IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the IQVIA fourth quarter 2018 earnings conference call. During the presentation, all participants will be in a listen-only mode. As a reminder, this conference is being recorded Thursday, February 14, 2019. I would now like to turn the conference over to Andrew Markwick, Vice President, Investor Relations. Please go ahead.

Thank you, Edison. Good morning, everyone. Thank you for joining our fourth quarter 2018 earnings call. With me today are Ari Boothby, Chairman and Chief Executive Officer, Michael McDonald, Executive Vice President and Chief Financial Officer, Eric Sherbert, Executive Vice President and General Counsel, and Nick Charles, Senior Vice President, Financial Planning and Analysis. Also here with us today is a new member of the Investor Relations team, Jennifer Helcheck, who just joined IQVIA as Senior Director of Investor Relations. Jen has over 20 years of experience working in the capital markets with extensive experience in IR. We're excited about Jen joining the team and I know she's looking forward to working with all of you. Today we'll be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call on the events and presentation section of our IQVIA investor relations website at iriqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this 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, including the impact of the changes to the Revenue Recognition Accounting Standards, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which could be considered a supplement to, and not a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures, the comparable GAAP measures, is included in the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Busby.

Thank you, Andrew, and good morning, everyone. Thank you for joining our fourth quarter 2018 earnings call. We will review how we closed 2018 and provide financial guidance for 2019. I'm pleased to report that we have another strong quarter, capping a year of consistent, solid operating performance at IQDIA. Once again, we reported results at the high end or above our financial targets. Let's review the numbers. Fourth quarter revenue of $2,688,000,000 came in above our guidance range, resulting in constant currency revenue growth of 8.1%. Relative to the midpoint of our guidance range, over half of the revenue beat was driven by an acceleration of our organic growth rates in both the R&D and technology and analytics segments. And a little less than half was driven by the higher than expected pass-through revenue associated with this organic growth. From a segment perspective, technology and analytics solutions revenue grew 10.9% at constant currency. On an organic constant currency basis, growth was over 5%. You will note This growth rate represents a significant acceleration of our historical consistent 4% organic growth in this segment. We expect this momentum to continue into 2019 and beyond. This strong organic growth performance was driven by solid double-digit growth in our real-world business and higher than expected year-end demand for our other commercial offerings. Also during the quarter, we marked the anniversary of several tech businesses we had acquired in 2017, which is why the contribution from M&A has tempered Sequentium. R&D Solutions revenue grew 8.7% at constant currency of which 8% was organic. You will note the strong organic constant currency growth in the quarter represents a significant acceleration of our R&D growth rate, which was 4.5% through the end of the third quarter. The strong organic growth performance in our R&D business reflects the early signs of revenue acceleration in this segment, with growth resulting from the team winning new business at an extremely high rate, and our unique core enabled approach to the business helping to execute parts of our existing book of business at a faster pace than we had expected. This, in turn, has brought faster revenue in at a faster rate than we had originally anticipated, which also contributed to the acceleration of growth. Fourth quarter contract sales and medical solutions revenue was down about 9% at constant currency. We are seeing the early signs of stabilization and turnaround in this business as the decline has been 13% through the end of the first quarter. Adjusted EBITDA of $583 million was at the high end of our guidance range and grew 9.7% at constant currency. Adjusted diluted EPS of $1.50 was also at the high end of our guidance range and grew 23%. Versus the midpoint of our guidance range, the beat for both adjusted EBITDA and adjusted diluted EPS was entirely driven by our stronger than expected operational performance. I'd like to take a minute and recap some of our key accomplishments during 2018, which will help drive growth in 2019 and beyond. In technology, we made significant progress with our orchestrated customer engagement, or OCE platform. Our CRM smart product Since we launched OCE in December 2017, we have had over 30 competitive wins, including previously announced contracts with Roche and Novo Nordisk. We have more than 30,000 users going live on the platform, and the tool is currently being deployed in over 100 countries. With a solid pipeline of opportunities, the team is currently engaged in over 100 active sales leads. As you know, OCE is powered by force.com, and we announced the expansion of our Salesforce partnership as we aim to build an integrated suite of clinical technology on the Health Cloud platform. For example, we built our virtual trial platform, Study Hub, which is already live in the market on Health Cloud. We see increasing levels of sponsor interest, as we leverage this transformative technology to bring clinical research directly to patients, ultimately increasing participation as we help clients reach diverse and difficult-to-recruit patients. You will have also seen our recent press releases for our regulatory and safety platform, also built on HealthCloud, which will go live in the first half of 2019. As the team builds on the success of our OCE platform, stay tuned for further updates in the clinical technology space. In real world, we close the year with solid double-digit organic revenue growth. Contrary to what is standard in the CRO industry, we