IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVS second quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll 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, press the pound key. As a reminder, this call is being recorded. Thank you. I would like to now 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 second quarter 2020 earnings call. With me on the call today are Ari Boosby, Chairman and Chief Executive Officer, Michael McDonald, Executive Vice President and Chief Financial Officer, Ron Braulman, who will be Mike's successor as of August 1st, 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 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, including COVID-19 impacts. 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.

Thank you for joining our second quarter 2020 earnings call. Before we get to the results, I'm sure you all saw the announcement last night, and so this will be Mike's last IQvia earnings call, and so I wanted to take the opportunity to thank him for his service and wish him well in his new role at Biogen. I also want to thank Ron and welcome him back. He really never left, but I want to thank him for agreeing to serve as our interim chief financial officer until we decided on a permanent successor. Many of you already know Ron, and I'm sure you are delighted to welcome him back to the CFO chair. Now, to our results. Revenue adjusted EBITDA and earnings all came in above our guidance ranges. We are also updating our guidance for the year and raising our full-year revenue, adjusted EBITDA, and earnings ranges. Before we review the numbers, I'd like to give you a quick operational update. During the second quarter, we saw gradual improvement in the accessibility of clinical research sites in the R&D solutions business, pretty much in line with what we told you three months ago. Global site access improved from approximately 20% in April to 40% at the end of June. Average site accessibility for the second quarter was about 30%, again in line with the assumption that we made when we set our second quarter guidance. The progress of global site reopenings is continuing into the third quarter, and today it's at 53%. I should point out that the progress has been slowing somewhat in the past couple of weeks as a result of several localized COVID-19 flare-ups in geographies around the world, and especially in parts of the United States. As sites have become accessible, we've seen an improvement in the number of on-site monitoring visits. In fact, on-site visits are now exceeding the number of remote visits. And as a result, remote visits have reduced from the peak in the second quarter. Of course, wherever sites are still inaccessible, our ability to deliver solutions like remote monitoring and virtual trials remains critical to ensuring trial continuity. Now, patients who are already enrolled in trials have slowly begun returning for in-person treatment. As you would expect, this varies by therapeutic area. For example, oncology patients are returning at a faster rate than dermatology patients. Also, The recent outbreaks in parts of the US have hampered the pace of recovery in the number of patients enrolled in trials who are willing to come in for in-person treatment. For trials that have not yet started, the pace of site startup and patient recruitment has obviously been slow. It's improving, but still slow. For example, Patient recruitment for new trials, which had been virtually halted during the second quarter, has resumed over the past few weeks and is now at about 25% of normal baseline enrollment levels. We expect this to continue to improve over time. RMDS business development activity has remained very strong. we still have not had any material cancellations of trials in our backlog due to COVID-19. Interactions with clients such as bid defenses continue as clients adjust to working virtually. RFP volume and value continue to hold at basically similar levels to 2019. And of course, the RNDS team has been awarded a wide range of COVID-19 vaccine therapeutics and related lab work. Of course, you will have seen we announced our collaboration with AstraZeneca last week to accelerate development of a potential COVID vaccine. COVID-19 more broadly has accelerated interest in our virtual trials solution. including StudyHub. Awards for our virtual trial solutions have actually