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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 under
the Securities Exchange Act of 1934


For
the month ended November, 2021

ICON plc
(Registrant's name)


333-08704
(Commission file number)


South County Business Park, Leopardstown, Dublin 18, Ireland
(Address of principal executive offices)


Brendan Brennan, CFO
South County Business Park, Leopardstown, Dublin 18, Ireland
Brendan.Brennan@iconplc.com
+353-1-291-2000
(Name, telephone number, email and/or facsimile number and address of Company contact person)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F___X___
Form 40-F______
Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes______
No___X___
Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes______
No___X___
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule12g3-2(b) under the Securities Exchange Act of 1934.
Yes______
No___X___
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82 N/A



ICON plc
    This report on Form 6-K is hereby incorporated by reference in the registration statement on Form F-3 (Registration No. 333-133371) of ICON plc and in the prospectus contained therein, registration statement on Form F-4 (Registration No. 333-254891) of ICON plc and in the prospectus contained therein, registration statement on Form S-8 (Registration No. 333-152802) of ICON plc, registration statement on Form S-8 (Registration No. 333-190068) of ICON plc, registration statement on Form S-8 (Registration No. 333-231527) of ICON plc, registration statement on Form S-8 (Registration No. 333-254891) of ICON plc, and registration statement on Form S-8 (Registration No. 333-257578) of ICON plc and this report on Form 6-K shall be deemed a part of each such registration statement from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished by ICON plc under the Securities Act of 1933 or the Securities Exchange Act of 1934.

1


GENERAL

    As used herein, “ICON”, the “Company” and “we” refer to ICON plc and its consolidated subsidiaries, unless the context requires otherwise.

Business

    ICON public limited company (“ICON”) is a clinical research organization (“CRO”), providing outsourced development services on a global basis to the pharmaceutical, biotechnology and medical device industries. We specialize in the strategic development, management and analysis of programs that support all stages of the clinical development process - from compound selection to Phase I-IV clinical studies. Our vision is to be the global CRO partner of choice in drug development by delivering best in class information, solutions and performance in clinical and outcomes research.

    We believe that we are one of a select group of CROs with the expertise and capability to conduct clinical trials in most major therapeutic areas on a global basis and have the operational flexibility to provide development services on a stand-alone basis or as part of an integrated “full service” solution. At September 30, 2021 we had approximately 37,960 employees, in 159 locations in 53 countries. During the nine months ended September 30, 2021, we derived approximately 44.5%, 48.4% and 7.1% of our revenue in the United States, Europe and Rest of World respectively.

    We began operations in 1990 and have expanded our business through organic growth, together with a number of strategic acquisitions to enhance our capabilities and expertise in certain areas of the clinical development process. We are incorporated in Ireland and our principal executive office is located at: South County Business Park, Leopardstown, Dublin 18, Republic of Ireland. The contact telephone number of this office is +353-1-291-2000.

Recent developments

PRA Health Sciences, Inc. - Merger Completion

On July 1, 2021, ICON plc completed its merger (the "Merger") with PRA Health Sciences, Inc. ("PRA"). The combined company has retained the name ICON and brings together 37,960 employees across 53 countries, creating the world’s most advanced healthcare intelligence and clinical research organization.

The combined company leverages its enhanced operations to transform clinical trials and accelerate biopharma customers’ commercial success through the development of much needed medicines and medical devices. The new ICON has a renewed focus on leveraging data, applying technology and accessing diverse patient populations to speed up drug development.

Upon completion of the Merger, pursuant to the terms of the merger agreement, PRA became a wholly owned subsidiary of ICON plc. Under the terms of the Merger, PRA shareholders received per share $80 in cash and 0.4125 shares of ICON stock. The trading of PRA common stock on NASDAQ was suspended prior to market open on July 1, 2021.

The condensed financial statements below reflect the results of the combined company for the three month period since the Merger completion on July 1, 2021. The results of PRA in the period prior to July 1, 2021 are not reflected in the condensed financial statements below, other than where clearly stated and required by GAAP.

Senior Secured Credit Facilities

In conjunction with the completion of the Merger agreement, on July 1, 2021, ICON entered into a credit agreement providing for a senior secured term loan facility of $5,515 million and a senior secured revolving loan facility in an initial aggregate principal amount of $300 million (the "Senior Secured Credit Facilities"). The proceeds of the senior secured term loan facility were used to repay the outstanding amount of (i) PRA’s existing credit facilities and (ii) the Company's private placement notes outstanding and fund, in part, the transaction. The senior secured term loan facility will mature in July 2028 and the revolving loan facility will mature in July 2026.

Borrowings under the senior secured term loan facility amortize in equal quarterly installments in an amount equal to 1.00% per annum of the principal amount, with the remaining balance due at final maturity. The interest rate margin applicable to borrowings under the senior secured term loan facility is, at the option of the applicable borrower (as defined in the credit agreement), either (i) the base rate (as described in the credit agreement) plus an applicable margin of 1.50% or (ii) LIBOR plus an applicable margin of 2.50%, in each case, with a step down of 0.25% if the first lien net leverage ratio is equal to or less than 4.00 to 1.00. The senior secured term loan facility is subject to a LIBOR floor of 0.50%.
2



The Borrowers’ (as defined in the credit agreement) obligations under the Senior Secured Credit Facilities are guaranteed by ICON and the subsidiary guarantors. The Senior Secured Credit Facilities are secured by a lien on substantially all of ICON’s, the Borrowers’ and each of the subsidiary guarantor’s assets (subject to certain exceptions), and the Senior Secured Credit Facilities will have a first-priority lien on such assets, which will rank pari passu with the lien securing the Senior Secured Notes (see below), subject to other permitted liens.

