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spk06: Good morning, everyone. With me on the call today are Alistair McDonald, Jason Meggs, Michelle Keefe, and Michael Brooks. 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, growth, trends, anticipated financial results, and our expectations regarding the COVID-19 pandemic and the war in Ukraine 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 end of December 31, 2021, 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 reconciliation of non-GAAP financial measures with the most directly comparable GAAP measures, please refer to the appendix of our presentation. I would now like to turn the call over to Alistair MacDonald. Alistair?
spk07: Thanks, Ronnie. Good morning, everyone, and thank you for joining us today. Before we begin discussing our first quarter results, I wanted to share some important news that we announced with our earnings today. After spending 20 years with Cineos Health, I have decided to retire from the company. I am very proud that Michelle Keefe, our current president of medical affairs and commercial solutions, will be assuming the role of CEO and board member, leading Cineos Health moving forwards. Michelle was the unanimous choice following an extensive search process conducted by our board, and having worked alongside her since 2017, I am confident that she is the right person for the job. With the succession plan now in place, I will be stepping down a CEO member of the board effective today. However, I will continue as an advisor for the next few months in order to ensure a smooth transition. During my 20 years with the company, we have made incredible progress transforming Sineos Health from a small, traditional contract research organization into a fully integrated biopharmaceutical solutions provider. Today, with our integrated solutions and compelling market position firmly established, we are better positioned for long-term growth and value creation than ever before. The board and I have full confidence that now is the right time for a new leader to take the company into its next chapter. During her 30-year career in the life sciences industry, Michelle has established herself as an accomplished executive with an impressive track record of execution, innovation, and customer success. Since joining Sineos Health in 2017, her leadership has driven the ongoing transformation of our commercial business, where she has built a world-class management team and a strong business development organization that has diversified and strengthened our commercial portfolio. The successes across the product development continuum include launching innovative services like Kinetic, enhancing our unique product development approach by building integrated services such as full-service commercial and medical affairs, while collaborating to drive growth in our unique Cineos One offering. Under Michelle's leadership, the Commercial Solutions Organization is experiencing its second straight year of double-digit growth. In just four years, she has become an invaluable member of our senior team, trusted and respected by customers and employees alike. She brings the expertise necessary to take the company into the next era as a data and insights-driven organization, and I know she is the right leader to drive Cineos Health's continued momentum into the future. Michelle joins us here today, and before we turn back to our first quarter results, I'll hand it over to her for some brief comments. Michelle? Michelle?
spk01: Thanks, Alistair. To start, I want to thank Alistair for his partnership and guidance over these past four and a half years. He has been an excellent leader and mentor, and it is thanks to his vision and passion that Cineos Health stands where it does today, with an industry-leading end-to-end solutions portfolio, purpose-built to help our customers shorten the distance from lab to life. As I take on this new role, my top priority will be to push our capabilities to the next level and accelerate our evolution toward becoming a more intelligent enterprise and impactful healthcare leader. I see a tremendous market opportunity to provide customers with a more meaningful, insight-driven conversation that is tailored to the needs of our patients, sites, and healthcare providers. As we head into our next phase of growth, I look forward to building on our innovative, data-driven approach through disciplined investments in our technology and our people that will position us and our customers for the future. I am also pleased to share that in connection with this transition, I have appointed Michael Brooks, our current Chief Development Officer and Global Head of Clinical Development Solutions, to the newly created role of Chief Operating Officer. As COO, Michael will be responsible for seamlessly connecting clinical development, medical affairs, and commercial solutions with a focus on creating greater customer success through integrated solutions and technology-driven insights. He brings more than 25 years of clinical development and commercialization experience to this role and I look forward to benefiting from his insights as we work together to deliver on the company's strategic goals. I am energized by the opportunities ahead for Cineos Health and eager to get started. Over the coming weeks, I'll be listening to and learning from our employees, customers, partners, and investors to hear as many perspectives on our business as possible. I look forward to providing you all an update on our next earnings call. With that, I'll turn the call back to Alistair to discuss the first quarter.
