IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA first quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Andrew Markwick, Senior Vice President, Investor Relations and Treasury. Mr. Markwick, please begin your conference.

Thank you. Good morning, everyone. Thank you for joining our first quarter earnings call. With me on the call 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 Charles, Senior Vice President, Financial Planning and Analysis, and Jen Halczak, Senior Director, Investor Relations. Today we will 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 IQVS Investor Relations website at ir.iqvs.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, including impacts from COVID-19, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual reports 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. And finally, please bear with us as we're conducting this call from various remote locations. We will do our best to make sure the call goes smoothly. I would now like to turn it over to our chairman and CEO, Ari Busby.

Thank you, Andrew, and good morning, everyone. Hope everyone is safe and well. Thanks for joining us on our first quarter 2020 earnings call. I want to apologize in advance that given the crisis, I will be a little longer in my narrative today in an effort to provide you a good amount of color on what we're seeing on the ground. Of course, as always, if you don't have time to get your question in, our team is available to answer questions after the call. Today, we will review our first quarter performance. We will also provide guidance for the second quarter and update our full year guidance in light of COVID-19. First, let's review how we've been navigating the challenges over the last couple of months. We've instituted a crisis management structure to ensure that we are aligned on priorities across the organizations. I've been meeting every day with my senior leadership team, and this close communication has allowed us to be agile and decisive in our response to the crisis. And collectively, we are currently centered around four priorities. First, the safety of our employees, patients, healthcare professionals, customers, suppliers with whom we frequently interact. To limit exposure, of course, it's prohibited substantially all travel. supply PPE to field-based employees, close facilities, and ask most of our staff to work remotely. We've added bandwidth, VPN capacity to our advanced infrastructure to enable remote working and avoid service disruptions. Second, as clinics and hospitals have become inaccessible and as it has become unsafe or difficult for patients to travel, we've continued to do everything in our power to mitigate disruptions to clinical trials and ensure patient safety. Wherever possible, we have been transitioning to remote monitoring with the number of remote monitoring visits reaching five times the level they were prior to the crisis. We have leveraged our existing drug delivery and home health services for activities such as at-home lab drills. Perhaps we could, whatever we could, we've been enabling telehealth visits to ensure continuity of contact between investigator patients and CRA, and we've been transitioning portions of trials to StudyHub, our virtual trial platform. Third, to help our clients and other organizations manage and plan for the outbreak, we are deploying our unique capabilities. For example, we are applying our people, data, and technology to bring AI and insights to help our clients track the progression of the disease, manage capacity, and monitor supply chain. We are actively engaged with clients through regular executive briefings, three weekly market tracking reports, white papers, top leadership pieces, and webinars to help them understand the rapidly evolving dynamics of the outbreak and to predict how things will develop. Finally, we are joining the global response to the crisis and contributing our resources to its resolution. Last week, for example, in the UK, on behalf of the Department of Health, we joined with the Office of National Statistics Oxford University, and the UK BioCenter, we immediately commenced a countrywide testing program of UK households for COVID-19 infection and immunity. In Asia, we provided an IQVIA team to help develop two new treatments for COVID-19 using existing HIV and flu vaccines. In the U.S., we're partnering with the University of Texas to develop new lab tests to identify vaccine candidates quicker than currently available tests. In the U.S. and Europe, we are collaborating with governments and the industry to develop several experimental vaccine candidates using our prime site networks and data assets to accelerate timelines. We are, of course, involved in multiple trials for COVID-19 therapeutics and vaccines, which I will talk more about later. During this critical time, we continue to innovate. Two weeks ago, our R&D team launched the first technology-enabled COVID-19 trial matching solution at c19trials.com. This online platform will connect at-risk individuals and researchers to ongoing COVID-19 clinical research projects within the U.S. In addition, the real-world team launched the IQVIA Care Project Registry. The platform will apply our vast experience with registries and analytics to help connect stakeholders and advance information sharing to better understand how to treat and prevent the disease. If successful, all of these will bring