On September 27, 2021, the Company repaid $13.8 million of the senior secured term loan facility and made a quarterly interest payment of $40.4 million.

Senior Secured Notes

In addition to the Senior Secured Credit Facilities, on July 1, 2021, a subsidiary of the Company issued $500 million in aggregate principal amount of 2.875% senior secured notes due 2026 (the “Senior Secured Notes”) in a private offering (the “Offering”). The Senior Secured Notes will mature on July 15, 2026. The proceeds from the Offering and borrowings made under the Senior Secured Credit Facilities, together with cash on hand, were used to (i) fund the cash consideration payable by ICON for the Merger, (ii) repay existing indebtedness of ICON and PRA and (iii) pay fees and expenses related to the Merger, the Offering and the Senior Secured Credit Facilities. The Senior Secured Notes are guaranteed on a senior secured basis by ICON and its direct and indirect subsidiaries that guarantee the Senior Secured Credit Facilities.

Repayment of the 2020 Senior Notes

On December 8, 2020, the Company issued new senior notes, (the "2020 Senior Notes") for aggregate gross proceeds of $350.0 million in the private placement market. The 2020 Senior Notes were issued in two tranches; Series A Notes of $275.0 million at a fixed interest rate of 2.32% and Series B Notes of $75.0 million at a fixed interest rate of 2.43%. The effective interest rate was adjusted by the impact of an interest rate cash flow hedge which was entered into in advance of the rate fixing date. This cash flow hedge was deemed to be fully effective in accordance with ASC 815 'Derivatives and Hedging'. The realized loss related to this derivative was recorded within other comprehensive income and amortized over the life of the 2020 Senior Notes. The effective rate on the 2020 Senior Notes was fixed at 2.41%.

In connection with the Merger with PRA, the Company was required to repay the 2020 Senior Notes prior to entering into the Senior Secured Credit Facilities and the Senior Secured Notes. In June 2021, ICON committed to entering into the Senior Secured Credit Facilities and the Senior Secured Notes and therefore committed to replacing the 2020 Senior Notes. The 2020 Senior Notes have been repaid and long term financing consisting of the Senior Secured Credit Facilities and the Senior Secured Notes have been drawn. The 2020 Senior Notes were repaid on July 1, 2021 inclusive of early repayment charges. The total repayment on July 1, 2021 was $364.0 million.

Board Appointments

As a result of the Merger, Mr. Colin Shannon and Dr. Linda Grais, who both served on the PRA Board, joined ICON’s Board of Directors. The appointments were approved at the Company's annual general meeting held on July 20, 2021.

Mr. Shannon previously served as PRA's President and Chief Executive Officer and was a director of the Company since 2010. He was also the Chairman of the Board of Directors at PRA. Mr. Shannon joined PRA in 2007, serving first as President and Chief Operating Officer. Prior to joining PRA, he was Executive Vice President, Global Clinical Operations at Pharmaceutical Product Development, Inc. (now known as PPD, Inc., or PPD). During his 12 year tenure with PPD, he held various leadership roles, including Chief Operating Officer for its European division and Chief Financial and Administration Officer for Europe and the Pacific Rim.

Dr. Grais was previously a member of the PRA board since October 2015. Dr. Grais served as a member of the board of directors of Ocera Therapeutics, Inc., a biopharmaceutical company, from January 2008 through December 2017 and as President and Chief Executive Officer of Ocera Therapeutics, Inc. from June 2012 to December 2017. Prior to her employment by Ocera Therapeutics, Dr. Grais served as a managing member at InterWest Partners, a venture capital firm from May 2005 until February 2011. She sits on the audit committees of Corvus Pharmaceuticals, Inc., Zosano Pharma Corporation and Arca Biopharma, Inc. and on the compensation committee of Arca Biopharma, Inc.
3



Assessment of COVID-19 impact on the business

    In the period since December 31, 2020, the Company has continued to experience a return to positive growth in revenue and net income as a result of the ongoing recovery from the global COVID-19 pandemic. At this point in time, there still remains some degree of uncertainty relating to the long-term effect of COVID-19 on our business and when it will be possible for business activity to return to normal operating levels. Although the impact of the global COVID-19 pandemic is reducing, we continue to experience restrictions on our ability to ensure laboratory samples are collected and analyzed on time, our ability to monitor our clinical trials, the ability of patients or service providers to travel, and our ability to travel, as a result of the outbreak.

ICON has continued to successfully mobilize its vaccine resources to address the COVID-19 global threat, including its ability to conduct home-based trials to minimize infection. In addition, the Company is currently providing clinical monitoring and safety oversight on more than 100 COVID-19 trials for both the private and government sectors.

Share repurchase program

     During the year ended December 31, 2020, 1,235,218 ordinary shares were redeemed by the Company for a total consideration of $175.0 million. During the nine months ended September 30, 2021, no ordinary shares were redeemed by the Company under this buyback program.

    All ordinary shares that were redeemed under the buyback program were canceled in accordance with the Constitution of the Company and the nominal value of these shares transferred to other undenominated capital as required by Irish Company law.

New accounting pronouncements

Recently adopted accounting standards

In December 2019, the FASB issued ASU 2019-12 'Simplifying the Accounting for Income Taxes (Topic 740)'. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company will adopt the amendments in this ASU on a prospective basis, except where the required method of adoption is retrospective or modified retrospective. ASU 2019-12 is effective for the Company for fiscal years commencing on or after December 15, 2020. The adoption of this ASU did not have a significant impact on the financial statements.