spk07: Thank you, Michelle, and congratulations to both you and Michael on taking these new roles within Cineo South. We'll be watching with great pride as you take the organization forward. Now, turning to our results. I'm pleased to report that Cineos Health delivered another strong quarter of revenue growth and profitability, exceeding the midpoint of our guidance across all financial metrics. We continue to advance our integrated value proposition, working seamlessly across the organization to accelerate success. Before I discuss our results, I want to acknowledge the war in Ukraine and offer care, compassion, and gratitude to our employees and site partners in the region. While the safety of our employees and their families remains our top priority, Our teams have worked tirelessly, both inside and outside Ukraine, to minimize the impact on clinical trials and, more importantly, maintain the safety of the patients we serve. Thus far, the war in Ukraine has not had a material impact on our business. Our thoughts are with everyone who has been impacted by the ongoing war and devastation. Demand for our high-value solutions from development through commercialization remains healthy. with robust new business pipelines across our organization. We continue to see sustained strong demand across all customer segments, including SMID customers, where RFP flow year-to-date exceeds the strong levels of 2021 and are well above pre-COVID levels. In addition, we are seeing more opportunities for preferred provider relationships with larger pharma customers as the impacts of the pandemic subside. This continued strong awards and backlog growth positions us for sustained long-term growth. We remain confident in the growth we have previously outlined for 2023 as we execute on our value creation plan. Now, some key highlights from the quarter. First, we reported solid book-to-bill ratios of 1.32 times for clinical solutions and 1.17 times for commercial solutions for the first quarter, excluding the impact of reimbursable expenses, resulting in trailing 12-month book-to-bill ratios of 1.37 times for clinical and 1.14 times for commercial. Total company net awards for the first quarter grew 17.9% compared to 2021, excluding reimbursable expenses, driven by a 20.3% increase in clinical and an 11.6% increase in commercial. Second, our commercial solutions business continues to demonstrate strong performance, with our full-service approach resonating with customers and the Cineos One portfolio beginning to achieve commercialization milestones, resulting in 18.1% revenue growth. With deployment solutions backlog growth of 26.4% at the end of Q1, excluding reimbursable expenses, our commercial business remains well positioned for strong growth in 2022 and beyond. Third, under our balanced approach to capital deployment, we repurchased $150 million worth of our own shares during the first quarter. Now, moving into further details on our results. In the first quarter, we delivered total company revenue growth of 10.5% year over year, driven by robust growth in both segments. In clinical solutions, revenue grew 8.4% compared to the first quarter of 2021, including the impact of acquisitions. Our organic growth was balanced across our full service portfolio and FSP portfolio, with ongoing strength in our SMID customer segment and our oncology business, as well as the continued ramp in our large pharma relationships. As previously highlighted, we have not seen a material impact on our results from the Ukraine war and the related sanctions, and we will continue working closely with our local teams and partners to ensure the safety of our employees and the patients we serve. We delivered another strong quarter of clinical awards, which included expanding an existing commercial relationship with another top 10 pharma customer to secure a global preferred provider relationship. This relationship includes hybrid services across multiple therapeutic areas and is another example of how our product development mindset and commercial capabilities are aiding clinical growth. Importantly, the clinical revenue in our top 20 pharma customer segment returned to year-over-year revenue growth in the first quarter, marking an important milestone in our growth strategy. This is a product of our new relationships building momentum coupled with stabilization of revenue with a key customer that we recently highlighted. Including reimbursable expenses, our clinical book-to-bill ratio for the first quarter was 1.22 times, resulting in a trailing 12-month book-to-bill ratio of 1.07 times. Excluding reimbursable expenses, our clinical solutions year-over-year ending backlog growth was 16.6%. Turning to commercial solutions, revenue growth was strong at 18.1% compared to the first quarter of 2021. Our commercial growth remains broad-based, with our highest growth rates in deployment solutions and consulting, driven by continued strength in our SMID customer segment. We also began to see significant contribution to revenue growth in deployment solutions from the team launches related to the CINEOS 1 portfolio assets. Deployment solutions reached another new five-year high in total deployed resources, with our highest quarter of additions since 2016. Our public relations and medical communications businesses also remained very strong in the quarter. The commercial team had a solid quarter of net awards, with a book-to-bill ratio of 1.15 times for the quarter and 1.13 times for a trailing 12-month basis, when including reimbursable expenses. Our unique Stenios One end-to-end offering continues to resonate with our customers and gain traction in the market. The new product launches from this portfolio continue to progress well across our commercial continuum, along with planning activities for additional launches in late 2022 subject to appropriate regulatory approvals. In addition to the substantial awards the growing CINEOS 1 portfolio has driven into our clinical business, we expect this unique offering to add further commercial awards and revenue over the coming years. We recently added new senior management talent in Asia-Pacific who bring unmatched expertise to drive our growth across both clinical and commercial in this important and rapidly expanding market. Ken Lee joined Cineos Health as our general manager and executive vice president of clinical development for Asia-Pac region. We also welcome Sam Wilson as our Senior Vice President and Head of AsiaPAC Deployment Solutions to drive commercial growth in the region, focusing on commercial model design and go-to-market strategies. Lastly, we recently announced the promotions of Babashetty to President, Technology and Data Solutions, and Suma Ramadas to Executive Vice President, Medical Affairs, both representing key roles in driving the integrated solutions at the core of our growth strategy. BABA will lead development of new customer-facing technologies across our business, including AI-based tools and advanced data solutions as we continue digital investments across the enterprise to further expand our dynamic assembly network. SUMA will head the optimization and delivery of our new comprehensive medical affairs solutions, seamlessly connecting the organization's high-value capabilities across the product development lifecycle. Our ability to attract, retain, and promote top-level talent is a testament to our culture and demonstrates the opportunities for career growth at Cineos Health. Finally, before I hand it over to Jason, I wanted to highlight an important update on our ESG initiatives. We recently signed the Climate Pledge, formalizing our commitment to achieve net zero carbon emissions by 2040, some 10 years ahead of the Paris Agreement. On behalf of our employees and other stakeholders, we proudly join the climate pledge with more than 300 other organizations in support of the shift to a low carbon economy. In closing, I want to thank all of my 28,000 plus Cineos Health colleagues for their collaboration and dedication as they continue to work tirelessly and seamlessly to provide innovative solutions and exceptional delivery. We remain optimistic about the year ahead and look forward to successfully delivering projects for our customers and their patients while executing on our financial growth goals. Jason will now provide additional comments on our financial performance and guidance. Jason?
