertainties inherent in operating in these regions, including:

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conducting a clinical trial in multiple countries is complex, and issues in one country can affect the progress of the trial in other countries and result in delays or cancellation of contracts;

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the United States or foreign countries could enact legislation or impose regulations, including unfavorable labor regulations, tax policies or economic sanctions, that could have an adverse effect on our ability to conduct business in or expatriate profits from the countries in which we operate;

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the complexities of operating within multiple tax jurisdictions, including potentially negative consequences from changes in tax laws or from current and future tax examinations;

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foreign countries are expanding or might expand their regulatory framework with respect to patient informed consent or other aspects of the conduct of clinical trials, which could delay or inhibit our ability to conduct trials in such countries;

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the regulatory or judicial authorities of foreign countries might not enforce legal rights and recognize business procedures in a manner to which we are accustomed or would reasonably expect;

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changes in political and economic conditions might lead to changes in the business environment in which we operate;

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changes in foreign currency exchange rates, including the impact of contractual provisions that shift the risk of unfavorable movement in certain exchange rates to us;

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potential violations of existing or newly enacted laws may cause difficulties in staffing and managing international operations;

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customers in foreign countries may have longer payment cycles, and it may be more difficult to collect receivables in those countries;

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political unrest could interrupt our services, endanger our personnel or cause project delays or loss of clinical trial material or results; and

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any failure by us to comply with foreign regulations or restrictions or become aware of and acknowledge changes in foreign regulations or restrictions, which could result in the delay of a clinical trial.

These risks and uncertainties could negatively impact our ability to, among other things, perform large, global projects for our customers. Furthermore, our ability to manage these risks and uncertainties could be affected by U.S. laws and could have an adverse impact on our business, results of operations, financial condition and/or cash flows. For further information regarding foreign currency exchange rate risk, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk—Foreign Currency Exchange Rate Risk.”

Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.

We depend on our customers, investigators, laboratories and other facilities for the continued operation of our business. While we maintain disaster recovery plans, they might not adequately protect us. Despite any precautions we take for natural disasters or other catastrophic events, these events, including terrorist attack, pandemic flu, hurricanes, fire, floods and ice and snow storms, result in interruptions in the flow of data to our servers and from our servers to our customers. Corruption or loss of data could result in the need to repeat a trial at no cost to our customer, but at significant cost to us, and may result in the termination of a contract and/or damage to our reputation. Finally, long-term disruptions in the infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities and acts of terrorism or other “acts of God,” particularly involving cities in which we have offices, could adversely affect our businesses. Although we carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain events, our coverage might not respond or be adequate to compensate us for all losses that may occur. Any natural disaster or catastrophic event affecting us or our customers, investigators or payers could have a significant negative impact on our operations and financial performance.

Tax reform in the United States could materially affect our business, results of operations, financial condition and/or cash flows.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), representing the most significant changes to tax legislation in over 30 years. The Tax Act made broad and complex changes to the U.S. tax code including, but not limited to, (i) reducing the corporate statutory income tax rate from 35% to 21%, effective for 2018 and thereafter, (ii) amending the limitations on deductions for interest and (iii) transitioning U.S. international taxation from a worldwide system to a territorial system, inclusive of a one-time mandatory transition tax on accumulated unremitted foreign earnings as of December 31, 2017. Although we have adopted the applicable portions of the Tax Act as required, certain amounts recorded represent our best estimate based on regulatory guidance and information available at the time of recording. The ultimate impact from applying the Tax Act may differ

materially from amounts recognized, due to, among other things, additional regulatory guidance that may be issued and actions we take because of the Tax Act. Much of the applicable regulatory guidance issued to date by the Internal Revenue Service (the “IRS”) and the U.S. Treasury has been in the form of proposed regulations, with varying effective dates that would be triggered when final regulations are published. The content of these final regulations and their effective dates remain uncertain. We continue to assess the impact of the Tax Act, and are awaiting further guidance from the IRS and the U.S. Treasury relating to interpretation and application of the Tax Act. Our accounting for the Tax Act could have a material effect on our business, results of operations, financial condition and/or cash flows.

Our cash taxes paid and effective tax rate have and will continue to fluctuate from time to time, and increases in either may adversely affect our business, results of operations, financial condition and/or cash flows.

Our cash taxes paid and effective income tax rate are influenced by our projected and actual profitability in the taxing jurisdictions in which we operate as well as changes in income tax rates. Additionally, changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our cash taxes paid and effective income tax rate. Factors that may affect our cash taxes paid and/or effective income tax rate include, but are not limited to:

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the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no income tax benefit can be recognized;

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actual and projected full year pre-tax income;

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changes in existing tax laws and rates in various taxing jurisdictions;

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examinations or audits by taxing authorities;

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the use of foreign tax credits, and restrictions therein;

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changes in our capital structure;

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the establishment of valuation allowances against deferred income tax assets if we determine that it is more likely than not that future income tax benefits will not be realized; and

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other provisions of the Tax Act, including (i) base erosion and anti-abuse tax, if applicable, (ii) taxation of foreign-derived intangible income and global intangible low-taxed income and (iii) limitations on deductions for interest, among others.

These factors could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.

Additionally, we rely upon generally accepted interpretations of tax laws and regulations in the countries in which we operate and cannot be certain that these interpretations are accurate or that the responsible taxing authority is in agreement with our views. We currently have open examinations with various tax authorities. If a satisfactory resolution cannot be achieved with the tax authorities, the ultimate tax outcome may have a material adverse effect on our results of operations, financial condition and/or cash flows.

Economic conditions and regulatory changes leading up to and following the United Kingdom’s proposed exit from the European Union could negatively affect our business, results of operations, financial condition and/or cash flows.

We have operations in multiple countries, including the United Kingdom, and have transactions in multiple currencies, including the Pound Sterling. We also employ nationals of E.U. countries in the United Kingdom and U.K. nationals in our E.U. businesses. During the second quarter of 2016, the United Kingdom voted by referendum to exit the European Union, commonly referred to as “Brexit.” On March 29, 2017, the U.K.

government initiated a process to leave the European Union. It is anticipated that the United Kingdom will cease to be part of the European Union on or before January 31, 2020 on the basis of the currently-negotiated withdrawal agreement. Whether or not this occurs at the time or on the conditions therein, the impact of the United Kingdom’s departure from, and future relationship with, the European Union are uncertain. Brexit has and continues to create general economic uncertainty in the United Kingdom and European Union. The effects of Brexit could have an adverse impact on our business, results of operations, financial condition, and/or cash flows.

Our inability to adequately protect our intellectual property rights could adversely affect our business.

Our success is dependent, in part, on our ability to develop, use and protect our proprietary methodologies, software, compositions, processes, procedures, systems, technologies and other intellectual property. To protect our intellectual property rights, we primarily rely upon trade secret law, confidentiality agreements and policies, invention assignments and other contractual arrangements, along with patent, copyright and trademark laws. Existing laws of the countries outside of the United States in which we provide services offer only limited protection, and these are subject to change at any time. In addition, the agreements upon which we rely to protect our intellectual property might be breached, or might not be fully enforceable. Our intellectual property rights might not prevent our competitors from independently developing intellectual property that is similar to or duplicative of ours. Also, enforcing our intellectual property rights might also require substantial time, money and oversight, and we might not be successful in enforcing our rights.

Any patents that we own or license might not provide adequate protection in the future for the covered technology or inventions. Any patent applications we file might not result in the issuance of valid patents or the scope of our issued patents might not provide meaningful competitive advantages. Also, any patent protection might not prevent others from developing competitive products using related or other technology that does not infringe our patent rights. The scope and enforceability of patents can be highly uncertain and often involves complex legal and factual questions and proceedings, which could be expensive, last several years and either prevent issuance of additional patents to us or result in a significant reduction in the scope or invalidation of our patents. Moreover, the issuance of a patent in one country does not assure the issuance of a patent with similar claim scope in another country, and claim interpretation and infringement laws vary among countries, so we are unable to predict the extent of patent protection in any country.

We cannot be certain that the conduct of our business does not and will not infringe the intellectual property or other proprietary rights of others. Any claim of infringement by a third party, even one without merit, could cause us to incur substantial costs to defend against such claim, could distract our management and employees, and generally interfere with our business.

Our investments in third parties are illiquid and subject to loss which could materially adversely affect our financial condition.

We have made investments and commitments to invest in other companies and investment vehicles. Most of our investments are as a limited partner in investment partnerships and are not directly in individual companies. In many cases, there is no public market for these investments and we might not be able to sell them on terms acceptable to us, if at all. In addition, if these funds or companies encounter financial difficulties, we might lose all or part of our investment. We account for the majority of these equity method investments at fair value, utilizing the fair value option, in accordance with GAAP. These investments could have a significant impact on our operating results due to changes in fair market value of their respective investment portfolios or changes in the valuation assumptions by management. We have recorded a liability for additional consideration estimated to be payable related to the recapitalization of the Company in 2017. The contingent additional consideration is based primarily on changes in the fair value of Auven and venBio, net of taxes and other expenses related to such investments. For more information see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

We may need to recognize impairment charges related to goodwill, definite-lived intangible assets and/or fixed assets.

We have substantial balances of goodwill and definite-lived intangible assets as a result of being taken private by our Majority Sponsors in 2011 as well as our other acquisitions. As of September 30, 2019, our goodwill and intangible assets totaled $1,743.6 million and $918.5 million, respectively. We are required to test goodwill for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment. We are also required to evaluate amortizable intangible assets for impairment if there are indicators of a possible impairment.

There is significant judgment required in the analysis of a potential impairment of goodwill and intangible assets. As a result of a general economic slowdown, deterioration in one or more of the markets in which we operate or in our financial performance and/or future outlook of reporting units with assigned goodwill or intangible assets, we may determine that impairment of our goodwill or intangible assets exists. An impairment charge would be determined based on the estimated fair value of the reporting unit’s assigned goodwill and estimated fair value of intangible assets and any such impairment charge could have a material adverse effect on our results of operations and financial condition. For example, for the years ended December 31, 2018, 2017 and 2016, we recognized goodwill impairment charges of $29.6 million, $38.4 million and $26.9 million, respectively. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” for additional information on the goodwill impairment recognized.

Difficult and volatile conditions in the capital and credit markets and in the overall economy could materially adversely affect our business, financial position, results of operations and/or cash flows.

Our business, financial position, results of operations and/or cash flows could be materially adversely affected by difficult conditions and volatility in the capital and credit markets and in the overall economy. Difficult conditions in these markets and the overall economy affect our business in a number of ways. For example:

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under difficult market conditions there can be no assurance that borrowings under our Revolving Credit Facility (as defined herein) would be available or sufficient, and in such a case, we might not be able to successfully obtain additional financing on reasonable terms, or at all;

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in order to respond to market conditions, we may need to seek waivers of various provisions in our Senior Secured Credit Facilities, and we might not be able to obtain such waivers on reasonable terms, if at all; and

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market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending or cause non-payment of invoices due, which in turn could result in decreased sales, cash flows and earnings for us.

Risks Associated with Our Indebtedness

Our substantial indebtedness could materially adversely affect our financial condition and our ability to operate our business, react to changes in the economy or industry or pay our debts and meet our obligations under our debt and could divert our cash flow from operations for debt payments.

We have a significant amount of indebtedness. As of September 30, 2019, our total borrowings under our Senior Notes and Senior Secured Credit Facilities was $5,679.5 million. Although we expect to use all of the proceeds from this offering to repay indebtedness, we do not expect to repay any of the indebtedness under our Opco Notes or our Senior Secured Credit Facilities and, as a result, we will continue to have a significant amount of indebtedness. See “Use of Proceeds.” In addition, as of September 30, 2019, we had a $300.0 million revolving credit facility (the “Revolving Credit Facility”) under which we had $298.4 million of availability after giving effect to outstanding letters of credit. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In addition, subject to restrictions in the agreements governing our Senior Notes and Senior Secured Credit Facilities, we may incur additional debt.

Our substantial debt could have important consequences to you, including the following:

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it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness;

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our ability to obtain additional financing for working capital, capital expenditures, debt service requirements or other general corporate purposes may be impaired;

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a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, acquisitions and other purposes;

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we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited;

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our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt; and

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our ability to borrow additional funds or to refinance debt may be limited.

Furthermore, all of our debt under our Senior Secured Credit Facilities bears interest at variable rates based on LIBOR. If these rates were to increase significantly, whether because of an increase in market interest rates or a decrease in our creditworthiness, our ability to borrow additional funds may be reduced and the risks related to our substantial debt would intensify. Each quarter-point increase in the LIBOR would increase interest expense on our current variable rate debt by approximately $7.8 million during 2019.

In addition, on July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calibration of LIBOR to the administrator of LIBOR after 2021.

If LIBOR ceases to exist, the method and rate used to calculate our interest rates and/or payments on our Senior Secured Credit Facilities in the future may result in interest rates and/or payments that are higher than, lower than or that do not otherwise correlate over time with the interest rates and/or payments that would have been applicable to our obligations if LIBOR was available in its current form. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate. As such, the potential effect of any such event is uncertain, but were it to occur, our cost of capital, financial results, cash flows and results of operations may be adversely affected.

Servicing our debt requires a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations.

Our business may not generate sufficient cash flow from operating activities to service our debt obligations. Our ability to make payments on and to refinance our debt and to fund planned capital expenditures depends on our ability to generate cash in the future. To some extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

If we are unable to generate sufficient cash flow from operations to service our debt and meet our other commitments, we may need to refinance all or a portion of our debt, sell material assets or operations, delay capital expenditures or raise additional debt or equity capital. We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms or at all, and these actions may not be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt agreements may restrict us from pursuing any of these alternatives.

Restrictive covenants in the Credit Agreement governing our Senior Secured Credit Facilities and the indentures governing our Senior Notes may restrict our ability to pursue our business strategies, and failure to comply with any of these restrictions could result in acceleration of our debt.

The operating and financial restrictions and covenants in the Credit Agreement governing our Senior Secured Credit Facilities and the indentures governing our Senior Notes may materially adversely affect our ability to distribute monies to our stockholders, finance future operations or capital needs or engage in other business activities. Such agreements limit our ability, among other things, to:

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incur additional indebtedness and guarantee indebtedness;

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pay dividends on or make distributions in respect of our common stock or make other restricted payments;

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make loans and investments;

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sell or otherwise dispose of assets;

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incur liens;

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consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

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enter into agreements restructuring our subsidiaries’ ability to pay dividends;

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enter into certain transactions with our affiliates; and

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designate our subsidiaries as unrestricted subsidiaries.

