IQVIA Q4 2024 Earnings Report

IQVIA EPS Results

• Actual EPS: $2.90
• Consensus EPS: $3.11
• Beat/Miss: Missed by -$0.21
• One Year Ago EPS: N/A

IQVIA Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

IQVIA Announcement Details

• Quarter: Q4 2024
• Date: 2/6/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 6, 2025
• Conference Call Time: 9:00AM ET

IQVIA (NYSE:IQV) engages in the provision of advanced analytics, technology solutions, and clinical research services to the life sciences industry in the Americas, Europe, Africa, and the Asia-Pacific. It operates through three segments: Technology & Analytics Solutions, Research & Development Solutions, and Contract Sales & Medical Solutions. The Technology & Analytics Solutions segment offers a range of cloud-based applications and related implementation services; real world solutions that enable life sciences and provider customers to generate and disseminate evidence, which informs health care decision making and improves patients' outcomes; and strategic and implementation consulting services, such as advanced analytics and commercial processes outsourcing services. This segment also provides country level performance metrics related to sales of pharmaceutical products, prescribing trends, medical treatment, and promotional activity across various channels, including retail, hospital, and mail order; and measurement of sales or prescribing activity at the regional, zip code, and individual prescriber level. The Research & Development Solutions segment offers project management and clinical monitoring; clinical trial support; strategic planning and design services; and patient and site centric solutions, as well as central laboratory, genomic, bioanalytical, ADME, discovery, and vaccine and biomarker laboratory services. The Contract Sales & Medical Solutions segment provides health care provider and patient engagement services, and scientific strategy and medical affairs services. It serves pharmaceutical, biotechnology, device and diagnostic, and consumer health companies. The company has a collaboration with argenx SE. The company was formerly known as Quintiles IMS Holdings, Inc. and changed its name to IQVIA Holdings Inc. in November 2017. The company is headquartered in Durham, North Carolina.

IQVIA Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Fourth Quarter twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, this conference is being recorded.

[Operator]

I would now like to turn the call over to Kerry Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, you may now begin the conference.

[Kerri Joseph, SVP of Investment Relation & Treasury at IQVIA]

Thank you, operator. Good morning, everyone. Thank you for joining our fourth quarter twenty twenty four earnings call. With me today are Ari Buzbee, Chairman and Chief Executive Officer Ron Brohman, Executive Vice President and Chief Financial Officer Eric Sherbert, Executive Vice President, Congenital Mike Bedock, Senior Vice President, Financial Planning and Analysis and Gustavo Peroni, Senior Director, Investor Relations. Today, we'll be referencing a presentation that will be visible during this call for those of you on our webcast.

[Kerri Joseph, SVP of Investment Relation & Treasury at IQVIA]

This presentation will also be available following this call in the Events and Presentations section of our IQVIA Investor Relations website at irsopikvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward looking statements. Actual results could differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10 ks and subsequent SEC filings. In addition, we will discuss certain non GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non GAAP measures to the comparable GAAP measures is included in this press release and conference call presentation.

[Kerri Joseph, SVP of Investment Relation & Treasury at IQVIA]

I would now like to turn the call over to our Chairman and CEO, Ari Ducey.

[Ari Bousbib, CEO & Chairman at IQVIA]

Thank you, Gary, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year twenty twenty four results. It was great to see many of you in person at our December Investor Day at Innovation Park Headquarters. I hope this helps you appreciate the depth and breadth of our offerings, as we showcased product demos and tour some of our industry leading laboratories. In fact, a number of you commented to me afterwards that they left with a deeper understanding of the breadth and depth of our capabilities and how our strategy to improve patient outcomes is being executed.

[Ari Bousbib, CEO & Chairman at IQVIA]

As we closed 2024, we delivered solid full year results with revenue growth of 5.5 at constant currency, excluding the COVID-nineteen step down, adjusted EBITDA earnings per share growing over 9% and free cash flow of $2,100,000,000 which represents growth of 41% versus last year as well as 104% of adjusted net income. I'm very proud of the results the IQVN team was able to deliver in an industry that faced significant challenges in 2024. We saw the consequences of the inflation reduction act, which led to delayed customer decision making, reduced discretionary spend and portfolio reprioritizations. Additionally, we had a challenging macro environment that persisted with geopolitical unrest, continued high interest rates and inflation, foreign currency headwinds and questions about the impact of political elections in The U. S.

[Ari Bousbib, CEO & Chairman at IQVIA]

And around the world, all of which created tremendous amount of noise and incremental uncertainty. In fact, very few companies in our broader industry sector achieved positive growth, and IQVIA really stood out as an outperform. More specifically, in the fourth quarter, we saw that we had strong operational results. Revenue came in above the high end of our guidance range, representing about 4.5% growth excluding the impact of foreign exchange and COVID related work. We delivered just under 10% growth in adjusted diluted earnings per share, and we achieved a record quarter of free cash flow.

[Ari Bousbib, CEO & Chairman at IQVIA]

On the clinical side, net new bookings for the quarter were over $2,500,000,000 and this all highlights the great work that was done by our RMBS team in securing new business contracts. This helped mitigate the outsized level of cancellations that did materialize in the quarter just as we had anticipated. Now despite the tough macro environment, the RNDS business had some significant achievements in 2024. We successfully renewed all of our large pharma strategic partnerships this past year, even as many clients reevaluated and consolidated their alliances. In addition, we established new relationships, displaced incumbents and expanded the scope of work in several partnerships, positively positioning our business for future growth.

[Ari Bousbib, CEO & Chairman at IQVIA]

IQV and R has partnerships with 22 of the top 25 pharma companies. We made significant advancements in our global health business. For example, we helped the World Health Organization control polio virus outbreaks in Africa. We collaborated with the Coalition for Epidemic Preparedness Innovations, CEPI, in Rwanda. So we were able to respond swiftly to a Marburg virus disease outbreak.