spk11: Thank you, Alistair, and good morning, everyone. Before I get into the details, I want to say that it's been a pleasure to work with Alistair over the past eight years. Just to provide some perspective on Alistair's tenure at the company, He joined the company in 2002 as an associate director of business projects when the company had less than $20 million of revenue and 200 employees. We are now 28,000 employees strong and achieved $1.3 billion of revenue just in the first quarter of 2022. Thank you for all you've done for me, our employees, and the company over the last 20 years, and especially over the last couple of years as you've led the company through the COVID-19 pandemic, continuing to ramp our DE&I and ESG efforts and most recently, the Russia-Ukraine war. You will be missed. As we look to the future, I've had the opportunity to work closely with Michelle over the last four and a half years. When Michelle joined the company in December of 2017, I was her CFO in the commercial solutions segment, and we've been working closely together ever since. I'm looking forward to continuing to work with both Michelle and Michael in their new roles as CEO and COO. Turning to the quarter. Our total revenue for the first quarter of 2022 was $1.34 billion, up 10.5% and 11.7% in constant currency compared to the first quarter of 2021. Revenue came in above our expectations due to the strength in our clinical business, despite an increasing headwind from foreign exchange. As noted in our earnings presentation, our comments today reflect a minor recast of segment revenue to reflect the consolidation of our customer-facing technologies and data solutions under executive leadership within our clinical segment. Our clinical solutions revenue for the first quarter was $1.02 billion, up 8.4% as reported, or 9.6% in constant currency compared to the first quarter of 2021. These increases were driven by balanced growth in our full-service and FSP portfolios, including strength in our oncology business and the ramp in our large pharma relationships. This total growth includes a 100 basis point contribution from acquisitions and a 240 basis point headwind from reimbursable expenses consistent with the updated expectations reflected in our guidance. Our first quarter of commercial solutions revenue was $317.9 million, up 18.1% or 18.9% in constant currency compared to the first quarter of 2021. Growth in commercial revenue continued to be driven by expansion across our core commercial businesses with particular strength in deployment solutions, including a growing contribution from field team launches for our Fresenius One portfolio assets. Reimbursable expenses did not have a material impact on commercial solutions growth. Adjusted EBITDA increased 14.9% to $173.6 million, representing an adjusted EBITDA margin of 13%, an increase of 50 basis points compared to the first quarter of 2021. The increase in adjusted EBITDA margin for the first quarter was primarily the result of benefits of revenue growth, foreign exchange, and reimbursable expenses, partially offset by a less favorable revenue mix. Adjusted diluted EPS of $1.01 for the first quarter increased 27.8% year-over-year, primarily driven by the increase in adjusted EBITDA and lower interest expense. Operating cash flow was $70.9 million for the first quarter, and we experienced an increase in DSO to 47.5 days that was mostly driven by an increased growth in accounts receivable related to large pharma customers with longer payment terms. Our capital expenditures were $23.5 million for the first quarter. During the first quarter, we repurchased $150 million of our outstanding shares. We funded these repurchases with cash on hand and short-term borrowings on our revolving credit facility. We ended the quarter with $119 million of unrestricted cash and total debt outstanding of $2.98 billion, resulting in net leverage of 3.6 times. Our non-GAAP effective tax rate for the quarter was 23.5%, consistent with our estimate for the full year 2022. Turning now to our updated 2022 guidance. This guidance contemplates our current view of the estimated impacts on our business of the COVID-19 pandemic, the war in Ukraine, and the related Russian sanctions, and the evolving interest rate environment. In addition, this guidance is based on foreign exchange rates as of March 31, 2022. Our expectations for total revenue remain unchanged at $5.6 billion to $5.75 billion, representing growth of 7.4% to 10.3%, despite an increased foreign exchange headwind of $54 million. Total revenue growth includes a contribution from acquisitions of approximately 100 basis points and an estimated net headwind of 210 basis points from reimbursable expenses. We now expect our total adjusted EBITDA to range from $845 million to $885 million, an increase of $5 million at the midpoint. This reflects an adjusted EBITDA margin of 15.1% to 15.4%, up approximately 55 basis points from 2021. Lastly, we now expect adjusted diluted EPS to range from $5.05 to $5.25, or an increase of 4 cents at the midpoint, representing year-over-year growth of 13.2% to 17.7%. This reflects the benefit of our first quarter share repurchases which was offset by an increase in our expected interest expense. Our guidance now incorporates interest expense of $76 million to $86 million. This range is based upon current market forecasts for LIBOR and reflects that 40% of our debt is variable rate. Guidance also assumes a non-GAAP effective tax rate of 23.5% and an estimated diluted share count of 103.9 million shares. Further, We expect our net cash outlay for income taxes during 2022 to range from $70 to $75 million. We expect second quarter revenue of $1.38 billion to $1.4 billion and total adjusted EBITDA of $200 million to $210 million. This reflects as-reported revenue growth of 7.6% to 9.2% and adjusted EBITDA growth of 14.5% to 20.2%. compared to the second quarter of 2021. This revenue growth includes an estimated contribution from acquisitions of approximately 100 basis points, a foreign exchange headwind of $19 million, and a headwind of approximately 190 basis points due to reimbursable expenses. This completes our prepared remarks, and we'll be happy to answer any questions. Operator?