In addition, the restrictive covenants in the Credit Agreement governing our Senior Secured Credit Facilities require us to maintain a specified first lien net leverage ratio when a certain percentage of our Revolving Credit Facility commitments are borrowed and outstanding as of the end of each fiscal quarter. In certain circumstances, our ability to meet this financial covenant may be affected by events beyond our control.

A breach of the covenants under the indentures governing our Senior Notes or the Credit Agreement governing our Senior Secured Credit Facilities could result in an event of default under the applicable indebtedness. Such a default might allow the creditors to accelerate the related debt and might result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the Credit Agreement governing our Senior Secured Credit Facilities would permit the lenders under our Senior Secured Credit Facilities to terminate all commitments to extend further credit under our Senior Secured Credit Facilities. Furthermore, if we were unable to repay the amounts due and payable under our Senior Secured Credit Facilities, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

As a result of all of these restrictions, we and/or our subsidiaries, as applicable, may be:

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limited in how we conduct our business;

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unable to raise additional debt or equity financing to operate during general economic or business downturns; or

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unable to compete effectively or to take advantage of new business opportunities.

These restrictions might hinder our ability to service our indebtedness or grow in accordance with our business strategy.

Furthermore, the terms of any future indebtedness we may incur could have further additional restrictive covenants. We may not be able to maintain compliance with these covenants in the future, and in the event that

we are not able to maintain compliance, we cannot assure you that we will be able to obtain waivers from the lenders or amend the covenants.

Despite current debt levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage.

We and our subsidiaries may be able to incur substantial additional debt in the future. Although the Credit Agreement governing our Senior Secured Credit Facilities and the indentures governing the Senior Notes contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions, and the debt incurred in compliance with these restrictions could be substantial. Additionally, we may successfully obtain waivers of these restrictions. If we incur additional debt above the levels currently in effect, the risks associated with our leverage, including those described above, would increase. In addition, we had a $300.0 million Revolving Credit Facility under which we had $298.4 million of availability as of September 30, 2019 after giving effect to outstanding letters of credit.

Risks Related to this Offering and Ownership of Our Common Stock

No market currently exists for our common stock, and an active, liquid trading market for our common stock may not develop, which may cause our common stock to trade at a discount from the initial offering price and make it difficult for you to sell the common stock you purchase.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market on Nasdaq or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling any shares of our common stock that you purchase. The initial public offering price for the shares has been determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

You will incur immediate dilution in the net tangible book value of the shares you purchase in this offering.

The initial public offering price of our common stock is higher than the pro forma net tangible book value per share of outstanding common stock prior to completion of this offering. Based on our pro forma net tangible book deficit as of September 30, 2019 and upon the issuance and sale of shares of common stock by us at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, if you purchase our common stock in this offering, you will suffer immediate dilution of approximately $ per share in net tangible book value. Dilution is the amount by which the offering price paid by purchasers of our common stock in this offering will exceed the pro forma net tangible book value per share of our common stock upon completion of this offering. If the underwriters exercise their option to purchase additional shares, you will experience future dilution. A total of 11,155,631 options to purchase common shares are outstanding as of September 30, 2019 under our existing 2017 Equity Incentive Plan (the “2017 Plan”). A total of shares of common stock have been reserved for future issuance under the 2020 Incentive Plan. You may experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our directors, officers and employees under our current and future stock incentive plans, including the 2017 Plan and the 2020 Incentive Plan. See “Dilution.”

Our stock price may change significantly following this offering, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The trading price of our common stock is likely to be volatile. The stock market has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular

companies. We and the underwriters have negotiated to determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in other portions of this “Risk Factors” section and the following:

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results of operations that vary from the expectations of securities analysts and investors;

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results of operations that vary from those of our competitors;

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changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

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declines in the market prices of stocks generally;

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strategic actions by us or our competitors;

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announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

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changes in general economic or market conditions or trends in our industry or markets;

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changes in business or regulatory conditions;

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additions or departures of key management personnel;

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future sales of our common stock or other securities by us or our existing stockholders, or the perception of such future sales;

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investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives;

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the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

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announcements relating to litigation;

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guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

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the development and sustainability of an active trading market for our stock;

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changes in accounting principles; and

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other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.

These broad market and industry fluctuations may materially adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock are low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors, which could materially adversely affect our stock price.

Our operating results have fluctuated from quarter to quarter at points in the past, and they may do so in the future. Therefore, results of any one fiscal quarter are not a reliable indication of results to be expected for any other fiscal quarter or for any year. If we fail to increase our results over prior periods, to achieve our projected results or to meet the expectations of securities analysts or investors, our stock price may decline, and the

decrease in the stock price may be disproportionate to the shortfall in our financial performance. Results may be affected by various factors, including those described in these risk factors. We maintain a forecasting process that seeks to align expenses to backlog conversion. If we do not control costs or appropriately adjust costs to actual results, or if actual results differ significantly from our forecast, our financial performance could be materially adversely affected.

We are a holding company with no operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations.

We are a holding company with no material direct operations. Our principal assets are the shares of common stock of Eagle II that we hold. Eagle II is the indirect parent of Pharmaceutical Product Development, LLC which, together with its subsidiaries, owns substantially all of our operating assets. As a result, we are dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us, including restrictions under the covenants of the Credit Agreement governing our Senior Secured Credit Facilities and the indentures governing our Senior Notes. If we are unable to obtain funds from our subsidiaries, we may be unable to meet our financial obligations.

We currently do not intend to declare dividends on our common stock in the foreseeable future and, as a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business or industry. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.

After this offering, the sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of this offering, we will have a total of shares of common stock outstanding. All shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933 (the “Securities Act”), except for any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”), including certain of our directors, executive officers and other affiliates (including the Sponsors), which may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale,” and any shares purchased in our directed share program which are subject to the lock-up agreements described in “Underwriting.”

The shares held by the Sponsors and certain of our directors, officers and employees immediately following the consummation of this offering will represent approximately % of our total outstanding shares of common stock following this offering (which do not include any shares that may be purchased by these holders through our directed share program), based on the number of shares outstanding as of September 30, 2019. Such shares will be “restricted securities” within the meaning of Rule 144 and subject to certain restrictions on resale following the consummation of this offering. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares Eligible for Future Sale.”

In connection with this offering, we, our directors and executive officers, and holders of substantially all of our common stock prior to this offering have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of certain representatives of the underwriters. See “Underwriting” for a description of these lock-up agreements.

Upon the expiration of the contractual lock-up agreements pertaining to this offering, up to an additional shares will be eligible for sale in the public market, of which are held by directors, executive officers and other affiliates and will be subject to volume, manner of sale and other limitations under Rule 144. Following completion of this offering, shares covered by registration rights would represent approximately % of our outstanding common stock (or %, if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

In addition, the shares of our common stock reserved for future issuance under the 2020 Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable. A total of shares of common stock have been reserved for future issuance under the 2020 Incentive Plan.

In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation, amended and restated bylaws and amended and restated stockholders agreement may have the effect of delaying or preventing a merger,

acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its best interest, including attempts that might result in a premium over the market price of our common stock.

These provisions provide for, among other things:

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the division of our board of directors into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year;

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that at any time when the Majority Sponsors and certain of their respective affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of our company entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of stock entitled to vote thereon, voting together as a single class;

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the ability of our board of directors to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change of control;

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advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings;

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the right of the Majority Sponsors and certain of their respective affiliates to nominate the majority of the members of our board of directors and the obligation of certain of our other pre-IPO stockholders to support such nominees;

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certain limitations on convening special stockholder meetings; and

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that certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may be amended only by the affirmative vote of the holders of at least two-thirds in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class, if the Majority Sponsors and certain of their respective affiliates beneficially own, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors.

These provisions could make it more difficult for a third-party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”

We are controlled by the Majority Sponsors, whose interests may be different than the interests of other holders of our securities.

Upon the completion of this offering, the Majority Sponsors will own approximately % of our outstanding common stock, or approximately % if the underwriters exercise in full their option to purchase additional shares, and will have the ability to nominate a majority of the members of our board of directors. As a result, the Majority Sponsors are able to control actions to be taken by us, including future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, amendments to our organizational documents and the approval of significant corporate transactions, including mergers, sales of substantially all of our assets, distributions of our assets, the incurrence of indebtedness and any incurrence of liens on our assets.

The interests of the Majority Sponsors may be materially different than the interests of our other stakeholders. In addition, the Majority Sponsors may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you. For example, the Majority Sponsors may cause us to take actions or pursue strategies that

could impact our ability to make payments under our Senior Secured Credit Facilities and Senior Notes or cause a change of control. In addition, to the extent permitted by agreements governing our Senior Secured Credit Facilities, the Majority Sponsors may cause us to pay dividends rather than make capital expenditures or repay debt. The Majority Sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Our amended and restated certificate of incorporation will provide that none of the Majority Sponsors, any of their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. The Majority Sponsors also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.

So long as the Majority Sponsors continue to own a significant amount of our outstanding common stock, even if such amount is less than 50%, they will continue to be able to strongly influence or effectively control our decisions and, so long as each of the Majority Sponsors continues to own shares of our outstanding common stock, they will have the ability to nominate individuals to our board of directors pursuant to a stockholders agreement to be entered into in connection with this offering. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.” In addition, the Majority Sponsors, acting together, will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

We will be a “controlled company” within the meaning of the Nasdaq rules and the rules of the SEC. As a result, we will qualify for exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

After completion of this offering, the Majority Sponsors will continue to own a majority of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

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the requirement that a majority of our board of directors consist of “independent directors” as defined under the rules of Nasdaq;

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the requirement that we have a compensation committee that is composed entirely of directors who meet the Nasdaq independence standards for compensation committee members with a written charter addressing the committee’s purpose and responsibilities; and

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the requirement that our director nominations be made, or recommended to our full board of directors, by our independent directors or by a nominations committee that consists entirely of independent directors and that we adopt a written charter or board resolution addressing the nominations process.

Following this offering, we do not intend to utilize these exemptions. However, if we utilize any of these exemptions in the future, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.

As a privately-held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-

Oxley Act of 2002 (“Section 404” and the “Sarbanes-Oxley Act,” respectively). As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal controls over financial reporting in the second annual report following the completion of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal controls over financial reporting. The rules governing the standards that must be met for our management to assess our internal controls over financial reporting are complex and require significant documentation, testing and possible remediation. Testing internal controls may divert our management’s attention from other matters that are important to our business. Our independent registered public accounting firm may be required to issue an attestation report on effectiveness of our internal controls following the completion of this offering.

In connection with the implementation of the necessary procedures and practices related to internal controls over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report.

Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. A material weakness in internal controls could result in our failure to detect a material misstatement of our annual or quarterly consolidated financial statements or disclosures. We may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. If we are unable to conclude that we have effective internal controls over financial reporting, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.

Our amended and restated bylaws will provide, subject to limited exceptions, that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the sole and exclusive forums for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated bylaws will provide, subject to limited exceptions, that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of our company to the Company or our stockholders, (iii) action asserting a claim against the Company or any director, officer or other employee of the Company arising pursuant to any provision of the Delaware General Corporation Law, (the “DGCL”), or our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) action asserting a claim against the Company or any director, officer or other employee of the Company governed by the internal affairs doctrine. These provisions shall not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction and our stockholders cannot waive compliance with federal securities laws and the rules and regulations thereunder. Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any

complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated bylaws.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a different judicial forum, including one that it may find favorable or convenient for disputes with us or any of our directors, officers or other employees which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provisions that will be contained in our amended and restated bylaws to be inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. For example, the Court of Chancery of the State of Delaware recently determined that a provision stating that U.S. federal district courts are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. However, this decision may be reviewed and ultimately overturned by the Supreme Court of the State of Delaware.

Our board of directors will be authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

Our amended and restated certificate of incorporation will authorize our board of directors, without the approval of our stockholders, to issue shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred stock may be senior to or on parity with our common stock, which may reduce its value.

We will incur increased costs as a result of operating as a publicly traded company, and our management will be required to devote substantial time to new compliance initiatives.

As a publicly traded company, we will incur additional legal, accounting, and other expenses that we did not previously incur. Although we are currently unable to estimate these costs with any degree of certainty, they may be material in amount. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules of the SEC, and the stock exchange on which our common shares are listed, have imposed various requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives as well as investor relations. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur additional costs to maintain the same or similar coverage.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this prospectus that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and other similar expressions. These forward-looking statements are contained throughout this prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

We base these forward-looking statements or projections on our current expectations, plans and assumptions, which we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at this time. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections contained herein are subject to and involve risks, uncertainties and assumptions, and therefore you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results, and therefore actual results might differ materially from those expressed in the forward-looking statements and projections. Factors that might materially affect such forward-looking statements and projections include:

•

the fragmented and highly competitive nature of the drug development services industry;

•

changes in trends in the biopharmaceutical industry, including decreases in research and development spending and outsourcing;

•

our ability to keep pace with rapid technological changes that could make our services less competitive or obsolete;

•

the United States and international healthcare industry is subject to political, economic and/or regulatory influences and changes, such as healthcare reform, all of which could adversely affect both our customers’ and our businesses;

•

any failure of our backlog to predict or convert into future revenue;

•

the fact that our customers can terminate, delay or reduce the scope of our contracts with them upon short notice or with no notice;

•

the impact of industry, customer and therapeutic area concentration;

•

our ability to accurately price our contracts and manage our costs associated with performance of such contracts;

•

any failures in our information and communication systems, including cybersecurity breaches, impacting us or our customers, clinical trial participants or employees;

•

any failure to perform services in accordance with contractual requirements, regulatory standards and ethical standards;

•

our ability to recruit, retain and motivate key personnel;

•

our ability to attract suitable investigators or enroll a sufficient number of patients for our customers’ clinical trials;

•

any failure by us to comply with numerous privacy laws;

•

our dependence on third parties for critical goods and support services;

•

our dependence on our technology network, and the impact from upgrades to the network;

•

any violation of laws, including laws governing the conduct of clinical trials or other biopharmaceutical research, and anti-corruption laws, such as the FCPA and the Bribery Act;

•

competition between our existing and potential customers and the potential negative impact on our business;

•

our management of business restructuring transactions and the integration of acquisitions;

•

risks related to the drug development services industry that could result in potential liability that could affect our business, reputation and financial condition;

•

any failure of our insurance to cover the potential liabilities, including indemnification obligations, associated with the operation of our business and provision of services;

•

our use of biological and hazardous materials, which could violate law or cause injury or death, resulting in liability;

•

international or U.S. economic, currency, political and other risks;

•

economic conditions and regulatory changes from the United Kingdom’s proposed exit from the European Union;

•

any inability to adequately protect our intellectual property or the security of our systems and the data stored therein;

•

consolidation amongst our customers, and the potential for rationalization of the combined drug development pipeline, resulting in fewer products in clinical development;

•

any patent or other intellectual property litigation we might be involved in;

•

changes in tax laws, such as U.S. tax reform, or interpretations of existing tax laws;

•

our investments in third parties, some of which are illiquid and subject to loss;

•

the substantial value of our goodwill and intangible assets, which we might not fully realize, resulting in impairment losses;

•

difficult and volatile conditions in the capital and credit markets and in the overall economy;

•

risks related to our indebtedness;

•

the significant influence of the Majority Sponsors over us; and

•

the other factors discussed under “Risk Factors.”

