The paragraph is an introductory script for the IQVIA First Quarter 2025 Earnings Conference Call. The operator welcomes participants and informs them about the proceedings, including a question-and-answer session after the speakers' remarks. Kerri Joseph, the Senior Vice President of Investor Relations and Treasury, then begins the presentation, introducing key company executives present on the call and mentioning that the presentation is available online. Kerri Joseph also highlights that the call will include forward-looking statements with potential risks and uncertainties and references non-GAAP financial measures, advising that these should supplement, not replace, GAAP measures.

In the second paragraph of the article, Ari Bousbib, the Chairman and CEO, discusses the company's strong financial performance in the first quarter, highlighting revenue and profit results that exceeded expectations despite challenges in the R&DS sector. The total revenue showed significant year-over-year growth when considering constant currency and excluding COVID-related work. Bousbib also mentions a positive trend in the TAS business due to new drug launches and commercial activities by clients, emphasizing the value of IQVIA's diverse portfolio during uncertain times in the biopharmaceutical sector. Adjusted EBITDA and EPS also saw increases, reflecting the company's robust market position.

The third paragraph discusses TAS's strong contribution to revenue, with growth exceeding expectations. Despite this, the clinical market is experiencing delays in decision-making due to economic and industry uncertainties, partly attributed to policies from the new U.S. administration. Although some clients are cautious, the company's demand metrics are positive, with a record backlog and improved RSP flow. The demand environment is affected by potential policy changes, notably in tariffs, agency actions, and drug pricing, though the pharmaceutical industry has certain tariff exemptions.

The Department of Commerce has initiated a national security investigation into the life sciences industry, potentially leading to sector-specific tariffs that could impact IQVIA's clients, though not significantly affecting IQVIA itself. The Department of Health and Human Services announced several initiatives, including delays and cancellations of NIH contracts and a 15% cap on indirect costs, but these have no impact on IQVIA's financials. IQVIA, which has no government-sponsored COVID-19 contracts, maintains good relationships with agencies like BARDA. NIH's funding cap aligns indirect costs with private foundations, leaving research funding and IQVIA unaffected. The FDA has restructured, affecting support functions but preserving core product review teams. IQVIA reports no trial or approval delays so far.

The paragraph discusses recent developments in the pharmaceutical industry, highlighting FDA Commissioner Makary's initiative to reduce animal testing in favor of AI models and increased use of real-world evidence, which is beneficial for companies like IQVIA. It notes a positive outlook for EVP companies due to potential changes in drug approval and pricing policies, particularly the removal of the "pill penalty" provision in the Inflation Reduction Act (IRA) that affects small molecule drug pricing. These proposals could drive faster clinical trials and spur the need for earlier clinical results and more real-world evidence. While some clients have slowed decision-making, leading to delays in contracts and funding, these industry shifts are ultimately seen as positive.

The paragraph highlights the resilience and strategic importance of the U.S. life sciences and biopharmaceutical industry, emphasizing its role in innovation, global leadership in biomedical discovery, and economic contribution. The industry is responsible for a significant portion of global drug approvals and pharmaceutical sales, with substantial investments in research and development. It supports employment and economic growth, attracting international companies to the U.S. The paragraph concludes by briefly mentioning business activity and revenue success in the quarter, noting new product launches and client partnerships for TAS.

The paragraph highlights IQVIA's recent achievements in various client engagements, particularly in the pharmaceutical and MedTech sectors. The company supported key projects, including product launches and omni-channel campaigns, leveraging their commercial technology and AI-driven platforms. They secured significant contracts and renewed strategic partnerships with major pharma clients, leading to new studies and trials. Their clinical trial technologies and expertise were crucial in winning these deals, and they continue to play a vital role in offering solutions to improve efficiency and manage increasing workloads.

In this paragraph, IQVIA's progress and financial performance are discussed. The company has advanced in AI deployment, collaborating with NVIDIA to introduce over 20 AI agents in production, leading to increased productivity and cost reductions in specific areas. They aim to expand to 40 use cases by year-end. Financially, the first quarter saw revenues of $3,829 million, a growth of 2.5% reported and 3.5% at constant currency. Adjustments for a decline in COVID-related revenue indicated a 4.5% growth at constant currency. The Technology & Analytics Solutions segment reported a 6.4% growth, while R&D Solutions grew by 3% excluding COVID-related work. Contract sales & Medical Solutions experienced a decline. Adjusted EBITDA for the quarter was $883 million, a 2.4% increase year-over-year.

