Syneos Health, Inc.

Good morning, and welcome to the CINEOS Health Third Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. I would now like to hand the conference over to Ronnie Spate, Senior Vice President of Investor Relations. Please go ahead, sir.

Good morning, everyone. With me on the call today are Alistair McDonald, our Chief Executive Officer, Jason Meggs, our Chief Financial Officer, Michelle Keefe, our President of Commercial Solutions, Paul Colvin, our Chief Business Officer, and Michael Brooks, our Chief Development Officer. In addition to the press release, a slide presentation corresponding to our prepared remarks is available on our website at investor.cineoshealth.com. Remarks that we make about future expectations, plans, growth, anticipated financial results and prospects, and our expectations regarding the COVID-19 pandemic constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, and we disclaim any obligation to update them. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors. These factors are discussed in the Risk Factors section of our Form 10-K for the year ended December 31, 2020, and our other SEC filings. During this call, we will discuss certain non-GAAP financial measures which exclude the effects of events and transactions we consider to be outside of our core operations. These non-GAAP measures should be considered a supplement to, and not a replacement for, measures prepared in accordance with GAAP. For a reconciliation of non-GAAP financial measures with the most directly comparable GAAP measures, please refer to the appendix of our presentations. I would now like to turn the call over to Alistair MacDonald. Alistair? Thanks, Ronnie.