spk03: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Patrick Donnelly from Citi. Your line is now open.
spk05: Hi, guys. This is Lizzie on for Patrick. I was just wondering if you could talk about the current M&A environment, what your view is on for deals, and just your outlook there. It would be great to hear from both of you. Thanks.
spk07: Sure. Morning. Yeah, I mean, the environment at the moment is cooled off a little bit, I think, in terms of M&A. You know, we've got a list of kind of priorities and targets that we want to continue adding to the business as we move forward, both across clinical and commercial. You know, and the medical affairs space actually is a place that we look and have good engagement in. But, you know, we've had that kind of capital deployment priorities for a while now, looking at tuck-ins, things that help us catalyze the business, you know, things like RxDataScience and Lingworth that we did, Cinteract and StudyKick, et cetera. So also continuing to look for things that bring digital kind of engagement and digitization of processes and systems like that. I mean, Michelle, your thoughts on that?
spk01: Yeah, hi. Well, what we've seen is there are opportunities for some good tuck-ins to really build out our integrated solutions approach. We're very pleased with the performance of our existing acquisitions that are really helping us become a much more data-driven organization. And we're excited about assessing things as they come along. But we feel really good about the business and the way we're running the business right now.
spk00: Yep.
spk05: Great, thank you. And then just one more on the Q2 guide. Given it's pretty strong, does that assume any conservatism at all in the back half of the year? And thanks for taking my questions.
spk07: Jason, you want to say something?
spk11: Yeah, so it is early in the year, to your point. And as we've looked out at the back half, we felt really good about the ability to have the Q2 guide where it was. and just some of the balance that allows for the back half as we let some of these macro situations in the world sort of work themselves out. So I wouldn't say conservatism. I would say balance. And we also want to look at where we want to take the investments in the company across everything that we've talked about previously, whether it's people or it's data and technology or technology. whatever it might be to help us drive growth in future periods.
spk03: Thank you. Our next question comes from the line of Eric Caldwell from Baird. Your line is now open.
spk09: Hey, thanks very much. Alistair, let me be the first to congratulate you on the retirement and Michelle and Michael on the promotions. Thanks, Eric. I want to hit on commercial first, Michelle, just, I'd love to get some broad comments on the market dynamics two years into COVID how clients are going back to the market is work returning to, it sounds like work is returning to more normal levels of deployment and regular way. But I'd love to get the update on the balance between, you know, virtual digital remote versus live meetings. Second, I'm curious about the competitive landscape. You've had good wins, good growth rates, good backlog growth. Is this the market recovery or is this changes in the competitive landscape? For example, one of your largest competitors recently changing hands, sometimes that causes disruptions. And then finally, with Cineos One, you sound very positive on it today. I'm curious if this is new wins or in growth in the backlog there or if this is just enthusiasm about the recent product launches and the momentum you have on the maturation of the existing pipeline. Thanks very much.
spk01: Well, thanks for the questions, Eric. I'll start with, first, the performance of the commercial team has been really impressive. Our trailing 12-month book-to-bill of 1.14 has, you know, really beat what we've kind of given as the area we want to focus on, which is between 0.05 and 1. So, to your point, we continue to see some really great momentum. Deployment Solutions, you know, has backlog growth of over 26%. And I think a lot of times people think Deployment Solutions is just, you know, feet on the street. I mean, the real success has been the fact that we really used COVID to create this hybrid solution where Our representatives are enabled with digital and call center and video capabilities to manage multiple channels to communicate with customers. We are seeing a rebound in in-person visits for sure. Obviously, that varies by therapeutic area, but we have been really impressed with the fact that our hybrid and tech-enabled solutions are truly differentiating ourselves in the market, which is why we're having the growth we're having. I really believe it's our differentiation. that is driving the success. So I think that would be the first answer to the commercial question. I'll take the second question with Cineos One. As, you know, it's a great portfolio of assets. Many of them are still in clinical. You know we're very excited about Idorsia, and that really starts to ramp in the second half of this year, which is, you know, why we have the growth we have in the second half of the year. It's a really good ramp. We also were awarded, you saw in the press release, we were awarded the Canada and European teams for IDORCIA as well. And, you know, our consulting business and our communications business does get early and early with CINEOS 1 on the clinical side. And we're looking forward to seeing how the portfolio, you know, continues to grow. I will turn it over to Michael to talk a little bit about it from a clinical perspective. So, Michael. Yeah, sure.
spk08: So, Eric, just looking at it from the lens of leading a clinical group, You know, the CDS1 operating model is resonating very well with our clients. They like the idea of how we approach the product development mindset, how we're operating with the end in mind. Just as importantly, the integrated solutions that we're bringing forward through data, tech, patient insights is also resonating with clients because it's very practical. They can see how it's bringing value to how they design their protocols, how they think about the geographic landscape or selection of sites, and how we target patients for recruitment. In terms of where I think one of our other differentiators, this year we've been really focusing in on customer, customer, customer, customer, being exceptional with delivery and quality, and simplifying our operating model. Our customers are seeing that come through, and perhaps against the backdrop of some of the changes with our competitors, that's been an advantage for us. And then finally, we have great talent here. We've also brought in some really exceptional talent from other CROs, pharma and biotech, who've also come in with good relationships. and helping us really increase that pipeline.
