The paragraph details the introduction and setup for the IQVIA Third Quarter 2024 Earnings Conference Call. The operator opens the call and introduces Kerri Joseph, the Senior Vice President of Investor Relations and Treasury, who then introduces the management team present on the call. Kerri Joseph also notes that a presentation will accompany the call and will be available on IQVIA's Investor Relations website. Additionally, Kerri provides a cautionary note about forward-looking statements and mentions that non-GAAP financial measures will be discussed, with reconciliations available in the press release and presentation.

During the earnings call, Ari Bousbib, Chairman and CEO of IQVIA, reports strong third-quarter performance, with revenue surpassing guidance and a 14% increase in adjusted diluted EPS. Despite a challenging market environment for clinical operations, including aggressive pricing and program cancellations due to portfolio reprioritizations by large pharmaceutical companies, IQVIA sees positive momentum in its short-cycle and TAS businesses. The company anticipates TAS growth to reach the high end of its projected range. On the EBP side, improved funding is noted, but it takes time to see these funds translate into requests for proposals and awards. A significant trial cancellation affected quarterly net new business by $350 million, reducing the net book-to-bill ratio, which would otherwise have been higher.

In late September, two clients postponed mega studies due to logistics issues, impacting short-term guidance, but the CRO business remains resilient. The company successfully renewed and expanded strategic partnerships with large pharma firms, gaining trust and opportunities for future programs. Biotech funding reached $16 billion for the quarter, totaling over $80 billion year-to-date, a 50% increase year-over-year, though it may take over a year to translate into projects. The company's backlog hit a record $31.1 billion, an 8% increase from the previous year, with a healthy 12-month book-to-bill ratio of 1.22, and next year's revenue from backlog is up 5.5%.

The paragraph outlines the company's quarterly performance and business highlights. The Request for Proposal (RFP) flow increased mid-single digits year-over-year, while the qualified pipeline grew low double-digits, although not as high as during stronger market periods. Quarterly revenue rose 4.3% on a reported basis and 4.2% at constant currency, excluding COVID-related work, with a 6.5% growth in the top line and nearly 5% organic growth. Adjusted EBITDA increased by 5.7%, leading to a 30 basis point margin expansion, and adjusted diluted EPS rose 14.1% year-over-year. Key business activities include achievements in the RMBS sector, with the company winning a top 10 pharma partnership and a strategic partnership for VCT solutions, while securing a selection by leading sponsors for a Phase III study in oncology.

The paragraph outlines various initiatives and collaborations by IQVIA in the pharmaceutical and biotech sectors. It mentions several clinical trials, including a Phase III trial for a multiple myeloma biosimilar and a groundbreaking trial for recurring lymphatic cancer. IQVIA utilizes AI-enabled site selection and a single sign-on platform to streamline trial processes. It highlights partnerships in responding to outbreaks, such as the Marburg virus in Rwanda, where an investigational vaccine was administered quickly. Additionally, IQVIA has launched a new generative AI tool, the IQVIA AI assistant, to provide life science customers with insights through a conversational interface. The company's efforts are supported by a recovery in their business performance.

The paragraph highlights IQVIA's AI-driven solutions and their impact on various healthcare and pharmaceutical processes. IQVIA secured multiple multiyear contracts with major pharma and biotech clients to enhance sales rep engagements, streamline workflow efficiency, improve HCP interactions, and support medication access through co-pay assistance. The company's solutions include real-time alerts, orchestrated analytics, and evidence-based approaches, which optimize processes such as funding decisions, prelaunch activities, and HCP and KOL engagement across multiple regions and therapeutic areas. These efforts aim to improve patient outcomes and drive better business decisions in the healthcare industry.

The paragraph discusses IQVIA's financial performance for the third quarter and year-to-date. It mentions an upcoming Investor Day on December 10th at their headquarters in Durham, NC. Ron Bruehlman reports that third-quarter revenue was $3.896 billion, representing a 4.3% increase on a reported basis and 4.2% at constant currency. COVID-related revenues decreased significantly. Excluding COVID-related work, the constant currency growth was 6.5%, with almost 5% being organic. The Technology & Analytics Solutions segment saw significant growth, while R&D Solutions had moderate growth, and Contract Sales and Medical Solutions experienced a slight decline. Year-to-date revenue was $11.447 billion, with a 3% increase on a reported basis and 3.5% at constant currency, excluding COVID-related work, showing a 6% growth.