[Ari Bousbib, CEO & Chairman at IQVIA]

Finally, we were selected by a large biotech client to expedite a vaccine trial for M pox in Sub Saharan Africa, addressing a critical outbreak and unmet medical needs. This all comes to show that whenever there is a crisis, IQVIA is the company public health officials turn to. Now moving to TAS. The growth trajectory materialized just the way we said it would. Low single digit growth in the first half and gradually ramping up each quarter.

[Ari Bousbib, CEO & Chairman at IQVIA]

In fact, growth exceeded our expectations in the second half. Obviously, this was helped by easier compares versus the second half of twenty twenty three. But we also had stronger organic demand than expected across all subsegments with Real World actually rejoining to double digit growth. We finished the year with constant currency growth of 5.7% and about 6.5% excluding the COVID step down, which was at the high end of our guidance. We expect to sustain these favorable trends into 2025.

[Ari Bousbib, CEO & Chairman at IQVIA]

Reflecting on 2024, we're proud of what we achieved in TAS. A couple of business highlights. We introduced 60 innovations this past year, including 39 AI enabled applications. For example, we introduced IQVIA AI Assistant, our first ever Gen AI interface. It allows customers to interact with a growing number of our products and get answers to their questions almost instantly.

[Ari Bousbib, CEO & Chairman at IQVIA]

We launched a number of AI enabled patient offerings, including our patient relationship manager, which has already been deployed at eight clients, including three top 10 pharma. Our digital business, which up to now is largely U. S, has begun expanding into Europe where we've doubled the number of websites, publishers and partners that are now integrated into our Vistral network. Now looking at 2025, we are reaffirming the guidance we provided to you at the December Investor Day. On the TAR side, things have continued to recover as we anticipated.

[Ari Bousbib, CEO & Chairman at IQVIA]

On the RMBS side, we still have some volatility, so we might see another quarter or two of fluctuating demand and elevated cancellations. But we think the bulk of the portfolio reprioritizations at large pharma has been completed. In fact, we feel good about the R and D's demand environment because leading indicators continue to be favorable. For example, our Q4 RFP flow was up mid single digits, little higher actually in the EBP segment. Our qualified pipeline is also up with positive growth across all segments.

[Ari Bousbib, CEO & Chairman at IQVIA]

EBP funding, as you noted, was strong through 2024. Full year biotech funding was over $100,000,000,000 which is 44% higher than it has been in 2023. Now, we did have much higher cancellations in 2024 than ever before. In fact, nearly 50% higher in 2024 than the average of the previous three years. But our gross new bookings before cancellations for 2024 were even stronger and up mid single digits at constant currency versus 2023, which led to an end of year backlog of $31,100,000,000 which is again at constant currency 5.5% higher than a year ago.

[Ari Bousbib, CEO & Chairman at IQVIA]

Now turning

[Ari Bousbib, CEO & Chairman at IQVIA]

to the results for the quarter. Revenue for the fourth quarter grew 2.3% on a reported basis and 3% at constant currency. Compared to last year and excluding COVID related work from both periods, we grew the top line about 4.5% on a constant currency basis and that included in the quarter about two points of contribution from acquisitions mostly on the tariff side. Fourth quarter adjusted EBITDA increased 3.1%, driven by revenue growth and ongoing cost management discipline, which resulted in 20 bps of margin expansion. Fourth quarter adjusted diluted EPS of $3.12 increased 9.9% year over year.

[Ari Bousbib, CEO & Chairman at IQVIA]

Let me now give you some color on business activity. IQVIA's success is achieved by continuing to raise the bar in innovation every year and investing in highly differentiated capabilities. You saw the recent announcement of our collaboration with NVIDIA to transform healthcare and life sciences to advanced agentic AI solutions. AI has the potential to transform our industry. For example, by addressing lengthy and complex processes in clinical trials or on the commercial side by helping expedite diagnosis and improve treatment adherence by patients.

[Ari Bousbib, CEO & Chairman at IQVIA]

Our collaboration with NVIDIA will help accelerate the introduction of AI agents within our workflows, with AI agents essentially becoming digital companions to researchers, HCPs, and patients. Let me give you some more examples of what was achieved in the quarter and let me start with TAS. The business is rapidly evolving as we see increasing demand for integrated solutions that combine information, analytics and services. This is enabling us to win much larger, longer term deals with our clients because of our unique ability to deliver these combined offerings. I'll give you a few examples.

[Ari Bousbib, CEO & Chairman at IQVIA]

IQVIA was awarded a strategic partnership to deliver omni channel marketing solutions to promote a top 10 pharma clients established portfolio. IQVIA here will utilize analytics, information, technology, and commercial outsourcing capability. IQVIA is also partnering with a biotech company to launch a new treatment for ovarian cancer, which will be our client's first product in market. This last deal leverages IQVIA's comprehensive commercial capabilities and expertise to execute regulatory process, launch and commercial activities. Another EBP client asked IQVIA to support them in launching a new cell therapy for a severe pediatric condition by providing the full comprehensive commercial infrastructure, and that includes field sales, medical and commercial communications, compliance and OCE.

[Ari Bousbib, CEO & Chairman at IQVIA]

A large pharma client engages IQVIA to simplify data management by integrating diverse sources from over three country 30 countries, reducing complexity and enhancing efficiency. IQVIA will support the client's information strategy to streamline operations and centralize its global information into a single standardized system that we will be operating. Moving now to real world. IQVIA is using advanced AI to support a top 10 pharma client to demonstrate efficacy for a gastric cancer treatment and gain approval in new markets. The top ten fifteen pharma client chose IQVIA to help track disease and treatment efficacy in support of various regulatory submissions in Europe.

