This paragraph introduces the IQVIA Second Quarter 2023 Earnings Conference Call and welcomes participants. Nick Childs, Senior Vice President of Investor Relations and Treasury, is leading the call. He is joined by Ari Bousbib, Ron Bruehlman, Eric Sherbet, Mike Fedock, and Gustavo Perrone. The call will reference a presentation that can be accessed through the IQVIA Investor Relations website. Additionally, listeners are cautioned that certain information discussed during the call may include forward-looking statements, and the company's SEC filings should be consulted for more information. Non-GAAP financial measures will also be discussed.

Ari Bousbib, the Chairman and CEO of IQVIA, discussed the company's strong second quarter results, with 9% organic revenue growth excluding the impact of foreign exchange and COVID-related work. The demand environment for the industry is healthy, with continued biotech funding, clinical trial starts, and FDA approvals. M&A activity in the biopharma sector is also strong, with over $90 billion spent in the first half of the year. Net new bookings for the quarter were just under $2.7 billion, with a book-to-bill of 1.34.

In the second quarter, the company's backlog grew 11%, RFP flow was the largest ever, and revenue grew 5.3% on a reported basis and 5.5% at constant currency compared to last year. Despite the positive fundamentals of the industry, clients have been cautious with their spending, particularly in the TAS and CSMS subsegments, resulting in delayed decisions and expected 6% organic growth for the year.

IQVIA has been awarded several significant contracts from top 10 pharma clients to implement various AI-powered data and analytics solutions. These solutions include personalized engagements with HCPs, leveraging multichannel capabilities, sales targeting, and cost efficiency. One of the contracts is for a project to track the sales performance of an immunotherapy drug in Europe, and another is for the deployment of an AI-powered multichannel sales management application that optimizes HCP engagement in real-time.

IQVIA was chosen over two competitors for their seamless integration with the client's current ecosystem, superior AI capability, and successful history with the clients. IQVIA was also awarded a five-year pregnancy exposure study due to their experience in post-approval safety studies and epidemiology. They have also been recognized by the Artificial Intelligence Breakthrough Awards with the Best AI-Based Solution for Healthcare award, and have been named the 2023 Health and Life Sciences Partner of the Year by Databricks and Snowflake.

IQVIA had a strong quarter in its R&DS segment, with several key wins, including two large Phase III trials for gastric and prostate cancer, a renewal of a partnership with a large FSP client, and a large study for a novel drug that improves the quality of life of patients with autoimmune diseases. Additionally, Sheetal Telang, Vice President of Therapeutic Strategy at IQVIA, was honored with the 2023 Rising Star Award by the Healthcare Business Women's Association.

In the second quarter of 2022, COVID-rebated revenues were approximately $120 million, down $140 million from the previous year. Excluding COVID-related work, organic growth at constant currency was 9%. Technology & Analytics Solutions revenue was up 3.4%, and R&D Solutions revenue was up 7.5%. Contract Sales and Medical Solutions revenue declined 3.8%. For the first half, total company revenue was up 3.8%, Technology & Analytics Solutions revenue was up 1.9%, and R&D Solutions revenue was up 6.1%. Adjusted EBITDA was $864 million, representing 8% growth, and GAAP net income was $297 million.

In the second quarter, adjusted net income was $454 million and adjusted diluted earnings per share was $2.43. Adjusted diluted earnings per share grew 14% in the second quarter and 11% for the first half. R&D Solutions had a record backlog of $28.4 billion, up 11% year-over-year. The balance sheet showed cash and cash equivalents of $1.382 billion and gross debt of $13.777 billion, resulting in net debt of $12.395 billion. Cash flow from operations was $402 million and capital expenditures were $160 million, resulting in free cash flow of $242 million. The Board of Directors authorized a $2 billion increase to the share repurchase plan, bringing the authorization to $2.736 billion. Due to client cautiousness, guidance has been updated to reflect this for the remainder of the year.

The company expects revenue for the full year to be between $15.050 billion and $15.175 billion, representing year-over-year growth of 4.4% to 5.3%. This excludes COVID-related work. The TAS segment is expected to grow 6%, while the R&DS segment and CSMS segment are unchanged and are expected to decline 3%, respectively. Adjusted EBITDA and adjusted diluted EPS are expected to be $3.600 billion to $3.635 billion and $10.20 to $10.45, respectively. For the third quarter, revenue is expected to be between $3.760 billion and $3.810 billion, with adjusted EBITDA expected to be between $880 million and $895 million.