The paragraph details the financial performance and position of a company, excluding COVID-related work, with a 7% growth in R&DS at constant currency. Contract Sales and Medical Solutions had $541 million in revenue, flat on a reported basis and up 3% at constant currency. The third quarter adjusted EBITDA was $939 million, a 5.7% increase, with a year-to-date figure of $2.688 billion, up 3.3% year-over-year. Third quarter GAAP net income was $285 million, with $1.55 in diluted EPS, while year-to-date figures were $936 million and $5.08 EPS. Adjusted net income for the third quarter was $523 million, with $2.84 EPS, reflecting 13.2% and 14.1% growth, respectively, compared to the previous year. Year-to-date adjusted net income was $1.478 billion or $8.02 per share. The backlog at the end of September was $31.1 billion, up 8% year-over-year, with the next 12 months' revenue from the backlog at $7.8 billion, growing 5.5%. As of September 30th, cash and cash equivalents were $1.572 billion, with a gross debt of $13.512 billion, resulting in a net debt of $11.940 billion and a net leverage ratio of 3.27x adjusted EBITDA. Third quarter cash flow from operations was $721 million, with $150 million in capital expenditures, yielding $571 million in free cash flow. The company repurchased $200 million worth of shares, leaving $2.2 billion authorized for additional repurchases. The company updates its full year guidance due to delays in two large trials caused by client logistical issues.

The team is working to resume trials by 2025, with 2023 revenue expected between $15.350 billion and $15.400 billion. Adjusted EBITDA is forecasted between $3.675 billion and $3.7 billion, and EPS between $11.10 and $11.20. Despite unchanged COVID-related assumptions, acquisitions are anticipated to contribute 1.5 points to annual revenue growth. TAS is projected to grow by 6% and R&D by 5%, both at constant currency, excluding COVID impacts. Q4 revenue is expected between $3.903 billion and $3.953 billion, with TAS growing by 8% and R&DS by 1%, adjusted for constant currency. Adjusted EBITDA for Q4 is between $987 million and $1.12 billion, with EPS of $3.08 to $3.18, assuming stable forex rates. Operationally, the quarter exceeded guidance with 6.5% revenue growth, a 24.1% adjusted EBITDA margin, and a 14% EPS growth. Free cash flow grew 31% year-over-year, with a 109% cash conversion rate. R&DS bookings were impacted by the cancellation of a large program due to drug futility.

The company has updated its Q4 guidance due to delays in two major trials, now expected to resume in 2025. Despite current challenges in R&D, forward-looking indicators show strong demand, suggesting business resilience into 2025 and beyond. During a Q&A session, Ari Bousbib from the company responded to Ann Hynes from Mizuho, indicating that while they typically don't provide guidance for the next year during the third-quarter earnings release, they will give an indication for 2025 at their December investor meeting. Though not fully planned yet, Bousbib expects similar mid-single-digit growth in 2025 as in 2024, following short-term challenges and with segments like TAS rebounding as anticipated.

The paragraph discusses projected growth rates for TAS and RDS within a company, with TAS expected to grow around 6% and RDS by 5% or more this year. The speaker anticipates similar growth patterns for the company in 2025, although detailed guidance will be shared later in the year. Additionally, Shlomo Rosenbaum asks for more details on trial delays and logistical issues impacting the company. Ari Bousbib explains that the delays are due to a broader trend of large pharmaceutical companies reprioritizing their programs, which is not unique to their company and relates to financial and logistical challenges.

The paragraph discusses the challenges faced by a company due to an increase in cancellations within a tough market environment. Despite the company's usual ability to perform well and absorb setbacks, a significant unrelated cancellation due to "futility" has strained its short-term performance. Other cancellations, unrelated to financial issues or the drug itself, are also affecting the company. These trials are expected to resume in 2025, and although bound by NDAs, the company cannot disclose specific details about the reasons behind the cancellations. Overall, they are navigating a complex situation involving separate, discrete challenges amid a challenging broader environment.

Ari Bousbib discusses the challenges related to project cancellations, noting that approximately half are due to client reprioritizations and half are due to normal drug futility based on results. The reprioritization process has been ongoing for about 1.5 years and is expected to peak by the end of the year, with elevated cancellations anticipated in the fourth quarter. IQVIA doesn't provide quarterly cancellation numbers, but the average is around $0.5 billion, with variability. Bousbib expects some quarters to potentially see double the average cancellations due to reprioritizations. Traditional cancellations due to unfavorable data are typically longer processes, involving independent reviews and FDA discussions, before a decision to cancel is made.

The paragraph discusses the complexities involved in ongoing and canceled clinical trials. It explains that winding down trials takes time, often causing additional work and bookings to accommodate patients already on treatment. This unwinding process can affect sequential growth and delay shifts in project timelines across multiple years, impacting future work schedules. Additionally, it touches on the financial aspect, highlighting a $228 million contribution from mergers and acquisitions (M&A) in a recent quarter, primarily in the TAS (Technology and Services) segment, which experienced significant organic growth. Ari Bousbib confirms the sequential growth impact and financial performance details will be provided in future guidance.

