IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the IQVIA Fourth 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 on Wednesday, February 12, 2020. I would now like to turn the conference over to Andrew Markwick. Senior Vice President, Investor Relations and Treasury. Please go ahead.

Thank you, Pema. Good morning, everyone. Thank you for joining our fourth quarter and full year 2019 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer, Michael McDonnell, 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 Halczak, 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 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 10K 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 for 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 and full year 2019 earnings call, where we will review how we closed 2019 and provide financial guidance for 2020. As you know, 2019 marks the final year of our three-year merger integration program. We've had 13 quarters since our merger closed. I am pleased that we have consistently delivered revenue EBITDA and EPS at or above expectations. Let's review this most recent quarter in more detail. Fourth quarter revenue of $2,895,000,000 came in $38 million above the high end of our guidance range. revenue growth was 7.7% on a reported basis and 8.5% on a constant currency basis. If we take a look back at our three-year growth performance, we grew revenue at 6.9% on average, and we exited 2019 at 7.7% or 8.5% on a constant currency basis. Recall at the time of the merger, we told you that total company revenue growth would be 100 to 200 basis points higher exiting the third year of our merger integration. And as you know, this was achieved during the third year of our merger integration. Full year 2019 revenue of $11,088,000,000 grew 8% at constant currency. and almost 6% on organic constant currency basis. That represents an organic revenue growth acceleration of well over 200 basis points compared to 2018. We see this strong top line growth rate continuing into 2020, and Mike will provide more details later. Back to the quarter. From a segment perspective, Technology and analytics solutions revenue grew 9% at constant currency. As expected, technology and analytics solutions growth moderated slightly sequentially. This was the result of our unusually strong Q3 organic performance, as well as a lower contribution from M&A. But despite this, technology and analytics solutions organic growth came in at over 7%, 7.4% to be precise, which is well above the historic trend from the IMS days, which some of you will recall was more in the 4% range. So, in this segment, significant acceleration. R&D solutions revenue grew 8.1% at constant currency. Now, we told you last quarter that RMDS organic services growth would be higher in the fourth quarter. And in fact, adjusting for the impact of pass-throughs of approximately 400 basis points and an M&A contribution of approximately 200 basis points, organic services growth on a constant currency basis accelerated to exactly 10%. also representing a significant acceleration versus the pre-merger services organic growth rate, which was just under 5%. Contract sales and medical solutions continues to demonstrate that it has turned a corner, growing 8.3% on a constant currency basis in the quarter. Now, this is undoubtedly very strong performance, but I would remind you, It was also an easy comparison against fourth quarter last year. We expect CSMS to maintain very modest growth going forward. Fourth quarter adjusted EBITDA came in at $642 million, resulting in adjusted EBITDA margins that continued to expand in the quarter. As you know, we've been making investments in technology, talents, and go-to-market resources. We've also been very active in deploying all of our tech wins, developing the clinical and commercial technology offerings, and acquiring tech companies, all of which have a dilutive impact on our margins. So in this context, we are very pleased with our results. Fourth quarter adjusted diluted DPS of $1.74 was at the high end of our guidance range and grew 16%. These strong financial results were driven by numerous operating achievements and milestones. I'd like to take you through some of our 2019 operational achievements. 2019 was a pivotal year for our technology business. OCE gained significant traction, earning deserved credibility in the market. We won 50 new OCE deals in 2019 compared to 30 in 2018, which was the first full year post-launch. We now have almost 60,000 contracted seats to deploy. We have four top 15 pharma clients who have made the decision to adopt our superior platform. Our deployment with Roche is complete for several countries in Asia. With that successful delivery, we are working to accelerate the rollout globally to enable Roche's worldwide digital strategy. The Novo Nordisk deployment is well underway, and feedback has been very positive. Additionally, we are excited to start our first large U.S. deployment, as you've seen in one AstraZeneca U.S. business for OCD. During 2019, we also ramped our investment in the clinical technology space, and I want to highlight today our progress in virtual trials. You will recall that our virtual trial technology, StudyHub, is a scalable SaaS platform built on Salesforce's Health Cloud. We're having success in the market with this transformative technology and delivery model. We're now executing on several studies on a global basis in all key geographies. Studies span multiple therapeutic areas, including CNS, oncology, and digital therapeutics, to name a few. And the study execution can take the form of either a full virtual trial or a combination of both traditional and virtual trial. We have a strong pipeline in virtual trials and have established ourselves as a premier provider in this space going into 2020. In real world, we continue to build our leading position in the real world market. We were selected as a preferred provider by a large pharma company with over 20 real world engagements already over the next five years. We also have the top 10 pharma company obtained an FDA-approved license extension for an oncology product using a real-world comparator arm. And lastly, we continue to make enhancements to E360 genomics, our patented technology platforms which will advance research in the real-world space through the use of non-identified genomic data linked to rich patient analytics. The real-world team continues to invest in our rich clinical data assets, which have now grown to 800 million non-identified patients globally. Moving to R&D. For the fourth quarter, our book-to-bill ratio was 1.46 on both the services basis and including pass-throughs. For the full year, our services book-to-bill was 1.34, and including pastures, the book-to-bill was 1.33. Our backlog at the end of the year was a record $19 billion. Our next 12 months' revenue from backlog increased by a further $100 million to $5.2 billion. In 2019, we won business with well over 250 new clients in the clinical space during the year. Importantly, we captured two preferred provider agreements with top 15 pharma clients that had been locked out previously. We are clearly seeing more and winning more trials as sponsors come to realize the benefits of our highly differentiated capabilities. In fact, our co-powered smart trial offering continues to drive new business ones. During the quarter, we were awarded over $900 million of co-powered smart trial business, excluding pass-throughs. Today, 13 of the top 20 pharma companies are using our co-powered approach to improve trial design, to speed up site identification, and to increase patient recruitment. As we speak, we have over 800 smart trials in operation, enrolling more than 120,000 patients. Finally, just like to say a few words about the business environment. R&D activity is at an all-time high. The total number of molecules in clinical development continues to grow, with the late-stage pipeline growing 11% in 2019. On average, over the last three years, the FDA has approved 51 new drugs. Importantly, outsourcing penetration of addressable clinical spend has grown to almost 50%. as pharma companies turn to CROs for expertise in running increasingly complex trials and recruiting increasingly hard-to-find patients. Venture capital funding of life sciences companies remains robust. The National Venture Capital Association reported a record number of deals in 2019 with dollars invested moderating only slightly over a record set in 2018. All of this supports a very solid backdrop for the industry as we go into 2020. Once again, another very strong quarter and a very, very strong year across all our businesses. Mike will now review the financials in more detail.