much-needed treatment to patients. Now, before I review the results of the quarter, let's take a look at some of the operational impacts to our business caused by the virus. It is important to note, across all of our segments, we view the impact from the virus as temporary. Client demand and interest in our differentiated offerings remain strong, even if their own ability to move forward on projects is hampered or delayed. In our NDS, site startup patient recruitments are the most impacted part of the clinical trial lifecycle. Site monitoring visits have also been impacted. As of today, only 20% of our global sites are currently accessible to our CRAs for on-site monitoring visits. On the other hand, Data collection and regulatory reporting activities are more or less continuing with little interruption. For in-flight trials, we are coordinating closely with local health authorities and customers to deploy, when appropriate and feasible, our services and technologies to further increase remote-based CRA and centralized monitoring for trials and remote patient visits. As site access remains constrained, we are seeing an uptick in demand for e-consent, virtual trials, e-COA, and connected devices. When the crisis subsides, we anticipate that some trials will require minimal additional work to satisfy requirements over and above the remote visits, but the vast majority, substantially most of the other trials, will require CRAs to go on-site and perform the tasks of checking documentation, et cetera, that we would not have performed safely during the crisis. R&D business development activity has remained strong. We have not had a single COVID-related cancellation. RFPs are holding strong at levels that are in line with 2019, which was a record year, and our qualified pipeline remains at a record high. Face-to-face interactions with clients is the obvious challenge. Big defenses, for example, have been delayed with some new business activity getting pushed to the right. In technology and analytics, we've had no interruptions in data supply or demand. Our data production centers remain fully operational, and our technology and analytics deliveries continue in the ordinary course. Conversely, The parts of the business that rely on face-to-face interactions or are dependent on in-person gatherings, events, or conferences are experiencing disruption. The prospective portion of our real-world business that requires site monitoring activity has also been impacted. That said, given the higher proportion of recurring revenue in the CAS segment, it remains relatively well insulated. Business development activity, however, has been somewhat hampered as decisions are being delayed due to the situation. Finally, CSMS did not see much of an impact in the first quarter. And what's happening here is that clients are reluctant to alter their commercial footprint in anticipation that the crisis will subside in the near term. And as a result, We have not seen any significant cancellations at this stage. We are, of course, also trying to deliver services remotely through e-detailing and virtual meetings. However, activity has become much more challenging due to a decline in sales rep visits and, of course, physician attention being focused on the COVID-19 crisis. Business development has also become challenging in CSMS due to delayed decision making and reduced RFP flow. Now against this backdrop, let's review the first quarter results. Revenue for the first quarter came in at $2,754,000,000 and was slightly higher than our most recent guidance range. The revenue beat was mostly driven by pass-through, which came in a little higher than we had anticipated. From a segment perspective, technology analytics solutions revenue came in at $1,117,000,000. Constant currency growth was 5.5%. R&D solutions was $1,441,000,000, up 2.4% of constant currency, and excluding a pass-through headwind of approximately 300 basis points, services growth would have been over 5%. Contract sales and medical solutions revenue in the quarter was $196 million and grew 2.6% at constant currency, essentially as we originally expected. First quarter adjusted EBITDA was $562 million, and first quarter adjusted diluted EPS was $1.50. I want to highlight bookings growth in RMBS, which was impressive by any standard, but especially so given the broader backdrop. First quarter contracted backlog, including pass-throughs, grew 14% year-over-year to $19.6 billion at March 31, 2020. In the first quarter, awards and net business, net new business, were strong across the board. LTM contracted net new business, including pass-throughs, at March 31st was up 7.5% compared to LTM new business at the end of last year. The contracted book-to-bill ratio, including pass-throughs, was 1.42 for the first quarter of 2020, And excluding pass-throughs, the first quarter contracted book-to-bill was 135. The LTM contracted book-to-bill ratio at March 31st was 143, including pass-throughs, and 136, excluding pass-throughs. The team was, of course, awarded a number of COVID-19 treatment and vaccine trials during the first quarter, most of which are not in our contracted bookings or backlogs that I just mentioned. In fact, Between treatments and vaccines, we are currently working on 36 COVID-19 awards with a pipeline of 70 other potential projects. Of course, these projects are generally heavily discounted. We are contributing to the general effort