[Ari Bousbib, CEO & Chairman at IQVIA]

Let me move now to RDS. I earlier noted the success of our RDS team and want to highlight some notable wins that represent our capabilities across segments, therapeutic areas and operational dynamics. Let me start with large pharma. The top five pharma clients selected IQVIA to conduct a complex, full service Phase III study addressing asthma and COPD patients. We won another full service global Phase III breast cancer study for a top 30 pharma.

[Ari Bousbib, CEO & Chairman at IQVIA]

Another top 10 pharma client awarded IQVIA a large FSP contract. This award is notable because we displaced two large, long time incumbent CROs. MedTech IQVIA was awarded a study to evaluate a novel medical device specifically targeting a cardiovascular condition. Biotech, few notable awards include a critical Phase III oncology study based on our strong data driven approach and ability to manage global complex trials efficiently. Another global study, full service study for another biotech client for progressive pulmonary fibrosis disease, which involves nearly one thousand patients in 26 countries.

[Ari Bousbib, CEO & Chairman at IQVIA]

And again, we are able to win this based on our global footprint and therapeutic expertise. The Phase II trial for rare CNS conditions with limited previous research lots of success in the marketplace with large pharma, med tech and EBP. Now before passing the call over to Ram for more detailed review of our financial results, I'd like to take a minute to acknowledge and congratulate our employees around the world for their extraordinary work this past year. It was challenging, but we delivered. A great team.

[Ari Bousbib, CEO & Chairman at IQVIA]

We also received amazing recognitions throughout the year. I just want to highlight a few. Frosted Sullivan Awards at IQV had the 2024 Global Customer Value Leadership Award for Excellence in AI Quality and Regulatory Solutions in Healthcare. IQVIA's Smart Solve Enterprise QMS was recognized for Best Use of AI in Healthcare by the MedTech Breakthrough Awards. My GreenLab awarded IQVIA Laboratories the 2024 Race to Zero Leadership Award for certifying 100% of our laboratories.

[Ari Bousbib, CEO & Chairman at IQVIA]

We received recognition as a leader in Forbes' world's best healthcare and life sciences management. And lastly, for the eighth year in a row, IQVIA was named one of the world's most admired companies in Fortune's annual survey. And importantly, for the fourth year in a row, IQVIA was named the number one most admired company in our category of healthcare, pharmacy and other services. In addition, IQVIA earned number one ranking in the categories of innovation, global competitiveness, people management and use of corporate assets. Now, Ron will give you more details on our financial performance.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

Thanks, Ari. And good morning, everyone. Let's start with revenue. Fourth quarter revenue of $3,958,000,000 grew 2.3% on a reported basis and 3% at constant currency. In the quarter, COVID related revenues were approximately $10,000,000 which is down about $50,000,000 versus the fourth quarter of twenty twenty three.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

Excluding all COVID related work, both from this year and from last, constant currency growth was about 4.5%. And as Ari mentioned, acquisitions contributed approximately two points of this growth. Technology and analytics solutions revenue for the fourth quarter was $1,658,000,000 which was 8.3% reported and 9.5% constant currency. R and D solutions fourth quarter revenue of $2,123,000,000 was down 1.3% reported and 1% constant currency. But excluding all COVID related work, R and D revenue grew over 1% at constant currency.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

And finally, contract sales and medical solutions fourth quarter revenue of $177,000,000 declined 4.8% reported and 3.2% at constant currencies. Now for the full year, revenue was $15,405,000,000 That's up 2.8% reported and 3.4% at constant currencies. COVID related revenue totaled approximately $110,000,000 for the year. Excluding all COVID related work from this year and last, constant currency growth in revenue was 5.5% for the year. Full year technology and analytics solutions revenue was $6,160,000,000 That was up 5.1% reported, 5.7% at constant currency, and 6.5 excluding all COVID related work at constant currency.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

Full year revenue in R and D solutions was $8,527,000,000 up 1.6% on a reported basis, 2% at constant currency. Excluding all COVID related work, growth in constant currency and RNDS was over 5%. And finally, our full year CSMS revenue was $718,000,000 down 1.2% reported, but up 1.4% at constant currency. As Ari mentioned in his opening remarks, the 2024 growth trajectory in TAS played out as we anticipated with improvements every quarter. Now, we had a we experienced a softening growth rate throughout 2023 due to cautious customer discretionary spending.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

And we predicted that 2024 would be a turnaround year based on our forward looking indicators in recent history. In fact, that's what happened. In 2024, cash growth picked up significantly finishing the second half with high single digit growth driven by strong mid single digit organic growth. As you know, TAS is the short cycle part of our business. And as we've seen, 2023 gave us early insight into customer spend behavior during the downturn.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

By the same token, we expect that the 2024 turnaround in TAS serves as a good leading indicator of the industry's recovery for 2025. To move down to P and L, adjusted EBITDA in the quarter was $996,000,000 representing growth of 3.1%. Full year adjusted EBITDA was $684,003,000 That's up 3.2% year over year. Fourth quarter GAAP net income was $437,000,000 and GAAP diluted earnings per share was $2.42 For the full year, GAAP net income was $1,373,000,000 or $7.49 of earnings per diluted share. Adjusted net income was $564,000,000 for the fourth quarter and adjusted diluted earnings per share was $3.12 That for the full year brought adjusted net income to $2,042,000,000 and adjusted diluted earnings per share to $11.13 R and D's backlog this December 31 was 31,100,000,000 an increase of 4.4% year over year and 5.5% at constant currencies.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