In January 2020, the FASB issued ASU 2020-01, 'Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)'. ASU 2020-01 states any equity security transitioning from the alternative method of accounting under Topic 321 to the equity method, or vice versa, due to an observable transaction will be re-measured immediately before the transition. In addition, the ASU clarifies the accounting for certain non-derivative forward contracts or purchased call options to acquire equity securities stating such instruments will be measured using the fair value principles of Topic 321 before settlement or exercise. The ASU is effective for fiscal years beginning after December 15, 2020, and will be applied on a prospective basis. The adoption of this ASU did not have a significant impact on the financial statements.

In August 2020, the FASB issued ASU 2020-06 ‘Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity’ which removes the separation models in ASC 470 ‘Debt’ for convertible debt with cash conversion features and convertible instruments with beneficial conversion features. The ASU also removes from ASC 815 ‘Derivatives and Hedge Accounting’ certain conditions for equity classification for contracts on an entity’s own equity. The adoption of this ASU did not have a significant impact on the financial statements.




4


     ICON plc
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(Unaudited)(Audited)
September 30,
2021
December 31, 2020
ASSETS(in thousands)
Current Assets:
Cash and cash equivalents$1,008,524 $840,305 
Available for sale investments1,712 1,729 
Accounts receivable, net of allowance for credit losses1,338,326 715,271 
Unbilled revenue550,692 428,684 
Other receivables60,376 35,394 
Prepayments and other current assets131,554 53,477 
Income taxes receivable38,484 28,118 
Total current assets3,129,668 2,102,978 
Other Assets:
Property, plant and equipment, net319,457 174,343 
Goodwill8,935,212 936,257 
Operating right-of-use assets238,107 84,561 
Other non-current assets57,637 20,773 
Non-current income taxes receivable16,119 17,230 
Non-current deferred tax asset117,313 12,705 
Equity method investments3,062 4,534 
Investments in equity-long term22,758 15,765 
Intangible assets, net4,815,184 66,460 
Total Assets$17,654,517 $3,435,606 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable$62,576 $51,113 
Unearned revenue1,349,000 660,883 
Other liabilities794,879 399,769 
Income taxes payable39,614 12,178 
Current bank credit lines and loan facilities55,150  
Total current liabilities2,301,219 1,123,943 
Other Liabilities:
Non-current bank credit lines and loan facilities5,872,720 348,477 
Non-current operating lease liabilities190,912 60,801 
Non-current other liabilities73,917 26,366 
Non-current government grants760 838 
Non-current income taxes payable18,868 14,539 
Non-current deferred tax liability1,227,535 10,406 
Commitments and contingencies  
Total Liabilities9,685,931 1,585,370 
Shareholders' Equity:
Ordinary shares, par value 6 euro cents per share; 100,000,000 shares authorized,
81,397,821 shares issued and outstanding at September 30, 2021 and
52,788,093 shares issued and outstanding at December 31, 2020
6,629 4,580 
Additional paid-in capital6,700,407 617,104 
Other undenominated capital1,134 1,134 
Accumulated other comprehensive loss(79,196)(35,477)
Retained earnings1,339,612 1,262,895 
       Total Shareholders' Equity7,968,586 1,850,236 
Total Liabilities and Shareholders' Equity$17,654,517 $3,435,606 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(UNAUDITED)
Three Months EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands except share and per share data)
Revenue$1,866,352 $701,729 $3,595,705 $2,037,059 
Costs and expenses: 
Direct costs (excluding depreciation and amortization)1,357,942 493,410 2,615,309 1,444,536 
Selling, general and administrative expense206,713 82,715 382,614 254,309 
Depreciation and amortization140,636 16,801 175,317 48,981 
Transaction and integration-related expenses149,791 402 182,309 (497)
Restructuring6,162  6,162 18,089 
Total costs and expenses1,861,244 593,328 3,361,711 1,765,418 
Income from operations5,108 108,401 233,994 271,641 
Interest income53 268 496 2,518 
Interest expense(102,306)(3,239)(129,584)(9,640)
(Loss) income before provision for income taxes(97,145)105,430 104,906 264,519 
Benefit arising (provision) for income taxes3,563 (13,706)(26,718)(32,706)
(Loss) income before share of earnings from equity method investments(93,582)91,724 78,188 231,813 
Share of equity method investments(688)(83)(1,471)(83)
Net (loss) income(94,270)91,641 76,717 231,730 
Net income attributable to noncontrolling interest   (633)
Net (loss) income attributable to the Group$(94,270)$91,641 $76,717 $231,097 
Net (loss) income per Ordinary Share attributable to the Group (note 14): 
Basic$(1.17)$1.74 $1.23 $4.28 
Diluted$(1.17)$1.72 $1.22 $4.25 
Weighted average number of Ordinary Shares outstanding (note 14):  
Basic80,771,397 52,737,299 62,264,851 52,885,252 
Diluted80,771,397 53,194,327 63,095,857 53,283,680 

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

6



ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(UNAUDITED)

Three Months EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)(in thousands)
Comprehensive (loss) income:
Net (loss) income attributable to the group$(94,270)$91,641 $76,717 $231,097 
Currency translation adjustment(35,300)24,004 (44,209)12,176 
Currency impact of long term funding (net of tax)(162)(297)(401)(1,299)
Transfer to realized capital gain   (232)
Amortization of interest rate hedge (243) (725)
Write off of loss on interest rate hedge (145)113 (905)
Fair value of cash flow hedge (net of tax) (77)778 306 
Total comprehensive (loss) income attributable to the group$(129,732)$114,883 $32,998 $240,418 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7


ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
 
Group
SharesAmountAdditional
Paid-in
Capital
Other
Undenominated
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
(dollars in thousands, except share data)
Balance at December 31, 202052,788,093 $4,580 $617,104 $1,134 $(35,477)$1,262,895 $1,850,236 
Net income— — — — — 97,122 97,122 
Exercise of share options— — — — — —  
Issue of restricted share units70,097 5 — — — — 5 
Non-cash stock compensation expense— — 6,310 — — — 6,310 
Share issuance costs— — (5)— — — (5)
Other comprehensive income, net of tax— — — — (19,497)— (19,497)
Balance at March 31, 202152,858,190 $4,585 $623,409 $1,134 $(54,974)$1,360,017 $1,934,171 
Net income— — — — — 73,865 73,865 
Exercise of share options4,020 — 170 — — — 170 
Issue of restricted share units95,853 7 — — — — 7 
Non-cash stock compensation expense— — 8,495 — — — 8,495 
Share issuance costs— — (5)— — — (5)
Other comprehensive income, net of tax— — — — 11,240 — 11,240 
Balance at June 30, 202152,958,063 $4,592 $632,069 $1,134 $(43,734)$1,433,882 $2,027,943 
Net loss— — — — — (94,270)(94,270)
Exercise of share options909,723 54 103,811 — — — 103,865 
Issue of restricted share units157,608 23 — — — — 23 
Issue of shares associated with a business combination27,372,427 1,960 5,656,166 — — — 5,658,126 
Replacement share-based awards issued to acquiree employees— — 209,399 — — — 209,399 
Non-cash stock compensation expense— — 99,771 — — — 99,771 
Share issuance costs— — (809)— — — (809)
Other comprehensive income, net of tax— — — — (35,462)— (35,462)
Balance at September 30, 202181,397,821 $6,629 $6,700,407 $1,134 $(79,196)$1,339,612 $7,968,586 

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


8


ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
Group
SharesAmountAdditional Paid-In CapitalOther Undenominated CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotalRedeemable Noncontrolling Interest
(dollars in thousands, except share data)
Balance at December 31, 201953,622,206 $4,635 $577,961 $1,052 $(75,819)$1,110,226 $1,618,055 $39,510 
Net income— — — — — 91,696 91,696 633 
Exercise of share options31,964 2 859 — — — 861 — 
Issue of restricted share units89,799 6 — — — — 6 — 
Non-cash stock compensation expense— — 6,035 — — — 6,035 — 
Share issuance costs— — (3)— — — (3)— 
Share repurchase program(1,235,218)(82)— 82 — (175,000)(175,000)— 
Share repurchase costs— — — — — (140)(140)— 
Other comprehensive income, net of tax— — — — (23,136)(23,136)— 
Noncontrolling interest redemption adjustment— — — — — (4,522)(4,522)4,522 
Exercise of call option on noncontrolling interest— — — — — — — (44,665)
Balance at March 31, 202052,508,751 $4,561 $584,852 $1,134 $(98,955)$1,022,260 $1,513,852 $ 
Net income— — — — — 47,760 47,760 — 
Exercise of share options8,235 1 586 — — — 587 — 
Issue of restricted share units112,081 7 — — — — 7 — 
Non-cash stock compensation expense— — 7,065 — — — 7,065 — 
Share issuance costs— — (3)— — — (3)— 
Other comprehensive income, net of tax— — — — 9,215 — 9,215 — 
Balance at June 30, 202052,629,067 $4,569 $592,500 $1,134 $(89,740)$1,070,020 $1,578,483 $ 
Net income— — — — — 91,641 91,641 — 
Exercise of share options140,945 9 10,878 — — — 10,887 — 
Issue of restricted share units5,231 1 — — — — 1 — 
Non-cash stock compensation expense— — 6,866 — — — 6,866 — 
Share issuance costs— — (4)— — — (4)— 
Other comprehensive income, net of tax— — — — 23,242 — 23,242 — 
Balance at September 30, 202052,775,243 $4,579 $610,240 $1,134 $(66,498)$1,161,661 $1,711,116 $ 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9


ICON plc
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020 (UNAUDITED)
Nine Months Ended
September 30, 2021September 30, 2020
(in thousands)
Cash flows from operating activities:
Net income $76,717 $231,730 
Adjustments to reconcile net income to net cash provided by operating activities:  
 Depreciation and amortization expense175,317 48,981 
 Impairment of right-of-use assets5,731 5,411 
 Reduction in carrying value of operating right-of-use assets30,607 21,367 
 Unrealized foreign currency gains, net(7,374)(3,982)
 Loss on issuance of debt59,460  
 Loss on equity method investments1,471 83 
 Stock compensation expense114,791 20,157 
 Loss/(gain) on interest rate hedge891 (725)
 Amortization of financing costs4,448 368 
 Loss on extinguishment of debt14,434  
 Deferred taxes(26,532)1,416 
Other non-cash items(1,592)(121)
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:  
   Accounts receivable123,413 24,623 
   Unbilled revenue49,203 (17,635)
   Unearned revenue(60,514)82,386 
   Other assets and liabilities(21,147)(41,446)
Net cash provided by operating activities539,324 372,613 
Cash flows from investing activities:  
 Purchase of property, plant and equipment(46,067)(28,026)
 Purchase of subsidiary undertakings, net of cash acquired(5,914,475)(37,761)
 Purchase of equity method investments(2,450)(2,450)
 Sale of available for sale investments17 47,902 
 Purchase of investments in equity - long term(2,243)(2,737)
Net cash used in investing activities(5,965,218)(23,072)
Cash flows from financing activities:  
 Financing related costs(30,349) 
 Proceeds from exercise of equity compensation104,070 12,349 
 Share issue costs(848)(10)
 Repurchase of ordinary shares (175,000)
 Share repurchase costs (140)
      Drawdown of bank credit lines and loan facilities, net of debt issuance costs and debt
      discount withheld
5,905,100  
   Repayment of bank credit lines and loan facilities(377,780) 
Net cash provided by (used in) financing activities5,600,193 (162,801)
Effect of exchange rate movements on cash(6,080)946 
Net increase in cash and cash equivalents168,219 187,686 
Cash and cash equivalents at beginning of period840,305 520,309 
Cash and cash equivalents at end of period$1,008,524 $707,995 