against COVID-19, so they won't represent much of our bookings. Importantly, a significant number of these studies entail transformative trial design, including several with government sponsorship, and many using the real-world comparator arm, which IQVIA is uniquely positioned to deliver on behalf of our customers. As dramatic as this crisis is, it will eventually subside. It will not change our industry's fundamental dynamics, and in fact, I believe the prospects for our industry are better than ever. We all know some industries will experience a permanent loss of revenue due to their short cycle or consumer-oriented nature. However, We are a long cycle business serving the critical needs of the pharma industry. We've got good visibility into our long-term business due to our backlog and pipeline. In our case, work is just being pushed to the right. This crisis is a reminder of how critical the pharmaceutical industry is to society. Patients will continue to require innovative new medicines and is no viable substitution for drug discovery. We have an enormous role to play in helping our clients bring life-saving treatments to patients. For example, every year, 100 million patients are treated in oncology, 500 million patients for cardiovascular disease, and at any given time, more than 250 million people suffer from more than 6,000 rare diseases. The need for our customers to use real-world data, advanced analytics, and technology to combined with therapeutic expertise to accelerate clinical trial timelines and to launch new medicines has become even more evident during this crisis. It will be even more relevant to our customers than we were before the crisis started. While the course of the virus is uncertain, and no one knows for sure how the balance of the year will develop, one could, of course, step back and say, well, Let's suspend guidance and see what happens. But we believe it is incumbent on us to have a point of view and to make assumptions about what our business looks like as we navigate this disruption. And our current point of view is that the business will snap back as the crisis subsides, hopefully later this year and certainly into 2021. Given these assumptions about the future, we are focused on maintaining our operational capability as we navigate through the crisis. We are, of course, taking aggressive actions to manage our costs in line with revenue declines while also ensuring we are ready for a quick recovery. We've stopped renewing temporary employment contracts in the second quarter. We've renegotiated real estate leases and vendor contracts. We've deferred some of our projects. We've stopped much of our discretionary third party spend and many similar actions to control costs. However, for now, we will do our best to preserve employment and to the extent we can to not affect base compensation for our employees. We want to take care of our employees as much as possible, especially in these difficult times. They are our greatest asset and we need to stick together in anticipation of the strong rebound we are expecting in demand for our services. Many companies are announcing growth-based reductions in pay affecting significant proportions of their staff. We are taking a somewhat more nuanced approach. This, of course, offers some employees who need the time off during this difficult time the option of a reduced work week. In very small parts of our business, where utilization has dropped very significantly, we are implementing temporary partial work weeks with corresponding pay reductions. In total today, approximately 650 people, employees, have either requested time off or been asked to take time off. This represents less than 1% of our total workforce. Obviously, should the recovery be delayed and our assumptions prove to be materially different from our current From reality, we are of course prepared to make more drastic decisions if conditions on the ground differ. For now, the rest of our 67,000 plus employees will not see any broad mandatory base compensation reductions. Separately, and as an expression of solidarity with all those affected by the crisis, we are launching a temporary voluntary pay reduction program this quarter for the most senior executives across the company, ranging from 10% for SVPs to 20% for my direct reports and to 50% for the CEO. These executive pay cuts will be used entirely to fund Ithulia Cares, a new COVID-19 relief program we are launching this week. The proceeds from these executive pay cuts will be distributed to lower pay level colleagues who are facing family hardships as a result of the COVID-19 outbreak. Finally, I want to highlight to you that at the same time as we are focused on managing the crisis and helping our organization navigate through these difficult times, we have also, in parallel, started our annual planning process for next year much earlier than usual. This is normally an end-of-summer through end-of-year activity, though we have already started engaging our leadership team and our business units in planning for 2021, based on various scenarios of recovery. While we usually provide annual guidance at the beginning of the year, concurrent with the release of our fourth quarter earnings, we hope this year to provide 2021 guidance earlier than usual. Now, I will turn it over to Mike for some detail on the quarter and the assumptions we've laid out for the remainder of 2020. Mike?