And to anticipate the question that I think we'll get about why backlog was flat sequentially versus Q3, recall that the dollar strengthened considerably during the fourth quarter and we have to retranslate the backlog at the end of each quarter for reporting to you. And that knocked about a half a billion dollars off the backlog, that retranslation alone. As of December 31, cash and cash equivalents totaled $1,702,000,000 and gross debt was $13,983,000,000 resulting in net debt of $12,281,000,000 Our net leverage ratio ended the year at 3.33 times trailing twelve month adjusted EBITDA. Fourth quarter cash flow from operations was $885,000,000 and CapEx was $164,000,000 resulting in free cash flow of $721,000,000 for the quarter, a record for quarterly free cash flow. For the full year, free cash flow was $114,002,000 as already set up 41% year over year.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

Now, you note that in the quarter, we've repurchased $1,150,000,000 to our shares bringing our full year share repurchase to $1,350,000,000 And just yesterday, actually, the IQVIA board of directors replenished the share repurchase authorization by $2,000,000,000 which increases the total remaining authorization to approximately $3,000,000,000 I'll just turn to the guidance. For the full year, we're reaffirming our 2025 outlook, which is for revenue growth at constant currency ex COVID of 4% to 7%, adjusted EBITDA margin expansion of up to 20 basis points, and adjusted diluted earnings per share growth of 5% to 9%. This translates into total revenues between $15,725,000,000 and $16,125,000,000 which includes just over a $100,000,000 step down in COVID related work, which is entirely in R and Ds, and of which 75% will be in the first half and 25% in the second half. We expect 100 to 150 basis points of contribution from M and A activity and an FX headwind should, rates continue of approximately 150 basis points versus 2024. Our adjusted EBITDA guidance is $3,765,000,000 to 3,885,000,000 And adjusted diluted EPS guidance is $11.7 to $12.1 This includes about $675,000,000 of net interest expense, approximately $575,000,000 of operational D and A, an effective income tax rate of about 18.5%, and an average diluted share count of approximately 178,000,000 shares.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

The guidance also assumes $2,000,000,000 of cash deployment split between acquisitions and share repurchase. And finally, the guidance assumes that foreign currency rates as of February 5 continue for the balance of the year. Now, the segment level guidance is also unchanged for TAS, RNDF, and CSMS. No changes in any of the segments. We expect TAS revenue to grow 5% to 7% at constant currency, which translates into 6.3 to $6,500,000 Note, we'll have easier comps in the first half than the second half.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

RNDS revenue is expected to grow 4% to 6% at constant currency ex COVID, which translates into $8.7 to $8,900,000,000 of revenue. This guidance includes over $100,000,000 of step down in COVID related revenue. That represents about 100 basis points of headwind to R and Ds growth rate. We anticipate that R and Ds growth rates will be lower in the first half and improve sequentially thereafter. Finally, CSMS revenue is expected to be approximately $700,000,000 and flattish year over year.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

Now, let's look at first quarter guidance. For the first quarter, we expect revenue to be between $3,740,000,000 and $3,790,000,000 Note that Q1 had the largest impact in the year for both foreign exchange and COVID revenue step down for a total of approximately 300 basis points of headwind. Adjusted EBITDA is expected to be between $870,000,000 and $890,000,000 in the quarter, and adjusted diluted EPS is expected to be between $2.6 and $2.7 And as mentioned, our guidance assumes that foreign currency rates of February 5 continue for the balance of the year. So, let's summarize. We delivered an excellent fourth quarter, which closed out a strong year.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

For the full year, revenue grew 5.5% at constant currency, excluding COVID related work. Adjusted EBITDA margin continued to expand and adjusted diluted EPS was up 9.1%. Free cash flow was a record in the quarter at $721,000,000 bringing the full year to over $2,100,000,000 up 41%. In the quarter, we repurchased $1,150,000,000 of our shares. For the full year, share repurchase was $1,350,000,000 Our board of directors increased our share repurchase authorization by $2,000,000,000 which brings the remaining authorization to approximately $3,000,000,000 During the year, we introduced 60 innovations, including 39 AI enabled applications.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

And the momentum continues to build with our recently announced collaboration with NVIDIA. IQVIA was named a Fortune's List of World's Most Admired Companies for the eighth consecutive year and earned first place ranking in our industry group for the fourth consecutive year. And lastly, we reaffirmed our full year 2025 revenue growth guidance, at constant currency of 4% to 7%, adjusted EBITDA margin expansion of up to 20 basis points, and adjusted diluted earnings per share growth of 5% to 9%. And that concludes our formal remarks. Let me hand it back over to the operator to open up the call Q and A.

[Operator]

Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then number one on your telephone keypad. We'll pause for just a mile we'll pause for to compile the Q and A roster. Our first question comes from Shlomo Rosenbaum from Stifel. Please go ahead.

[Operator]

Your line is open.

[Shlomo Rosenbaum, Managing Director at Stifel Institutional]

Hi. Thank you very much. Ari, I wanted to just ask you to dig back in a little bit more on how the operating environment progressed through the quarter and relative to what you were expecting in 4Q. We had some discussion about reassessing of vendor relationships kind of ending the expectation it would end in the fourth quarter and some of that reprioritizing work ending. We're still talking about some potential volatility for the next one to two quarters.

[Shlomo Rosenbaum, Managing Director at Stifel Institutional]

Is that kind of the way you were expecting it coming into the fourth quarter? Or is there any change into about that? And as part of that, maybe you could talk about is there any change in your expectation in those divided contracts that you discussed last quarter? Thank you.

