The operator welcomes everyone to the IQVIA second quarter 2024 earnings conference call and reminds participants that the call is being recorded. Kerri Joseph, Senior Vice President, Investor Relations and Treasury, introduces the speakers and mentions that a presentation will be referenced during the call. She also cautions listeners about forward-looking statements and the use of non-GAAP financial measures.

The CEO of IQVIA, Ari Bousbib, discussed the company's second quarter results during a conference call. The company saw a 5% revenue growth and an 8.6% growth in adjusted diluted earnings per share. The industry fundamentals remain strong and there is a gradual improvement in the commercial side. The company is confident in their outlook for the business and expects a mid-single digit growth for the full year. The TAS revenue growth was 3% in the first quarter and 4% in the second quarter, excluding COVID and foreign exchange. The company remains confident in their full year forecast for TAS and expects 6% to 7% growth for the rest of the year.

The article discusses the positive trends seen in the clinical side of the biotech industry, with large pharma companies reallocating funds towards more attractive programs and an increase in funding for emerging biotech companies. The R&DS segment also saw good net new bookings and a record backlog. In terms of financial results, revenue and adjusted EBITDA increased, and IQVIA signed a contract with a Top 20 client to expand their commercial technology ecosystem.

IQVIA offers AI and machine learning solutions that seamlessly integrate into clients' technology infrastructure, allowing them to manage data more effectively and optimize customer engagement. In the first quarter, IQVIA won a multi-year contract with a top five pharma client to improve their digital communication strategy. IQVIA has a history of developing AI for healthcare and has invested heavily in AI and ML algorithms for clinical development and commercialization. They have won awards for their AI solutions, including a GenAI solution that collects and analyzes survey data from healthcare professionals in multiple languages in just minutes. A top 10 client has also awarded IQVIA a contract to implement their centralized GenAI reporting and analytics solution for their entire U.S. sales force.

IQVIA's GenAI solution allows users to ask questions and receive contextual responses in the form of charts, graphs, and KPIs. This solution also proactively alerts users of key trends and anomalies. A medtech client utilized IQVIA's AI solution to train patients to use their medical device for diabetes, resulting in better adherence to treatment protocols. IQVIA's AI solution for TAS won an award for Best Use of Artificial Intelligence in Healthcare. IQVIA also won a study with a mid-sized pharma client for patients with migraines and a real-world study in Japan for a coronary intravascular therapy. Additionally, a Top 15 pharma client awarded IQVIA a contract to study the effectiveness of a therapy for schizophrenia.

In summary, IQVIA will use data tokenization and AI to provide a comprehensive view of patients pre and post-therapy in real world settings. They have been recognized as a leader in medical affairs and life sciences regulatory operations. In R&DS, they have been selected by a Top 15 pharma client to conduct high volume testing for obesity treatment, resulting in faster study timelines. They have also been chosen for a Phase III trial for a new influenza vaccine and have won a large Phase III oncology study for small cell lung cancer due to their expertise, data capabilities, and unique delivery approach.

The paragraph discusses how IQVIA has been selected by various clients in the biotech and pharmaceutical industries to support their clinical trials and pharmacovigilance projects. These engagements were awarded to IQVIA due to their AI-enabled solutions, which improve productivity and reduce costs. The company's second quarter revenue also saw growth, with a 5% increase when excluding COVID-related work. Technology & Analytics Solutions revenue was up 2.7% reported and 3.8% at constant currency.

In the second quarter of 2023, excluding COVID-related work, the company saw 4% growth overall, with Technology & Analytics Solutions growing at 3.5%, R&D Solutions at 6%, and Contract Sales & Medical Solutions at 2.8%. For the first half of the year, total company revenues were up 3.2%, with Technology & Analytics Solutions growing at 3.5%, R&D Solutions at 7%, and Contract Sales & Medical Solutions at 5%. Adjusted EBITDA for the quarter was $887 million and for the first half was $1,749 million. GAAP net income for the quarter was $363 million and for the first half was $651 million. Adjusted net income for the quarter was $487 million and for the first half was $955 million. R&D Solutions bookings were strong, resulting in a backlog of $30.6 billion at June 30.

In the second quarter, the company's revenue from backlog increased to $7.8 billion, a 6.9% increase from the previous year. Their net debt was $11,713 million and their net leverage ratio was 3.25 times adjusted EBITDA. They had a cash flow from operations of $588 million and free cash flow of $445 million. The company has refined their financial guidance for the rest of the year, with expected revenue between $15,425 million and $15,525 million and adjusted diluted EPS between $11.10 and $11.30. Their third quarter guidance includes expected revenue between $3,830 million and $3,880 million, adjusted EBITDA between $925 million and $950 million, and adjusted diluted EPS between $2.76 and $2.86. The company had a strong book-to-bill ratio of 1.27 and a 8.6% increase in adjusted diluted EPS year-over-year. They are moving towards resuming double-digit EPS growth.

The company had a strong quarter and first half, with strong free cash flow and confidence in meeting full-year targets for revenue growth. The operator then opened the session for Q&A. The guidance for revenue and EPS was raised at the midpoint, but EBITDA was slightly lowered due to the mix of business. The company is still delivering margin growth and the slight changes in guidance should not be heavily focused on.