Thank you, Ari. Good morning, everyone, and I also hope that you're staying safe and healthy. Let's start with revenue. First quarter revenue of $2,754,000,000 grew 3.7% at constant currency and 2.6% reported. As Ari noted, revenue outperformed our revised first quarter guidance due to greater than expected pass-throughs, which, as we have said, are very hard to predict. Technology and analytic solutions first quarter revenue of $1,117 million grew 5.5% at constant currency and 3.9% reported. R&D solutions first quarter revenue of $1,441 million grew 2.4% at constant currency and 1.8% reported. First quarter contract sales and medical solutions revenue of $196 million grew 2.6% on a constant currency basis, and 1.6% reported. Turning to profit. Adjusted EBITDA was $562 million for the first quarter. First quarter GAAP net income was $82 million, and GAAP diluted earnings per share was 42 cents. Adjusted net income was $294 million for the first quarter, or $1.50 per share. Let's now turn to R&D solutions backlog. Closing backlog at March 31st, 2020 was $19.6 billion. New business wins remain strong and to date we have not experienced any COVID-19 related cancellations. Let's now review the balance sheet. As of March 31st, cash and cash equivalents totaled $927 million. and debt was approximately $12 billion, resulting in net debt $11.1 billion. Our net leverage ratio was 4.7 times our trailing 12-month adjusted EBITDA. Cash flow from operating activities was $163 million in the first quarter. CapEx for the quarter was $141 million, and free cash flow for the quarter was $22 million. A reminder, the first quarter is seasonally our lightest free cash flow quarter. To date, we have not experienced any collection delays related to COVID-19. Prior to the COVID-19 outbreak becoming a pandemic in March, the company had repurchased $321 million of its common stock in the first quarter, including the purchase of 1 million shares in connection with the February 2020 private resale by certain stockholders. Since the COVID-19 outbreak became a pandemic in March, we have temporarily suspended share repurchase activity. As of March 31st, 2020, we had approximately $1 billion of share repurchase authorization remaining. We continue to have strong liquidity. At March 31st, we had over $900 million of cash on the balance sheet and $1.4 billion of available borrowing capacity on our revolver. Our first maturity of any size is not until 2023, which is our term loan A, held by a consortium of our relationship banks. We also have approximately $1 billion of EBITDA cushion on one of our maintenance covenants in our credit agreement and about $1.1 billion under the other. Our senior secured net leverage ratio must be below four times, and at March 31st, it was 2.17 times. Our interest coverage must be above 3.5 times, and as of March 31st, we were at 5.92 times. And finally, I would point out that we have a lot of flexibility with capital allocation, which includes CapEx, M&A, and share repurchases, and which would typically equate to about $2 billion per year. Before we turn to guidance, it will be useful to take a closer look at the COVID-19 situation in China. In China, there were about eight weeks of a public health emergency from January to March, during which about 80% of our clinical research sites in China were inaccessible. After that eight-week period, activity started to return to normal outside of the Hubei province, and by the end of March, about 40% of our sites were inaccessible. As we moved into April, services outside of Hubei returned to normal, with nearly 100% of clinical research sites becoming accessible during May. As we recap our 2020 guidance, we have used what we have seen in China as a reference point and we are using a proprietary model with predictive analytics and AI, which is guiding our forecast. All models rely on the accuracy of the inputs used in the model and the future course of the virus is inherently uncertain. Despite this uncertainty, we have used our best efforts to estimate the impact of COVID-19 on our business, and when resetting 2020 guidance, we have assumed that new cases of the virus continue to increase globally through the second quarter, then level off and begin to decline by the end of the quarter. This slide here shows the number of active cases for 100,000 people, but the curves of the number of new cases or symptomatic cases would be similar. We expect that business activity begins to recover during the third quarter as access to clinical research sites resumes gradually during the quarter with a return to 100% functionality at the beginning of the fourth quarter. Currently, with the exception of China, most of the company's offices are closed and substantially all of the IQV employees are working remotely. Because this is also the case with our clients, business development and execution activities, especially when they require face-to-face interaction, have been inhibited. We assume that commercial activity gradually resumes throughout the second and third quarters and returns to normal by the beginning of the fourth quarter. Currently, approximately 80% of our clinical research sites are inaccessible. We assume the number of inaccessible sites will average about 70% through the second quarter. For the third quarter, we expect an average of 35% of sites to be inaccessible, with all sites open and accessible by the beginning of the fourth quarter. Based on those assumptions, we are revising our full year 2020 guidance ranges. Full year revenue was now expected to be between $10 billion $600 million to $10,925,000,000. The new revenue guidance includes an unfavorable $75 million impact to reflect FX rates as of April 24th. For full-year profit, we expect adjusted EBITDA to be between $2,200,000,000 and $2,300,000,000. And we expect adjusted diluted EPS to be between $5.75 per share and $6.10 per share. This guidance assumes foreign currency rates at April 24th, 2020 remain in effect for the rest of the year. Now, turning to guidance for the second quarter of 2020. Consistent with the assumptions that we laid out for our full-year guidance, including the assumption that business starts to return to normal in some parts of the world in the third quarter, we are expecting the second quarter will have the biggest impact from COVID-19, representing approximately half of the expected total impact for the year. Assuming FX rates at April 24, 2020 remain constant through the end of the quarter, we expect revenue to be between $2,365,000,000 and $2,440,000,000. Note that FX is expected to be a headwind to revenue growth of approximately 150 basis points in the second quarter. Adjusted EBITDA is expected to be between $445 million and $470 million, and adjusted diluted EPS is expected to be between $1 per share and $1.09 per share. You should note in the second half of 2020 of the remaining impact from COVID-19, we expect approximately 75% to be weighted to the third quarter. And so in summary, continued strength in new business wins position us well for a return to strong growth and the momentum we had earlier in the year. We are utilizing our unique capabilities to help in the fight against COVID-19 globally. We are engaging with clients around the world at a much higher level and frequency than ever before. We are taking cost actions to mitigate the impact but have decided to prioritize operational capability in anticipation of the return to normal later this year. We expect a migration back to normal business conditions by the beginning of the fourth quarter, with the second quarter bearing most of the impact from COVID-19. And we are already planning for 2021 in anticipation of a return to our growth trajectory. And with that, let me hand it back to the operator for Q&A. Thank you.