spk01: So, Eric, did I miss one of your questions? Maybe one in the middle?
spk09: I think you did. Yeah, not probably the least important, but I'm just curious about the competitive landscape and if you've seen any changes in the behavior of your peers, especially the large one that recently changed hands to private equity.
spk07: Well, I'll kind of say that, Eric. I don't think we've seen any changes changing behaviors. I mean, obviously, they're bringing in the full kind of horsepower of thermo capabilities to some of their opportunities, as obviously you would. But not really seeing any real changes in the landscape. I mean, it's, you know, what we are seeing is good pipes, good funding across. We're penetrating large pharma. You know, we talked today about a new cross-sell from commercial over to clinical on the large pharma side. That's going to be a significant relationship for us as we start to ramp that up towards the tail of this year, or Michelle and the team ramp it up towards the tail of this year. And, you know, we're super excited about that. And I think kind of the questions you asked together, you know, I truly believe that what we've built here is something very different. And, you know, we've built a culture that supports that, and that's really resonating with people who want to come and work here, and that resonates with the projects we win and the customers that we serve. I'm very proud of that, and I know Michelle will continue that legacy and push that forward. I think the service catalogue we've built, CineOS 1 capabilities, our ability to engage SMIDs in a different way, more holistically, take them all the way on whatever journey they want to go, wrap them in great advisory skills as well as execution, plus the fact we have the scale to compete for the really big projects. I think we've put it all in a very good package and a very good situation. So healthy market, healthy company, and heading in the right direction.
spk01: Yeah, Eric, I'll just add one thing. In regards to the commercial market specifically and the one competitor being moved private, what we're seeing is that our value proposition, our integrated value proposition, is resonating beautifully with customers. And regardless of where we are, intersect with a customer, whether it's earlier in MedAffairs or in full commercialization. They really like the strategy, and that's, you know, how talent thinks about the product holistically to make sure it gets commercial success. And I think we have a winning strategy, and I think what we're seeing with other competitors is, you know, they're thinking about what is their strategy to try to compete with us, because right now we are the market leader by far. Yep.
spk09: Great. Congrats on good update. Thank you very much. Thanks, Eric.
spk03: Thank you. Our next question comes from the line of Casey Woodring from J.P. Morgan. Your line is now open.
spk12: Hi, guys. Thanks for taking my questions. I guess first off, Alistair, congratulations. I'm Michelle. Welcome.
spk00: Thank you.
spk12: I guess you talked a little bit about strong RFP flow in this mid-cap customer segment. Can you talk about, you know, your outlook for this segment for the rest of the year given where capital markets stand now and anything to call out maybe on the Centrax business or anywhere else in terms of maybe cancellations or delays? Yeah, just the mid-market environment.
spk07: Yeah, sure. So, you know, thanks, Casey. Thanks for your comments. Much appreciated. So, I think, like we said at the last learning school, when we talked about SMID environment and funding, et cetera, we really look at SMID as a multi-channel exercise, you know, a sector. So, we've got the funding, obviously, coming through public events that get tracked in the biotech funding index, IPOs, secondaries, et cetera. And that, you know, forms a part of that. That does also feed the work that goes in through what was the Sinteract model, you know, in that emerging biotech, we see that it's still pretty strong. You know, it's moving along. We have good engagement with customers. I think the fact that we're able to take those customers a very different model now with, you know, Cineos One wrapped around it, the ability to go end-to-end. And we look at the private funding in the biotech space. The, you know, the big equity houses putting money to work through their biotechs, et cetera. We have great relationships with them. Again, they are very keen on the Cineos One model, on the end-to-end model, because they know that every dollar they're spending is pushing the molecule forward. It's not, you know, building an office. It's not, you know, hiring, you know, hundreds of people to do outsourcing, et cetera. And then a big part of our work for SMID and biotech is coming out of Asia. And I think we set a new record in Asia in Q1 in terms of the sales. That's primarily SMID we're coming through. We're very capable of delivering that both in Asia, obviously, and the rest of the world. But for us, those channels combined are healthy. I think they're showing good growth against where we've been in the past. Even when we look back at 2021, which had a lot of the COVID catch-up in it, we're seeing pipelines equivalent to that. So we're not concerned by that. Add to that the fact that we're breaking in more and more to large pharma, getting new relationships there, adding anchor tenants to the backlog through that. It's a very healthy picture for us. Funding environment, fine. Good engagement with customers. We're not seeing that as an issue at all.
spk12: Got it. That's helpful. You guys talked about year-over-year growth returning in the top 20 pharma customer segment in the corner, specifically around that large pharma global preferred provider win. Can you talk toward your momentum here on the large pharma side and how you're winning business with these customers specifically? Thank you.