The accompanying notes are an integral part of these condensed consolidated financial statements.
10


ICON plc
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2021
1. Basis of presentation

    These condensed consolidated financial statements which have been prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”) have not been audited. The condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary to present a fair statement of the operating results and financial position for the periods presented. The preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures in the condensed consolidated financial statements. Actual results could differ from those estimates.

    The condensed consolidated financial statements should be read in conjunction with the accounting policies and notes to the consolidated financial statements included in ICON’s Form 20-F for the year ended December 31, 2020 (see note 2 - Significant accounting policies for impact of adoption of any new accounting standards). Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal period ending December 31, 2021.

Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. Most notably, the Company has presented transaction and integration-related expenses as a separate line in the Condensed Consolidated Statement of Operations and reclassified certain costs incurred in the three and nine months ended September 30, 2020 within this line. These costs consist of transaction and integration-related expenses and contingent consideration valuation adjustments related to ICON's prior period acquisitions. These costs were previously presented in the selling, general and administrative expenses but have been reclassified to transaction and integration-related expenses to conform to the current period’s presentation.

2. Significant accounting policies
Revenue recognition
The Company earns revenues by providing a number of different services to its customers. These services, which are integral elements of the clinical development process, include clinical trials management, consulting, contract staffing, data services and laboratory services. Contracts range in duration from a number of months to several years.

    ASC 606 requires application of five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies the performance obligation(s).

Clinical trial service revenue
A clinical trial service is a single performance obligation satisfied over time, i.e. the full-service obligation in respect of a clinical trial (including those services performed by investigators and other parties) is considered a single performance obligation. Promises offered to the customer are not distinct within the context of the contract. We have concluded that ICON is the contract principal in respect of both direct services and in the use of third parties (principally investigator services) that support the clinical research project. The transaction price is determined by reference to the contract or change order value (total service revenue and pass-through/ reimbursable expenses) adjusted to reflect a realizable contract value. Revenue is recognized as the single performance obligation is satisfied. The progress towards completion for clinical service contracts is measured based on an input measure being total project costs incurred (inclusive of third party costs) at each reporting period as a percentage of forecasted total project costs.

Contracting services revenue
    The Company has availed of the practical expedient which results in recognition of revenue on a right to invoice basis. Application of the practical expedient reflects the right to consideration from the customer in an amount that corresponds directly with the value to the customer of the performance completion to date. This reflects hours performed by contract staff.

Consulting services revenue
    We have concluded that our consulting services contracts represent a single performance obligation satisfied over time. The transaction price is determined by reference to contract or change order value. Revenue is recognized as the performance obligation is satisfied. The progress towards completion for consulting contracts is measured based on total project inputs (time) at each reporting period as a percentage of forecasted total project inputs.


11


Laboratory services revenue
    Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the products or services are transferred to the customer. Revenue for laboratory services is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Where contracts with customers contain multiple performance obligations, the transaction price is allocated to each performance obligation based on the estimated relative selling price of the promised good or service. Service revenue is recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The determination of the methodology to measure progress requires judgment and is based on the nature of services provided. This requires an assessment of the transfer of value to the customer. The right to invoice measure of progress is generally related to rate per unit contracts, as the extent of progress towards completion is measured based on discrete service or time-based increments, such as samples tested or labor hours incurred. Revenue is recorded in the amount invoiced since that amounts corresponds to the value of the Company's performance and the transfer of value to the customer.

Data services revenue
The Company provides data reports and analytics to customers based on agreed-upon specifications, including the timing of delivery, which is typically either weekly, monthly, or quarterly. If a customer requests more than one type of data report or series of data reports within a contract, each distinct type of data report is a separate performance obligation. The contracts provide for the Company to be compensated for the value of each deliverable. The transaction price is determined using list prices, discount agreements, if any, and negotiations with the customers, and generally includes any out-of-pocket expenses. Typically, the Company bills in advance of services being provided with the amount being recorded as unearned revenue.

When multiple performance obligations exist, the transaction price is allocated to performance obligations on a relative standalone selling price basis. In cases where the Company contracts to provide a series of data reports, or in some cases data, the Company recognizes revenue over time using the “units delivered” output method as the data or reports are delivered. Expense reimbursements are recorded to revenue as the expenses are incurred as they relate directly to the services performed.

