The operator welcomes everyone to the IQVIA Fourth Quarter 2023 Earnings Conference Call and introduces the speakers. The call will be recorded and a presentation will be referenced during the call. The speakers caution listeners that there may be forward-looking statements and discuss non-GAAP financial measures.

The paragraph discusses the strong performance and accomplishments of IQVIA in 2023, particularly in their R&DS segment. The company saw strong demand from clients, with net new bookings exceeding $2.8 billion and a quarterly book-to-bill ratio of 1.31. They also saw growth in their qualified pipeline and funding for emerging biotech companies. In 2023, the company booked $10.7 billion in net new business and added nearly 400 new customers. They also expanded their R&D site network and management organization through strategic acquisitions. A reconciliation of non-GAAP measures to GAAP measures can be found in the press release and conference call presentation.

In the third paragraph, the company discusses their expansion of capabilities in the lab business through a new synthetic antibody offering and a partnership with CEPI. They also mention that their commercial business is facing challenges due to cautious spending from clients, but leading market indicators suggest a potential improvement in the future. The company expects demand to pick up in the second half of the year, which may result in a reversal of the trend seen in 2023 for their commercial business.

In the first quarter of 2023, revenue growth is expected to be similar to the growth seen in the fourth quarter, with further improvement throughout the year. Despite a challenging macro environment, the TAS business achieved significant milestones, including expanding their technology and analytics offerings, adding new clients, launching a new software platform, and acquiring a quality metric to enhance their patient health measurement tools. In the fourth quarter, revenue grew 3.5% and adjusted EBITDA increased 5%, with adjusted diluted EPS facing headwinds from interest expense and a UK corporate tax rate increase. The TAS business also secured a four-year outsourcing program from a midsized pharma client to support their life cycle strategy.

In the quarter, IQVIA secured multiple contracts with large pharmaceutical companies and organizations. These contracts include providing global market intelligence, monitoring services for the CDC, and conducting clinical trials for various diseases. IQVIA's Patient Services business also secured a significant contract for adherence monitoring and at-home treatment administration. In addition, IQVIA was selected by the National Health Service of England to deploy privacy technology. In the RDS division, a top 5 pharma client selected IQVIA as a key clinical FSP provider, and another top 5 client awarded IQVIA a full-service Phase 2 study for ALS. A biotech client also chose IQVIA to conduct a trial for a cell and gene therapy targeting myositis.

In the sixth paragraph, it is mentioned that IQVIA was selected for six new global oncology trials due to their AI capabilities and expertise in oncology. They were also chosen by a leading biotech firm for a program in cancer research and awarded a major contract by a top 10 global pharma for their pharmacovigilance platform. The company was also recognized as one of the world's most admired companies and their Chief Scientific Officer, Christina Mack, received a prestigious industry-wide honor. The financial review will be provided by Ron.

The paragraph discusses the revenue growth for the fourth quarter and full year of the company, with a breakdown of the different segments. It also mentions the impact of COVID-related work on revenue and excludes it to show the underlying growth. The paragraph then moves on to discuss the adjusted EBITDA for the fourth quarter.

In the fourth quarter, adjusted EBITDA for the company grew by 5%, with full year adjusted EBITDA increasing by 6.7%. GAAP net income for the fourth quarter was $469 million, and for the full year it was $1.358 billion. Adjusted net income for the fourth quarter was $523 million and for the full year it was $1.901 billion. The company's R&D Solutions segment had a strong quarter for bookings and ended the year with a record backlog of $29.7 billion. The company's cash and cash equivalents totaled $1.376 billion, with gross debt of $13.673 billion resulting in a net debt of $12.297 billion and a net leverage ratio of 3.45 times. The company also repurchased $229 million of its shares in the quarter and has $2.4 billion remaining in its share repurchase authorization. The company made significant investments and acquisitions after the merger, taking advantage of the low interest rate environment.

In this paragraph, the speaker discusses the company's net interest expense and how it has remained steady at around $400 million per year. However, in 2022 and 2023, there was a rapid and unprecedented rise in interest rates, causing the expense to increase by almost $0.25 billion and impacting the adjusted EPS. To address this, the company successfully refinanced $2.75 billion of debt, extending maturities and reducing interest rate risk. As a result, they expect net interest expense to be approximately $650 million in 2024. The speaker then goes on to provide guidance for 2024, including expected revenue, adjusted EBITDA, and adjusted diluted EPS, as well as factors such as COVID-related work, M&A activity, FX headwinds, interest expense, and income tax rate.

The guidance for the company's financial performance in 2024 assumes a $2 billion deployment for acquisitions and share repurchases, as well as stable foreign currency rates. TAS revenue is expected to be between $6 billion and $6.2 billion, with minimal impact from COVID-related revenues. R&DS revenue is expected to be between $8.7 billion and $8.8 billion, with a significant decrease in COVID-related revenue and pass-through headwinds. CSMS revenue is expected to be slightly lower than the previous year. For the first quarter of 2024, revenue is expected to be between $3.650 billion and $3.725 billion, with a decline in COVID-related work and a recovery in market conditions and TAS in the second half of the year. Adjusted EBITDA is expected to be between $850 million and $870 million, and adjusted diluted EPS is expected to be between $2.45 and $2.55. The first quarter is expected to have the toughest comparison for adjusted diluted EPS due to interest rate increases in 2023.