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Other sections of this prospectus may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Before investing in our common stock, investors should be aware that the occurrence of the events described under the caption “Risk Factors” and elsewhere in this prospectus could have a material adverse effect on our business, results of operations and future financial performance.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $ million from the sale of shares of our common stock in this offering, based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses.

We intend to use the net proceeds from this offering, together with cash on hand, (1) to redeem $550.0 million in aggregate principal amount of the Initial Holdco Notes, plus accrued and unpaid interest thereon and $ million of redemption premium and (2) to redeem $900.0 million in aggregate principal amount of the Additional Holdco Notes, plus accrued and unpaid interest thereon and $ million of redemption premium. To the extent we raise more proceeds in this offering than currently estimated, the amount of cash on hand used would be reduced, and to the extent the proceeds exceed the amount required to consummate the aforementioned redemptions, we will use such excess proceeds for general corporate purposes, which may include, among other things, further repayment of indebtedness. To the extent we raise less proceeds in this offering than currently estimated, the amount of cash on hand used to consummate the aforementioned redemptions would be increased. As of September 30, 2019, $550.0 million aggregate principal amount of the Initial Holdco Notes and $900.0 million aggregate principal amount of the Additional Holdco Notes was outstanding. The Initial Holdco Notes mature on May 15, 2022 and have an interest rate of 7.625% or 8.375%. The Additional Holdco Notes mature on May 15, 2022 and have an interest rate of 7.75% or 8.50%. The Additional Holdco Notes were issued by Eagle II on May 14, 2019 and the proceeds thereof were used to fund the payment of dividends and distributions to PPD, Inc., which PPD, Inc. used, together with cash on hand, to pay a special dividend of $1,086.0 million to its stockholders and to pay fees and expenses associated with the issuance of the Additional Holdco Notes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness” for additional information regarding the Initial Holdco Notes and the Additional Holdco Notes. Certain of the underwriters and/or certain of their affiliates hold a position in the Holdco Notes and, as a result, will receive a portion of the net proceeds from this offering.

DIVIDEND POLICY

We currently do not expect to declare any dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be used to provide working capital, to support our operations, to finance the growth and development of our business and to reduce our net debt. Any determination to declare dividends in the future will be at the discretion of our board of directors, subject to applicable laws, and will be dependent on a number of factors, including our earnings, capital requirements and overall financial condition. Upon completion of the offering, we will be controlled by the Majority Sponsors, who will have the ability to nominate a majority of the members of our board of directors and therefore control the payment of dividends. See “Risk Factors—Risks Related to this Offering and Ownership of Our Common Stock—We are controlled by the Majority Sponsors, whose interests may be different than the interests of other holders of our securities.” In addition, because we are a holding company, our ability to pay dividends on our common stock may be limited by restrictions on our ability to obtain sufficient funds through dividends from subsidiaries, including restrictions under the covenants of the Credit Agreement governing our Senior Secured Credit Facilities and the indentures governing our Senior Notes, and may be further restricted by the terms of any future debt or preferred securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness” for more information about our Senior Secured Credit Facilities and our Senior Notes.

In May and November 2019, we paid special dividends to our stockholders of $1,086.0 million and $160.0 million, respectively.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2019:

•

on an actual basis;

•

on a pro forma basis, giving effect to the special cash dividend declared in November 2019, and subsequently paid, to our stockholders, of $160.0 million, or $1.03 per share, with cash on hand as if it had occurred as of September 30, 2019; and

•

on a pro forma as adjusted basis, giving effect to (1) the pro forma items described immediately above, (2) the sale by us of shares of our common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, (3) the application of the estimated net proceeds from the offering (a) to redeem $550.0 million in aggregate principal amount of the Initial Holdco Notes, plus accrued and unpaid interest thereon and $ million of redemption premium and (b) to redeem $900.0 million in aggregate principal amount of the Additional Holdco Notes, plus accrued and unpaid interest thereon and $ million of redemption premium, as described in “Use of Proceeds,” (4) the conversion of our non-voting common stock into voting common stock on a one-for-one basis upon the closing of this offering and (5) the filing and effectiveness of our amended and restated certificate of incorporation and the effectiveness of our amended and restated bylaws in connection with the closing of this offering.

You should read this table together with “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this prospectus.


	As of September 30, 2019
	Actual			Pro Forma⁽¹⁾			Pro Forma as Adjusted⁽²⁾
	(dollars in thousands)
Cash and cash equivalents	$	403,398		$	243,398		$

Long term debt, including current portion of long-term debt:
Senior Secured Credit Facilities:⁽³⁾
Term Loan	$	3,104,535		$	3,104,535		$
Revolving Credit Facility⁽⁴⁾		—			—
6.375% Senior Notes due 2023⁽⁵⁾		1,125,000			1,125,000
Holdco Notes due 2022⁽⁶⁾		1,450,000			1,450,000
Other debt		5,811			5,811
Finance lease obligations		27,689			27,689
Combined aggregate unamortized debt discount, modification and issuance costs		(67,409	)		(67,409	)

Total debt		5,645,626			5,645,626

Stockholders’ deficit:
Common stock, $0.01 par value, voting common stock; 225,000,000 shares authorized, actual, 153,362,216 shares issued and outstanding, actual and pro forma, shares authorized, pro forma as adjusted, shares issued and shares outstanding, pro forma as adjusted		1,534			1,534
Common stock, $0.01 par value, non-voting common stock; 20,000,000 shares authorized, actual and pro forma, 2,228,920 shares issued and 1,873,955 outstanding, actual, no shares authorized, pro forma as adjusted, no shares issued and outstanding, pro forma as adjusted		22			22
Treasury stock, at cost, 354,965 shares		(11,368	)		(11,368	)
Additional paid-in capital		10,561			—
Accumulated deficit		(2,245,284	)		(2,394,723	)

Accumulated other comprehensive loss		(359,344	)		(359,344	)

Total stockholders’ deficit		(2,603,879	)		(2,763,879	)

Total capitalization	$	3,041,747		$	2,881,747		$

(1)

In November 2019, the Company declared, and subsequently paid, a special cash dividend to its stockholders of $160.0 million, or $1.03 per share, with cash on hand. The special cash dividend was considered a return of capital to the Company’s stockholders. A pro forma balance sheet is presented in our unaudited condensed consolidated financial statements included elsewhere in this prospectus to give effect to the special cash dividend as if it was paid as of September 30, 2019. The pro forma balance sheet reflects an adjustment to cash for the dividend paid, an adjustment to decrease additional paid-in-capital and an adjustment to increase accumulated deficit.

(2)

increase (decrease) of 100,000 shares from the expected number of shares to be sold by us in this offering, would not significantly increase (decrease) our pro forma as adjusted cash and cash equivalents and would decrease (increase) our pro forma as adjusted total debt and total stockholder’s deficit by $ million, assuming, in each case, no change in the assumed initial public offering price per share, which is the midpoint of the price range set forth on the front cover of this prospectus.

(3)

Our Senior Secured Credit Facilities consist of (a) a senior secured term loan of $3,104.5 million (net of original issue discount of approximately $7.3 million) (the “Term Loan”) and (b) the Revolving Credit Facility with commitments of $300.0 million (not giving effect to the $1.6 million of outstanding letters of credit as of September 30, 2019). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness” for more information about our Senior Secured Credit Facilities.

(4)	The $300.0 million Revolving Credit Facility was undrawn (not giving effect to the $1.6 million of outstanding letters of credit) as of September 30, 2019.

(5)

Consists of $1,125.0 million 6.375% Senior Notes due 2023 issued by Jaguar Holding Company II and Pharmaceutical Product Development, LLC in August 2015. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness” for more information regarding the Opco Notes.

(6)

Consists of $550.0 million 7.625%/8.375% Senior PIK Toggle Notes due 2022 issued by Eagle II in May 2017 and the $900.0 million 7.75%/8.50% Senior PIK Toggle Notes due 2022 issued by Eagle II in May 2019. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness” for more information regarding the Holdco Notes.

The number of shares of our common stock to be outstanding immediately after this offering is based on 155,236,171 shares outstanding as of September 30, 2019 and excludes:

•

(1) 4,875,888 shares of common stock issuable upon the exercise of time-based options to purchase shares of our common stock outstanding as of September 30, 2019 with a weighted average exercise price of $28.22 per share, (2) 4,973,940 shares of common stock issuable upon the exercise of performance-based options to purchase shares of our common stock outstanding as of September 30, 2019 with a weighted average exercise price of $23.92 per share, and (3) 1,305,803 shares of common stock issuable upon the exercise of liquidity event-based options to purchase shares of our common stock outstanding as of September 30, 2019 with a weighted average exercise price of $20.33 per share, and which have not previously vested, will not vest upon the consummation of this offering or are eligible to vest only if and when the Majority Sponsors have achieved specified internal rates of return and a multiple on invested capital with respect to its investment in the Company; and

•

shares of our common stock available for future issuance under the 2020 Incentive Plan.

DILUTION

If you invest in our common stock in this offering, your ownership interest in us will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value per share of our common stock as adjusted to give effect to this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the shares of common stock held by existing stockholders.

Our net tangible book deficit as of September 30, 2019 was approximately $(5,262.4) million or $(33.90) per share. We calculate net tangible book value per share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of shares of common stock outstanding.

Our pro forma tangible book deficit as of September 30, 2019 was approximately $(5,422.4) million or $(34.93) per share. We calculate pro forma net tangible book value per share by taking the amount of our pro forma tangible assets, reduced by our total liabilities, and then dividing the amount by our total number of shares of common stock outstanding, after giving effect to the special cash dividend declared in November 2019, and subsequently paid, to our stockholders of $160.0 million, or $1.03 per share, with cash on hand.

After giving effect to our sale of the shares in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and after giving effect to the application of the net proceeds from this offering as described under “Use of Proceeds,” our pro forma as adjusted net tangible book deficit after giving effect to this offering on September 30, 2019 would have been $ million, or $ per share. This amount represents an immediate increase in pro forma net tangible book value of $ per share to existing stockholders and an immediate dilution in pro forma net tangible book deficit of $ per share to new investors purchasing shares in this offering at the initial public offering price.

The following table illustrates this dilution on a per share basis:


Initial public offering price per share			$
Historical net tangible book deficit per share as of September 30, 2019	$	(33.90)
Decrease per share attributable to the pro forma adjustments described above		(1.03)
Increase in pro forma net tangible book value per share attributable to new investors purchasing shares in this offering

Pro forma as adjusted net tangible book deficit per share after giving effect to this offering

Dilution per share to new investors in this offering			$

Dilution is determined by subtracting pro forma as adjusted net tangible book value per share of common stock after giving effect to this offering, from the initial public offering price per share of common stock.

The following table summarizes, as of September 30, 2019, on a pro forma as adjusted basis as described above, the differences between the number of shares purchased from us, the total consideration paid to us, and the average price per share paid by existing stockholders and by new investors. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing stockholders paid. The table below is based on shares of common stock outstanding immediately after the consummation of this offering and does not give effect to shares of common stock issuable upon exercise of outstanding options to purchase shares of our common stock outstanding as of September 30, 2019 or the shares of common stock reserved for future issuance under the 2020 Incentive Plan. A total of 11,155,631 options to purchase shares of common stock are outstanding as of September 30, 2019 under the 2017 Plan. A total of shares of common stock have been reserved for future issuance under the 2020 Incentive Plan. The table below is based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, for shares purchased in this offering and excludes underwriting discounts and commissions and estimated offering expenses payable by us:


	Shares Purchased					Total Consideration⁽¹⁾				Average Price Per Share⁽¹⁾
	Number		Percent			Amount	Percent			Average Price Per Share⁽¹⁾
						(millions)
Existing stockholders		155,236,171			%	$			%	$
New investors

Total				100.0	%	$		100.0	%

(1)	Total consideration and average price per share for existing stockholders does not take into account any return of capital as a result of the recapitalization of the Company in 2017 or the dividends paid to stockholders.

If the underwriters were to fully exercise the underwriters’ option to purchase additional shares of our common stock, the percentage of shares of our common stock held by existing stockholders would be % and the percentage of shares of our common stock held by new investors would be %.

Assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same, excluding assumed underwriting discounts and estimated commissions and offering expenses payable by us, a $1.00 increase (decrease) in the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) total consideration paid by new investors and total consideration paid by all stockholders by approximately $ million.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth the selected consolidated financial data of the Company and its consolidated subsidiaries for the periods and dates indicated.

On January 1, 2018 the Company adopted ASC 606, which outlines a single comprehensive model for entities to use in accounting for revenue from contracts with customers. The Company adopted ASC 606 using the modified retrospective method for all contracts not completed as of the date of adoption. Our consolidated financial data for the periods beginning January 1, 2018 and thereafter are presented in accordance with ASC 606. Prior to January 1, 2018, the Company applied the accounting guidance from the application of ASC 605.

The balance sheet data as of September 30, 2019 and the statements of operations and cash flow data for the nine months ended September 30, 2019 and 2018 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2018 and 2017 and the statement of operations and cash flow data for the years ended December 31, 2018, 2017 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2016, 2015 and 2014 and the statements of operations and cash flow data for the years ended December 31, 2015 and 2014 have been derived from the audited consolidated financial statements of the Company not included in this prospectus.

The selected consolidated financial data set forth below should be read in conjunction with “Risk Factors,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and audited consolidated financial statements included elsewhere in this prospectus.