The paragraph discusses the role of acquisitions in the company's growth strategy, specifically in the TAS (Technology and Services) area. Acquisitions contributed over 1.5 points to the company's 6.5 points of growth, excluding COVID impacts. Although the company aims for at least 2 points of growth from acquisitions, historically, it has achieved between 1 and 1.5 points. The company frequently makes numerous small acquisitions, such as H3O and B2i, each with around $1 million in annual revenue. Despite their small size and revenue impact, these acquisitions are strategically important. The company believes in the potential growth of these acquired companies after integration, although sometimes the acquisitions can be costly.

The paragraph discusses a company's acquisition strategy and recent acquisitions. The speaker mentions that they have made several acquisitions in the recent past, sometimes paying up to 10 times the revenue of the acquired companies, such as for a digital space entry. They spent $649 million on acquisitions by the end of the third quarter, with almost half of that amount used to acquire Micra, a specialized CRO in medical devices, at nearly 5 times its revenue. Despite the high spending, the immediate revenue contribution from these acquisitions is minimal. The speaker also highlights another significant acquisition, the purchase of the remaining 40% stake in a joint venture with Quest in their central lab, for $760 million, which brought no new revenue but was nonetheless considered a successful deal. Overall, the acquisitions are part of a broader strategic plan.

In the paragraph, Ari Bousbib addresses questions about the company's capital deployment strategy. Initially, the company aimed for a $2 billion to $3 billion deployment annually, split between acquisitions and share repurchases. However, they have only spent $649 million on acquisitions and $200 million on share repurchases so far, partly due to difficulties in securing larger acquisitions. Bousbib anticipates only modest additional spending on acquisitions before year-end. He emphasizes the company's intention to significantly increase share buybacks in the fourth quarter, given their current $2.2 billion buyback authorization and favorable share price. Finally, he indicates excitement about this focus on share repurchases, although there's a brief mention of pricing pressure in another area without further elaboration.

The paragraph discusses the challenges of pricing in the CRO industry, emphasizing the particular difficulties faced with Functional Service Provider (FSP) services, which make up 15-20% of revenue and have lower margins. The competition in the industry has increased due to large pharma companies initiating a rebid process, which led to the company securing existing partnerships and expanding with new ones, especially in Central Lab services. Despite intense pricing pressures from desperate second-tier CROs and overall competitive pricing dynamics, the company remains optimistic about its future in Research & Development Solutions (R&DS) and its ability to maintain and grow its market position in the long term.

In the paragraph, David Windley from Jefferies seeks clarification on the discrepancy between the reported book-to-bill ratio and backlog growth, suggesting it might be due to foreign exchange (FX) differences. Ari Bousbib confirms the math is likely correct and acknowledges significant cost challenges in managing resources due to delays in two major trials. The company has invested in resources and infrastructure for these trials, which are now paused but expected to resume in 2025. Bousbib highlights that they are unable to let go of these resources, leading to additional costs over the next few quarters. They plan to redeploy some resources to other opportunities but will still face cost pressure.

The paragraph discusses the company's financial performance and strategic partnerships. The company experienced high operating margins of 24.1% in the fourth quarter, a record since its inception in 2016, and a 30 basis point expansion this quarter. However, the future could be uncertain due to large trials potentially affecting margins, and more details will be shared in December. Strategically, the company has been successful in forming and expanding preferred partnerships with large pharmaceutical companies, largely due to cost management strategies and ongoing vendor relationship reevaluations prompted by industry-wide cost reduction programs. The company believes it is through these adjustments and is ready to progress further.

In the paragraph, Ron Bruehlman discusses interest expenses, expecting them to remain relatively stable for the next year, with future adjustments depending on central bank actions. Michael Cherny from Leerink Partners inquires about conditions affecting R&D spending, particularly regarding macroeconomic factors and trial cancellations. Ari Bousbib responds by noting that while the specifics are uncertain, he anticipates the current wave of program reprioritizations will conclude by year's end, based on client interactions and ongoing market trends.

The paragraph discusses the financial impact of recent program cancellations on R&DS (Research and Development Services) and outlines anticipated growth expectations for 2025. It references two major program cancellations totaling $600 million in the current year. These cancellations and delays impact short-term growth, with R&DS experiencing a growth rate of 8% in the first quarter, followed by 6% in subsequent quarters, and anticipated 1% in the fourth quarter. The speaker indicates that, based on current knowledge, this trend may reverse in 2025 due to these factors. The paragraph concludes with the call's operator handing back to Mr. Joseph and closing the conference call.

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