Good morning, everyone, and thank you for joining us today. I am delighted to report another quarter of strong results, demonstrating the enthusiastic customer response to our differentiated product development strategy and our continued market momentum. We again exceeded the midpoint of our guidance across all financial metrics for the quarter. Our integrated offerings, those where we work across the product lifecycle, fueled strong awards and backlog growth in both segments during this quarter. Both clinical and commercial continued their robust year-over-year growth in the quarter, and we now anticipate 2022 revenue growth rates above the midpoint we outlined during our investor event in December 2020. The demand environment remains very healthy, with strong pipelines ahead of us across our business in terms of RFPs, relationship discussions, new drug approvals, and demand for our innovative models based around the CINEOS 1 approach. Now for three key highlights from the quarter. First, overall net awards grew by 35.1% year-over-year. This performance drove third-quarter book-to-bill ratios of 1.30 times for clinical solutions and 0.89 times for commercial solutions, resulting in robust GTM bulk-to-bill ratios of 1.39 times for clinical and 1.16 times for commercial. Second, we are enthusiastic about the continued strength of our commercial solutions business and the success of our integrated solutions approach, as demonstrated by revenue growth accelerating to 18.7% and deployment solutions backlog growth of 24.9%. Third, we are pleased to have recently closed the acquisitions of StudyKick and RX Data Science, enhancing our patient engagement and data science capabilities. Both companies expand our dynamic assembly network to bring further innovation and technology-enabled service offerings to our customers. Now, moving into further details on our results. We continue to see recovery from the impacts of COVID-19, and our total company year-over-year revenue growth remained strong at 22.7% compared to the third quarter of 2020. Clinical solutions revenue grew 23.9% compared to the third quarter of 2020. Our organic growth was driven by our full-service portfolio, including the continuing ramp-up in our larger pharma relationships, particularly in oncology, as they gain full scale and efficiency. This was accompanied by rapid growth in our real-world and late-phase businesses. Our clinical team also closed another strong quarter of awards, particularly in the SMID segment. Driven by these strong sales, record-ending backlog that is up 22.3% year-over-year, and a record pipeline of new opportunities, Clinical Solutions remains well-positioned for robust revenue growth into 2022 and beyond. Before I discuss our recent acquisitions, we're sharing an update that will drive further growth across Clinical Solutions and our broader organizations. As we continue to focus on our product lifecycle model, we're rotating executive leadership across the organization to drive deep connections. Michael Brooks, our current chief development officer, will now lead our clinical solutions organization. Michael has a 25-plus year track record across clinical development and commercialization, setting strategy and driving business transformation. Paul Colvin will transition into Michael's former role and take his customer-focused approach to lead our go-to-market ecosystem as Chief Business Officer. Paul's deep customer relationships and product development mindset will accelerate deploying high-value solutions to the marketplace. We believe this partnership will be powerful, aligns to our customers, and is a competitive advantage for Cineos Health. Shifting to our recent acquisitions, we are constantly enhancing our approach to the way we engage with sites, patients, physicians, and communities. And as the clinical trial landscape evolves, we are placing increasing focus on decentralized trial capabilities and patient recruitment. We continue to expand our dynamic assembly network of service, data, and technology providers to bring additional innovative solutions to our customers. We are very enthusiastic about the advanced patient engagement capabilities added by the acquisition of StudyKick. Through their global network of patient communities and advanced technology platform, StudyKick expands our ability to accelerate site startup as well as patient enrollment engagement, helping to improve patient retention and access. Innovative capabilities include e-consent, telemedicine, and improved patient accessibility to enhance experiences for both patients and sites. with a goal of reaching more diverse patient populations and reducing the burden of clinical trial participation. In addition, patient concierge services and site support capabilities remain a key focus for our clinical solutions organization. We see a unique opportunity to connect the service support platforms of StudyKick with our home health technology platforms PatientGo and SourceGo, creating a compelling patient and site support ecosystem. PatientGo is an integrated patient concierge service and application, facilitating patient travel, reimbursement, and caregiver support. SourceGo is a recently released application that enables our mobile nurses to securely capture high-quality patient data in real-time during home health visits. Combining these technology-enabled capabilities with our home health services further positions Synios Health as a leader in decentralized clinical trial delivery. We also recently acquired RX Data Science, a specialist organization that helps biopharma customers solve challenging problems via advanced analytics, data management, and AI. RX Data Science is well aligned to our lab-to-life model, offering advanced analytic solutions across the entire product development spectrum, from clinical through real-world late phase and commercial. Combined with our existing data science and analytics capabilities, including kinetic and modern engagement capability, RX Data Science will allow us to accelerate delivery of cutting-edge analytical solutions for customers. These solutions help to drive increased performance in areas like clinical trial diversity, clinical trial protocol insights, decentralized clinical trials, real-world evidence generation, and omnichannel analytics. As biopharma companies increasingly harness data to address their most difficult challenges, RX Data Science offers excellent AI capabilities, helping to structure and organize massive data sets and rapidly develop prototypes of solutions that drive value. I'm excited about the significant strides we continue to make in bringing the latest innovation and technology-enabled services to our customers to further our goal of shortening the distance from lab to life. Turning now to commercial solutions, We saw accelerating year-over-year revenue growth of 18.7% compared to the third quarter of 2020. Growth in our core business outpaced this level, partially offset by the headwind from the 2020 divestiture of our medication adherence business. This growth continued to be broad-based across our commercial services. Deployment solutions had another high-performing quarter of new team starts, driving the number of deployed resources and ending backlog to a four-year high. Consulting had the highest growth rate of our commercial businesses, and we also experienced impressive growth in the public relations and medical communications specialties within our communications business. In addition, full-service commercial gross awards are up over 70% on a year-to-date basis compared to 2020. We expect the success of this integrated model to further enhance commercial revenue visibility and drive more consistent growth as customer adoption continues to increase. The market for our commercial services remains strong, driven in part by the pace of innovation, new drug approvals, and the biotech funding environment. We expect commercial solutions performance to continue in the fourth quarter with growth again in the high teens. Our commercial expertise continues to fuel innovation across the product development spectrum with dynamic capabilities such as Kinetic. Kinetic is designed to optimize HCP engagement in commercial and accelerate patient referrals into clinical trials through advanced targeting and digital capabilities. Our early case studies across clinical and commercial indicate that Kinetic is producing, on average, a 15% improvement in these activities. We believe this unique suite of capabilities, along with our other innovative solutions, continue to differentiate Synios Health and our key factors in driving new business awards. Cineos One, our end-to-end product development methodology, also continues to differentiate Cineos Health, particularly with our small to mid-sized customers. During the third quarter, we began the first commercial launch among the 23 assets currently managed by the Cineos One team. This marks a significant milestone for our team, demonstrating the success of this unique offering and is only the first of these launches. We have also initiated planning activities for two additional CINEOS 1 commercial launches expected during the first half of 2022, subject to final regulatory approval. This quarter, we also expanded one of our largest CINEOS 1 relationships beyond the U.S. product launch to include the European and Canadian launch activities for the same asset. We anticipate these launches will start contributing to awards and backlog in the second half of 2022. Expanding the geographic reach of an existing asset demonstrates yet another way that Cineos One can drive revenue growth and also diversify our commercial pipeline. We expect the Cineos One portfolio to increasingly contribute to commercial awards and revenue over the coming years with an expanding, diverse group of product launches in multiple therapeutic areas, indications, and regions around the globe. Lastly, I wanted to highlight the recent publication of our 2020 Sustainability Report. This marks our third annual report, which showcases our commitment to creating a diverse, equitable, and inclusive workplace for our employees while making a positive social impact. It also outlines our pledge to reduce the company's environmental impact. I am proud that these continued ESG efforts and commitments represent the fabric of our culture. I want to thank the entire Cineos Health community for their passion and commitment to these important issues while they work tirelessly to provide excellent service to our customers, sites, and patients worldwide. Jason will now provide additional comments on our financial performance and guidance. Jason?