doubled, albeit of a relatively small base. We're leveraging our virtual trial technology platform, StudyHub, to deliver a seamless patient experience. As you know, the platform combines e-consent, telemedicine, e-coa, and digital communication. Moving to technology and analytics, we continue to have very little interruption in data supply or demand. Our data production centers around the world remain fully operational and our technology and analytics deliveries continue in the ordinary course. Selling activities have started to resume as clients have adjusted to working virtually as well. There is still some delayed decision-making for ad hoc services work, But we've had real good momentum in our fastest growing businesses, such as real world and tech. Our real world business continues to expand, even in this environment, with strong growth in the quarter. As a reminder, the results of our real world business are reported in our TAS segment. So unlike our CRO peers, this growth is not included in our NDS results. In the technology space, OCE has added 35 new clients so far in 2020. OCE deployments continue to progress as scheduled as clients look to accelerate their usage and get up and running on the platform even faster. We now have 115 customers that have chosen OCE and they represent over 60,000 potential users of the platform. Most of these customers are still in the early stage of deployment. So far, our win rate in this segment when going head-to-head against the incumbent is approximately 70%. Finally, in our CSMS business, we've not experienced any material cancellations Although, as expected, we've experienced softer demand for field reps, which, of course, impacts revenue. Additionally, business development has slowed considerably in this segment. Let's now review the second quarter results. Revenue for the second quarter came in at $2,521,000,000, which is $118 million above the midpoint of our guidance range. Now, $41 million of these $118 million BIT came from FX and pass-throughs. Second quarter adjusted EBITDA was $483 million with a $25 million BIT versus the midpoint of our guidance. And this came entirely from better operational performance. Second quarter adjusted diluted EPS was $1.18. Second quarter RNDS contracted backlog, including pass-throughs, grew 13.5% year-over-year to $20.5 billion at June 30, 2020. We saw good growth in awards for our large pharma clients as well as our EBP clients in the quarters. We had broad-based booking strength by offering with particular strength in full-service clinical and in lab. The contracted net book-to-bill ratio including pass-throughs was 164 for the second quarter of 2020, and excluding pass-throughs, the second quarter contracted book-to-bill ratio was 1.60. The LTM contracted book-to-bill ratio at June 30th was 1.43 including pass-throughs and 1.42 excluding pass-throughs. As we said previously, we've continued to make every effort to preserve employment during this crisis, and to the extent possible, we have not affected base compensation for our employees. Of course, we've worked to reduce other costs and discretionary spend, And as a result of these actions, our adjusted EBITDA came in well above our expectations. You can see when you adjust for pass-throughs and FX that the dropped through incremental margin on the revenue beat was over 30%. So far, even considering several flare-ups around the world, things seem to be moving in the right directions. Sites are reopening globally, allowing us to resume our critical work in our NDS. We continue to be cautiously optimistic, and we anticipate a sharp recovery in the back end of the year. Mike will review in more detail how we see the second half playing out. Finally, a quick update on our 2021 planning process. As I've already shared with you, We started this process earlier than usual, and our plan is to provide 2021 guidance before the end of this year. Given the positive trends we've seen in operational execution and client demand, together with catch-up work and the associated change orders that we currently anticipate, as well as the COVID awards, we remain optimistic that in 2021 we will see a return to our previous growth trajectory. Now, I'll turn it over to Mike for some more detail on the quarter, how we see the second half of the year playing out, and the upward revisions to our guidance.