	Nine Months Ended September 30,						Year Ended December 31,
	2019⁽¹⁾⁽³⁾			2018⁽¹⁾			2018⁽¹⁾			2017⁽²⁾⁽³⁾			2016⁽²⁾⁽³⁾			2015⁽²⁾⁽³⁾			2014⁽²⁾
	(in thousands)
Statement of operations data:
Revenue:
Revenue	$	2,984,133		$	2,770,334		$	3,748,971		$	2,767,476		$	2,467,941		$	2,073,484		$	1,919,954
Reimbursed revenue⁽⁴⁾		—			—			—			233,574			211,624			178,350			165,854

Total revenue		2,984,133			2,770,334			3,748,971			3,001,050			2,679,565			2,251,834			2,085,808

Operating costs and expenses:
Direct costs, exclusive of depreciation and amortization		1,112,181			989,560			1,333,812			1,302,983			1,175,051			965,098			888,135
Reimbursed costs		688,696			714,912			940,913			233,574			211,624			178,350			165,854
Selling, general and administrative expenses		681,431			599,563			813,035			809,333			718,139			652,900			622,043
Recapitalization costs⁽⁵⁾		—			—			—			114,766			—			—			—
Depreciation and amortization		197,896			195,335			258,974			279,066			260,487			262,871			249,610
Goodwill and asset impairment		—			—			29,626			43,459			28,101			13,686			1,290

Total operating costs and expenses		2,680,204			2,499,370			3,376,360			2,783,181			2,393,402			2,072,905			1,926,932

Income from operations		303,929			270,964			372,611			217,869			286,163			178,929			158,876
Interest expense, net		(229,147	)		(197,920	)		(263,618	)		(253,891	)		(203,294	)		(228,084	)		(213,323	)
(Loss) gain on investments⁽⁶⁾		(22,716	)		47,040			15,936			92,750			61,576			19,525			65,985
Loss on extinguishment of debt		—			—			—			—			—			(131,755	)		—
Other (expense) income, net		(3,158	)		(7,159	)		21,701			(40,259	)		22,448			19,462			18,526

Income (loss) before provision for (benefit from) income taxes		48,908			112,925			146,630			16,469			166,893			(141,923	)		30,064

Provision for (benefit from) income taxes		12,387			20,819			39,579			(284,360	)		(15,961	)		2,173			3,250

Income (loss) before equity in losses of unconsolidated affiliates		36,521			92,106			107,051			300,829			182,854			(144,096	)		26,814
Equity in losses of unconsolidated affiliates, net of income taxes		(2,060	)		—			(186	)		—			—			—			—

Net income (loss)		34,461			92,106			106,865			300,829			182,854			(144,096	)		26,814
Loss from discontinued operations, net of taxes		—			—			—			—			—			(4,139	)		(21,717	)
Net (income) loss attributable to noncontrolling interests		(3,390	)		(1,313	)		(2,679	)		(4,802	)		241			1,678			587

Net income attributable to PPD, Inc.		31,071			90,793			104,186			296,027			183,095			(146,557	)		5,684
Recapitalization investment portfolio consideration⁽⁶⁾		16,830			(31,047	)		(7,849	)		(97,136	)		—			—			—

Net income (loss) attributable to common stockholders of PPD, Inc.	$	47,901		$	59,746		$	96,337		$	198,891		$	183,095		$	(146,557	)	$	5,684


	Nine Months Ended September 30,				Year Ended December 31,
	2019⁽¹⁾⁽³⁾		2018⁽¹⁾		2018⁽¹⁾		2017⁽²⁾⁽³⁾		2016⁽²⁾⁽³⁾		2015⁽²⁾⁽³⁾			2014⁽²⁾
	(shares in thousands, except per share data)
Per share data:
Earnings per share attributable to common stockholders:
Basic	$	0.31	$	0.39	$	0.62	$	1.23	$	1.06	$	(0.82	)	$	0.16
Diluted	$	0.31	$	0.38	$	0.62	$	1.22	$	1.04	$	(0.82	)	$	0.15
Weighted average common shares outstanding:
Basic		155,131		155,170		155,132		161,681		173,370		173,264			173,053
Diluted		155,587		155,204		155,176		163,237		175,863		173,264			177,239


	Nine Months Ended September 30,						Year Ended December 31,
	2019⁽¹⁾⁽³⁾			2018⁽¹⁾			2018⁽¹⁾			2017⁽²⁾⁽³⁾			2016⁽²⁾⁽³⁾			2015⁽²⁾⁽³⁾			2014⁽²⁾
	(in thousands)
Cash flow data:
Net cash provided by (used in):
Operating activities	$	313,722		$	301,106		$	423,406		$	359,079		$	407,995		$	416,288		$	96,000
Investing activities		(195,548	)		(58,990	)		(90,525	)		(92,743	)		(519,746	)		(253,542	)		(26,308	)
Financing activities		(253,229	)		(140,776	)		(166,942	)		(249,393	)		130,465			(44,629	)		(24,477	)


	As of September 30, 2019⁽¹⁾⁽³⁾			As of December 31,
	As of September 30, 2019⁽¹⁾⁽³⁾			2018⁽¹⁾			2017⁽²⁾⁽³⁾			2016⁽²⁾⁽³⁾		2015⁽²⁾⁽³⁾			2014⁽²⁾
	(in thousands)
Balance sheet data:
Cash and cash equivalents	$	403,398		$	553,066		$	418,960		$	361,741	$	365,846		$	264,336
Property and equipment, net		425,484			399,103			384,187			382,946		333,737			341,252
Working capital		(87,472	)		137,456			30,352			150,452		252,699			307,040
Total assets		5,589,509			5,489,361			5,444,873			5,310,304		4,849,447			4,878,905
Total debt		5,645,626			4,795,684			4,822,234			4,309,112		3,655,200			3,049,716
Total stockholders’ (deficit) equity		(2,603,879	)		(1,522,421	)		(1,491,680	)		964,241		(444,369	)		302,475

(1)	Financial data as of and for the year ended December 31, 2018, as of September 30, 2019 and for the nine months ended September 30, 2019 and 2018 is reported in accordance with ASC 606.

(2)	Financial data as of and for the years ended December 31, 2017, 2016, 2015 and 2014 is reported in accordance with ASC 605.

(3)

We acquired Synarc Inc. on September 3, 2019, Medimix International on July 1, 2019, Optimal Research, LLC on September 1, 2017, Evidera Holdings, Inc. on September 1, 2016, Synexus Clinical Research Topco Limited on May 31, 2016, CRA Intermediate Holdings, Inc. on May 12, 2015 and the clinic as research division of SNBL, subsequently renamed PPD-SNBL, on April 1, 2015. We own 60% of PPD-SNBL. The financial results of these entities have been included as of and since the dates of each acquisition.

(4)	Represents out-of-pocket revenues and related costs reimbursed by our customers at cost when we are the principal (and not the agent) in the relationship in accordance with ASC 605 for the years ended December 31, 2017, 2016, 2015 and 2014.

(5)	Represents expenses in connection with the recapitalization of the Company in 2017. For more information, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

(6)

Represents the fair value accounting gains or losses primarily from our investments in Auven and venBio. The gains or losses from our investments in Auven and venBio will likely continue to fluctuate from period to period based on the changes in fair values of the net asset values of the limited partnerships and changes in the discounts applied to such investments for our lack of control and lack of marketability. A contingent liability for additional consideration estimated to be payable to certain owners prior to the 2017 recapitalization was recorded, primarily based on changes in the fair value of such investments, net of taxes and other related expenses. For more information, see Note 2 to our audited consolidated financial statements included elsewhere in this prospectus.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with “Selected Consolidated Financial Data,” the condensed consolidated financial statements and the related notes thereto and the consolidated financial statements and the related notes thereto all included elsewhere in this prospectus. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and all other non-historical statements in this discussion are forward-looking statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors.”

Company Overview

We are a leading provider of drug development services to the biopharmaceutical industry, focused on helping our customers bring their new medicines to patients around the world. We have been in the drug development services business for more than 30 years, providing a comprehensive suite of clinical development and laboratory services to pharmaceutical, biotechnology, medical device and government organizations, as well as other industry participants. Over that time, we have developed a track record of consistent quality, delivery and continuous innovation that has enabled us to grow faster than our underlying market over the past five years and deliver strong financial results. In 2018, we served all of the top 50 biopharmaceutical companies in the world, as ranked by 2018 R&D spending, and were involved in 66 drug approvals. We also participated in the development of all of 2018’s top ten selling drugs, as ranked by 2018 revenue. Since 2014, we have also worked with over 300 companies in the growing biotechnology sector through our PPD Biotech model, which was built specifically to serve the unique needs of this customer segment.

Our purpose and mission are to improve health by helping our customers deliver life-changing therapies to patients. We pursue our purpose and mission through our clinical development and laboratory services and our strategy to bend the cost and time curve of drug development and optimize value for our customers. Our customers benefit from accelerated time to market because it results in lengthened periods of market exclusivity, and our real-world evidence solutions support the superior efficacy and value of their novel therapies. We believe our medical, scientific and drug development expertise, along with our innovative technologies and knowledge of global regulatory requirements, help our customers accelerate the development of safe and effective therapeutics and maximize returns on their R&D investments.

Our service offerings include both clinical development and laboratory services. Our clinical development services include all phases of development (i.e., Phase I-IV), peri- and post-approval and site and patient access services, amongst others. Our laboratory services offer a range of high-value, advanced testing services, including bioanalytical, biomarker, vaccine, GMP and central laboratory services. We have deep experience across a broad range of rapidly growing areas of drug development and engage with customers through a variety of commercial models, including both full-service and functional service partnerships and other offerings tailored to address the specific needs of our customers.

Effective January 1, 2018, we adopted ASC 606, using the modified retrospective method for all contracts not completed as of the date of adoption. The unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2019 and 2018, and the audited consolidated financial statements as of and for the year ended December 31, 2018 included elsewhere in this prospectus, reflect the application of the accounting guidance of ASC 606, while the respective consolidated financial statements and other financial information (as applicable) for the periods commencing prior to January 1, 2018, reflect previous accounting

guidance from the application of ASC 605. See below in our discussion and analysis of our financial condition and results of operations, as well as Note 1, “Basis of Presentation and Summary of Significant Accounting Policies,” and Note 3, “Revenue,” to our audited consolidated financial statements included elsewhere in this prospectus for additional information on the impact of the adoption of ASC 606.

Consolidated results for periods starting on or after January 1, 2018 are presented on an ASC 606 basis, unless otherwise noted, and consolidated results for periods commencing prior to January 1, 2018 are presented on an ASC 605 basis.

Sources of Revenue

Under ASC 606, revenue is comprised of direct, third-party pass-through and out-of-pocket revenue from providing services to our customers and is accounted for in accordance with ASC 606 as of January 1, 2018. As outlined above, periods prior to January 1, 2018, were accounted for in accordance with ASC 605. Direct revenue represents revenue associated with the direct services provided under our contracts. Third-party pass-through and out-of-pocket revenue represents the reimbursement by customers of third-party pass-through and out-of-pocket costs incurred by us under our contracts. Revenue typically fluctuates and may fluctuate significantly period to period based on the timing and types of services performed, staff utilization and hours worked, actual and estimated third-party pass-through and out-of-pocket costs and the volume of our net authorizations driving growth in backlog, among other factors. With the adoption of ASC 606, we record the reimbursement of the third-party pass-through and out-of-pocket revenue and the related costs incurred as revenue and reimbursed costs on the consolidated statements of operations. In accordance with ASC 606, we record these reimbursed costs as revenue when we are the principal in the relationship, are primarily responsible for the services provided by third parties and significantly integrate the services of the third parties with our own services in delivering a combined output to the customer.

Previously under ASC 605, revenue only included direct revenue from providing services to our customers. Third-party pass-through revenue and costs were presented on a net basis and out-of-pocket revenue and costs were presented on a gross basis as reimbursed revenue and reimbursed costs on the consolidated statements of operations. Additionally, third-party pass-through and out-of-pocket costs were excluded from the costs used in the measure of progress for full-service clinical trial management contracts that utilized the proportional performance method to recognize revenue, and the related revenue was recognized for these reimbursed costs when the costs were incurred. Third-party pass-through and out-of-pocket revenue and costs did not have a significant impact on our financial performance, because they were ancillary to the clinical development and laboratory services provided by us, generally provided by us without profit or mark-up and variable from period to period without being important to our underlying business performance. Therefore, prior to January 1, 2018, we did not analyze third-party pass-through and out-of-pocket revenue and related costs from period to period.

Our clinical development services (“Clinical Development Services”) segment represented 81.2% and 82.2% of direct revenue for the nine months ended September 30, 2019 and 2018, respectively, with the remainder generated from our Laboratory Services segment. Clinical Development Services represented 82.3%, 83.8% and 83.4% of direct revenue for the years ended December 31, 2018, 2017 and 2016, respectively, with the remainder generated from Laboratory Services. These segment results are based on management segment reporting.

We have a diverse customer mix, with no one customer accounting for more than 10% of our revenue for the nine months ended September 30, 2019 or 2018 or for the years ended December 31, 2018, 2017 or 2016. Our top 10 customers accounted for approximately 45.2% and 49.3% of our revenue for the nine months ended September 30, 2019, and 2018, respectively, and approximately 47.5%, 50.5%, and 49.5% of our revenue for the years ended December 31, 2018, 2017 and 2016, respectively. Based on the diversity of our customer base, we do not believe we have significant customer concentration risk. We do not have any significant product revenues.

Operating Costs and Expenses

Our operating costs and expenses primarily consist of direct costs, reimbursed costs, selling, general and administrative (“SG&A”) expenses and depreciation and amortization.

Direct Costs

Direct costs represent costs for providing services to customers. Direct costs primarily include labor-related costs, such as compensation and benefits for employees providing services, an allocation of facility and information technology costs, supply costs, costs for certain media-related services for patient recruitment, other overhead costs and offsetting R&D incentive credits. Direct costs typically increase or decrease with changes in revenue and may fluctuate significantly from period to period as a percentage of revenue due to staff labor utilization, project labor mix, the type of services, changes to the timing of work performed and project inefficiencies, among other factors.

Reimbursed Costs

Reimbursed costs include third-party pass-through and out-of-pocket costs which are generally reimbursable by our customers at cost. Third-party pass-through and out-of-pocket costs include, but are not limited to, payments to investigators, payments for the use of third-party technology, shipping costs and travel costs related to the performance of services, among others. Third-party pass-through and out-of-pocket costs are incurred across both of our reportable segments.

Because services associated with reimbursed costs are generally provided by us without profit or mark-up and fluctuate from period to period without being important to our underlying performance over the full term of a contract, these costs do not have a significant impact on our income from operations. While fluctuations from period to period are not meaningful over the full term of a contract, actual and estimated reimbursed costs can impact revenue recognized and income from operations under ASC 606 throughout the duration of a contract.

Selling, General and Administrative Expenses

SG&A expenses represent costs of business development, administrative and support functions. SG&A expenses primarily include compensation and benefits for employees, costs related to employees performing administrative tasks, stock-based compensation expense, sales, marketing and promotional expenses, employee recruiting and relocation expenses, employee training costs, travel costs, an allocation of facility and information technology costs and other overhead costs.