[Ari Bousbib, CEO & Chairman at IQVIA]

Okay. Thank you, Sean. Well, no, look, we spoke not that long ago in December in a rally and we shared there our sentiment with respect to the operating environment. Not much has changed versus what we told you then. That is, it was a difficult operating environment for all the reasons we mentioned then and I reiterated in my introductory remarks, the macro environment, consequences of the IRA, a bunch of unexpected large cancellations due to the strategic reasons we had last year.

[Ari Bousbib, CEO & Chairman at IQVIA]

And then the two large fast burning trials that we had just started that for reasons independent of IQVIA were just delayed. And because of the nature of these projects, they basically pushed back to the back end of twenty five. Nothing's changed here. We think the bulk of the cancellation, the reprioritizations has occurred. We said then I'll repeat now.

[Ari Bousbib, CEO & Chairman at IQVIA]

We're still going to have 144 of some volatility. And I start sitting here, I can tell you what it's going to be first quarter or second quarter. In December, we were closer to the end of the quarter, so we had more visibility. Frankly, after one month in a quarter, you can never tell. What are we going to book?

[Ari Bousbib, CEO & Chairman at IQVIA]

What are we going to sell? Which deals are going to come in this quarter or going to be pushed off to the next quarter? Which cancellations may or may not occur this quarter? We have no idea. I'm just always shocked when people are able to predict what their bookings, their net bookings will be in a given quarter.

[Ari Bousbib, CEO & Chairman at IQVIA]

I have no idea as I stand here one month into the quarter, especially first month of the year, January, not much happens. So, yeah, I mean, I would say, you know, what is it, two thirds, maybe 70%, seventy five % of the, somewhere there, almost two thirds, 75% of the reprioritization that we know of at large pharma essentially is our own. So there may still be a little bit of fluctuation here in the next quarter or two, but I can't tell for certain what may or may not happen. And with respect to these two trials that were delayed, which was your second question, nothing changed, they're still on, the clients very much want to do them. It causes us to have to maintain some costs through the year and that's kind of affecting a little bit of gross margin because we have distraded costs, but that's okay.

[Ari Bousbib, CEO & Chairman at IQVIA]

We'll manage that and we feel good about that. And those will happen, as we said, no change back end of the year.

[Shlomo Rosenbaum, Managing Director at Stifel Institutional]

Thank you.

[Operator]

Our next question comes from Elizabeth Anderson from Evercore ISI. Please go ahead. Your line is open.

[Elizabeth Anderson, Analyst at Evercore]

Hi, Ari. Hi, Ron. Thanks so much for the question.

[Elizabeth Anderson, Analyst at Evercore]

I

[Elizabeth Anderson, Analyst at Evercore]

was wondering if you could give a

[Elizabeth Anderson, Analyst at Evercore]

little bit more color on two things. I think you've been given some nice pharma color. I was wondering if you could talk a little bit more about the biotech environment, how that's going, how you're sort of seeing RFP flow? Are you seeing any kind of unlocking of some of the funds that were raised last year but not spent? And then also talk a little bit more about what you think the drivers on the real world evidence acceleration are?

[Elizabeth Anderson, Analyst at Evercore]

Thank you.

[Ari Bousbib, CEO & Chairman at IQVIA]

Okay. All right. So look, the biotech funding, which is sort of a leading indicator of what is going to happen in terms of the booking environment for that segment has been strong, okay? We consistently use the same stats. And according to those stats, it's over $100,000,000,000 for 2024.

[Ari Bousbib, CEO & Chairman at IQVIA]

There's been fluctuation quarter in quarter out, but that's the number. And that's a huge number. That's a record number ever if you exclude the two years of 2020 and 2021, which were, I think, 100 and '30 and January and '20 respectively. But I mean last year, what was the number last year guys for was that in the 6, dollars 70 million, dollars 70 million? 20 1, yes.

[Ari Bousbib, CEO & Chairman at IQVIA]

$71,000,000,000 last year. Okay. So significant growth in fund. Now as we said before, just because biotech gets funding today doesn't mean that it translates into a clinical trial awards the next day, okay? It takes time.

[Ari Bousbib, CEO & Chairman at IQVIA]

And, you know, take six months, take a year, but it's a good strong leading indicator. And we saw funding start to pick up already a year ago. And therefore, you know, we're start we're starting to see this. RFP flow, as I said, was up mid single digits for us across the portfolio, which again in the current environment is very, very good. And EBP was higher than that, okay, higher than the five percent.

[Ari Bousbib, CEO & Chairman at IQVIA]

And yeah, so that's about the environment. So I think we feel good about the EBP segment, lots of opportunity and we're chasing all of that.

[Operator]

Our next question comes from Anne Hynes from Mizuho. Please go ahead. Your line is open.

[Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group]

Hi, good morning. Just on cancellations, I know going into Q4, you thought it would be $1,000,000,000 Did it come in into that $1,000,000,000 or was it higher? And then I know you said that you successfully renewed all your RFP activity. Can you just talk about pricing on those renewals and how that's playing out from a competitive landscape? Thanks.

[Ari Bousbib, CEO & Chairman at IQVIA]

Right. Well, first of all,

[Ari Bousbib, CEO & Chairman at IQVIA]

I never said the word $1,000,000,000 I said that historically the average quarterly cancellations is about $500,000,000 a in, quarter out. I mean, identify anyone to predict what the cancellations would be in a given quarter ever. That's it's a flow. And there were calls where we had $300,000,000 where there were calls where we had $600,000,000 But on average, that's kind of the number, okay? And if you take a look at the past and so what I said was given the amount of work that large pharma is doing and the scrutiny that they are placing on those programs and the increased level of cancer as we saw through the years, I was suggesting that it wouldn't be surprising the fourth quarter was double that.

[Ari Bousbib, CEO & Chairman at IQVIA]

And basically it was that it wasn't a billion, but it was way above the higher end of what we could have imagined. So it was somewhere around that. Not far from a billion, but not quite a billion. So it was very high. In fact, for the year, and I think that's an interesting, I mean, actually I mentioned it in my introductory remarks.