Ari Bousbib discusses the company's strong performance despite challenges in the market, including budget constraints and price pressure from customers. He notes that large pharmaceutical companies are cutting costs and reviewing their vendors, but there is still demand for the company's services.

The decision timeline has improved significantly, but is not yet at pre-cautiousness levels. Pricing remains tough due to large pharma clients being more disciplined and a segmented industry with desperate players. The company is responding with productivity and cost containment programs, as well as AI deployment. The performance of different business segments within TAS is not specified, but the company has seen outperformance in some areas.

The speaker discusses the current state of the company's data business and notes that it has remained consistent. They also mention that the rest of the business has shown improvements, with mid to high-single digit growth overall. The real world sector has seen significant growth in the past quarter. The speaker also mentions that the reported revenue can fluctuate due to pass-throughs, but overall, the R&DS growth is in line with their forecast. The company has a disproportionate share of oncology programs.

The critical decision factors for the company are therapeutic expertise and patient enrollment, which is where their data analytics and AI solutions come in. This has resulted in an increase in bookings and backlog for complex studies in oncology and rare diseases. The burn rate is also decreasing, following a trend in the industry. The company is confident in their backlog conversion and expects revenue growth in the balance of the year and next year. In terms of R&DS, the company did not quantify the increase in RFP flows in the qualified pipeline at the end of the second quarter, but they are expecting an uptick in bookings as a result. The timeline for this conversion is unknown.

During a conference call, the speaker, Ari Bousbib, responds to a question about the potential acceleration of book-to-bill ratios above 1.3 times before the end of the year. He states that 1.3 has become a benchmark, but the company is happy with ratios of 1.27 or 1.2. He also clarifies that there is no need for a rebound in bookings as they have reported excellent bookings, which are the third highest ever. When asked about RFP flows and qualified pipelines, Bousbib mentions that they are up across the board, with qualified pipelines increasing by 12% and RFP grows by mid-teens. The call ends with another question about RFP flows, which Bousbib answers by stating that they are up single-digits.

In this paragraph, Jailendra Singh asks Ari Bousbib about the performance of individual businesses within TAS and how they will impact overall expectations for the second half. Bousbib mentions that they expect TAS to grow by 6-7% at constant currency, with 30% of the business remaining flat and the remaining 70% growing in high-single digits. When asked about the possibility of double-digit growth, Bousbib clarifies that it is not yet expected, but low-teens growth could be possible.

The strength of TAS and the outlook for the rest of the year is a combination of the underlying market improving and IQVIA winning its fair share of business with their tools. The market is not rebounding, but certain critical projects that were delayed last year are now happening. IQVIA is being more responsive to client needs, accommodating with their terms, and commercially more aggressive in order to win projects.

The speaker, Ari Bousbib, responds to a question about the improving decision-making timelines at the company. He mentions that this improvement is seen broadly, not just for mission-critical projects. He also expresses confidence in the continued improvement despite the upcoming election cycle. Additionally, he confirms that the work related to new drug approvals is starting to show up in the project backlog.

The speaker addresses a question about the company's delayed projects and explains that some projects were pushed back to the second half of the year. They also discuss the favorable recovery in TAS and the expected increase in sales in the fourth quarter due to favorable comparisons and seasonality. The speaker also mentions the company's $220 million spent on acquisitions in the first half of the year.

The speaker was asked about the revenue contribution of the company's recent acquisitions and whether there are any upcoming plans for more acquisitions. The speaker responded that the acquisitions have contributed to a little over a point of revenue growth so far, with more contributions in the RDS sector. They also mentioned that there have been recent cancellations of clinical trials in the industry, but these are not a new trend and are largely due to large pharma reprioritizing their programs in response to the IRA and other potential impacts.

The company has cancelled some programs that were not meeting their expectations, resulting in more cancellations than usual. They do not disclose the specific programs that are cancelled, but their average quarterly cancellations are around $500 million. Last quarter, they disclosed a cancellation of a program that amounted to $4 billion. Companies usually terminate programs due to reprioritization or data not supporting continuation. This is a common occurrence in the industry. A question was asked about EBITDA guidance earlier.

In response to a question about mix-shift impacting margins in the second half of the year, Ari Bousbib of Iqvia Holdings Inc. stated that he could not provide much more detail and that it could be due to acquisitions and forecast adjustments. He also mentioned winning a top-five client due to their solution being better suited to their goals. In terms of capital deployment, Bousbib expressed a desire for more M&A activity, but acknowledged that the current environment may not be favorable. The company has been buying back stock and is comfortable with their leverage ratio.

The speaker discusses the company's cash flow performance and its impact on reducing leverage. They also mention their long-term guidance for acquisitions and the unpredictability of future acquisitions. The speaker then answers a question about potential revenue mix-shift and the impact on different types of services. They clarify that there is a timeline between funding, RFPs, and bookings in their business.

The speaker is pleased with the strong funding in the current quarter, which will benefit the company in the long term. However, it will not significantly change the mix of their work in the next few quarters. The backlog is the largest in the industry and will result in a higher mix of full-service work in the future. The trend of large pharma companies favoring FSP work is being mitigated by an increase in EBP funding. The call is now concluded.

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