Depreciation and Amortization

Depreciation and amortization represents the costs charged for our property and equipment and intangible assets. We record depreciation and amortization using the straight-line method, based on the estimated useful lives of the respective assets. We depreciate leasehold improvements over the shorter of the lease term or the estimated useful lives of the improvements. We amortize software developed or obtained for internal use, including software licenses obtained through a cloud computing arrangement, over the estimated useful life of the software or term of the licensing agreement. Amortization expense primarily comes from acquired definite-lived intangible assets. We amortize definite-lived intangible assets using either the straight-line method or sum-of-the-years digits method over the estimated useful lives of the assets.

How We Assess the Performance of Our Business

We manage and assess our business based on segment performance and allocate resources utilizing segment revenue, segment direct costs and segment profit. We also assess the performance of our consolidated business

using a number of metrics including backlog and net authorizations. Our financial information for all periods presented below for backlog and net authorizations exclude the impact of net authorizations from anticipated third-party pass-through and out-of-pocket revenue.

Backlog and backlog conversion to direct revenue (defined as direct revenue for the period divided by opening backlog for that period) vary from period to period depending upon new authorizations, contract modifications, cancellations and the amount of direct revenue recognized under existing contracts. We adjust backlog for foreign currency fluctuations and exclude direct revenue that has been recognized as revenue in our statements of operations.

Although an increase in backlog will generally result in an increase in future direct revenue to be recognized over time (depending on future contract modifications, contract cancellations and other adjustments), an increase in backlog at a particular point in time does not necessarily correspond to an increase in direct revenue during a particular period. The timing and extent to which backlog will result in direct revenue depends on many factors, including the timing of commencement of work, the rate at which we perform services, scope changes, cancellations, delays, receipt of regulatory approvals and the nature, duration, size, complexity and phase of the studies. Our contracts generally have terms ranging from several months to several years. In addition, delayed projects remain in backlog until they are canceled. As a result of these factors, our backlog might not be a reliable indicator of future direct revenue and we might not realize all or any part of the direct revenue from the authorizations in backlog as of any point in time.

We add new authorizations to backlog based on the aforementioned criteria for backlog. Net authorizations represent new business awards, net of award or contract modifications, contract cancellations, foreign currency fluctuations and other adjustments. New authorizations vary from period to period depending on numerous factors, including customer authorization volume, sales performance and overall health of the biopharmaceutical industry, among others. New authorizations have varied and will continue to vary significantly from quarter to quarter and from year to year.

Backlog and Net Authorizations


							Change
(dollars in millions)	2019			2018			$		%
Backlog (as of September 30)	$	6,805.7		$	6,103.6		$	702.1		11.5	%
Backlog conversion (quarterly average for the nine months ended September 30)		11.9	%		11.7	%				0.2
Net authorizations (for the nine months ended September 30)	$	2,814.4		$	2,448.9			365.5		14.9

Our backlog at September 30, 2019 was $6,805.7 million, an 11.5% increase from September 30, 2018. Our net authorizations for the nine months ended September 30, 2019 were $2,814.4 million, a 14.9% increase from the nine months ended September 30, 2018. The increase in backlog and net authorizations was primarily due to a higher number and dollar value of competitive decisions (which represents the total dollar amount of new business on which we bid) and lower cancellations, partially offset by unfavorable foreign currency fluctuations.


										Change
										2018 vs. 2017					2017 vs. 2016
(dollars in millions)	2018			2017			2016			$		%			$			%
Backlog (as of December 31)	$	6,313.7		$	5,730.6		$	6,006.6		$	583.1		10.2	%	$	(276.0	)		(4.6	)%
Backlog conversion (quarterly average for the years ended December 31)		11.9	%		11.7	%		11.4	%				0.2						0.3
Net authorizations (for the years ended December 31)	$	3,421.0		$	2,485.4		$	3,051.6			935.6		37.6			(566.2	)		(18.6	)

Our backlog as of December 31, 2018, 2017 and 2016 was $6,313.7 million, $5,730.6 million and $6,006.6 million, respectively. Our net authorizations for the years ended December 31, 2018, 2017 and 2016 were $3,421.0 million, $2,485.4 million and $3,051.6 million, respectively. The increase in backlog and net authorizations in 2018 as compared to the same period in the prior year was primarily due to a higher number of competitive decisions and lower cancellations, partially offset by unfavorable foreign currency fluctuations. The decrease in backlog and net authorizations in 2017 as compared to the same period in the prior year was primarily due to a lower number of competitive decisions and increased cancellations, partially offset by the 2016 acquisitions of Synexus and Evidera (the “2016 Acquisitions”) and favorable currency fluctuations.

Acquisitions

September 2019 Acquisition

On September 3, 2019, we acquired 100% of the equity of Synarc Inc., the global clinical research site network of Bioclinica, Inc. The preliminary purchase price was $50.4 million and was paid with cash on hand. The initial accounting for the acquisition is not yet complete. See Note 2, “Business Combinations,” of the unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information.

July 2019 Acquisition

On July 1, 2019, we acquired 100% of the equity of Medimix International, a global technology company that provides real-world evidence insights and information to the pharmaceutical, diagnostic and medical device industries. The preliminary purchase price was $37.8 million, including $5.0 million of common stock of the Company. The initial accounting for the acquisition is not yet complete. See Note 2, “Business Combinations,” of the unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information.

September 2017 Acquisition

On September 1, 2017, we acquired 100% of Optimal Research, LLC (“Optimal Research”), a dedicated clinical research site network with enhanced oncology enrollment capabilities. The purchase price was $24.0 million.

September 2016 Acquisition

On September 1, 2016, we acquired 100% of Evidera Holdings, Inc. (“Evidera”), a provider of evidence-based solutions to demonstrate the real-world effectiveness and value of biopharmaceutical products. The purchase price was $170.5 million.

May 2016 Acquisition

On May 31, 2016, we acquired 100% of Synexus Clinical Research Topco Limited (“Synexus”), a global clinical research site network. Synexus provides clinical trial site management and patient recruitment services to the biopharmaceutical industry. The purchase price was $267.1 million.

Impacts of the Initial Public Offering

Impact of Debt Extinguishment

Assuming the net proceeds after expenses to us of $ in connection with the sale of common stock in this offering, based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus, together with cash on hand, are used to repay the Holdco Notes, plus accrued and unpaid interest and redemption premium, as described in “Use of Proceeds,” we expect to incur debt extinguishment costs of $ related to the write-off of debt issuance and debt modification costs and $ related to the write-off of unamortized debt discounts. We also expect interest expense to be lower in future periods based on the reduction in debt.

Incremental Public Company Expenses

Following our initial public offering, we will incur significant expenses on an ongoing basis that we did not incur as a private company. Those costs include additional director and officer liability insurance expenses, as well as third-party and internal resources related to accounting, auditing, Sarbanes-Oxley Act compliance, legal and investor and public relations expenses. These costs will generally be SG&A expenses.

Stock-based Compensation Expense

We may incur incremental stock-based compensation expense in the future related to liquidity-event based options held by certain members of management. Such options have not vested, will not vest upon the consummation of this offering or are eligible to vest only if and when the Majority Sponsors have achieved specified internal rates of return and a multiple on invested capital with respect to their investment in us. See Note 4, “Stock-based Compensation,” to our audited consolidated financial statements included elsewhere in this prospectus for additional information on our stock-based compensation plans.

Results of Operations

We have included the results of operations of acquired companies in our consolidated results of operations from the date of their respective acquisitions, which impacts the comparability of our results of operations when comparing results for the nine months ended September 30, 2019 to the nine months ended September 30, 2018, the year ended December 31, 2018 to the year ended December 31, 2017 and the year ended December 31, 2017 to the year ended December 31, 2016. We have noted in the discussion below, to the extent meaningful and quantifiable, the impact on the comparability of our consolidated results of operations to prior year results due to the inclusion of acquired companies as well as the impact of ASC 606 when comparing the year ended December 31, 2018 to the year ended December 31, 2017.

Nine Months Ended September 30, 2019 versus Nine Months Ended September 30, 2018

Consolidated Results of Operations

Revenue


	Nine Months Ended September 30,				Change
(dollars in thousands)	2019		2018		$		%
Revenue	$	2,984,133	$	2,770,334	$	213,799		7.7	%

Revenue increased $213.8 million, or 7.7%, to $2,984.1 million for the nine months ended September 30, 2019 as compared to the same period in 2018. Revenue increased 8.6% from organic volume growth due to increased net authorizations and backlog growth in 2019 and 2018 and 0.3% from inorganic growth primarily due to our current year acquisitions of Synarc and Medimix (the “2019 Acquisitions”). The increase in revenue was partially offset by a 1.2% decrease from the unfavorable impact from foreign currency exchange rates.

Direct Costs


	Nine Months Ended September 30,						Change
(dollars in thousands)	2019			2018			$		%
Direct costs	$	1,112,181		$	989,560		$	122,621		12.4	%
% of revenue		37.3	%		35.7	%

Direct costs increased $122.6 million to $1,112.2 million for the nine months ended September 30, 2019 as compared to the same period in 2018. The increase in direct costs was due to (i) a $66.1 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases, (ii) a $6.3 million increase from the impact of the 2019 Acquisitions, (iii) an increase in project delivery costs, including media-related costs for patient recruitment services and laboratory supply costs and (iv) a decrease in R&D incentive credits. The increase in direct costs was partially offset by a 1.9% decrease from the favorable impact from foreign currency exchange rates. As a percentage of revenue, direct costs increased to 37.3% for the nine months ended September 30, 2019 as compared to 35.7% in the same period in 2018 primarily due to the factors identified above.

Reimbursed Costs


	Nine Months Ended September 30,						Change
(dollars in thousands)	2019			2018			$			%
Reimbursed costs	$	688,696		$	714,912		$	(26,216	)		(3.7	)%
% of revenue		23.1	%		25.8	%

Reimbursed costs decreased $26.2 million to $688.7 million for the nine months ended September 30, 2019 as compared to the same period in 2018. Reimbursed costs decreased due to lower pass-through costs for certain larger clinical trials within our Clinical Development Services segment which were nearing completion, as well as the general timing of costs incurred which will vary over the course of clinical trials due to the timing of the work performed, scope changes and the complexity and phase of the study, among other factors.

Selling, General and Administrative (“SG&A”) Expenses


	Nine Months Ended September 30,						Change
(dollars in thousands)	2019			2018			$		%
Selling, general and administrative expenses	$	681,431		$	599,563		$	81,868		13.7	%
% of revenue		22.8	%		21.6	%

SG&A expenses increased $81.9 million to $681.4 million for the nine months ended September 30, 2019 as compared to the same period in 2018. The increase in SG&A expenses was primarily due to (i) a $30.4 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases, (ii) $14.3 million in compensation costs related to a stock option modification and special cash bonus to option holders and (iii) an increase in professional fees, including acquisition and transaction costs of $8.9 million. The increase in SG&A expenses was partially offset by a 1.9% decrease from the favorable impact from foreign currency exchange rates. As a percentage of revenue, SG&A expenses increased to 22.8% for the nine months ended September 30, 2019 as compared to 21.6% in the same period in 2018 primarily due to the factors identified above.

Interest Expense, Net


	Nine Months Ended September 30,
(in thousands)	2019		2018
Interest expense, net	$	229,147	$	197,920

Interest expense, net, was $229.1 million for the nine months ended September 30, 2019 as compared to $197.9 million for the same period in 2018. The increase in interest expense is due to $29.6 million of interest expense related to the issuance of the Additional Holdco Notes and an increase in the interest rate on our term loan under our Senior Secured Credit Facilities for a portion of the year, partially offset by favorable amortization from our terminated interest rate swaps.

(Loss) Gain on Investments


	Nine Months Ended September 30,
(in thousands)	2019			2018
(Loss) gain on investments	$	(22,716	)	$	47,040

Loss on investments was $22.7 million for the nine months ended September 30, 2019 as compared to a gain of $47.0 million for the same period in 2018. The loss and gain for the current year and prior year, respectively, was primarily a result of changes in the fair values of the net asset values of our investments, partially offset by a change in our discount rate on certain investments. The gains or losses from our investments will likely continue to fluctuate from period to period based on the changes in fair values of the underlying holdings and changes in the discounts applied to such investments for our lack of control and lack of marketability, where applicable.

Other Expense, Net


	Nine Months Ended September 30,
(in thousands)	2019			2018
Other expense, net	$	(3,158	)	$	(7,159	)

Other expense, net, was $3.2 million for the nine months ended September 30, 2019 as compared to other expense, net of $7.2 million for the same period in 2018. Foreign exchange rate movement resulted in transaction and re-measurement losses of $1.4 million for the nine months ended September 30, 2019 and transaction and re-measurement losses of $5.7 million for the same period in 2018.

Provision for Income Taxes


	Nine Months Ended September 30,
(dollars in thousands)	2019			2018
Provision for income taxes	$	12,387		$	20,819
Effective income tax rate		25.3	%		18.4	%

Our provision for income taxes was $12.4 million, resulting in an effective income tax rate of 25.3%, for the nine months ended September 30, 2019 as compared to $20.8 million, or an effective income tax rate of 18.4%, for the same period in 2018. Our provision for income taxes for the nine months ended September 30, 2019 was primarily due to the estimated tax effect on our income before provision for income taxes offset by the impact from certain discrete items. Our provision for income taxes for the nine months ended September 30, 2018 was primarily due to the estimated tax effect on our income before provision for income taxes, an adjustment related to the one-time mandatory transition tax on accumulated unremitted foreign earnings and other discrete items.

Segment Results of Operations

We assess our segment revenue on a direct revenue basis, excluding third-party, pass-through and out-of-pocket revenue. Clinical Development Services and Laboratory Services segment revenue and segment direct costs for the nine months ended September 30, 2019 and 2018 are detailed below.

Clinical Development Services


	Nine Months Ended September 30,						Change
(dollars in thousands)	2019			2018			$		%
Direct revenue	$	1,887,369		$	1,705,901		$	181,468		10.6	%
Direct costs		872,643			787,127			85,516		10.9

Segment profit		1,014,726			918,774			95,952		10.4
Direct costs as a % of direct revenue		46.2	%		46.1	%

Direct Revenue

Clinical Development Services’ direct revenue was $1,887.4 million for the nine months ended September 30, 2019, an increase of $181.5 million, or 10.6%, as compared to the same period in 2018. Direct revenue increased (i) 11.1% from organic volume growth in our Phase II-IV clinical trial management services, site and patient access services and medical communications services, as well as higher opening backlog at the beginning of the year and (ii) 0.5% from inorganic growth due to the 2019 Acquisitions. The increase in direct revenue was partially offset by a 1.0% decrease from the unfavorable impact from foreign currency exchange rates. The higher opening backlog was primarily due to increased net authorizations for our Phase II-IV clinical trial management services in 2018.