In the first quarter, the company reported a GAAP net income of $249 million and adjusted net income of $479 million, with diluted earnings per share growing to $2.70. The R&DS backlog increased to $31.5 billion, with expected next 12-month revenue of $7.9 billion. The company's cash and cash equivalents totaled $1,740 million versus a gross debt of $14,330 million, resulting in a net leverage ratio of 3.40 times trailing 12-month adjusted EBITDA. They generated a free cash flow of $426 million and repurchased $425 million of shares. The company raised its full-year revenue guidance to between $16,000 million and $16,400 million due to favorable foreign currency exchange rates. This includes growth prospects despite reductions in COVID-related work, with M&A contributing 150 basis points. Adjusted EBITDA guidance is reaffirmed at $3,765 million to $3,885 million, showing growth of 2.2% to 5.5%.

The company reaffirmed its adjusted diluted EPS guidance of $11.70 to $12.10, reflecting a 5.1% to 8.7% increase from the previous year. For the second quarter, expected revenue is between $3.925 billion and $4 billion, with adjusted EBITDA between $895 million and $915 million, and adjusted diluted EPS between $2.72 and $2.83. These figures assume consistent foreign currency rates as of May 5. In Q1, the company achieved strong revenue and profit results and demonstrated solid free cash flow, with the TAS business showing 7.6% revenue growth at constant currency. While R&DS bookings were affected by delayed customer decisions and lower EBP funding due to macroeconomic uncertainties, forward-looking indicators remain positive. The company is also progressing on deploying new AI agents with 40 use cases identified for 2025. During the quarter, $425 million worth of shares were repurchased, and full-year revenue guidance was increased by $275 million due to FX changes. The company also reaffirmed past guidance and opened the call for questions.

In the paragraph, Ari Bousbib discusses the strong revenue growth for the company, particularly highlighting the double-digit growth in their real-world evidence (RWE) segment. This growth contributed to the company surpassing the upper end of its revenue guidance with a 7.6% growth at constant currency. The real-world segment had previously declined due to discretionary parts shutting down, but has now rebounded with both discretionary and mission-critical work resuming. This recovery is fueled by pent-up demand, and they expect continued strength based on the book of business. Additionally, other segments within TAS also performed well, achieving low- to mid-single-digit growth. Justin Bowers and Ron Bruehlman then discuss margin expectations, with Matt Sykes asking about potential margin expansion and cost management strategies in light of the FX impact on top-line revenue but not on the bottom-line.

The paragraph discusses the company's financial performance and strategy. Despite increased revenues from a weaker dollar, profits have not risen accordingly, primarily due to foreign exchange (FX) impacts and changes in product mix affecting gross margins. The company is focused on reducing costs to improve future margins, including exploring AI. Restructuring efforts are ongoing, despite pressures from FX and product mix shifts. Ari Bousbib notes that in their R&DS business, the request for proposal (RFP) flow remains strong despite lower overall demand, and they have seen a trend of vendor consolidation. Even with elevated cancellation rates in 2024, underlying demand remains solid.

In the quarter, cancellations were within the normal historical range. Bookings were mostly paused by clients awaiting the impact of administrative pronouncements. There was a deterioration in funding for EBP, with many awards being contracted but not included in bookings due to uncertainty about funding. Despite this, RFP flow remained stable with consistent numbers in dollar value and volume. Large pharma RFPs are performing well, and there's a sequential high-single-digit increase. Moreover, new RFPs from renewed large pharma contracts are starting to benefit the company. Meanwhile, Shlomo Rosenbaum from Stifel queried about the operating environment and was surprised that the uncertainty in R&DS wasn't seen in the short cycle business in TAS, given that the guidance remained unchanged.

Ari Bousbib addresses concerns about potential uncertainty affecting TAS (Therapeutic Area Services) and related areas like consulting and analytics. He acknowledges that uncertainty typically causes hesitation in spending but notes that TAS has not been negatively impacted. He attributes this to a pent-up demand following a period of spending restraint from mid-2023 through mid-2024, especially with the need to launch approved drugs. TAS continues to support drug launches, market access, and commercialization, which remain vital to clients. While discretionary spending, such as consulting, remains modest with flat to mid-single-digit growth, the necessary operations and prior demands drive TAS's current growth.

The paragraph discusses the impact of uncertainty on decision-making in the R&D sector, particularly due to the Inflation Reduction Act (IRA) which led to reprioritization and elevated cancellations in large pharma pipelines. The speaker notes that this reprioritization process is largely complete, though it's unclear if further cancellations could occur due to new developments. Uncertainty has caused delays, with the time from receiving requests for proposal (RFPs) to awarding contracts extending by about 10%. Clients are hesitant to make large capital investments in uncertain environments. Michael Ryskin from Bank of America then asks a follow-up question regarding cancellations and book-to-bill trends.

In the paragraph, Ari Bousbib addresses a question about the quarterly book-to-bill ratio, noting its decrease to 1.02. He attributes this softer performance to delays in contract signings by large pharmaceutical companies and a decline in Emerging Biopharma (EBP) funding, which has dropped significantly compared to previous quarters. The overarching reason for these challenges, according to Bousbib, is the general macroeconomic uncertainty affecting the biopharmaceutical sector. Consequently, even if an EBP signs a contract, it may not be included in the bookings due to funding uncertainties, a situation that has occurred more frequently in this quarter.

