IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the IQVIA Third 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, October 30, 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. Good morning, everyone. Thank you for joining our third quarter 2019 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, Nick Charles, Senior Vice President, Financial Planning and Analysis, and Jen Haljo, Senior Director, Investor Relations. Today, we will be referencing a presentation that will be visible during this call for those of you on our website. This presentation will also be available following this call on the events and presentation section of our 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 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 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 the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Boothby.

Thank you, Andrew, and good morning, everyone. Thanks for joining our first quarter 2019 earnings call. I'm pleased to report that the first quarter is a continuation of the solid momentum we've had since the beginning of the year. Once again, revenue adjusted EBITDA and earnings all came in at the high end or above our guidance ranges even after the currency impact. Third quarter revenue of $2,769,000,000 came in $14 million above the midpoint of our guidance range and $34 million above the midpoint of our guidance range when you adjust for the foreign currency impact. Revenue growth was 7.9% on a constant currency basis. Actually, when you adjust for acquisitions and pass throughs for the total company, organic constant currency revenue growth is already in the 7% range. From a segment perspective, technology analytics solution revenue grew 10% at constant currency. During the quarter, we marked the anniversary of several tech businesses we had acquired in 2018, and therefore, the contribution to growth from M&A was about 280 points, which is half of what it was last quarter. The acceleration of the TAS organic constant currency revenue growth which came in at almost 8% this quarter, was driven by the timing of our real-world client engagement deliverables, as well as accelerated technology deployments. R&D solutions revenue grew 6.8% at constant currency. This growth rate included an impact from pass-throughs of approximately 200 basis points, which was roughly offset by the contribution from M&A. Contract sales and medical solutions continues to demonstrate that it has turned a corner, growing about 5% on a constant currency basis. This is the result of our strategy to integrate the business with our commercial operations. We expect the CSMS business to deliver the flat year-over-year growth we projected for the year and to sustain modest growth in 2020, maybe in the low single digits. Third quarter adjusted EBITDA of $593 million was towards the high end of our guidance range. As I mentioned, our technology deployments are driving our top line acceleration, but we also incur upfront costs with these deployments, which are included in our margins. So, in this context, our adjusted EBITDA performance in the quarter was quite strong. Adjusted EPS of $1.60 was above the high end of our guidance range and grew 12.7%. The $0.04 beat versus the midpoint of our guidance was driven by $0.02 of strong organic operational performance and $0.02 of below-the-line efficiencies. Let me give you some color on the businesses and our progress. In technology, I am pleased to report that we now have over 70 OCE wins since launch. In the third quarter alone, we signed 20 new OCE deals, including a win with a top 15 pharma client to deploy OCE sales and marketing in the U.S. And another win with a top 15 pharma client to deploy OCE in Asia. Both of these deals with large pharmas have the potential for geographic as well as therapeutic area expansion. Of the 20 new wins in the quarter, 15 were head-to-head competitions against the leading dominant incumbent in the CRM space. And the two top 15 pharma wins were outright displacements. Turning to real world. We've spoken to you before about our success in supporting single-arm studies using real-world evidence. Our clients are increasingly looking to us for innovation in this space. In fact, in just the last 12 months, the number of projects we're working on that use an external comparator arm has quadrupled. We had a recent win with the top 10 pharma clients in Europe to conduct an hematology oncology external comparator project. Critical to the success of the project was a QGIS proprietary oncology network infrastructure, which was utilized to access a very difficult to find comparator patient population. Our global infrastructure allows us to provide our clients a faster and more predictable path to deep clinical insights on each patient populations and enable this kind of novel research. During the call, the real-world team was also awarded a preferred provider partnership with a top 10 pharma company for our ECOA or electronic clinical outcome assessment technology platform. Our newly launched cloud-based technology platform uses a simple interface to collect direct-from-patient clinical data. This allows sponsors to better understand and improve the patient experience, resulting in reduced timelines, improved transparency, and real-time insights about patients. Moving to R&D, the team continued their strong momentum with another quarter of excellent bookings. For the quarter, On a contracted basis and excluding pass-throughs, our book-to-bill was 131, and including pass-throughs, the RMDS book-to-bill was 124. We are reporting this metric for transparency, but as we've said many times before, we think it is much less meaningful than services bookings as the estimates and timing of pass-throughs can vary greatly quarter to quarter. For the last 12 months, as of September 30, the contracted book-to-bill ratio was 140, excluding reimbursed expenses, and 136, including reimbursed expenses. R&D's backlog of $18.3 billion grew over 11% compared to the third quarter of 2018. And importantly, our next 12 months' revenue from backlog increased by a further $200 million to $5.1 billion, growing 10.6% year-over-year, or 13.3% if you exclude pastors. This important forward indicator metric supports our expectations of continued RMDS revenue growth acceleration into 2025. Demand for our core power capabilities continues to be strong. We now have 13 large pharma clients using our differentiated solution. Further, during the call, we were very excited to secure a new preferred provider agreement with a top 10 pharma client. This was previously a locked out account and our achievement resulted in the displacement of two competitors. Let's call them particularly prominent competitors. The environment for R&D and outsourcing remains very healthy. Our pipeline of R&D opportunities, whether you look at dollars or number of RFPs, continues to be at the same strong pace as 2018. And that was a record year for us. Our pipeline is growing heightened year to date compared with last year. The EBP segment, which I know is often the subject of questions, remains very healthy. As you know, 2018 was a blockbuster year in terms of funding the year to date 2019 funding is tracking similar to 2017, which was also a very strong year. The pipeline of late-stage molecules continues to expand, growing 8% since the end of last year, and interestingly, 11% in oncology. Once again, another strong quarter across all of our businesses, and I'm going to now turn it to Mike We'll review the financials in more detail.