Direct Costs

Clinical Development Services’ direct costs were $872.6 million for the nine months ended September 30, 2019, an increase of $85.5 million, or 10.9%, as compared to the same period in 2018. The increase in direct costs was primarily due to (i) a $43.3 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases, (ii) a $6.3 million increase from the impact of the 2019 Acquisitions, (iii) an increase in project delivery costs including media related-costs for patient recruitment services and (iv) a decrease in R&D incentive credits. The increase in direct costs was partially offset by a 2.2% decrease from the favorable impact from foreign currency exchange rates. As a percentage of direct revenue, direct costs increased slightly to 46.2% for the nine months ended September 30, 2019 as compared to 46.1% in the same period in 2018 primarily due to the factors identified above.

Laboratory Services


	Nine Months Ended September 30,						Change
(dollars in thousands)	2019			2018			$		%
Direct revenue	$	437,661		$	370,000		$	67,661		18.3	%
Direct costs		227,181			192,280			34,901		18.2

Segment profit		210,480			177,720			32,760		18.4
Direct costs as a % of direct revenue		51.9	%		52.0	%

Direct Revenue

Laboratory Services’ direct revenue was $437.7 million for the nine months ended September 30, 2019, an increase of $67.7 million, or 18.3%, as compared to the same period in 2018. Direct revenue increased from

organic volume growth across all our laboratory services as well as higher opening backlog at the beginning of the year. The higher opening backlog was primarily due to increased net authorizations in 2018.

Direct Costs

Laboratory Services’ direct costs were $227.2 million for the nine months ended September 30, 2019, an increase of $34.9 million, or 18.2%, as compared to the same period in 2018. The increase in direct costs was primarily due to (i) a $19.4 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases and (ii) an increase in laboratory supply costs associated with the growth in revenue.

Year Ended December 31, 2018 versus Year Ended December 31, 2017 and Year Ended December 31, 2017 versus Year Ended December 31, 2016

Consolidated Results of Operations

Revenue


							Change
	Years Ended December 31,						2018 vs. 2017						2017 vs. 2016
(dollars in thousands)	2018		2017		2016		$			%			$		%
Revenue	$	3,748,971	$	2,767,476	$	2,467,941	$	981,495			35.5	%	$	299,535		12.1	%
Reimbursed revenue		—		233,574		211,624		(233,574	)		n.m.			21,950		10.4

Total revenue	$	3,748,971	$	3,001,050	$	2,679,565	$	747,921			24.9		$	321,485		12.0

Total revenue increased $747.9 million, or 24.9%, to $3,749.0 million for the year ended December 31, 2018 as compared to 2017. Total revenue increased primarily due to the adoption of ASC 606, which requires third-party pass-through revenue and out-of-pocket reimbursed revenue to be reported on a gross presentation basis as part of revenue. Previously, under ASC 605, third-party pass-through revenue was presented net of third-party pass-through costs in our consolidated statements of operations. Excluding the impact of the adoption of ASC 606, revenue increased $70.3 million, or 2.5%. Total revenue increased 1.5% primarily due to organic volume growth and higher backlog conversion, 0.7% due to the effect of favorable foreign currency exchange rates, and 0.3% due to inorganic growth from the 2017 acquisition of Optimal Research (the “2017 Acquisition”).

Revenue increased $299.5 million, or 12.1%, to $2,767.5 million for the year ended December 31, 2017 as compared to 2016. Revenue increased 8.1% due to organic volume growth, 3.7% due to inorganic growth from the 2016 Acquisitions and the 2017 Acquisition, and 0.3% due to the effect of favorable foreign currency exchange rates. The organic volume growth was primarily the result of a higher opening backlog and increased net authorizations in 2016. Reimbursed revenue increased $22.0 million to $233.6 million for the year ended December 31, 2017 as compared to 2016. The increase in reimbursed revenue is due to the increase in reimbursed costs and our overall growth.

Direct Costs


										Change
	Years Ended December 31,									2018 vs. 2017					2017 vs. 2016
(dollars in thousands)	2018			2017			2016			$		%			$		%
Direct costs	$	1,333,812		$	1,302,983		$	1,175,051		$	30,829		2.4	%	$	127,932		10.9	%
% of total revenue		35.6	%		43.4	%		43.9	%

Direct costs increased $30.8 million to $1,333.8 million for the year ended December 31, 2018 as compared to 2017. The increase in direct costs was primarily due to (i) a $30.9 million increase from growth in employee

headcount to support current and anticipated growth in future revenue and compensation increases, (ii) an increase in project delivery costs, including media-related costs for patient recruitment services and (iii) an inorganic increase of $5.2 million for the 2017 Acquisition, partially offset by increased R&D incentive credits. The increase in direct costs included a 0.8% increase from the unfavorable impact from foreign currency exchange rates. As a percentage of revenue, direct costs decreased to 35.6% for the year ended December 31, 2018 as compared to 43.4% in 2017. Excluding the impact from the adoption of ASC 606, direct costs were 43.4%, as a percentage of revenue, for the year ended December 31, 2018.

Direct costs increased $127.9 million to $1,303.0 million for the year ended December 31, 2017 as compared to 2016. The increase in direct costs was primarily due to (i) a $104.1 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases, and (ii) an inorganic increase of $50.8 million and $1.8 million for the 2016 Acquisitions and the 2017 Acquisition, respectively, partially offset by increased R&D incentive credits and a decrease in certain project delivery costs. The increase in direct costs included a 0.9% increase from the unfavorable impact from foreign currency exchange rates. As a percentage of revenue, direct costs decreased to 43.4% for the year ended December 31, 2017 as compared to 43.9% in 2016. The decrease in direct costs as a percentage of revenue was primarily due to increased R&D incentive credits, partially offset by the impact from unfavorable foreign currency exchange rates.

Reimbursed Costs


										Change
	Years Ended December 31,									2018 vs. 2017					2017 vs. 2016
(dollars in thousands)	2018			2017			2016			$		%			$		%
Reimbursed costs	$	940,913		$	233,574		$	211,624		$	707,339		302.8	%	$	21,950		10.4	%
% of total revenue		25.1	%		7.8	%		7.9	%

Reimbursed costs increased $707.3 million to $940.9 million for the year ended December 31, 2018 as compared to 2017. Reimbursed costs increased primarily due to the adoption of ASC 606, which requires third-party pass-through costs to be recorded on a gross presentation basis instead of being presented net of pass-through revenue. Previously, under ASC 605, third-party pass-through costs were presented net of third-party pass-through revenue in our consolidated statements of operations for periods that commenced prior to January 1, 2018. Excluding the impact from the adoption of ASC 606, reimbursed costs would have been $222.2 million for the year ended December 31, 2018. See discussion above on the impact from the adoption of ASC 606 on our revenues.

Reimbursed costs increased $22.0 million to $233.6 million for the year ended December 31, 2017 as compared to 2016. The increase in reimbursed costs is due to the increase in revenue and our overall growth.

Selling, General and Administrative Expenses


										Change
	Years Ended December 31,									2018 vs. 2017					2017 vs. 2016
(dollars in thousands)	2018			2017			2016			$		%			$		%
Selling, general and administrative expenses	$	813,035		$	809,333		$	718,139		$	3,702		0.5	%	$	91,194		12.7	%
% of total revenue		21.7	%		27.0	%		26.8	%

SG&A expenses increased $3.7 million to $813.0 million for the year ended December 31, 2018 as compared to 2017. The increase in SG&A expenses was primarily due to (i) a $9.5 million increase from growth

in employee headcount to support current and anticipated growth in future revenue and compensation increases and (ii) an inorganic increase of $3.3 million from the 2017 Acquisition, partially offset by $10.4 million of lower stock-based compensation, severance and other related costs. The increase in SG&A expenses included a 0.4% increase from the unfavorable impact from foreign currency exchange rates. As a percentage of revenue, SG&A expenses decreased to 21.7% for the year ended December 31, 2018 as compared to 27.0% in 2017. Excluding the impact from the adoption of ASC 606, as a percentage of revenue, SG&A expenses decreased to 26.7% for the year ended December 31, 2018 primarily due to effective leverage of our SG&A functions as we grow.

SG&A expenses increased $91.2 million to $809.3 million for the year ended December 31, 2017 as compared to 2016. The increase in SG&A expenses was primarily due to (i) a $54.0 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases, (ii) higher stock-based compensation costs and (iii) an inorganic increase of $27.8 million and $1.1 million from the 2016 Acquisitions and 2017 Acquisition, respectively. The increase in SG&A expenses included a 0.2% increase from the unfavorable impact from foreign currency exchange rates. As a percentage of revenue, SG&A expenses increased slightly to 27.0% for the year ended December 31, 2017 as compared to 26.8% for the year ended December 31, 2016 primarily due to the factors above.

Recapitalization Costs


	Years Ended December 31,
(in thousands)	2018		2017		2016
Recapitalization costs	$	—	$	114,766	$	—

Recapitalization costs associated with the recapitalization of the Company were $114.8 million for the year ended December 31, 2017 and consisted of (i) $51.2 million of transaction costs, (ii) $52.2 million of stock-based compensation expense for the vesting and cash settlement of options, (iii) $4.3 million of accelerated other compensation expense for special cash bonuses and (iv) $7.1 million of other compensation expense for payroll taxes related to the cash and share settlement of options and the special cash bonuses. There were no recapitalization costs for the years ended December 31, 2018 or 2016.

Depreciation and Amortization


	Years Ended December 31,
(in thousands)	2018		2017		2016
Depreciation and amortization	$	258,974	$	279,066	$	260,487

Depreciation and amortization was $259.0 million for the year ended December 31, 2018 as compared to $279.1 million in 2017. Depreciation and amortization expense decreased primarily due to certain definite-lived intangible assets and internally developed software becoming fully amortized in 2017, partially offset by an unfavorable impact from foreign currency exchange rates.

Depreciation and amortization was $279.1 million for the year ended December 31, 2017 as compared to $260.5 million in 2016. Depreciation and amortization expense increased primarily due to amortization expense for definite-lived intangible assets attributable to the 2016 Acquisitions, the 2017 Acquisition and amortization expense for the acceleration of the useful life of a trade name intangible asset that was fully amortized in 2017, partially offset by a favorable impact from foreign currency exchange rates.

Goodwill Impairment


	Years Ended December 31,
(in thousands)	2018		2017		2016
Goodwill impairment	$	29,626	$	38,374	$	26,890

Goodwill impairment was $29.6 million for the year ended December 31, 2018 as compared to $38.4 million in 2017 and $26.9 million in 2016. Our 2018, 2017 and 2016 annual goodwill impairment tests each indicated that one reporting unit in our Clinical Development Services segment had an estimated fair value below carrying value as a result of decreases in future cash flows. The goodwill impairments in 2018 and 2016 were recorded on the same reporting unit.

In 2018, the expected future cash flows decreased due to lower forecasted long-term revenue growth and higher forecasted operating expenses, resulting in reduced margins. In 2017, the expected future cash flows decreased due to lower forecasted long-term revenue growth and reduced margins, primarily as a result of the loss of certain key customers. In 2016, the reporting unit’s expected future cash flows decreased due to lower forecasted long-term revenue growth and reduced margins, primarily as a result of lower revenue generation from certain customers in a key customer segment and higher operating costs.

Interest Expense, Net


	Years Ended December 31,
(in thousands)	2018		2017		2016
Interest expense, net	$	263,618	$	253,891	$	203,294

Interest expense, net, was $263.6 million for the year ended December 31, 2018 as compared to $253.9 million in 2017. The overall increase in interest expense is due to $16.0 million of interest expense from the issuance of the Initial Holdco Notes in connection with the May 2017 recapitalization of the Company and an increase in the interest rate on our term loan under our Senior Secured Credit Facilities from 4.38% to 5.02%. These increases were partially offset by favorable interest rate swaps and the impact of a repricing of our term loan in March 2018 resulting in a lower margin on our term loan.

Interest expense, net, was $253.9 million for the year ended December 31, 2017 as compared to $203.3 million in 2016. The overall increase in interest expense was primarily related to $20.6 million of interest expense from the incremental term loan borrowings under our Senior Secured Credit Facilities in May 2016 (“Incremental Term Loan A”) and November 2016 (“Incremental Term Loan B”), totaling $660.0 million, and $28.1 million of interest expense from the issuance of the Initial Holdco Notes in connection with the May 2017 recapitalization of the Company.

Gain on Investments


	Years Ended December 31,
(in thousands)	2018		2017		2016
Gain on investments	$	15,936	$	92,750	$	61,576

Gain on investments was $15.9 million for the year ended December 31, 2018 as compared to a gain of $92.8 million in 2017. The gain in 2018 and 2017 was primarily a result of increases in the fair value of the net asset values of our investments, partially offset by changes to the discount on certain investments.

Gain on investments was $92.8 million for the year ended December 31, 2017 as compared to $61.6 million in 2016. The gains on investments during 2017 and 2016 were primarily a result of increases in the fair value of the net asset values of our investments, partially offset by changes to the discount on certain investments.

The gains or losses from our investments will likely continue to fluctuate from period to period primarily based on the changes in fair value of the net asset values of the limited partnerships and changes in the discounts applied to such investments for our lack of control and lack of marketability.

Other Income (Expense), Net


	Years Ended December 31,
(in thousands)	2018		2017			2016
Other income (expense), net	$	21,701	$	(40,259	)	$	22,448

Other income, net, was $21.7 million for the year ended December 31, 2018 as compared to other expense, net, of $40.3 million in 2017. The change in other income (expense), net, was primarily due to foreign exchange rate movement that resulted in transaction and re-measurement gains of $16.7 million for the year ended December 31, 2018 as compared to transaction and re-measurement losses of $40.1 million in 2017.

Other expense, net, was $40.3 million for the year ended December 31, 2017 as compared to other income, net, of $22.4 million in 2016. The change in other income (expense), net, was primarily due to foreign exchange rate movement that resulted in transaction and re-measurement losses of $40.1 million for the year ended December 31, 2017 and transaction and re-measurement gains of $23.0 million in 2016.