At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. Your first question comes from the line of Tycho Peterson from JP Morgan. Your line is open.

Hey, thanks. Appreciate all the color. Ari, I'm just wondering if you can talk to the mitigation efforts, what percentage has actually moved to virtual enrollment and remote monitoring at this point? you know, how comfortable the FDA is, you know, maybe switching trials mid-course to more remote monitoring. If you could just talk to those dynamics.

Well, thank you, Bob. On your question, about 50%, I would say, move to remote monitoring. Obviously, The FDA has issued guidance on how we should do remote monitoring. The guidelines are extremely beneficial. They provide a way to enable remote approaches to monitor patients and cite data. Obviously, you have to check that they are taking their medications and so on. We build the industry's largest central monitoring organization. And it's across five global locations. It supports our remote monitoring capability. We have hundreds of already successfully executed risk-based monitoring studies, RBN studies, in which remote monitoring has been the key component. This is before the crisis. And, you know, we complete thousands of remote monitoring successfully every year, and the number is growing. So we're happy with the FDA guidance. There are, of course, as I just said, there are trials where remote monitoring of data is not always an option. Even when the technology and complexity of the trial and the regulatory infrastructure allows it, sometimes it's not always feasible. Not all of the components of the trial also may be monitored remotely. So the key to monitor successfully is to apply the appropriate level of remote and on-site monitoring based on risk. To do that, you need a good therapeutic understanding of the protocol. You need to learn strong analytics and technology. So we've got all these elements at scale, but not every trial lends itself to remote monitoring.

And then for a follow-up, as we think about the recovery, just wondering if you could give us some color on what type of work you think could come back sooner, you know, Phase 1 versus 2, 3, oncology versus other therapeutic areas. And, you know, to what degree do you have to fight through sites that have been repurposed, you know, for COVID and beds that have been turned over? You know, how much of a headwind could that be as we think about trial sites getting back up and running?

Obviously, we've got over 100,000 sites around the world, so the situation is very different side by side, and you're right to point to therapeutic differences. Patient safety, obviously, in oncology is paramount because the patients are in the middle, especially for in-flight trials, where you can't just stop the treatment mid-course. those are more likely to come back faster. The activities that are hampered by the lack of access are site startup, patient enrollment, and, as we just discussed, monitoring. So it's not just the monitoring visits. It's also the early part. And as you know, we've got the big backlog of trials in startup phase. So that has been the key hindrance for us. Thank you. I'll ask everyone to, if you could just, given the timing constraint and so on, to limit your questions to one unless it's an obvious follow-up. Thank you. Thanks, Bob.