spk07: Yeah, absolutely. I'll kick you off. One of the points of creating Cineos out of the merger back in the day was to create the scale to be competitive in scale transactions like that. And we've done that and we've done it on the clinical side and we've done it on the commercial side. We are the biggest in commercial. We are top three in the in the clinical side, and I think when we're able to combine those skills with capabilities in medical affairs, et cetera, we have a very compelling engagement. The feedback that we're getting about the culture that we have, our abilities around building hybrids and being able to deliver that clinically, as well as bringing that advisory in from commercial, the cross-sell that we're seeing as well, You know, I think I'll get Michelle to talk a little bit about the new awards that we've got in the large pharma, but they're really where Michelle's team have excelled, delivered very well. These people want us now to come in and deliver clinical. Michelle, any thoughts on that?
spk01: Yeah, it's been an exciting quarter for sure. You know, we had a top 10 pharma win in clinical, one of the largest commercial clients, and This really goes to why we're a different kind of company, the way we think about these opportunities from an integrated perspective and getting our best talent, regardless of which business unit they sit in, to work together to really deliver an exceptional, differentiated offer to our customers. And this top 10 win was a real, a true integrated offering between some of the expertise that sat in commercial working together with the expertise in clinical And so, we're really excited about that because it's another, you know, top 10 pharma win. I can tell you we've had the other happen as well. One of our biggest clinical clients has just opened the door for us on the commercial side, and we've had a big commercial win in Q1 as well from one of our top 10 clinical clients. So, you know, the integration between the businesses is there, and customers really are responding to the way we approach them with these innovative integrated solutions. I'll give Michael a chance to top it off, and then we can go.
spk08: Yeah, just two key points, Casey. First, with our existing partnerships, what I really love about the relationships right now is it's not just order fulfillment. They're actually talking to us about how can they restructure their operating models, how can they better leverage our solutions outside of whatever the existing contract might be. And so it's much more around integrated solutions than being transactional. In addition, with other pharma companies where we may not have existing clinical work, we've got quite a few irons in the fire. We're talking to clients around solutions, capabilities, what are the problems they need us to help them solve. So we're really pleased with the momentum and also what the future holds for us.
spk03: Thank you. Our next question comes from the line of Christine Raines from William Blair. Your line is now open.
spk04: Hi. Congratulations on the quarter and congratulations, Michelle, on the new position. Just two for me. Awesome. The first one is on if there's a staffing update as it relates to retention and hiring and if there's any difficulties you're experiencing. On this front... And then the other one is, given the new CEO announcement, can you discuss any changes in strategic vision or execution that may come? Thanks.
spk01: Sure. Thanks for both questions, Christine. I'll start with staffing. You know, we've seen a stabilization in staffing across the board. I mean, it is a very competitive marketplace out there right now. But we have seen it stabilize, I think, for a couple reasons. People are really excited about the culture and what we're offering here as a value proposition at Cineos Health. And I think we're doing some really innovative things that I'll turn it to Michael in a second to talk about some of the really innovative things that we're doing from a talent acquisition and retention perspective. So I think that would be the first thing. In regards to anything new in strategy, I really believe we have a winning strategy. And obviously, you know, we are poised to enter this next era as a data and insights-driven intelligence provider. You know, we've been really focusing on insights and analytics, and we've really focused on how we can support decentralization through StudyKick and how we do better targeting through Kinetic. So I'm really excited about the strategy that we have, but obviously every strategy over time has enhancements based on what customers need. It goes back to what Michael said in the last question around we're really trying to help customers as they think about reimagining their models, that we can help them with the transformations that they're going through and be their partner of choice. So I'll turn it over to Michael to go back to a little bit about the staffing.
spk08: Yes, absolutely. So from the lens of the clinical group in my prior role, as Michelle said, it has been and continues to be a tight labor market. We watch the data every single day. Really pleased to see that our retention has stabilized. Where there are a couple of pockets of either therapeutic or geographical pressure, We're taking very specific action around how we can support those individuals and those families, whether it's through career development, whether it's through new training opportunities, even giving them choices in the projects that they're going to be working on. And that seems to be really resonating with our employees. In terms of some of the innovation, one of the really unique features that I was excited about here at CINEOS is You know, while we have our traditional CRO talent acquisition, we also have tailored strategy partners that exist within our commercial group. And we've been leaning on that group to help bring in new ideas of how do we recruit top talent, how do we create a job opportunity, a career opportunity that's very attractive to them, obviously with really good compensation and benefits. And then as we onboard them, how do we make that an exceptional experience for those employees? Christine, we've also invested in professional development infrastructure to provide line management, mentoring support, and a variety of other things that seems to be really resonating with our employees.
spk00: Thank you.
spk03: Our next question goes in the line of Justin Bowers from Deutsche Bank. Your line is now open.
spk02: Hi, good morning, everyone, and happy retirement to Alistair, and congratulations, Michelle.
spk00: Thank you.
spk02: Yeah, really positive comments on the call, and I was hoping that we could dig in a little deeper on the strategic partnership opportunities that you mentioned. One is the top 10 win part of that bucket, and then can you just kind of elaborate on the landscape there? Are these things that are, you know, outside of the typical renewal cycle, new opportunities for you, clinical, commercial, et cetera, et cetera, just trying to get a better sense of the landscape there?