Provision for (Benefit from) Income Taxes


	Years Ended December 31,
(dollars in thousands)	2018			2017			2016
Provision for (benefit from) income taxes	$	39,579		$	(284,360	)	$	(15,961	)
Effective income tax rate		27.0	%		(1,726.6	)%		(9.6	)%

Our provision for income taxes was $39.6 million, resulting in an effective income tax rate of 27.0%, for the year ended December 31, 2018, as compared to a benefit from income taxes of $284.4 million, or an effective income tax rate of (1,726.6)%, in 2017. Our benefit from income taxes was $284.4 million, or an effective income tax rate of (1,726.6)%, for the year ended December 31, 2017 as compared to $16.0 million, or an effective income tax rate of (9.6)% in 2016. Our provision for income taxes for the year ended December 31, 2018 was primarily due to the estimated tax effect on our income before provision for income taxes, which included a decrease in the corporate statutory tax rate and other tax impacts as a result of the Tax Act. Our benefit from income taxes for the year ended December 31, 2017 was primarily due to (i) the net impacts of the Tax Act, including the benefit on our deferred tax liabilities from the decrease in the corporate statutory tax rate, the generation of foreign tax credits and the release of a deferred tax liability for accumulated unremitted foreign earnings, offset by the inclusion of the one-time mandatory transition tax and (ii) the estimated tax effect of certain stock-based and other compensation costs, offset by certain non-deductible transaction costs, all related to the recapitalization of the Company in May 2017. Our benefit from income taxes for the year ended December 31, 2016 was primarily due to the release of a deferred tax liability on foreign earnings previously considered not permanently reinvested, partially offset by the estimated tax effect on our income before benefit from income taxes.

Segment Results of Operations

We assess our segment revenue on a direct revenue basis, excluding third-party pass-through and out-of-pocket revenue. Clinical Development Services and Laboratory Services segment revenue and segment direct costs for the years ended December 31, 2018, 2017 and 2016 are detailed below.

Clinical Development Services


										Change
	Years Ended December 31,									2018 vs. 2017					2017 vs. 2016
(dollars in millions)	2018			2017			2016			$		%			$		%
Direct revenue	$	2,336.0		$	2,319.1		$	2,057.4		$	16.9		0.7	%	$	261.7		12.7	%
Direct costs		1,058.2		$	1,053.6			948.7			4.6		0.4			104.9		11.1

Segment profit		1,277.8			1,265.5			1,108.7			12.3		1.0			156.8		14.1
Direct costs as a % of direct revenue		45.3	%		45.4	%		46.1	%

Direct Revenue

Clinical Development Services’ direct revenue was $2,336.0 million in 2018, an increase of $16.9 million, or 0.7%, as compared to 2017. Direct revenue increased 0.4% due to inorganic growth from the 2017 Acquisition and 0.7% due to favorable foreign currency exchange rates, partially offset by a 0.4% decrease in organic volume. The decrease in organic growth was primarily the result of a lower opening backlog and a decrease in net authorizations in 2017 in our Phase II-IV clinical trial management services.

Clinical Development Services’ direct revenue was $2,319.1 million in 2017, an increase of $261.7 million, or 12.7%, as compared to 2016. Direct revenue increased 8.0% due to organic volume growth, 4.5% due to inorganic growth from the 2016 Acquisitions and the 2017 Acquisition and 0.3% due to the effect of favorable foreign currency exchange rates. Our organic volume growth was primarily from volume increases in our Phase II-IV clinical trial management services and higher opening backlog at the beginning of the year, partially offset by declines in our early development services. The higher opening backlog was primarily due to increased net authorizations for our Phase II-IV clinical trial management services in 2016.

Direct Costs

Clinical Development Services’ direct costs were $1,058.2 million in 2018, an increase of $4.6 million, or 0.4%, as compared to 2017. The increase in direct costs was primarily due to (i) a $20.2 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases, (ii) an increase in media-related costs for patient recruitment services and (iii) an inorganic increase of $5.2 million for the 2017 Acquisition, partially offset by increased R&D incentive credits and a $23.1 million decrease in temporary labor and certain other project delivery costs. The increase in direct costs included a 0.9% increase from the unfavorable impact from foreign currency exchange rates. As a percentage of direct revenue, direct costs decreased to 45.3% for the year ended December 31, 2018 as compared to 45.4% for the year ended December 31, 2017.

Clinical Development Services’ direct costs were $1,053.6 million in 2017, an increase of $104.9 million, or 11.1%, as compared to 2016. The increase in direct costs was primarily due to (i) an $80.6 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases and (ii) an inorganic increase of $50.8 million and $1.8 million, respectively, for the 2016 Acquisitions and the 2017 Acquisition, partially offset by increased R&D incentive credits and a $24.5 million decrease in certain project delivery costs. The increase in direct costs included a 1.0% increase from the unfavorable impact from foreign currency exchange rates. As a percentage of direct revenue, direct costs decreased to 45.4% for the year ended December 31, 2017 as compared to 46.1% for the year ended December 31, 2016. The decrease in direct costs as a percentage of direct revenue was primarily due to the increase in R&D incentive credits and our efforts to appropriately leverage our direct costs related to the services we are providing.

Laboratory Services


										Change
	Years Ended December 31,									2018 vs. 2017					2017 vs. 2016
(dollars in millions)	2018			2017			2016			$		%			$		%
Direct revenue	$	501.8		$	448.4		$	410.6		$	53.4		11.9	%	$	37.8		9.2	%
Direct costs		258.5			235.1			218.6			23.4		10.0			16.5		7.5

Segment profit		243.3			213.3			192.0			30.0		14.1			21.3		11.1
Direct costs as a % of direct revenue		51.5	%		52.4	%		53.2	%

Direct Revenue

Laboratory Services’ direct revenue was $501.8 million in 2018, an increase of $53.4 million, or 11.9%, as compared to 2017. Direct revenue increased primarily from organic volume growth from our bioanalytical and GMP laboratory services as well as higher opening backlog at the beginning of the year. The higher opening backlog was primarily due to increased net authorizations in 2018.

Laboratory Services’ direct revenue was $448.4 million in 2017, an increase of $37.8 million, or 9.2%, as compared to 2016. Direct revenue increased primarily from organic volume growth from our GMP laboratory services as well as higher opening backlog at the beginning of the year. The higher opening backlog was primarily due to increased net authorizations in 2017.

Direct Costs

Laboratory Services’ direct costs were $258.5 million in 2018, an increase of $23.4 million, or 10.0%, as compared to 2017. The increase in direct costs was primarily due to (i) a $19.1 million increase from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases and (ii) an increase in laboratory supplies costs associated with the growth in revenue. As a percentage of direct revenue, direct costs decreased to 51.5% for the year ended December 31, 2018 compared to 52.4% for the year ended December 31, 2017. The decrease in direct costs as a percentage of direct revenue was primarily due to an increase in revenue and our efforts to appropriately leverage our direct costs related to the services we are providing.

Laboratory Services’ direct costs were $235.1 million in 2017, an increase of $16.5 million, or 7.5%, as compared to 2016. The increase in direct costs in absolute terms was primarily due to a $16.2 million from growth in employee headcount to support current and anticipated growth in future revenue and compensation increases. As a percentage of direct revenue, direct costs decreased to 52.4% for the year ended December 31, 2017 compared to 53.2% for the year ended December 31, 2016. The decrease in direct costs as a percentage of direct revenue was primarily due to an increase in revenue and the operating leverage we are obtaining as our Laboratory Services segment grows.

Liquidity and Capital Resources

Overview

We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary cash uses on a short-term and long-term basis are for repayment of debt, interest payments, working capital, capital expenditures, geographic or service offering expansion, acquisitions, investments and other general corporate purposes. We have historically funded our operations with cash flows from operations. We have historically used long-term debt and cash on hand to fund acquisitions and make special dividends or distributions to our stockholders. We hold our cash balances in the United States and numerous locations in the rest of the world.

The following table presents key measures of our liquidity on the dates set forth below:


(in thousands)	September 30, 2019		December 31,
	September 30, 2019		2018		2017		2016
Cash and cash equivalents:
Cash held in the United States	$	112,128	$	371,495	$	79,917	$	203,202
Cash held in foreign locations		291,270		181,571		339,043		158,539

Total	$	403,398	$	553,066	$	418,960	$	361,741

Revolving Credit Facility (net of letters of credit)	$	298,370	$	298,370	$	298,070	$	298,070

We have provided for the impact of the Tax Act and applicable proposed and final regulatory guidance issued to date by the IRS and the U.S. Treasury on our cash taxes. However, we are still assessing the ultimate impact that the Tax Act will have on our cash taxes. The Tax Act included a transition of U.S. international taxation from a worldwide system to a territorial system, including a one-time mandatory transition tax on accumulated unremitted foreign earnings. In our 2017 U.S. Corporate Income Tax Return, previously generated tax benefits and foreign tax credits offset our transition tax owed on accumulated unremitted foreign earnings. Historically, we recorded a deferred tax liability for unremitted foreign earnings that were not permanently reinvested, however, as a result of the Tax Act, that deferred tax liability was released in 2017. Exclusive of any actions we may take as a result of the Tax Act, we expect that certain provisions, including the interest deductibility limitation and Global Intangible Low-Taxed Income (“GILTI”), may impact our future taxable income and ultimately increase our cash taxes payable in the future. See Note 9, “Income Taxes,” to our unaudited condensed consolidated financial statements and Note 11, “Income Taxes,” to our consolidated financial statements included elsewhere in this prospectus for further discussion and additional information regarding income taxes.

As a result of the recapitalization of the Company in 2017, we incurred certain future obligations associated with potential additional recapitalization consideration. During 2018, we finalized the amount of the recapitalization tax benefit liability and distributed $108.3 million from our cash and cash equivalents on-hand to the pre-closing holders. We do not expect the payment of the recapitalization investment portfolio liability (as defined in our audited consolidated financial statements included elsewhere in this prospectus) to impact our future liquidity or capital resources as the right for the pre-closing holders to receive any such payment depends upon receipt of future cash proceeds from the applicable portion of the investment portfolio. We have classified in long-term liabilities the portion of the investment portfolio we estimate to be payable to the pre-closing holders. Future payments will be required to be made, if and when, cash proceeds are received and are payable under the Recapitalization Transaction merger agreement. For example, as required under the Recapitalization Transaction merger agreement, during 2018 and 2017, we made cash distributions of $16.0 million and $10.5 million, respectively, for the payment of a portion of the recapitalization investment portfolio liability from the cash proceeds received from the investment portfolio.

On May 2, 2019, we amended the Initial Holdco Notes indenture to permit us to make special dividends and distributions to our stockholders. Expenses of $11.0 million for consent fees were capitalized in connection with this debt modification.

On May 14, 2019, we issued $900.0 million of Additional Holdco Notes at 99% of face value, or a discount of 1.0%. We used the net proceeds from the Additional Holdco Notes, together with cash on hand, to pay a special cash dividend of $1,086.0 million to our stockholders, as well as pay for fees and expenses associated with the debt issuance. Debt issuance costs of $18.2 million, consisting primarily of underwriters’ and professional fees, deferred and presented as a direct deduction from long-term debt and finance lease obligations on the unaudited condensed consolidated balance sheet.

As of September 30, 2019, we had total long-term debt and finance lease obligations outstanding of approximately $5.7 billion. See Note 5, “Long-term Debt and Finance Lease Obligations,” to our unaudited

condensed consolidated financial statements and Note 10, “Long-term Debt and Lease Obligations,” to our audited consolidated financial statements included elsewhere in this prospectus for further discussion and additional information regarding our debt instruments and other obligations. We expect our long-term debt and finance lease obligations to decrease due to the repayment of debt from the use of proceeds in connection with the sale of our common stock in this offering and our intention to pay down additional long-term debt from time to time. See “Use of Proceeds,” for additional information.

In November 2019, the Company declared, and subsequently paid, a special cash dividend to its stockholders of $160.0 million, or $1.03 per share, with cash on hand. See Note 17, “Subsequent Events,” to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for more information.

We expect to continue funding our operations from existing cash, cash flows from operations and, if necessary or appropriate, borrowings under our Revolving Credit Facility, which remains undrawn. We believe that these sources of liquidity will be sufficient to fund our operations and service our debt and interest for the foreseeable future. From time to time, we evaluate potential acquisitions, investments and other growth and strategic opportunities that might require use of existing cash, borrowings under our Revolving Credit Facility or additional long-term financing.

While we believe we have sufficient liquidity to fund our operations for the foreseeable future, our sources of liquidity could be affected by factors described under “Risk Factors,” “Contractual Obligations and Commercial Commitments,” “Critical Accounting Policies and Estimates,” “Potential Liability and Insurance” and “Quantitative and Qualitative Disclosures about Market Risk,” included elsewhere in this prospectus.

Cash Flows

Nine Months Ended September 30, 2019 versus Nine Months Ended September 30, 2018

Cash flows from operating activities


	Nine Months Ended September 30,
(in thousands)	2019		2018
Net cash provided by operating activities	$	313,722	$	301,106

The increase in operating cash flows of $12.6 million was due to a $56.5 million increase in net income and non-cash reconciling items, partially offset by a $43.9 million decrease in cash from the changes in operating assets and liabilities. The change in operating assets and liabilities was primarily due to period over period fluctuations in the timing of collections and payments, with the use of cash for (i) net accounts receivable (defined as the sum of period-end balances of accounts receivable and unbilled services net of unearned revenue), (ii) operating lease liabilities and (iii) prepaid expenses and other current assets being unfavorable and the source of cash from accounts payable, accrued expenses and other liabilities being favorable.

The increase in non-cash reconciling items was primarily due to (i) a loss on investments during the first nine months of 2019, compared to a gain on investments in the same period in the prior year and (ii) non-cash operating lease expense, partially offset by a decrease in net income. The change in operating lease liabilities and the non-cash operating lease expense was the result of the adoption of ASC Topic 842 (“ASC 842”), Leases.

The change in the use of cash for net accounts receivable of $35.4 million for the nine months ended September 30, 2019 is due to the timing in the receipt of collections and contractual billings under our contracts. Other changes to cash flows from operating activities include a $7.4 million increase in cash paid for interest and a $8.6 million net decrease in cash paid for income taxes during the first nine months of 2019 as compared to the same period in 2018. Cash paid for interest increased due to higher interest rates on our Term Loan for a portion of the nine months ended September 30, 2019. Cash paid for income taxes decreased as a result of foreign

income tax refunds recognized during the nine months ended September 30, 2019. Additionally, during the first nine months of 2019, we paid a special cash bonus of $14.6 million to option holders in connection with the special cash dividend to our stockholders that we declared in November 2019.

Cash flows from investing activities


	Nine Months Ended September 30,
(in thousands)	2019			2018
Net cash used in investing activities	$	(195,548	)	$	(58,990	)

The increase in cash used during the first nine months of 2019 was primarily due to (i) the net cash paid for the 2019 Acquisitions of $74.2 million, (ii) new and incremental investments in unconsolidated affiliates and (iii) an increase in purchases of property and equipment. Additionally, the increase in cash used resulted from $8.0 million of net cash proceeds received from the sale of a business in the prior year and no proceeds from the sale of a business in the same period in the current year.