Our next question comes from Bob Jones from Goldman Sachs. Your line is open.

Hey, thanks for the questions. I guess maybe just to follow up on that line of questioning, Ari, if you look at the update from the end of March with the number of sites that you guys framed as inaccessible, I think real-time you're saying 80%, and then obviously expecting 100% back online by 4Q. Maybe just spending a little bit more time understanding what's informing the cadence of the recovery. Obviously, you guys are are a lot closer to it than us on this side of the world. And so just trying to get a better sense of, you know, really kind of how you're thinking through that type of recovery, because I think on the surface, obviously, it does seem to be fairly sharp, but kind of V-shaped from here to the end of the year.

Well, look, What we're talking about here is accessibility to on-site monitoring. That doesn't necessarily mean that all of the activities related to the trial are going to be enabled just because we can now access safely the site. You also have to have patients coming back. For example, we've seen in China that Even when the site is open, not all patients are willing to come in. There's going to be a little bit of lingering concerns. So that's number one. Number two, once the site is accessible to our CRAs, then they can go in and perform all the tasks that, as I said in my introductory remarks, there are many tasks that we cannot do remotely, but the vast majority of the trials are going to require us to go back on site and do the work that we would have done now in the second quarter or third quarter, you know, checking documentations, making sure everything is in order and so on physically, which is required, and our clients have already told us they will require that. When they accept remote monitoring visits, It's really to check on the patients and to do all the things we can do remotely. We still have to go on-site to do that work. So this snapback does include a catch-up, if you will. In a given trial, that means, and I think our clients understand that, that the overall cost of the trial is going to go up because in addition to the remote monitoring visits, which we're doing now, we still have to do an on-site visit. It won't be the same on-site visit because a lot of the activity is will have been done remotely. But there is an incremental piece of work that still needs to be done to ensure full compliance. So this is part of why it looks like a V-shaped summer.

That's helpful. I'll leave it there. Thanks, Ari. Thank you.

Your next question comes from Eric Quiltball from Baird. Please go ahead. Your line is open.

Hey, thanks very much. A couple of topics. First off, in the early days of IQVIA, there was a lot of talk about fixed price contracts, and I know that conversation died down over time, but I am curious, to the extent that you implemented fixed price contracting, what are the impacts on those contracts in the current environment? And secondarily, or as an add-on, I'm curious if you have any early views on what change orders will look like over the next year or so net negative, net neutral, net positive, just your best guess on what happens to the total book of business compared to original expectations and what you might need to go back to clients for. Thanks.

Thank you, Eric. Okay, I think it's a good question, but look, when we said fixed price, I think it's a big, it's a quote-unquote fixed price, right? It's We don't have any contract where we take one price for everything. It's part of the contract that are based on a specific milestone being achieved in exchange for a specific value to be paid. Now, obviously, all contracts have caveats, have outs, have circumstances. And look, our clients want the trial to be conducted. So they understand there are changes of scope that are being discussed. You know, a fixed price is assuming the site visit can actually be performed. If it cannot be performed, then, you know, there's no way to fulfill the contractual obligation. So there has to be scope changes. I understand where your question comes from, but it's not a concern for us. With respect to the book of business in aggregate, look, the RFP flows, as I said earlier, are essentially flat to 2019, whether it's in dollars or in volume. And as you know, 2019 was a real, real record year. Our total R&DS pipeline is up meeting year over year, and our qualified pipeline for the next 12 months is the largest qualified pipeline we've ever had. So the message I'm trying to send here, and frankly, while it might be intuitively easy to conclude that, we ourselves are stunned by the degree to which this is a very resilient industry, the pharma industry. And as I said before, it's not going away, if anything. I think, you know, people have liked in the past to target pharma companies. I think these talks hopefully will be seen and people will understand how crucial drug discovery is. And frankly, Eric, we are very confident going into 2021. This is why we decided not to alter our operational capabilities, even as many of our employees are essentially at home, not very utilized. We decided we want to take care of them and continue because we've got strong expectations for 2021. It's also why we decided to engage with the leadership team now. We've already started planning for 2021 because, again, we have good visibility on the book of business. Thanks, Alex.