In the third quarter, the company delivered strong financial performance with organic revenue growth of 9% and net new bookings of almost $2.7 billion. The company also had a record backlog of $28.4 billion, up 11% year-over-year. Additionally, the company took advantage of the stock price multiples falling to 2017 levels and bought back almost $0.5 billion worth of shares. The company also had a record high of RFP flow in the quarter, up 6% sequentially versus Q1 2023. Lastly, the company is confident in the longer-term outlook for the company due to the healthy fundamentals of the clinical and commercial markets.

Ari Bousbib reports that the market in regards to R&D services has been strong and growing sequentially every quarter, and bookings have been beating records. Attrition rates are back to pre-pandemic levels, and the company is actively recruiting and hiring to meet the demand. They currently have 87,000 employees and are recruiting thousands more each year.

Ari Bousbib discusses staffing issues at some sites, noting that while there are still sporadic issues, staffing levels have dramatically improved in the last six to nine months. He then moves on to discuss the sub-segments of TAS, noting that both consulting and analytics have good margins. He explains that consulting is not traditional consulting, but rather pricing, market access, launch, and sales force optimization studies.

The TAS segment has grown 6% organically at constant currency without accounting for the impacts of COVID-19. This growth rate is expected to continue for the rest of the year. Eric Coldwell asked if the cautiousness or sluggishness extended beyond the analytics and consulting side, and it was revealed that there have been growth trends in data, real-world evidence, and technology, but no specific nuances or changes were discussed.

Ari Bousbib states that the core of their business, data, has not changed and the revenue generated in technology corresponds to technology awards from prior periods. He also mentions that there is some cautiousness and delay in terms of new buys and transitions in consulting and analytics, as well as late-phase real-world studies. However, he does not believe that this has impacted their revenue for the year.

Ari Bousbib and Ron Bruehlman provide commentary on the TAS segment which is down by 5% year-over-year. Eric Coldwell asked about the $426 million spent on acquisitions in the quarter. Bousbib mentions the acquisition of Cognitive which is a clinical site network with customers in internal medicine, CNS, vaccines and is based in Arizona. The other acquisition was a site network in psychiatry and smoking cessation.

Ron Bruehlman and Ari Bousbib discussed the company's move into the hybrid SMO marketplace and the purchase of two companies in the quarter. Tejas Savant then asked Bruehlman about the company's confidence in margin expansion into the fourth quarter, to which Bruehlman attributed the expansion to market expansion and productivity initiatives. Bousbib was then asked about the Propel Media acquisition and the new merger review guidelines, to which he did not respond.

Ari Bousbib discusses the company's strategy to continue to grow in the digital space, despite pending litigation with the FTC. He believes that the acquisition will increase competition in the digital space, allowing smaller players to counter the larger players that dominate the market. He also notes that there are labor cost pressures that will be lapped in the back half of the year, which will help support margins.

Ari Bousbib states that the R&DS segment is not experiencing any delays in decision-making and is actually doing very well, with record bookings and RFP flow. However, the TAS segment and CSMS are largely being affected in the consulting and analytics segment, with delays in decision-making that cannot be quantified in terms of months.

The clients on a specific opportunity have not yet decided to move forward, and this has caused a delay of six months or more. This is due to the uncertain economic environment, causing clients to re-evaluate their decisions and delay projects. Cash flow has also been affected in the past quarter.

Ari Bousbib was asked why large pharma companies are not paying their bills on time, to which he responded that it is a high interest environment and people are finding reasons to delay payments. Bousbib then answered a question about the growth rate of real-world evidence in the quarter, which he said was still strong double-digits. Lastly, he discussed their investments in AI/ML since 2015 and 2016 and how they are well positioned to capitalize on the opportunity.

AI is being used in many areas of the pharmaceutical industry, from drug development and clinical development to market access and medical affairs. AI is being used to optimize site identification, patient recruitment, drug development protocols, customer engagement, biomarker databases, and patient pathways. IQVIA has over 150 patent pending methodologies and algorithms, 30 predictive disease models, and 300 life science-specific analytical libraries.

Ari Bousbib and Nick Childs discuss the difficulty of applying generative AI and the need for access to business rules and relevant content to be more precise and accurate. Bousbib then explains that this is why they are working with technology partners to leverage internally for margin expansion. Finally, Bousbib discusses their data business and how it is a more stable and high-margin business with high barriers to entry.

IQVIA has been collecting data on over 1.2 billion patients since the 1950s, with a global presence in over 100 countries and a highly granular infrastructure to process, cleanse, and connect the data. The team has offered to be available to take any follow-up questions from the second quarter earnings conference call, and concluded the call by wishing everyone a great day.

This summary was generated with AI and may contain some inaccuracies.