The paragraph discusses the impact of delayed contract signings and unconfirmed funding on a company's bookings for the quarter, leading to softer results than expected. Despite this, the company projects a 5% growth for the year, with their Contract Research Organization (CRO) business expected to grow by 4% to 6%, excluding the decrease in COVID-related business and foreign exchange impacts. The company compares its situation to a competitor with similar book-to-bill ratios, highlighting that their competitor projects a mid-single-digit decline in growth, while they anticipate mid-single-digit growth. This comparison is used to illustrate that quarterly book-to-bill ratios are not reliable indicators of future growth and performance.

The paragraph involves a discussion between Michael Ryskin, Ari Bousbib, and Jailendra Singh about a company's pricing environment and its strategies in the face of macroeconomic uncertainty. Ari Bousbib explains that there has been no change in pricing, with negotiations having been completed the previous year with large pharmaceutical clients. Jailendra Singh then asks about any changes in the mix of Request for Proposals (RFPs) and new bookings, specifically between Full-Service Outsourcing (FSO) and Functional Service Provider (FSP) models, and inquires about the status of two delayed mega trials. Ari acknowledges these questions, indicating a willingness to address them.

The paragraph discusses the shifting dynamics in the pharmaceutical industry between Functional Service Provider (FSP) models and full-service outsourcing. Over the past year, large pharmaceutical companies increased their reliance on FSP, with its share rising to nearly 20% of bookings in 2024 and 15-16% of revenue. However, there's a noticeable shift back to full-service outsourcing as companies realize the limitations and costs of managing FSP internally. Recent data indicates FSP bookings have dropped below 10%, with pipeline activity in single digits. The need for specialized expertise and cost efficiency are driving this return to full-service models.

The paragraph discusses updates on two mega trials, with one confirmed to start as planned in the second half of the year and the other delayed due to client logistics issues, not starting this year. Despite these changes, the guidance remains unchanged. Mike Fedock notes that the adjusted guidance range might lean towards the lower end, although their business development teams are working to secure more business. Eric Coldwell from Baird seeks clarification on the impact of foreign exchange (FX) on guidance, acknowledging that FX initially caused a year-over-year gross margin reduction in Q1 but has since shifted to become a moderate tailwind.

In this paragraph, Ron Bruehlman explains that the impact of foreign exchange (FX) fluctuations on EBITDA is limited, and as a result, their EBITDA and EPS projections would not be significantly affected by FX. However, FX has a notable impact on revenue, which influenced their overall revenue guidance for the year and affected their implied margin guidance. Eric Coldwell inquires about the M&A impact on TAS, receiving clarification that M&A contributed 200 basis points for the quarter and 150 for the year, with TAS accounting for a significant portion. However, the organic growth in TAS is reported to be in the low mid-single digits. The paragraph concludes with David Windley from Jefferies asking about margin performance by segment and restructuring expenses.

In this discussion, Ari Bousbib and Ron Bruehlman address strategies for cost reduction and margin management across different business segments. They emphasize ongoing efforts to optimize the cost structure by adjusting overheads, leveraging labor arbitrage through global offshore centers, and using technology and AI to improve efficiency. These efforts have led to restructuring headcount globally. They also mention segment-specific margin dynamics, noting that while both R&DS and TAS segments show good SG&A performance, R&DS experiences more gross margin pressure due in part to business mix, with faster growth in lower-margin areas like real-world data impacting overall margins.

The paragraph is part of a discussion about the financial performance and strategic considerations of a company. It mentions that the Full Service Partnership (FSP) and lab services have lower margin profiles compared to full-service offerings, impacting quarterly margins. This variation is noted to fluctuate quarterly. David Windley asks about any significant changes in pass-through revenue, to which Ron Bruehlman responds that there are no long-term effects. Tejas Savant inquires about the costs related to a delayed mega trial and its potential further delay, as well as the company's approach to leveraging real-world evidence opportunities. Ron Bruehlman addresses the cost concerns, stating that the impact is minor and resources will be redirected, while there's an implication that Ari Bousbib is considering strategies, possibly involving mergers and acquisitions, to capitalize on emerging opportunities.

In the article's paragraph, the speakers discuss the continuation of a project, confirming that one trial is proceeding as planned while another experienced a minor delay. Ari Bousbib emphasized that they have not received any updates or changes to the schedule. The conversation then shifts to the company's strong position in real-world data and its ability to capitalize on new opportunities. There is optimism and confidence in the industry's adaptability during challenging times, with current metrics showing improvement compared to the previous quarter. Kerri Joseph wraps up by expressing gratitude for participation in their second-quarter 2025 earnings call and invites further questions for the team. The call is then concluded by the operator.

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