[Ari Bousbib, CEO & Chairman at IQVIA]

If you look at the average cancellations in a given year, let's take the last three years, for example, it's just somewhere close to a couple of, a little bit under $2,000,000,000 right, for the year, okay, consistent with what you experienced. This year, it was almost 50% higher, meaning this year, 2024 was 50% higher than that. And despite that, we grew our backlog grew and that's because we were able on the growth level to book even more business than last year, offsetting more than offsetting the higher level of cancellation. So on the demand side, things are good. The cancellations were very elevated.

[Ari Bousbib, CEO & Chairman at IQVIA]

I look at the surprises there. It came essentially as we expected. And, as I said, I just don't know where they're going to be next quarter or '2, but you know, we are going to navigate that environment. We feel good that the bulk of that is behind us. You asked about the pricing environment of things, right?

[Ari Bousbib, CEO & Chairman at IQVIA]

Yes. So I mean, yeah, I mean, look, in the current environment, you would expect and anticipate that pricing is going to be more difficult because, it's tough competition. There are lots of CROs out there. I mean, people tend to forget, There are 4,000 CROs out there. Okay?

[Ari Bousbib, CEO & Chairman at IQVIA]

So they don't all participate in every single bid, but it's not unusual that when, EVPs go around and shop their dealer around, they talk to a lot of people. And on the large pharma side, as we mentioned, they decided last year to reopen all their partnerships. And thankfully, we won. We re re signed with all these partners and in fact expanded our portfolio. Lars Rambla wanted to consolidate the spend and we were on the winning side of that exercise.

[Ari Bousbib, CEO & Chairman at IQVIA]

That was very good and it bodes well for the future.

[Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group]

Great. Thanks.

[Operator]

Our next question comes from David Windley from Jefferies. Please go ahead. Your line is open.

[Dave Windley, Managing Director at Jefferies LLC]

Hi, good morning. Thanks for taking my questions, and a good segue from the last. Ari, you've talked a fair amount about the push toward FSP. You've talked about, pricing pressures you just kind of highlighted generally. But that pricing pressure also in FSP with these, partnership, re procurements.

[Dave Windley, Managing Director at Jefferies LLC]

And then, you've also talked about carrying costs for these mega trials. I was actually surprised at the Investor Day that you could expand margin at all. And so, my question is, what are the cost levers that you're pulling, to be able to eke up your margin just a little bit in the face of all those pressures? And then just more simply in the navigation on gross margin versus SG and A and EBITDA, are we seeing some of that business mix shift toward FSP and P and L already like in the fourth quarter? Thank you.

[Ari Bousbib, CEO & Chairman at IQVIA]

Thank you, Dave. Well, as always, you're right on the mark and you are highlighting essentially the tasks that we have day in and day out. How do we offset all of those headwinds? Yes, you are absolutely correct. You expressed surprise how we're able to still grow margins.

[Ari Bousbib, CEO & Chairman at IQVIA]

I mean, bear in mind, since the merger and end of 'sixteen, we've grown our margins. I mean, we had a quarter with over 25% Correct. Adjusted EBITDA margins. In those days, you might recall we were more in the 20% kind of range. So we expanded margins.

[Ari Bousbib, CEO & Chairman at IQVIA]

Now in the early years, we sell margins a lot more. Now obviously it's harder, but that is what we do here. We try our best to grow our margins, you know, and try to grow our profits faster than our revenue. That's our operating mode here. How do we do that?

[Ari Bousbib, CEO & Chairman at IQVIA]

Yes, you're right. The mix influences can influence the gross margin. I don't think that that was the case in Q4. I think we see you could see on gross margin was a little, you know, interesting in Q4, but I don't think it is a reflection of the higher FSP mix. The higher FSP mix is in the bookings.

[Ari Bousbib, CEO & Chairman at IQVIA]

It's going to take time, okay? It's not yet in the P and L to be precise and answer your question. It's more quarter in, quarter out. If you look at Q3, for example, of last year, we had gross margin expansion. So it's really the given mix of revenue that you recognize in a quarter, Plus obviously, the TAS business also influences that.

[Ari Bousbib, CEO & Chairman at IQVIA]

For example, within TAS, I can tell you that real world is a little lower margin than the rest, right? It's lower margin than data, lower margin and analytics and lower margin than tech. And in the fourth quarter, real world was very strong, really strong. I mentioned it was back to double digits. And so that, of course, affects the mix.

[Ari Bousbib, CEO & Chairman at IQVIA]

And then I'll remind you that from the fourth quarter, we had these high level of stranded costs on those two mega trials that also affected gross margin. But we pulled the usual levers. And you've been covering us for a while, you know what we do. We constantly evaluate how to optimize the average labor rate across all of our geographies. We constantly explore opportunities to increase our economies of scope that is restructure, flatten the organization.

[Ari Bousbib, CEO & Chairman at IQVIA]

We constantly lever IT infrastructure. And for the past year, we've accelerated the deployment of AI tools within our own processes. I mentioned before that the next big thing, certainly operationally within our own workflows, is to leverage AI tools as much as can be. And we start to see some impact of that, and we plan to continue use and deployment of those. And that these are the levers that help us mitigate all the cost pressures that you just highlighted.

[Ari Bousbib, CEO & Chairman at IQVIA]

So it's a day in, day out, deep in the trenches, strong operational discipline, and a relentless focus on continuing to optimize our costs.

[Dave Windley, Managing Director at Jefferies LLC]

Good for you for that. Thank you very much. It was very helpful.

[Operator]

Our next question comes from Charles Rhyee from TD Cowen. Please go ahead. Your line is open.