do not report our real-world members together with our clinical development members. So unlike our peers, real-world business growth is not included in our R&D solutions business growth. The team has had significant success in 2018 and continues to shape the industry by infusing data smartly into research. For example, the team had a number of wins for single-arm studies during 2018. You'll recall this is an innovative approach where we use a real-world data arm to benchmark the results of the client's single-arm study. We also signed an important collaboration with Genomics England that will make the world's largest pool of linked clinical whole genome sequence data available for research. As you all know, when people speak about genomic data, such as commercial companies that analyze your DNA, they usually have snippets or a partial genome sequence. The focus of Genomics England is that they sequence whole genomes and they link this to the patient's complete clinical record which creates much more extensive granular data. Alongside our novel genomic de-identification approach and E360 machine learning analytics platform, this will accelerate faster and more efficient drug research and greater access to personalized medicine. Across the board, the real-world team has continued to scale our overall real-world business by applying novel and scalable technology to unique data sets. We now receive over 70 billion healthcare records annually, resulting in data sets on over 600 million non-identified patients globally. R&D Solutions had a very strong year of new business wins. We closed 18 with another record quarter of contracted bookings. Our fourth quarter contracted net new business, excluding pass-through, was 1.7 billion, which resulted in a book-to-bill of 1.7 for the quarter. Bookings growth was over 40% compared to the fourth quarter of 2017. And the good news is that the R&D bookings engine is firing on all cylinders. We saw strength across all segments. If you look at this from a customer segment perspective, large pharma bookings growth, which still represents the majority of our bookings, grew 20%. EBP bookings grew over 50%. From a product offering segment perspective, we saw particular strength in full clinical, which comprised the bulk of our bookings. It continued to accelerate with bookings growth of over 60% in the quarter. The lab was also strong with bookings growth of over 30%. The functional service provider business, which as you know, we are still trying to make a comeback in, is still not where we need to be and is still a small part of our bookings. R&D solutions. full-year contracted net new business was $5.85 billion, representing year-over-year growth of over 29%. We now have over $17 billion of R&D solutions backlog when you include fast food. The strategic rationale for our merger is increasingly proving itself in the marketplace. As we exited 2018, we applied our core-enabled smart offering to over 60% of the R&D sales pipeline, resulting in the next generation of clinical development team having yet another strong quarter of gross new business awards of over $800 million, which excludes pass-through associated with this revenue. Large Pharma represents an increasing proportion of our core-enabled smart trial bookings. It has gone from less than 20% when we introduced this differentiated offering to about 60% for Large Pharma at this call. Automation has been key to gaining scale for our core-enabled next-generation smart trials. We can now generate analytics in minutes as opposed to weeks. The team has built analytical libraries to drive automated analytics that can be used off the shelf. In total, we have over 1,000 automated analytics covering nearly 100 indications that we plan to use in over 25 countries in 2019. Today, we have 500 smart trials in operation, representing a third of our total trials in operation. And these 500 trials alone have more than 90,000 patients to be enrolled at about 20,000 sites. In fact, over 70% of the patient recruitment for these next generation smart trials will take place outside of the United States. Once again, underlying the power of our global capabilities. Additionally, and consistent with our new post-merger go-to-market strategy, which we call See More, Win More, we have seen 2018 RFP volume in general increase more than 30%. And we want business with more than 300 new clients in the clinical space during the year. Importantly, We won significant contracts with five large pharma accounts that the R&D team has not done business with in many years. We are clearly seeing more and we are winning more as sponsors come to realize the benefit of our highly differentiated capabilities. Now, we close 18 on a strong note and as we look to 19, the market we address remains healthy. The life science industry is expected to grow mid-single digits over the next five years, R&D activities at an all-time high, and the total number of molecules in clinical development continues to grow, with the late-stage pipeline growing 10% in 2018. The FDA approved 59 drugs in 2018, up from 46 in 2016. The Aikiduya Institute estimates that 270 new molecular entities will be launched over the next five years, up 17% compared to the last five years. The FDA continues to support innovative approaches to clinical development, specifically the use of data, analytics, and technology to accelerate clinical development and reduce regulatory risk. In fact, recent announcements from the FDA continue to support the use of secondary data in the real-world space. And finally, commentary from our client base remains healthy. Pharma is bullish on the science, innovative research, and current clinical research programs. Our clients continue to drive SG&A efficiencies through increased commercial outsourcing to allow for growth in R&D funding. Our clients also acknowledge that pricing is under scrutiny on the commercial side, but they currently don't anticipate this to become a major disruptor to their clinical development initiatives. Taken together, It's clear this is a very compelling backdrop for the industry, and IQVIA is better positioned than ever to capitalize on these dynamics. And with that, let me turn it over to Mike McDonald, our Chief Financial Officer.