Your next call comes from the line of John Krieger from William Blair. Your line is open.

Thanks very much. Ari, you've mentioned a number of things you've been able to do to help mitigate the crisis, like remote monitoring and virtual visits and televisits. Just curious, in your view, as you move to the recovery phase, let's say next year, do you think any of these things are going to sort of be structurally adopted by sites and clients, or are you viewing them primarily as just temporary ways to mitigate that crisis? Thanks.

Yeah, I mean, look, we, you know, long before the crisis, had been advancing our virtual trial platform, and which was being piloted, you know, last year, and for which we're having a lot of demand right now. You know, many, many clients calling to ask whether we can transition. Now, it's hard, you know, to... in the middle of a trial, but we are doing it to the degree we can, and we're actually accelerating development. We think the trend will continue, but you will always need physical visits as well. There's no way around it. A virtual trial means that All the pieces that can be done remotely will be done remotely. The patient still has to interact with their physician, and to the degree they can do it with telehealth, they'll do that. But there will be physical interactions as well. So the answer to your question is yes. People will accelerate the way they are thinking about this going forward. So, yeah, I mean, look, it's true. I know what you're looking at. The unit price for a remote monitoring visit is less than a standard in-person site visit, given that there's less effort. There's also less pass-through expense because there's no travel, for example, to the site. On the other hand, there is more time and more productivity. you know, again, as I said before, in-person site visits are still required, even in virtual trials, to meet the source data verification criteria. And until, you know, the standards, the regulatory standards change, we still need to verify the source data. And so, yeah, I mean, the trial budgets actually, in the context of the crisis, as I said before, probably are going to go up not down for now.

Great. Thank you.

Your next question comes from Patrick Donnelly from Citi. Your line is open.

Great. Thanks. Ari, maybe just on the task business, it seems like that's proving pretty durable during these uncertain times. Can you just talk through recent trends, conversations with customers there, and then just expectations kind of through this and then, again, on the other side? It feels like we have a pretty good handle on on the R and D business, you know, expecting that acceleration on the backend. Can you just talk about the pace of tasks during the year? And then again, on the other side of this as well.

Yeah, go ahead. Do you mind just repeating?

Which area of the business? I couldn't hear the first part of your question. The task business. Sorry. The task business. Okay. Yes. Yes. Well, look, I mean, again, I just, I want to remind you that that business roughly can be divided into three-thirds, which is our legacy IMS info business, and then you've got the technology business, and then you've got the technology analytics business, and then you've got the real-world business. So with respect to information, the demand and our ability to supply the information has been, if anything, has had a little uptick in the middle of the crisis. And once again, this is a business that is historically flat. It is subscription-based, license-based. and is more than 90% recurring. So that is entirely intact. The part of the business that, on the real-world side, that is based on patient-level data and so on is intact. The part of the business that feels prospective studies is more similar, more akin to the R&DS business, and does require Site visits, that has similar type of characteristics and has a little bit of headwind as a result of the crisis. The technology and analytics business is basically intact. A lot of it is also licenses and recurring business. What is true, frankly, in this business is that the business that requires more marketing and sales That requires face-to-face interactions. It's not a big business, frankly, but it is, you know, essentially virtually coming to a halt. You just can't have meetings with doctors. You can't have the conferences where all the compliance meetings and so on take place. And it's very hard to do it remotely or maybe remotely. I think the last number I saw is 12% of that business has been moved to webinar-type format, but it's clearly not the same thing. And so that is very affected. But again, it's a very small part of the total. So yeah, that is why the impact on TAS is less than on RMDS. With respect to the exciting part of the business, which is the OCE platform, We've crossed the 100 customer mark with over 100 wins. We continue to see a lot of success. We're winning two out of three times against the competition. We are with a handful of exceptions. Generally speaking, we are not seeing any slowdowns in the implementations. Actually, we've seen accelerations. We went live in the middle of the crisis for several deployments. That was very successful. I saw some very nice feedback from clients. The demand for remote detailing continues to rise with the OCE remote detailing, which is the most secure compliance platform in the space. We also launched in Q1 our compliance solution in the commercial space. We also launched HCP Engagement Management, which already has four wins in Q1 and a strong pipeline. So the technology platform business, you know, we're not seeing any slowdown even on the business development front. Now, there are, you know, projects, analytics. We've got a little bit of consulting projects. All of that, as always, you know, is delayed. And some of the business development activities is just being pushed to the right because the meetings can take place and because the clients themselves are somewhat on hold with respect to new purchases of somewhat discretionary projects. So that obviously is a headwind to the rest of the year, third, fourth quarter, and first quarter next year. And again, these are smaller parts of the task. Thank you. That's helpful. Thanks, Ari.