spk07: Yeah. Yeah, so, yes, this is a new strategic opportunity, top ten partnership, so very excited about that. This is one that we have actually been waiting for. Its original cycle would have had it renewing sometime right in the middle of COVID, so it's a little bit overdue. But I think we knew how to position ourselves well against it. We've done great work for that customer in the past, both commercially and a little bit clinically. It's been on the clinical side where they acquired assets that we were already working on. I think we took quite an innovative approach to it, to bridge from commercial over to clinical, which is the power of Cineos, really, by working with them to help them find staff in hard-to-find roles and areas through our tailored strategy partners offering, and then being able to kind of parlay that into a large kind of hybrid FSP as well as full-service work, which will start to come to us later in the year. So that landscape, I think, was one that was kind of delayed by COVID. People who were on a normal cycle for renewals pushed that out a little bit, which is very understandable, obviously. And we are very compelling when we get in front of large customers, I think.
spk01: Absolutely. So, you know, we've had a lot of success this quarter. So the first one Alistair talked about, was a win that we were, you know, getting ready to win and we won. But, you know, we've had some others which are really exciting. We're starting to see, you know, RFP flow on the clinical side from, you know, big commercial customers. We're starting to see the opposite, too. You know, clinical customers are now reaching out on the commercial side. We've also seen on the commercial side partnerships that some of our competitors have had have opened up to us, and we've been winning some business on the commercial side and top ten as well. And so, you know, when you think about the fact that we've been on this journey to have this integrated value proposition, to be able to enable a more intelligent enterprise, and that Michael and I have been working so closely over the last year to really put the pieces together, you know, it's It's kind of like you push a rock uphill for a while, and then you get to enjoy watching it roll down the other side. We are hitting on all cylinders on this integrated value proposition, and I think our customers are responding appropriately, not just in the SMID, but, you know, we're starting to see it happen really in the top 10, top 20 pharma, which is really very exciting for us. So I don't know if you want to add anything, Michael.
spk08: Well, one of the nuance on this top 10 pharma, obviously we want to win as much business as we can. We want to grow. This particular client just has a fantastic culture and fantastic leadership, and our employees want to work with this customer. And in the current labor market, that matters. that the cultural mix between our customers and employees fits together. So we originally sat down with them with Alistair, Michelle, and I had a chance to talk to their leaders. We started talking about what is the problem you're trying to solve? What are the solutions we're bringing together? And it wasn't a sales message. We committed to them we're going to be authentic and transparent about what we can do today and what we may have to build in the future. And I think that authenticity really resonated with them. So we have a strong foundation of honesty and candor. and a great cultural fit that I think is going to give us just both parties just great success. And I think that will translate into other customer relationships as well where they don't want a sales-to-sales relationship. They want ideas, solutions, authenticity, and candor. Yep.
spk02: Appreciate all the detail. Maybe just one quick follow-up. For Jason, can we talk about maybe the capital deployment philosophy from here? You guys did a good job buying back stock in the quarter. It sounds like the M&A market is not as tight. The stock is trading pretty much at the lowest multiple it has, I think, since the original INC IPO. Just how you guys are thinking about that through the rest of the year.
spk11: Yeah, sure. Hey, Justin. It really hasn't changed in terms of we still want to delever and get in and around that three times by the end of the year. That just creates flexibility for us that we want to have in the event we want to do something later. Besides that, it is M&A and tuck in. The pipeline within that space continues to be fairly robust and As Alistair alluded to, we're just picking our spots here as we, you know, work through what's going on sort of in the macro environment. And then finally, given, you know, that and where we are on leverage coming out of last year at 3.6 and with the market where it was, we were opportunistic in repurchasing the $150 million of shares. We typically will, every year we will do at a minimum enough to prevent dilution from RSUs and options and things, vesting. But we had $182 million and change on the remaining plan, and we used the majority of that. So, you know, those three key areas remain the focus as we move through the rest of 22. Got it.
spk02: I'll hop back in queue. Thank you.
spk03: Thank you. Our next question comes from the line of David Windley from Jefferies. Your line is now open.
spk10: Hi, thanks for taking my questions, Alistair. Congratulations on a long, successful career. Michelle and Michael, best of luck in your new roles. Thanks for taking these questions. I wanted to kind of come at the strategic relationships that you've talked a lot about on this call from a margin angle. And could you talk about You know, I guess when we think on the commercial side, specifically going from individually sold solutions, Michelle, to more of a kind of a full service launch that you've kind of pioneered, is that a margin enhancement opportunity because you kind of control and orchestrate the broader base of services? And then if I expand that to the cross-sale between clinical and commercial, are those opportunities also giving you more margin levers as you capture them?
