Segments

6 Months Ended

Jun. 30, 2021

The Company is managed through two reportable segments, Clinical Development Services and Laboratory Services. The Company determines reportable segments using the management approach. The management approach is based on how the Company’s chief operating decision maker (“CODM”) organizes the segments for purposes of assessing performance and making operating decisions. The Clinical Development Services segment provides a wide range of services to its customers including early development/Phase I, patient recruitment and enrollment, investigator site management, Phase II-IV clinical trial management, medical communications and various peri- and post-approval services. The Laboratory Services segment provides comprehensive services to its customers including bioanalytical, vaccine sciences, good manufacturing practice, central lab and biomarker testing. Both segments provide services to pharmaceutical, biotechnology, medical device, government organizations and other industry participants.

The Company’s CODM assesses segment performance and makes resource allocation decisions based on segment revenues and segment operating income. The CODM reviews the Company’s assets on a consolidated basis and does not assess performance or make operating decisions based on segment assets.

Information on reportable segment revenue and segment operating income, including a reconciliation of segment operating income to consolidated income from operations, for the respective periods were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020
Segment revenue:
Clinical Development Services	$	1,300,217	$	815,250	$	2,417,587	$	1,686,136
Laboratory Services	275,255		195,668		536,265		397,244
Total segment revenue	1,575,472		1,010,918		2,953,852		2,083,380
Segment direct costs:
Clinical Development Services	377,056		283,378		733,105		592,456
Laboratory Services	120,887		89,748		238,956		176,799
Total segment direct costs	497,943		373,126		972,061		769,255
Segment reimbursed costs:
Clinical Development Services	480,404		198,226		830,086		421,755
Laboratory Services	36,105		25,581		67,260		52,902
Total segment reimbursed costs	516,509		223,807		897,346		474,657
Segment SG&A expenses:
Clinical Development Services	193,941		135,518		367,425		277,350
Laboratory Services	30,072		21,863		57,434		43,646
Total segment SG&A expenses	224,013		157,381		424,859		320,996
Segment operating income:
Clinical Development Services	248,816		198,128		486,971		394,575
Laboratory Services	88,191		58,476		172,615		123,897
Total segment operating income	337,007		256,604		659,586		518,472








Operating costs and expenses not allocated to segments:
Direct costs	2,253		1,713		5,759		20,023

SG&A expenses	106,014		80,235		199,104		164,396

Depreciation and amortization	80,255		68,763		153,398		135,078
Long-lived asset impairment	—		—		1,584		—


Income from operations	$	148,485	$	105,893	$	299,741	$	198,975

Entity-wide Information by Geographic LocationThe table below presents certain entity-wide information about the Company’s operations by geographic location. The Company allocates revenues to geographic locations based on where the services are performed. Total revenues by geographic location for the respective periods were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020
Revenue:
North America	$	967,637	$	574,060	$	1,788,849	$	1,132,299
Latin America	51,640		45,711		94,016		90,621
Europe, Middle East and Africa	391,425		279,159		774,384		633,610
Asia-Pacific	164,770		111,988		296,603		226,850
Revenue	$	1,575,472	$	1,010,918	$	2,953,852	$	2,083,380

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

PPD, Inc. 10-Q