Certain arrangements include upfront customization or consultative services for customers. These arrangements often include payments based on the achievement of certain contractual milestones. Under these arrangements, the Company contracts with a customer to carry out a specific study, ultimately resulting in delivery of a custom report or data product. These arrangements are a single performance obligation given the integrated nature of the service being provided. The Company typically recognizes revenue under these contracts over time, using an output-based measure, generally time elapsed, to measure progress and transfer of control of the performance obligation to the customer. Expense reimbursements are recorded to revenue as the expenses are incurred as they relate directly to the service performed.

The Company enters into contracts with some of its larger data suppliers that involve non-monetary terms. The Company will issue purchase credits to be used toward the data supplier's purchase of the Company's services based on the fair value of the data obtained. In exchange, the Company receives monetary discounts on the data received from the data suppliers. The fair value of the revenue earned from the customer purchases is recognized as services are delivered as described above. At the end of the contract year, any unused customer purchase credits may be forfeited or carried over to the next contract year based on the terms of the data supplier contract.

Commissions
    Incremental costs of obtaining a contract are recognized as an asset on the Condensed Consolidated Balance Sheet in respect of those contracts that exceed one year. Where commission costs relate to contracts that are less than one year, the practical expedient is applied as the amortization period of the asset which would arise on deferral would be one year or less.

Business combinations

The cost of a business combination is measured as the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued in exchange for control. Where a business combination agreement provides for an adjustment to the cost of the acquisition which is contingent upon future events, the amount of the estimated adjustment is recognized at the acquisition date at the fair value of the contingent consideration. Any changes to this estimate outside the measurement period will depend on the classification of the contingent consideration. If the contingent consideration is classified as equity it shall not be re-measured and the settlement shall be accounted for within equity. If the contingent consideration is classified as a liability any adjustments will be accounted for through the Condensed Consolidated Statement of Operations or Other Comprehensive Income depending on whether the liability is considered a financial instrument.

    The assets, liabilities and contingent liabilities of businesses acquired are measured at their fair values at the date of acquisition. In the case of a business combination which is completed in stages, the fair values of the identifiable assets, liabilities and contingent liabilities are determined at the date of each exchange transaction. When the initial accounting for a business combination is determined provisionally, any subsequent adjustments to the provisional values allocated to the identifiable assets, liabilities and contingent liabilities are made within twelve months of the acquisition date and presented as adjustments to goodwill in the reporting period in which the adjustments are determined.


12


Debt issuance costs

Debt issuance costs relating to the Company’s long-term debt are recorded as a direct reduction of long-term debt; these costs are deferred and amortized to interest expense using the effective interest method, over the respective terms of the related debt. Debt issuance costs relating to the Company’s revolving credit facilities are recorded as an asset; these costs are deferred and amortized to interest expense using the straight-line method.

Transaction and integration-related expenses

Transaction and integration-related expenses are the incremental costs directly attributable to the completion and integration activities associated with the Company’s recent acquisitions. The costs consist of investment banking fees, advisory costs, retention agreements with employees, accelerated share compensation charges, contingent consideration valuation adjustments and ongoing integration activities. The Company accounts for these transaction and integration-related costs as expenses in the periods in which the costs are incurred and the services are received.

Goodwill

Goodwill represents the excess of the cost of acquired entities over the net amounts assigned to assets acquired and liabilities assumed. Goodwill primarily comprises acquired workforce in place which does not qualify for recognition as an asset apart from goodwill. Goodwill is stated net of any provision for impairment.

Intangible assets

Intangible assets are amortized on a straight line basis over their estimated useful life.

Disclosure of fair value of financial instruments

Cash, cash equivalents, other receivables, available for sale investments, accounts receivable, accounts payable, investigator payments and income taxes payable have carrying amounts that approximate fair value due to the short term maturities of these instruments. Other liabilities' carrying amounts approximate fair value based on net present value of estimated future cash flows. Debt is measured at historical cost.

Financial instruments are measured in the Condensed Consolidated Balance Sheets at amortized cost or fair value using a fair value hierarchy of valuation inputs. For financial instruments measured at amortized cost, the fair value of these financial instruments closely approximates their fair value. The fair value hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:
Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The Company classifies its investments in short term debt or equity investments as available for sale, as it does not actively trade such securities nor does it intend to hold them to maturity. The fair value of short term investments are represented by level 1 fair value measurements – quoted prices in active markets for identical assets. The unrealized movements in fair value are recognized in equity until disposal or sale, at which time, those unrealized movements from prior periods are recognized in the Condensed Consolidated Statement of Operations. Losses other than temporary, which reduce the carrying amount below cost are recognized in Condensed Consolidated Statement of Operations.

Share-based compensation

The Company accounts for its share options, Restricted Share Units ("RSUs") and Performance Share Units ("PSUs") in accordance with the provisions of ASC 718 'Compensation – Stock Compensation'. Share-based compensation expense for equity-settled awards made to employees and directors is measured and recognized based on estimated grant date fair values.

These equity-settled awards include employee share options, RSUs and PSUs. Share-based compensation expense for share options awarded to employees and directors is estimated at the grant date based on each option's fair value as calculated using the Black-Scholes option-pricing model. Share-based compensation for RSUs and PSUs awarded to employees and directors is calculated based on the market value of the Company's shares on the date of award of the RSUs and PSUs. The value of
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awards expected to vest is recognized as an expense over the requisite service periods. We account for forfeitures as they occur.

Estimating the grant date fair value of share options as of the grant date using an option-pricing model, such as the Black-Scholes model, is affected by the Company's share price as well as assumptions regarding a number of complex variables. These variables include, but are not limited to, the expected share price volatility over the term of the awards, risk-free interest rates and the expected term of the awards.