spk07: Well, I'll start, Dave. Thanks for your comments. You know, we've really enjoyed a long engagement with you as well. So, you know, it's been a pleasure and I'm really looking forward to seeing Michelle and Michael take this business to the next level. It's, you know, the new strategic relationship in terms of margin and it's right where we'd expect it to be for that kind of relationship. Yeah, it's, you know, you make kind of a, when you're putting the proposals together, something that's with a SMID and it's full services, a higher margin, but you get a much bigger utilization out of the relationships with large pharma at scale. So, you know, they kind of, they blend each other out. This is a hybrid, so it's going to have a bit of both. And we're very excited to engage with them in it. You know, and I think, build upon it. So this relationship now will be something that stretches right across from clinical to commercial. It's not, you know, we're not taking assets across like a Syneos 1 style, but it's a big cross-sell. We'll be doing a big part of their commercial work and a big part of their clinical work. And we're very excited about that. So I think more to come if relationships of that style that I think only Syneos is capable of winning. And that's a key differentiator that I think we can carry forward.
spk11: And I guess, Dave, just to add on the cross-sell and commercial and then the full-service commercial, with full-service commercial, it depends, right? It doesn't – I wouldn't think of it as simple as, you know, FSP monitoring, no utilization risk, you know, cost plus to utilization risk, different margin profile, et cetera. Within full-service commercial, at the moment, it depends on what services are in that full-service commercial. If you have full consulting, full communications, full field teams, and the operations around those field teams, yes, it's going to be a far better margin. If you pull one of those pieces out and just go with a field team and a little bit of consulting, the margin profile is going to be a little bit lower than the prior. So it really depends on the underlying services. within that. On the cross-sell, I would just say that it, you know, depends on, again, the services and which way it's going. If it's cross-selling from the commercial side into clinical full service, great margins, you know, what we want to see, you know, in terms of the standard business. If it's a cross-sell from clinical into a field team, you know, then it's going to be the standard margin you'd think about on a field team.
spk10: Yeah, so it kind of just depends on what's in it. Yep. In focusing on, I tend to ask about Cineos One and the pipeline that you've built there, Michelle, you mentioned specifically, I think it's Idorsia and the ramp there. So part A would be how does the lineup stack up in terms of more launches and the timing of those? And then if you wouldn't mind to elaborate on Idorsia since you mentioned it, What is the driver of the ramp there? Is it the geographic expansion, or is it really just the raw launch of the product itself?
spk01: So I'll answer that in two ways. It is both, but the back half of 2022 is the full U.S. launch, right? You saw the press release that Eidorsia put out that they chose us as their partner.
spk07: You can see the advert with Jennifer Aniston.
spk01: And you can see the ad with Jennifer Aniston.
spk07: I should have been on that bed in the advert.
spk01: Okay. So the full U.S. launch is, you know, going to be occurring right now. So we'll have the full breadth of the U.S. launch occurring in Q3 and Q4, right? It was a ramp up in Q1 and Q2. So that's why you see that. that U.S. launched taking hold fully in the back half of this year and obviously will continue. The second announcement from my Dorothea was the asking us to take on Canada and the EU. And obviously, that comes with regulatory approval. Those are still not approved in those countries and absolutely country by country, right? The approvals across all of the EU will happen over time. And as they happen, we will layer in additional resources into 2023 and beyond, right? So, that's iDorothea specifically, which, as you know, they've publicly named us as their partner. When you look at the full Synios Health portfolio, Synios One portfolio, as you know, some are smaller assets, rare disease, you know, more targeted commercialization. Some are larger. iDorothea is absolutely on the larger side of a dollar value because it's insomnia asset. And, you know, we all know this. Insomnia has a very large and wide physician target-based versus something like an oncology rare disease. So as the CINEOS 1 assets come through, obviously we are hoping that first they get approved and then, yes, that we continue to win that business, whether it's through consulting and comms, which happens early on, and then obviously deploying resources over time. And so, as you know, we've talked about the full potential value of those assets, but we know all of them are not going to make it or some of them might license their assets. But we just think it's a really very well-defined pipeline that we should get our fair share of that business.
spk10: Thanks for that, and congrats. Yes, it does. I've asked long questions, so I'll back into the queue, but congrats again. Thank you very much.
spk00: You're welcome. Thank you.
spk03: Thank you. Our next question comes from the line of Sandy Draper from Guggenheim Securities. Your line is now open.
spk13: Thanks. Not going to ask a question, but just wanted to say congratulations, Alistair. It's been great working with you, and congratulations to Michelle. And looking forward to working with you going forward. So that's it for me. I'll turn it over to the other people.
spk07: Thank you. Thank you. Thanks, Sandy. Appreciate that.
spk03: Thank you. At this time, I'm sure no further questions. I would like to turn the call back over to Ronnie Speight for closing remarks.
spk06: Okay. And then I'll turn it over to Alistair McDonald.
spk07: Thank you, Gigi. Thanks, Ronnie. Well, folks, before I sign off, I want to offer my, well, our sincere thanks to the entire Cineos Health team for all they continue to do to serve our customers, sites, and patients, particularly our staff in the Ukraine and the neighboring countries. We remain confident in our market positioning and look forward to strong growth and profitability in 2022 and beyond as we execute on the value creation plan. Serving as Cineos Health CEO has been a great honor. I'm incredibly proud of all this team has achieved I know I'm leaving the company in the most capable hands, and I look forward to watching your continued success as the years come through. So thank you, everybody, for your attendance today and for your continued interest and investment in our company. Please be safe, have a great day, and be good.
spk03: This concludes today's conference call. Thank you for participating. You may now disconnect.
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