[Charles Rhyee, Analyst at Cowen]

Yes. Thanks for taking the question. Hey, Ari, just wanted to go back maybe then to the TAS segment. I think earlier you just mentioned, obviously, real world evidence had, something like you said, double digit growth in the quarter. Maybe can you give us a sense for sort of the trends you're seeing across between both RWE, analytics and consulting and maybe technology platforms?

[Charles Rhyee, Analyst at Cowen]

And give us a sense for within the '25 outlook, how you see those kind of separate parts of it, kind of the outlook for each of those relative as we think about the mix going forward?

[Ari Bousbib, CEO & Chairman at IQVIA]

Yeah. Well, thank you for the question. Yeah. I mean, look, the TAS business should be, should have been and should remain a very resilient business with very consistent type of growth. So info, as you know, is a low single digit, right?

[Ari Bousbib, CEO & Chairman at IQVIA]

It's about a 1% grower that did not change through the period. That's a very sticky subscription based repetitive business. The analytics and consulting is where we had seen a dramatic impact of the cautionary spending trends we saw end of twenty twenty three and early twenty twenty four because some of that, the significant part of that is discretionary spend and that essentially got shut down. So we had negative orders in analytics and consulting earlier in the year. And as we evolved through year, it went back towards these mid single digit kind of mark towards the end of the core year.

[Ari Bousbib, CEO & Chairman at IQVIA]

And then the higher growth businesses, which had been higher growth, real world and tech, basically for the full year essentially went back to high single digits, and in the quarter back into double digits. So that's what we saw. Now because we anticipated this, why did this happen and why were we confident in the recovery is because a lot of the work in real world tech and also some in analytics and consulting are must do activities for our clients. When our clients get the drug approved, and as you know, in 2023 was a record year, I think we had 55 approvals in 2023. By the way, 2024 was also good.

[Ari Bousbib, CEO & Chairman at IQVIA]

I think it was about 50 approvals. These are very high numbers if you look back historically. These approvals, typically within six to nine months, you've got to launch the project. And that's where we come in. This is where our services play.

[Ari Bousbib, CEO & Chairman at IQVIA]

It's in launching the drug, promoting the drug, commercializing the drug, pricing the drug, etcetera, etcetera. Supporting the efficacy demonstrations and safety demonstrations and supporting pricing for the drugs. All of that is what we're seeing in our analytics business and in our real world business. And so those needed to be done and clients delayed that, but eventually they had to do it. And that's why we saw a strong return of the business in the second half.

[Charles Rhyee, Analyst at Cowen]

Great. Thank you. I appreciate it.

[Operator]

Our next question comes from Jack Meehan from Nephron Research. Please go ahead. Your line is open.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

Thank you and good morning.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

I had a couple

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

of questions for Ron just on the interim statement. First was, the gross margins in the fourth quarter. I was wondering if you could just walk us through the dynamics there. So they were down a little over 100 bps year over year, but you had lower pass throughs. So was this the trapped cost related to those two trials or just any other color would be great?

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

Well, the first thing I would caution is when you're looking at gross margins, you're looking at reported and not adjusted. So if you're trying to tie the gross margins and SG and A on our income statement back to our adjusted EBITDA, there's a difference right there because those are reported not adjusted numbers. But having said that, Ari did already give you some insight into that. We have stranded costs associated with those files that got delayed. Certain of our businesses that had strong growth like the real world business tend to be lower margin businesses for us.

[Ron Bruehlman, Executive Vice President & Chief Financial Officer at IQVIA]

So there's a mix impact in there certainly. But again, any time you're looking at the reported numbers, remember that things like restructuring or other adjustments that get added back can affect the percentages that you're calculating straight off the income statement.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

Got it. Okay. That makes sense. And one for Ari, just on the policy front, we're in a couple of weeks into the new administration here. Just any thoughts on how just implications for pharma biotech customers?

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

And then second, one question we get is just any exposure to NIH funding or anything related to that would be great. Thank you.

[Ari Bousbib, CEO & Chairman at IQVIA]

I mean, the short answer to that question is zero. Zero impacts, zero NIH, nothing. The longer answer is, I think overall it's gonna be the more business friendly environment. That's clear. The, you know, the new administration apparently, from what we've gathered, is, maybe open to adjust some of the aspects of the IRA, looking into differences between small and large molecules and a number of adjustments, and we are in dialogue at the appropriate levels.

[Ari Bousbib, CEO & Chairman at IQVIA]

You know, there could be, you know, some reforms are being discussed on the PDM side, on reimbursement side and so on. But I mean, again, all of that is net positive for us, frankly. And, yeah, I mean, we don't sound like I think there's a strong possibility the administration will embrace life sciences innovation sector more positively relative to other competing economies like China or Europe and support more ongoing investments of U. S.-based research, manufacturing, etcetera. I think there are a lot of positives here.

[Ari Bousbib, CEO & Chairman at IQVIA]

And I don't see any of the noise around the specific nominations affecting us at all, frankly. I think that that's just basically noise. What we see and our dialogue so far has been actually very constructive and very positive. We're very pleased with the nominations as head of the FDA and head of NHS. All of those are very, very good.

[Ari Bousbib, CEO & Chairman at IQVIA]

We have good relationships. They also hold strong evidence based science, which is exactly the business we're in. The M and A environment would be more favorable. I think all of that are net positives.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

That all sounds good. Thank you.

[Operator]

Our next question comes from Michael Ryskin from Bank of America. Please go ahead. Your line is open.

[Michael Ryskin, Analyst at Bank of America]

Great. Thanks for taking the question. Ari, I want to go back to something you touched on earlier. You made some comments in the prepared remarks in terms of pharma reprioritization sort of working through it. Still expect maybe a couple of quarters of some volatility going forward, but thinking you're mostly through it.