3. Revenue

    Revenue disaggregated by customer profile is as follows:
Three Months EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
(in thousands)(in thousands)
Clients 1-5525,806 269,460 1,242,446 802,503 
Clients 6-10283,003 89,062 472,788 249,807 
Clients 11-25398,816 118,156 704,312 344,463 
Other658,727 225,051 1,176,159 640,286 
Total$1,866,352 $701,729 $3,595,705 $2,037,059 

Revenue from individual customers greater than 10% of consolidated revenue in the respective periods was as follows:
Three Months EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
Customer:
Customer A*12.4 %*11.5 %
Customer B***10.7 %
*Less than 10%


4. Accounts receivable, unbilled revenue (contract assets) and unearned revenue or payments on account (contract liabilities)

    Accounts receivables and unbilled revenue are as follows:
September 30, 2021December 31, 2020
(in thousands)
Contract assets:
Billed services (accounts receivable)$1,345,588 $722,420 
Unbilled services (unbilled revenue)550,692 428,684 
Accounts receivable and unbilled revenue1,896,280 1,151,104 
Allowance for credit losses(7,262)(7,149)
Accounts receivable and unbilled revenue, net$1,889,018 $1,143,955 
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Unbilled services and unearned revenue or payments on account (contract assets and liabilities) were as follows:
(in thousands, except percentages)September 30, 2021December 31, 2020$ Change% Change
Unbilled services (unbilled revenue)$550,692 $428,684 $122,008 28.5 %
Unearned revenue (payments on account)(1,349,000)(660,883)(688,117)104.1 %
Net balance$(798,308)$(232,199)$(566,109)243.8 %

    Timing may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to our contracts with customers. We record assets for amounts related to performance obligations that are satisfied but not yet billed and/or collected. These assets are recorded as unbilled services and therefore contract assets rather than accounts receivables when receipt of the consideration is conditional on something other than the passage of time. Liabilities are recorded for amounts that are collected in advance of the satisfaction of performance obligations or billed in advance of the revenue being earned.

Unbilled services/revenue balances arise where invoicing or billing is based on the timing of agreed milestones related to service contracts for clinical research. Contractual billing arrangements in respect of certain reimbursable expenses (principally investigators) require billing by the investigator to the Company prior to billing by the Company to the customer. As there is no contractual right to set-off between unbilled services (contract assets) and unearned revenue (contract liabilities), each are separately presented gross on the Condensed Consolidated Balance Sheet.

Unbilled services as at September 30, 2021 increased by $122.0 million compared to December 31, 2020. Unearned revenue increased by $688.1 million over the same period resulting in a decrease of $566.1 million in the net balance of unbilled services and unearned revenue or payments on account between December 31, 2020 and September 30, 2021. These fluctuations are primarily due to the Merger with PRA on July 1, 2021 but also partly due to timing of payments and invoicing related to the Group's clinical trial management contracts. Billings and payments are established by contractual provisions including predetermined payment schedules which may or may not correspond to the timing of the transfer of control of the Company's services under the contract. Unbilled services arise from long-term contracts when a cost-based input method of revenue recognition is applied and revenue recognized exceeds the amount billed to the customer.

    As of September 30, 2021 approximately $13.0 billion (September 30, 2020: $6.1 billion) of revenue is expected to be recognized in the future in respect of unsatisfied performance obligations. The Company expects to recognize revenue on approximately 49% of the unsatisfied performance obligation over the next 12 months, with the remainder recognized thereafter over the duration of the customer contracts.

5. Goodwill
Nine Months EndedYear Ended
September 30, 2021December 31, 2020
(in thousands)
Opening balance$936,257 $883,170 
Current period acquisitions (Note 7)8,013,878 27,191 
Prior period acquisitions 123 
Foreign exchange movement(14,923)25,773 
Closing balance$8,935,212 $936,257 
There are no accumulated impairment charges as of September 30, 2021 and December 31, 2020.



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6. Intangible assets

Intangible assets, net consisted of the following:
Nine Months EndedYear Ended
September 30, 2021December 31, 2020
Cost(in thousands)
Customer relationships$4,047,002 $144,251 
Order backlog527,324 39,269 
Trade names & brands204,705 2,766 
Patient database170,513 2,552 
Technology assets121,672 11,173 
Total cost5,071,216 200,011 
Accumulated amortization(256,032)(133,551)
 Net book value$4,815,184 $66,460 

The identifiable intangible assets are amortized over their estimated useful lives.



7. Business combinations 

PRA Health Sciences, Inc. - Merger Completion

On July 1, 2021 (the "Merger Date"), ICON plc announced the completion of its Merger with PRA Health Sciences, Inc. ("PRA"). The combined company has retained the name ICON and brings together approximately 37,960 employees across 53 countries, creating the world’s most advanced healthcare intelligence and clinical research organization. The Merger was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations.

The combined company leverages its enhanced operations to transform clinical trials and accelerate biopharma customers’ commercial success through the development of much needed medicines and medical devices. The new ICON has a renewed focus on leveraging data, applying technology and accessing diverse patient populations to speed up drug development.

Upon completion of the Merger, pursuant to the terms of the merger agreement, PRA became a wholly owned subsidiary of ICON plc. Under the terms of the Merger, PRA shareholders received per share $80 in cash and 0.4125 shares of ICON stock. The trading of PRA common stock on NASDAQ was suspended prior to market open on July 1, 2021.