The paragraph summarizes the financial performance of IQVIA in the fourth quarter of 2023 and the full year. It mentions strong revenue growth, margin expansion, and increased earnings per share. The company was also recognized for its success and has issued guidance for 2024. A leadership change within the finance organization is also announced, with Nick Childs moving on to become CFO of the North American business and Kerry Joseph taking over as CFO.

The operator introduces a question from Anne Samuel of JPMorgan about the company's TAS business. Ari Bousbib responds by mentioning expectations for a back half recovery and early indicators of this recovery. He notes that the FDA has approved 50% more molecules than last year, which bodes well for the commercial business. Bousbib also mentions more optimism from clients for 2024, but the company is being cautious in planning due to previous setbacks.

In the paragraph, the speaker discusses the forecast for the company's TAS business based on their pipeline of opportunities. They note that the pipeline for 2024 is higher than ever before, giving them confidence in their forecast. However, they caution that there may be a decline in growth in 2023 before a ramp-up in 2024. They also mention that there were significant contract signings in the quarter.

The CEO of the company was asked about the second largest quarter in the company's history and he mentioned that there were no specific contracts or awards that boosted it, but the EBP segment was particularly strong. He also mentioned that the company continues to excel in oncology and cell and gene therapy. When asked about competition, he stated that there have been disruptions in the CRO space due to acquisitions and spin-offs.

The speaker discusses the impact of the company's merger seven years ago on the industry and subsequent transactions. They believe this gave them a competitive advantage and helped them gain market share. The speaker also addresses a question about the shift in mix between FSP and full service work and explains that while FSP tends to have lower margins, the inclusion of pass-through revenues makes the average margins similar. The shift towards FSP is gradual and has not had a significant impact on margins.

The company is constantly working to improve their margins and reduce costs, but they don't expect any major impact from new contracts. Their EBITDA margins have been improving despite R&DS being over 50% of their revenue. Regarding the recovery in the back half of the year, the company has a strong pipeline and high level of confidence, but they have built in some cushion due to delays experienced last year. The overall sentiment from clients is positive, but there is still a focus on cost containment.

The company is anticipating a recovery in their TAS business, but there is still uncertainty due to factors such as the unknown impact of the IRA and LOEs. Negotiations with large pharmaceutical companies have become more difficult, but there has been an increase in opportunities and projects, which is expected to result in sales towards the end of the year. The company is being cautious and conservative in their forecast due to the challenges faced last year.

The company's overall business is growing, despite some headwinds in the more discretionary parts of the TAS segment. The data business is holding up well, while the analytics and consulting business saw some improvement in Q4 compared to Q3. The real-world business, which has longer cycles, was impacted by the deceleration in Q3 and Q4. The issues seen in Analytics and Consulting earlier in the year were also seen in the real-world business in Q3 and Q4, and this is expected to continue in Q1.

The speaker addresses concerns about a potential slowdown in biotech RFPs and bookings in the first quarter. He dismisses these concerns, citing strong EVP funding and a continued trend of bookings over the next year. He acknowledges a slight shift towards FSP in the large pharma segment, but states that overall there is no significant drop-off in funding or research.

The speaker discusses the company's performance in various segments and reassures investors that there is no cause for concern. They mention a 13% increase in RFP flow and record high levels of awards and pipeline. The speaker also addresses the demand environment and mentions that a significant portion of their bookings were for FSP.

In paragraph 21, the speakers discuss the percentage of bookings for FSP and EVP in the quarter and for the full year. They also mention the pressure from clients to negotiate lower rates, which has been a surprise for the company. They attribute this to competition and the need to maintain long-term relationships with clients. There is a general trend of pressure on pricing across the board.

Ari Bousbib discusses the current decision cycle environment with large pharmaceutical companies. He notes that while RFP flows and awards are holding up, clients are taking longer to make decisions due to factors such as IRA and pending loss of exclusivity. The company's backlog continues to grow and the second highest bookings quarter ever was recently achieved. However, conversations with clients are more difficult and negotiations are longer. Despite this, the volume and number of opportunities continue to increase, with EBP funding at an all-time high.

The company has shown strength in EBP and expects it to continue this year, with no signs of slowing down. While the commercial side has seen some green shoots, the R&DS side has faced challenges with pricing and negotiation. However, the company is actively pursuing opportunities and responding to RFPs, with a high number of opportunities and a fertile environment. The disconnect between high RFP award pace and below mid-single-digit revenue growth is attributed to factors such as TAS and COVID, but the company expects to see growth as projects ramp up.

In 2024, R&DS growth will be impacted by multiple factors, including a decrease in resources and projects related to COVID, slower revenue growth in the oncology area, and a headwind from pass-throughs. These factors will result in a 450 basis point decrease in R&DS growth, but the underlying business is still expected to grow at a high single-digit rate.

The speaker, Dave, is praised for his intelligence and for pointing out the discrepancy between the strong growth in bookings and the reported growth in 2024. The speaker hopes to be out of this discrepancy by 2025 and believes that year will be successful. They do not want to discuss plans for 2025 yet, but they are confident in their current progress. The call ends with the speaker thanking everyone for joining and saying they will be available for follow-up questions.

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