[Michael Ryskin, Analyst at Bank of America]

I think you said something about 70% to 75% of the rate prioritizations done. Just wondering sort of how you're arriving at that number? Just put it bluntly, I mean, we've had some announcements just in the last twenty four hours and we just seems like there's still you never know, companies could come back and decide they're going to do more in a second cut and a third cut and a fourth cut. So just what are the conversations you're having with the pharma companies, especially your top 20 top 20 side?

[Ari Bousbib, CEO & Chairman at IQVIA]

Yes.

[Ari Bousbib, CEO & Chairman at IQVIA]

I mean thank you. Thanks for the question. You know, when I said, earlier, you know, two thirds 70%, maybe 75%. So I saw Carey with his head in his hands because he told me, don't give them a number because someone is gonna sell you, someone is in 70, in '71, maybe in '65? Maybe in '76?

[Ari Bousbib, CEO & Chairman at IQVIA]

So look, we're trying to give you a sense. Okay? How do I know? Because we speak to our clients, okay, day in and day out. And we know what they're looking at.

[Ari Bousbib, CEO & Chairman at IQVIA]

So if they're done, they're done. It's not like they're gonna go back. Okay? So we know that there are still a few programs that are kind of where they haven't made a decision. And that's where I say, you know, maybe a quarter to a third of those, you know, more to go.

[Ari Bousbib, CEO & Chairman at IQVIA]

But, you know, that's an estimate. Again, I repeat, I have no idea what will get canceled in even quarter or will get booked. I just don't know, okay? I'm basing myself on conversations that we're having with clients at every level. We know what their pipe is.

[Ari Bousbib, CEO & Chairman at IQVIA]

We know what the programs that they have are. We know what they're prioritizing. And they tell us what they are looking at. In fact, in many cases, we help them review these programs and reanalyze them. So that's how we know.

[Ari Bousbib, CEO & Chairman at IQVIA]

But it's all best based on these analysis, and that's my best guess for now. I mean, I would caution you always not to focus on a given quarter, okay? I mean, I see someone reports that you've heard me before. I'm waiting on another tangent here, but you're wide about this obsessive focus on what's the what are the bookings in a quarter, what's the book to bill, that infamous number, what is it? And then derive implications for an entire industry from what one company reports.

[Ari Bousbib, CEO & Chairman at IQVIA]

You just can't do that. It's a long cycle business. One quarter is a window. There's been some volatility. There might be some volatility.

[Ari Bousbib, CEO & Chairman at IQVIA]

I just don't know. Also frankly, you have very little visibility on the sector. I said before there are 4,000 CROs out there, you have no idea what their numbers are. Actually, our next best, largest competitor is part of a larger company and they report nothing about this competitor of ours, nothing. No revenues, no margins, no bookings, no backlog, certainly no book to bill.

[Ari Bousbib, CEO & Chairman at IQVIA]

So we have no idea. You have no idea. We have no idea. There are only four publicly traded CROs. Each and every one of them is extremely different from the others.

[Ari Bousbib, CEO & Chairman at IQVIA]

You cannot derive what we report from what we report what's gonna happen to them. We cannot derive what they report what's gonna happen to us. I saw that before, earlier, in a few past quarters, just because one of our competitors say something, all of a sudden our stock goes up or down. It's ridiculous. It's everyone is extremely different.

[Ari Bousbib, CEO & Chairman at IQVIA]

You just cannot extrapolate. Plus, frankly, it's causing issues with our customers. Someone was asking before about customers and pricing. That obsessive quarterly focus on this book to bill ratio causes our clients know that at large pharma, they know that. So at the end of the quarter, they handle another $10,000,000 here, another $12,000,000 there.

[Ari Bousbib, CEO & Chairman at IQVIA]

That affects pricing. It affects our bottom line long term and it's detrimental to investors. So there is a somewhat obsessive focus on this quarterly numbers in a long cycle business that are not that great. Plus again, I remind you, we are a large company. We're not just a Seattle.

[Ari Bousbib, CEO & Chairman at IQVIA]

The Seattle business is just over half of our business. And to infer any thesis about what's going on in industry for the quarter or two of cancellations or book to bills or what have you is intellectual fraud. I'm sorry if I can share one. I can have my people here you know, agitated. But okay.

[Ari Bousbib, CEO & Chairman at IQVIA]

I'll I'll end with that. I'm sorry for for now.

[Michael Ryskin, Analyst at Bank of America]

That's helpful. Appreciate it. I'm sorry. Thank you.

[Ari Bousbib, CEO & Chairman at IQVIA]

Okay. Alright. So we have another question or we're done here? We're done. We're done.

[Ari Bousbib, CEO & Chairman at IQVIA]

Okay.

[Kerri Joseph, SVP of Investment Relation & Treasury at IQVIA]

Okay,

[Kerri Joseph, SVP of Investment Relation & Treasury at IQVIA]

guys. Thank

[Kerri Joseph, SVP of Investment Relation & Treasury at IQVIA]

you. Thank you, guys.

Participants

Executives

• Kerri Joseph, SVP of Investment Relation & Treasury
• Ari Bousbib, CEO & Chairman
• Ron Bruehlman, Executive Vice President & Chief Financial Officer

Analysts

• Shlomo Rosenbaum, Managing Director at Stifel Institutional
• Elizabeth Anderson, Analyst at Evercore
• Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group
• Dave Windley, Managing Director at Jefferies LLC
• Charles Rhyee, Analyst at Cowen
• Jack Meehan, Equity Research Analyst at Nephron Research LLC
• Michael Ryskin, Analyst at Bank of America