prah-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2021

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

For the transition period from to .

Commission file number: 001-36732

PRA Health Sciences, Inc.

(Exact name of registrant as specified in its charter)


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

4130 ParkLake Avenue, Suite 400, Raleigh, NC 27612

(Address of principal executive offices) (Zip Code)

(919) 786-8200

(Registrant’s telephone number, including area code)

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

Title of each class

Name of exchange on which registered

Trading symbol

Common Stock $0.01 par value

Nasdaq Global Select Market

PRAH

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

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


Class	Number of Shares Outstanding
Common Stock $0.01 par value	64,795,400	shares outstanding as of April 26, 2021

Table of Contents

PRA HEALTH SCIENCES, INC.

FORM 10-Q

FOR QUARTERLY PERIOD ENDED March 31, 2021

TABLE OF CONTENTS


Item Number		Page

	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Condensed Balance Sheets as of March 31, 2021 and December 31, 2020	3
	Consolidated Condensed Statements of Operations for the three months ended March 31, 2021 and 2020	4
	Consolidated Condensed Statements of Comprehensive Income (L oss) for the three months ended March 31, 2021 and 2020	5
	Consolidated Condensed Statements of Changes in Stockholders' Equity for the three months ended March 31, 2021 and 2020	6
	Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2021 and 2020	7
	Notes to Consolidated Condensed Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
SIGNATURES		35

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share amounts)


	March 31,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and cash equivalents	$	690,259	$	506,303
Accounts receivable and unbilled services, net of allowance for credit losses of $3,103 and $3,064 as of March 31, 2021, and December 31, 2020, respectively	779,346		843,905
Other current assets	126,156		110,306
Total current assets	1,595,761		1,460,514
Fixed assets, net	192,462		194,620
Operating lease right-of-use assets	170,091		178,144
Goodwill	1,690,464		1,691,007
Intangible assets, net	581,170		599,885
Other assets	52,797		54,331
Total assets	$	4,282,745	$	4,178,501
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of borrowings under credit facilities	$	91,300	$	91,300
Current portion of long-term debt	25,000		25,000
Accounts payable	46,478		56,935
Accrued expenses and other current liabilities	388,361		320,375
Current portion of operating lease liabilities	38,771		39,631
Advanced billings	732,641		732,782
Total current liabilities	1,322,551		1,266,023
Long-term debt, net	1,152,663		1,158,668
Long-term portion of operating lease liabilities	150,551		158,983
Deferred tax liabilities	48,324		63,451
Other long-term liabilities	52,134		52,191
Total liabilities	2,726,223		2,699,316
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock (100,000,000 authorized shares; $0.01 par value)
Issued and outstanding -- none	—		—
Common stock (1,000,000,000 authorized shares; $0.01 par value)
Issued and outstanding -- 64,765,369 and 64,538,729 at March 31, 2021 and December 31, 2020, respectively	648		645
Additional paid-in capital	1,174,096		1,137,028
Accumulated other comprehensive loss	(115,487)		(98,813)
Retained earnings	497,265		440,325


Total stockholders' equity	1,556,522		1,479,185
Total liabilities and stockholders' equity	$	4,282,745	$	4,178,501

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

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)


	Three Months Ended March 31,
	2021		2020
Revenue	$	933,775	$	783,708
Operating expenses:
Direct costs (exclusive of depreciation and amortization)	472,010		403,862
Reimbursable expenses	223,352		176,841
Selling, general and administrative expenses	122,778		106,957
Transaction-related costs	13,436		609
Depreciation and amortization expense	32,568		32,278
Loss (gain) on disposal of fixed assets, net	123		(19)
Income from operations	69,508		63,180
Interest expense, net	(5,212)		(13,487)
Foreign currency gains, net	12,388		7,842
Other expense, net	(48)		(4)
Income before income taxes	76,636		57,531
Provision for income taxes	19,696		16,871




Net income	$	56,940	$	40,660
Net income per share attributable to common stockholders:
Basic	$	0.89	$	0.65
Diluted	$	0.86	$	0.63
Weighted average common shares outstanding:
Basic	64,147		62,933
Diluted	66,170		64,339

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

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in thousands)


	Three Months Ended March 31,
	2021		2020
Net income	$	56,940	$	40,660
Other comprehensive loss:
Foreign currency translation adjustments, net of income tax of $(608) and $4,041	(16,674)		(42,756)
Unrealized losses on derivative instruments, net of income tax of $0 and $(1,157)	—		(3,377)
Reclassification adjustments:
Losses on derivatives included in net income, net of income taxes of $0 and $679	—		1,981
Comprehensive income (loss)	$	40,266	$	(3,492)

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

Table of Contents

PRA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)


						Accumulated Other Comprehensive Loss (Note 15)		Retained Earnings
	Common Stock			Additional Paid-in Capital
	Shares	Amount								Total
Balance at January 1, 2021	64,539	$	645	$	1,137,028	$	(98,813)	$	440,325	$	1,479,185
Exercise of common stock options and stock award distribution	226	3		18,296		—		—		18,299
Stock-based compensation	—	—		18,772		—		—		18,772
Net income	—	—		—		—		56,940		56,940
Other comprehensive loss, net of tax	—	—		—		(16,674)		—		(16,674)
Balance at March 31, 2021	64,765	$	648	$	1,174,096	$	(115,487)	$	497,265	$

SEC Form 10-Q filed by PRA Health Sciences, Inc.