Your next question comes from Sandy Draper from SunTrust. Your line is open.

Thanks very much for taking the question. With regards to time, it'll be a quick one, I think, for Mike. On the delay of the share or the halting of the share repos, what are sort of the key factors that open that back up to you? Is it really if you hit your fourth quarter, everything's fully ramped back up, then you go back? Do you want to see a couple quarters? How should we think about going back to a more normalized capital deployment strategy? What are the factors that go into that decision? Thanks.

Thanks for the question. As we mentioned, we did repurchase $321 million of our stock in the first quarter, and that all occurred largely before the crisis, including a chunk that we participated in a secondary offering by our sponsors. I think, you know, We're going to be judicious with respect to capital deployment, obviously manage our liquidity as a priority. As I mentioned in the prepared remarks, we've not seen any disruption or delays in collections at this point. We're continuing to manage that closely and carefully. We've got $1.4 billion on our $1.5 billion facility that's undrawn, so it puts us in a very good liquidity spot, but at the same time, obviously, with declines in EBITDA, Purchase ratio was ticked up a bit. We're going to monitor that carefully. We prioritized keeping our employee base in a great place and not impacting base compensation in any way in anticipation of a big delivery task as things come back to normal. And I think that share repurchases will just continue to monitor as we get through the crisis what the prudent time to reenter the market obviously is. we would love to be buying shares at the current levels. But at the same time, we're going to be very judicious with our capital allocation, whether it's M&A, share repurchase, or CapEx. And I think we'll, you know, logically find the most prudent time to reenter when we get through to the other side.

Great. Thanks for answering the question.

Do you want one more question? Yeah, I think we've got time for one more before we hit the top of the hour and I'll break it.

Our final question comes from Shlomo Rosenbaum from Stiefel. Your line is open.

Hi. Thank you very much for taking my question. Ari, can you talk a little bit more about how the billing works in the current environment on the CRO side? If people can't get into the sites, is there a portion of what they do that's billable or portions not billable? And then just to clarify as part of this, when they actually have to go back in physically, the cost of that additional cost, you expect that to be largely borne by the client versus being borne by the company. Is that correct?

Thanks. So, yeah, the second part of your question, yeah, obviously, as I said before, there are, as a result of the crisis, changes of scope to the trial, and that includes... you know, conversations with the clients as to how do we handle that incremental work that needs to be done. As to the first question, I wasn't sure I understood the practical, the actual way that we do the billing. I don't know, Mike, do you have any insights on that?

Yeah, I mean, I think, you know, bear in mind that, you know, revenue is driven by a percentage of completion, not so much the billing. But, you know, to the extent that we're able to complete tasks in the ordinary course and progress toward completion, You know, we're able to build that. In some cases, if we have milestones that we actually physically cannot hit because of factors that are outside of our control, in some cases we have to have that conversation or having those conversations with clients that allow us to build and collect in cases where we're just, you know, stuck on not being able to hit a predetermined milestone that didn't anticipate this kind of pandemic. So we haven't seen that. disruption at this point, and we continue to monitor it. We have a great roadmap in China where, you know, sites are now reopening, and we've not seen really any disruption of note at all anywhere in the billing and collections front, including in the R&DS business.

Thank you.

Thank you for taking the time to join us today, everyone, and we look forward to speaking with you again on our second quarter 2020 earnings call. Jen and I will be available for the rest of the day to take any follow-up questions that you may have. Thank you.

This concludes today's conference call. You may now disconnect.