In the nine months ended September 30, 2021, the Company incurred $182.3 million of Merger-related expenses which were accounted for separately from the business combination and expensed as incurred within the “Transaction and integration related expenses” line item of the condensed consolidated statements of operations. These costs consisted primarily of investment banker fees, advisory fees, legal costs, accounting and consulting fees, share-based compensation expense, and employee retention bonuses. The Company also incurred approximately $78.2 million of financing fees which are included in the “Interest expense” line item in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021. The Company deferred $76.2 million of financing costs incurred as a result of the Senior Secured Credit Facility and Senior Secured Notes. These costs will be amortized over the term of the related debt.

The purchase accounting associated with the PRA Merger remains ongoing and we continue to review the acquisition balance sheet. We expect to conclude the purchase accounting exercise by June 30, 2022.

The preliminary Merger Date fair value of the consideration transferred consisted of the following:

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 (in thousands)
Fair value of cash consideration$5,308,646 
Fair value of ordinary shares issued to acquiree stockholders5,658,126 
Fair value of replacement share-based awards issued to acquiree employees209,399 
Repayment of term loan obligations and accrued interest *865,800 
$12,041,971 
* This represents the portion of PRA debt paid by ICON. PRA also paid $401.6 million from available cash to settle debt obligations that existed at the Merger Date.


The following table summarizes the preliminary allocation of the consideration transferred based on management’s estimates of Merger Date fair values of assets acquired and liabilities assumed, with the excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill:

July 1,
2021
(in thousands)
Cash and cash equivalents$259,971 
Accounts receivable and unbilled revenue934,308 
Other current assets110,691 
Fixed assets, net162,988 
Operating lease right-of-use assets192,345 
Goodwill *8,013,878 
Intangible assets, net4,875,000 
Deferred tax assets172,229 
Other assets35,094 
Accounts payable(50,259)
Accrued expenses and other current liabilities(342,552)
Current portion of operating lease liabilities(38,371)
Unearned revenue(758,901)
Non-current portion of operating lease liabilities(157,658)
Non-current deferred tax liabilities(1,313,599)
Other non-current liabilities(53,193)
Net assets acquired$12,041,971 
* The goodwill in connection with the Merger is primarily attributable to the assembled workforce of PRA and the expected synergies of the Merger. None of the goodwill recognized is expected to be deductible for income tax purposes.

The following table summarizes the preliminary estimates of the fair value of identified intangible assets and their respective useful lives as of the Merger Date (in thousands, except for estimated useful lives):
Estimated Fair ValueEstimated Useful Life
Customer relationship3,905,000 23 years
Order backlog489,000 3 years
Trade names202,000 3 years
Patient database168,000 7 years
Technology111,000 5 years
4,875,000 

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Since July 1, 2021, PRA has earned revenue of $1,019.7 million and pre-tax net income of $113.4 million in the three months ended September 30, 2021.

Pro forma financial information
The following pro forma financial information was derived from the historical financial statements of the Company and PRA and presents the combined results of operations as if the Merger had occurred on January 1, 2020. The pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the results that would have actually occurred had the Merger been completed on January 1, 2020. In addition, the pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may result from the Merger, or any estimated costs that have been or will be incurred by the Company to integrate the assets and operations of PRA. Consequently, actual future results of the Company will differ from the pro forma financial information presented below:
Nine months endedYear ended
September 30December 31
20212020
(in thousands, except per share data)
Revenue$5,580,879 $5,964,653 
Net income/(loss)$231,442 $(151,209)

The pro forma adjustments primarily relate to the amortization of acquired intangible assets, interest expense and amortization of deferred financing costs related to the new financing arrangements. In addition, the pro forma net income for the nine months ended September 30, 2021 was adjusted to exclude certain merger-related nonrecurring adjustments; these adjustments were included in the year ended December 31, 2020 giving effect to the Merger as if it had occurred on January 1, 2020. The nonrecurring merger related adjustments include transaction costs, share-based compensation expense related to the acceleration of share-based compensation awards and replacement share-based awards, and financing fees. The merger related adjustment were tax effected using the Company's effective tax rate.




































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Acquisitions – MedPass Group ("MedPass")

On January 22, 2020 a subsidiary of the Company, ICON Investments Limited acquired 100% of the equity share capital of the MedPass Group. MedPass is the leading European medical device CRO, regulatory and reimbursement consultancy, that specializes in medical device development and market access. The acquisition of MedPass further enhances ICON’s Medical Device and Diagnostic Research services, through the addition of new regulatory and clinical capabilities in Europe. The integration of MedPass’s services brings noted expertise in complex class 3 medical devices, interventional cardiology and structural heart devices. Accounting for the acquisition of MedPass was finalized in the period ended December 31, 2020.

    The acquisition of MedPass has been accounted for as a business combination in accordance with ASC 805 'Business Combinations'. The Company has made an assessment of the fair value of assets acquired and liabilities assumed as at that date. The following table summarizes the Company’s fair values of the assets acquired and liabilities assumed:
January 22,
2020
(in thousands)
Cash & cash equivalents$10,170 
Property, plant and equipment45 
Operating right of use assets539 
Goodwill *27,191 
Customer relationships 11,725 
Order backlog 2,883 
Accounts receivable3,033 
Prepayments and other current assets 158 
Accounts payable(368)
Unearned revenue(989)
Other liabilities(2,202)
Current lease liabilities(219)
Non-current lease liabilities(320)
Non-current deferred tax liability(4,090)
Net assets acquired$47,556 
Cash outflows$46,992