IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the IQVS second quarter 2019 earnings conference call. During the presentation, all participants will be in a listen-only mode. As a reminder, this conference is being recorded Wednesday, July 24th, 2019. I would now like to turn the conference over to Andrew Markwick, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Thank you, Jennifer. Good morning, everyone. And thank you for joining our second quarter 2019 earnings call. With me today are Ari Boothby, Chairman and Chief Executive Officer, Michael McDonnell, Executive Vice President and Chief Financial Officer, Eric Sherbert, Executive Vice President and General Counsel, Nick Childs, Senior Vice President, Financial Planning and Analysis, and Jen Haljerk, 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. This presentation will also be available following the call on our events and presentation section of the IQVIA Investor Relations website at ir.iqvia.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 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 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 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. Thanks for joining us on our second quarter 19 earnings call. It was great to see you all at our Analyst and Investor Conference just last month. As you recall, the objective of the event was to take stock of our progress since the merger, which was almost three years ago, and to lay out the path forward to 2022. We are all very proud of the unique company that has been created from this merger. Turning to our Q2 earnings release, this quarter was largely a repeat of the first quarter. with continued strong momentum and similar outstanding financial and operational performance. Once again, both revenue and earnings came in above our guidance ranges. Second quarter revenue of $2,740,000,000 came in above our guidance range, resulting in constant currency revenue growth of 8.5% from a segment perspective. Technology and analytics solutions revenue grew 11.4% of constant currency, and organic growth was the same as last quarter, about 7%. This strong performance was again driven by solid double-digit growth in our real world and technology businesses. R&D solutions revenue grew 7.5% of constant currency. Excluding pass-through, constant currency growth was 8.8%, with acquisitions contributing about 150 basis points to R&D revenue growth. Again, similar to last quarter, organic constant currency growth was over 7%. As you recall, we said contract sales and medical solutions will return to growth in the second half of 2019, with the objective of flat revenue year over year. I am pleased to report that the CSMS business has turned a corner in the second quarter, growing 1% on a constant currency basis. Second quarter, adjusted EBITDA of $578 million was toward the high end of our guidance range. Adjusted EBITDA of $1.53 was above the high end of our guidance range and grew 18.6%. Let me provide a brief update on our business. In technology first, OCE continues to gain traction in the market, and there is a tremendous amount of excitement from clients and prospects about our revolutionary solution. So far in 2019, our technology team has won over 20 new OCE engagements, resulting in over 50 OCE wins since the SaaS offering was launched just 18 months ago. You saw that orchestrated analytics for OCE was launched in April. This is an important enhancement to the platform which leverages AI and machine learning to identify and recommend next best actions to the sales reps. This is a level of insight that surfaces any capabilities that are available in the market today. Turning to real world, Discord, the team was awarded a large contract with a consortium of life science companies to demonstrate the long-term safety for a certain kind of agent that is used in a common procedure. This research was mandated by the FDA, and the choice of IQVIA as the consortium's partner in this important study demonstrates our leadership in this area. In addition, our clients are increasingly looking for a partner in the real-world space. During the quarter, we were named a preferred provider for a large pharma company. This award includes more than 20 real-world engagements over the next five years and covers all regional studies which will implement a new hybrid outsourcing model combining both in-source and outsourced services. Our capabilities in both prospective research and advanced machine learning-based predictive analytics really set us apart from the competition. Moving to R&D, the team continued their momentum with another strong quarter of net new business. Backlog of over $18 billion grew almost 15% year-over-year. Our bookings growth and book-to-bill ratios remain robust, and whatever way you look at it, we had another great quarter for R&D bookings. For the quarter, our book-to-bill on an as-contracted 606 basis, that is, including pass-throughs, was 159. Excluding pass-throughs, our book-to-bill was 135 for the quarter. Looking at the last 12 months, our book-to-bill on an ad-contracted 606 basis was 141. Excluding pass-throughs, the book-to-bill is still at 150 on an LTM service basis. In addition, the R&D team secured another record quarter of over $800 million of co-powered gross new business awards, which excludes pass-throughs associated with these bookings. We now have over $5.1 billion in core-powered smart trial awards since launch. Again, that is excluding pass-throughs. Finally, I'd like to recognize the work of our management team to turn around the contract sales business. We are beginning to see the fruits of their efforts with the stabilization of that business and even a return to modest growth. In sum, we have a very, very strong quarter across all our businesses.