Cash paid for investments in unconsolidated affiliates for the first nine months of 2019 and 2018 was $30.0 million and $9.0 million, respectively. For the first nine months of 2019 and 2018, cash paid for property and equipment was $89.4 million and $75.5 million, respectively. The increase in cash paid for property and equipment was primarily due to the timing of payments and year over year growth in the business.

Cash flows from financing activities


	Nine Months Ended September 30,
(in thousands)	2019			2018
Net cash used in financing activities	$	(253,229	)	$	(140,776	)

The increase in cash used during the first nine months of 2019 was primarily due to a special cash dividend paid to our stockholders, partially offset by the cash proceeds received from additional long-term borrowings. During the second quarter of 2019, we borrowed $891.0 million net cash under the Additional Holdco Notes to fund, along with cash on hand, a special cash dividend of $1,086.0 million to our stockholders. The use of cash also included $30.1 million in payments for debt issuance and debt modification costs associated with the issuance of the Additional Holdco Notes and modification of the Initial Holdco Notes. The increase in cash used for financing activities was partially offset by an increase of $3.2 million in proceeds from the exercise of stock options in the current period compared to the same period in the prior year. For the first nine months of 2019 and 2018, quarterly principal payments on the term loan and payments for finance leases were $25.6 million and $26.4 million, respectively.

Year Ended December 31, 2018 versus Year Ended December 31, 2017 and Year Ended December 31, 2017 versus Year Ended December 31, 2016

Cash flows from operating activities


	Years Ended December 31,
(in thousands)	2018		2017		2016
Net cash provided by operating activities	$	423,406	$	359,079	$	407,995

2018 compared to 2017

The increase in operating cash flows of $64.3 million was due to a $74.2 million increase in net income and non-cash reconciling items, partially offset by a $9.9 million decrease in cash from the changes in operating

assets and liabilities. The change in operating assets and liabilities was primarily due to period over period fluctuations in the timing of collections and payments, with the use of cash for (i) accounts payable, accrued expenses and other liabilities and (ii) prepaid expenses and other current assets being unfavorable and the source of cash for (i) net accounts receivable (defined as the sum of period-end balances of accounts receivable and unbilled services net of unearned revenue), (ii) income taxes and (iii) certain assets being favorable. The increase in net income and non-cash reconciling items was primarily due to an increase in income from operations and a decrease in the cash used as a result of the costs related to the 2017 recapitalization of the Company, which did not reoccur during 2018, and growth in the business.

The change in source of cash for net accounts receivable of $94.6 million for the year ended December 31, 2018 was largely a result of a decrease in days sales outstanding. Other changes to cash flows from operating activities included a $24.1 million increase in cash paid for interest and a $21.3 million increase in cash paid for income taxes during 2018 as compared to 2017. Cash paid for interest increased primarily as a result of the issuance of the Initial Holdco Notes in May 2017 as part of the recapitalization. Cash paid for income taxes increased during 2018 as compared to 2017 as a result of increased tax payments in certain foreign jurisdictions due to increases in pre-tax income from foreign subsidiaries.

2017 compared to 2016

The decrease in operating cash flows of $48.9 million was due to a $79.1 million decrease in net income and non-cash reconciling items, offset by a $30.2 million increase in cash from the changes in operating assets and liabilities. The change in operating assets and liabilities was primarily due to period over period fluctuations in the timing of collections and payments, with the source of cash for (i) net accounts receivable and (ii) prepaid expenses and other current assets being favorable, and the use of cash for (i) other assets and (ii) accounts payable, accrued expenses and other liabilities being unfavorable. The decrease in net income and non-cash reconciling items was primarily due to lower income from operations resulting from the effects of the recapitalization, including certain transaction costs and stock-based and other compensation costs, partially offset by growth in the business and the effect of the 2016 Acquisitions.

The change in source of cash for net accounts receivable of $87.7 million for the year ended December 31, 2017 was largely a result of growth in revenue and the timing of billings and cash collections. Other changes to cash flows from operating activities included a $47.7 million increase in cash paid for interest and a $6.6 million increase in cash paid for income taxes during 2017 as compared to 2016. Cash paid for interest increased as a result of the issuance of the Initial Holdco Notes in May 2017 as part of the recapitalization of the Company, borrowings from Incremental Term Loan A and Incremental Term Loan B totaling $656.9 million in 2016 and the interest rate swaps that were entered into, or became effective, during the second half of 2016. Cash paid for income taxes increased during 2017 as compared to 2016 as a result of the change in taxable income and the timing of foreign income tax payments. Cash paid for liabilities increased period over period due to a change in the timing of vendor payments, settlement of the special cash bonuses as part of the recapitalization of the Company and an increase in annual bonus payments. Additionally, transaction costs of $51.0 million, consisting primarily of deal-related fees such as advisory and other professional fees, were paid as part of the recapitalization of the Company.

Cash flows from investing activities


	Years Ended December 31,
(in thousands)	2018			2017			2016
Net cash used in investing activities	$	(90,525	)	$	(92,743	)	$	(519,746	)

2018 compared to 2017

The decrease in cash used during 2018 was primarily due to the net cash paid for the acquisition of Optimal Research of $24.2 million in 2017 and an increase in net cash proceeds from the sale of business of $8.0 million

in 2018. The decrease in cash used was partially offset by an increase in net cash used for property and equipment, cash used for a new investment in an unconsolidated affiliate and a decrease in cash received from investments. Cash paid for property and equipment was $116.1 million and $105.1 million for 2018 and 2017, respectively. The increase in cash paid for property and equipment was primarily due to the timing of payments. Cash paid for a new investment in an unconsolidated affiliate was $9.0 million in 2018. The decrease in cash received from investments resulted from distributions received from investments in 2018 that were $8.6 million lower than the prior year. The distributions received from investments will vary from period to period based on the timing and amount of distributions received, if any.

2017 compared to 2016

The decrease in cash used during 2017 was primarily due to the net cash paid for the 2016 Acquisitions of $433.4 million, offset by the acquisition of Optimal Research for $24.2 million in 2017. Additionally, the decrease in cash used resulted from distributions received from investments (net of capital contributions paid for investments) in 2017 that were $29.4 million greater than the prior year. The distributions received from, and capital contributions paid for, investments will vary from period to period based on the timing and amount of distributions received and capital calls, if any. Cash paid for property and equipment was $105.1 million and $90.3 million for 2017 and 2016, respectively. The increase in cash paid for property and equipment was due to the timing of payments and increased expenditures to support current and future growth.

Cash flows from financing activities


	Years Ended December 31,
(in thousands)	2018			2017			2016
Net cash (used in) provided by financing activities	$	(166,942	)	$	(249,393	)	$	130,465

2018

During 2018, the use of cash was primarily due to the distribution of $108.3 million for the Recapitalization Tax Benefit Liability, quarterly principal payments on the term loan of $32.4 million, a Recapitalization Investment Portfolio Liability distribution of $16.0 million and the use of $8.6 million for the purchase of treasury stock.

2017

During 2017, the use of cash was primarily due to the effects of the recapitalization of the Company. The use of cash for the recapitalization of the Company included $3.3 billion in payments for redemption of shares of common stock, $194.5 million for the cash settlement of the initial Eagle I options and $7.3 million in payments for transaction costs. The use of cash also included $11.9 million in payments for debt issuance costs associated with the issuance of the Initial Holdco Notes, a Recapitalization Investment Portfolio Liability distribution of $10.5 million to the initial Eagle I stockholders and option holders and the purchase of a portion of the noncontrolling interest held in our majority-owned consolidated subsidiary, PPD-SNBL K.K., for $7.1 million. The source of cash included $550.0 million in proceeds from the issuance of the Initial Holdco Notes and $2.8 billion in proceeds from the issuance of shares of Eagle I common stock in connection with the recapitalization of the Company. Additionally, the source of cash included $7.5 million from employee purchases of shares of Eagle I non-voting common stock. Cash used for quarterly principal payments on our term loan was $32.4 million in 2017.

2016

During 2016, the source of cash included total net borrowings on long-term debt of $656.9 million. We borrowed $198.0 million net cash under Incremental Term Loan A which was used to fund, in part, the

acquisition of Synexus. We also borrowed net cash of $458.9 million under Incremental Term Loan B to pay, together with cash on hand, a $486.0 million special cash dividend to our stockholders. Cash used for quarterly principal payments on our term loan was $28.4 million in 2016.

Indebtedness

The following table details our borrowings outstanding as of September 30, 2019 and the associated interest expense, including amortization of debt issuance and modification costs and debt discounts and the average effective interest rates for such borrowings for the nine months ended September 30, 2019:


	Principal Balance			Interest Expense
(dollars in thousands)	September 30, 2019		Average Effective Interest Rate	For Nine Months Ended September 30, 2019
Term Loan	$	3,104,535	4.75%	$	120,361
Revolving Credit Facility		—	—		1,284
Senior Notes		1,125,000	6.61%		55,308
Initial Holdco Notes		550,000	8.92%		34,387
Additional Holdco Notes		900,000	8.90%		29,608
Other debt		5,811	1.13%		70
Finance lease obligations		27,689	Various		1,503

Total	$	5,713,035		$	242,521

Senior Secured Credit Facilities

On August 18, 2015, Jaguar Holding Company II and Pharmaceutical Product Development, LLC (the “Borrowers”) entered into the Senior Secured Credit Facilities consisting of a $2.575 billion senior secured term loan (the “Term Loan”) issued at 99.5% of face value, or a discount of 0.5%, and the Revolving Credit Facility. The Term Loan matures on August 18, 2022 and the Revolving Credit Facility matures on May 15, 2022.

In May 2016, we amended our Credit Agreement to borrow Incremental Term Loan A in the amount of $200.0 million issued at 99.0% of face value, or a discount of 1.0%, to fund, in part, the acquisition of Synexus. Additionally, in November 2016, we amended our Credit Agreement to borrow Incremental Term Loan B in the amount of $460.0 million issued at 99.75% of face value, or a discount of 0.25%, to fund, together with cash on hand, a special cash dividend to our stockholders. The terms of Incremental Term Loan A and Incremental Term Loan B were the same as the terms of our existing Term Loan, including in respect of interest rate and maturity. Incremental Term Loan A and Incremental Term Loan B are considered an increase in the aggregate principal amount of the existing Term Loan outstanding under our Credit Agreement and are part of the existing Term Loan. In May 2017 and March 2018, we further amended our Credit Agreement. The 2017 and 2018 amendments provided for a reduction of 50 basis points and 25 basis points, respectively, in the margin under the Term Loan. As of September 30, 2019, we had approximately $3.1 billion of long-term debt outstanding related to our Credit Agreement. Additionally, we had available $298.4 million of unused credit capacity on our Revolving Credit Facility.

The Term Loan amortizes in equal quarterly installments in an amount equal to 1.0% per annum of the original principal amount thereof, with the balance due at maturity. We may voluntarily prepay loans or reduce commitments under the Credit Agreement, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty.

As of September 30, 2019, we are obligated to pay the following fees under the Revolving Credit Facility: (i) an unused line fee of 0.375% per annum of the unused amount of the Revolving Credit Facility, (ii) a letter of credit participation fee of 3.25% per annum on the aggregate stated maximum amount of each letter of credit

available to be drawn, (iii) a letter of credit fee of 0.125% per annum on the maximum daily amount of each letter of credit available to be drawn and (iv) other customary fees and expenses of the letter of credit issuers.

Borrowings under the Term Loan bear interest at a variable rate, at our option, of either (i) a Eurocurrency rate based on LIBOR for a specific interest period plus an applicable margin, subject to a Eurocurrency rate floor of 1.00%, or (ii) an alternate base rate plus an applicable margin, subject to a base rate floor of 2.00%. The margins for the Term Loan are fixed at 2.50% per annum for Eurocurrency rate loans and 1.50% per annum for base rate loans. As of December 31, 2018, the interest rate on the Term Loan was based on the Eurocurrency loan rate. The Borrowers were in compliance with all covenants under the Credit Agreement at September 30, 2019 and December 31, 2018.

Opco Notes

On August 18, 2015, Jaguar Holding Company II and Pharmaceutical Product Development, LLC issued (the Senior Notes) at par bearing interest at 6.375% per annum. The Senior Notes mature on August 1, 2023 and interest is payable semi-annually on February 1 and August 1 of each year. The Senior Notes do not have registration rights.

Effective August 1, 2018, Jaguar Holding Company II and Pharmaceutical Product Development, LLC may redeem the Senior Notes, at their option, in whole at any time or in part from time to time, upon notice, at the various redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). As of September 30, 2019, no redemptions have been made.

Additionally, upon the occurrence of specific change of control events, Jaguar II and Pharmaceutical Product Development, LLC are required to offer to repurchase all of the Senior Notes then outstanding at 101% of their principal amount, plus accrued and unpaid interest. Jaguar Holding Company II and Pharmaceutical Product Development, LLC were in compliance with all covenants under the Senior Notes indenture at September 30, 2019 and December 31, 2018.

Initial Holdco Notes

On May 11, 2017, in connection with the recapitalization of the Company, Eagle II issued in a private placement $550.0 million aggregate principal amount of unsecured Initial Holdco Notes at par. The Initial Holdco Notes mature on May 15, 2022 and interest is payable semi-annually on May 15 and November 15 of each year. The Initial Holdco Notes do not have registration rights. The Initial Holdco Notes permit Eagle II, if certain conditions are met, to issue additional notes in lieu of paying cash interest. Any additional notes issued by Eagle II in lieu of paying cash interest will bear interest at the rate of 8.375%. We have paid to date, and intend to continue to pay, cash interest on the Initial Holdco Notes.

Effective May 15, 2018, Eagle II may redeem the Initial Holdco Notes, at their option, in whole at any time or in part from time to time, upon notice, at the various redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). As of September 30, 2019, no redemptions have been made.

Additionally, upon the occurrence of specific change of control events, Eagle II is required to offer to repurchase all of the Initial Holdco Notes then outstanding at 101% of their principal amount, plus accrued and unpaid interest. Eagle II was in compliance with all covenants under the Initial Holdco Notes indenture at September 30, 2019 and December 31, 2018.

In May 2019, we amended the Initial Holdco Notes indenture to permit Eagle II to make special dividends and distributions to our stockholders. This transaction was treated as a debt modification for accounting purposes.

Additional Holdco Notes

On May 14, 2019, Eagle II issued in a private placement $900.0 million of aggregate principal amount of unsecured Additional Holdco Notes at 99% of face value, or a discount of 1.0%. The Additional Holdco Notes mature on May 15, 2022 and interest is payable semi-annually on May 15 and November 15 of each year. The Additional Holdco Notes do not have registration rights and permit Eagle II, if certain conditions are met, to issue additional notes in lieu of paying cash interest. Any additional notes issued by Eagle II in lieu of paying cash interest will bear interest at the stated