Thank you, Ari, and good morning, everyone. Turning first to revenue. Second quarter revenue was $2,521,000,000 compared to $2,740,000,000 in the second quarter of 2019. First half revenue was $5,275,000,000 compared to $5,424,000,000 in the first half of 2019. Second quarter revenue in technology and analytic solutions was $1,109,000,000 compared to $1,102,000,000 in the second quarter of 2019. First half Tech and analytic solutions revenue was $2,226,000,000 compared with $2,177,000,000 for the first half of 2019. R&DS solutions second quarter revenue was $1,235,000,000 compared with $1,435,000,000 in the second quarter of 2019. First half revenue in R&D solutions was $2,676,000,000 compared with $2,000,000,000 $851 million in the first half of 2019. Second quarter contract sales and medical solutions revenue was $177 million compared with $203 million in the second quarter of 2019. First half contract sales and medical solutions revenue was $373 million compared to $396 million in the first half of 2019. Turning now to profit, adjusted EBITDA was $483 million for the second quarter and $1,045,000,000 for the first half. Second quarter GAAP net loss was $23 million, resulting in a $0.12 loss per diluted share. For the first half, we had GAAP net income of $59 million, or $0.30 of earnings per diluted share. Adjusted net income was $229 million for the second quarter, or $1.18 per share. Adjusted net income for the first half was $523 million, or $2.68 per share. Let's now turn to R&D Solutions backlog. Closing backlog grew 13.5% to $20.5 billion at June 30, 2020. New business winds remain strong, and to date, we have experienced no material COVID-19-related cancellations. Let's now review the balance sheet. At June 30, cash and cash equivalents totaled $1.1 billion, and debt was $12.1 billion, resulting in net debt of approximately $11 billion. As of June 30, 2020, our net leverage ratio ticked up slightly to 4.8 times our trailing 12-month adjusted EBITDA as a result of the COVID-19-related impacts on our first half adjusted EBITDA. As a reminder, we continue to be committed to bringing our leverage ratio to a range of three and a half to four times as we exit 2022. Cash flow from operating activities was $472 million in the second quarter and $635 million year to date. CapEx for the quarter was $142 million, $283 million year to date. And free cash flow for the quarter was $330 million or $352 million year-to-date. As you know, when the COVID-19 outbreak became a pandemic in March, we temporarily suspended share repurchase activity. Accordingly, we did not repurchase any shares in the second quarter, and as of June 30 of 2020, we had approximately $1 billion of share repurchase authorization remaining. We will continue to evaluate the right time to reinitiate our share repurchase program. We continue to have strong liquidity. At June 30, we had $1.1 billion of cash on the balance sheet, and our $1.5 billion revolving credit facility was undrawn. $1 billion of EBITDA cushion relative to our leverage and interest coverage maintenance covenants, even as our first half adjusted EBITDA has suffered a significant and unusual impact from COVID-19. 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 now let's move to guidance. On our first quarter earnings call, we outlined our assumptions regarding the global progression of the virus, the percentage of clinical research sites accessible to us throughout 2020, and our ability to interact with clients to support business development activities. These assumptions supported our 2020 guidance provided at that time. During the second quarter, it became apparent that the global spread of the virus would become wider and more prolonged than we had assumed. However, the percentage of sites accessible to us tracked in line with our expectations, and business development activities have progressed better than our original assumptions. We also had made the assumption at the time that 100% of clinical research sites would be accessible by the beginning of the fourth quarter. However, given localized flare-ups around the world, we now see this happening more at the beginning of 2021. But in spite of this, we have been able to overcome restricted site access better than we initially thought through workarounds, including the use of our remote capabilities. Based on our better than expected performance in the second quarter, the company's ability to execute in this environment, incremental COVID-19 trial work, and evaluation of current business conditions and outlook for the balance of the year, we are now forecasting better performance in our TAS segment and better execution against our R&DS backlog than previously anticipated. Together, these factors are expected to contribute to improved financial performance in 2020 versus the company's expectations on April 28th of 2020. As a result, we are raising our full year guidance ranges for the full year. We now expect full year revenue to be between $11 billion and $11 billion and $100 million, which represents an increase of approximately $290 million at the midpoint, of which approximately 20% represents a favorable FX impact based on exchange rates as of the end of the second quarter. Please note that FX still represents a year-over-year headwind of 60 basis points on our average revenue guidance. At the midpoint of the new guidance range, the constant currency growth represents slight growth year-over-year. For full-year profit, we expect adjusted EBITDA to be between $2,295,000,000 and $2,345,000,000, and we expect adjusted diluted EPS to be between $6.10 and $6.30. This guidance assumes foreign currency rates at the end of the second quarter remain in effect for the rest of the year. Now turning to guidance for the third quarter of 2020. Assuming FX rates at the end of the second quarter remain constant through the end of the third quarter, we expect revenue to be between $2.725 billion and $2.775 billion. Adjusted EBITDA is expected to be between $564 million and $582 million, and adjusted diluted EPS is expected to be between $1.47 and $1.55. So in summary, we delivered second quarter revenue with adjusted EBITDA and adjusted EPS all above the top end of our guidance ranges. We are seeing encouraging signs of a migration back to normal business conditions by the end of the year. We are utilizing our unique capabilities to help in the fight against COVID-19 globally. We have raised our guidance for the full year, and we are already planning for 2021 in anticipation of a return to our growth trajectory. And finally, as Ari mentioned at the start of the call, this is my last earnings call with IQVIA. I am very grateful for the opportunity to serve as IQVIA's chief financial officer since our merger. It's been a privilege to work with Ari and the executive leadership team. I have learned a lot over the past four years, and I am incredibly proud of what we have accomplished. I firmly believe IQVIA is incredibly well positioned to achieve its Vision 22 ambitions. I intend to remain a shareholder in the company and will be rooting for its continued success. And with that, let me hand it back to the operator for Q&A.

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of George Hill from Deutsche Bank. Your line is now open.

Yeah. Good morning, guys, and thanks for taking the question. You covered a lot. I guess the first question I would ask is, have you seen any change in the competitive environment as it relates to COVID-19? And I know you haven't had any cancellations, and the win rate's been strong. But I guess just talk about how the selection process is going and whether you guys think you're taking share.

Thank you, George. Good morning. Again, when we refer to no material cancellations related to COVID-19, we're speaking about cancellations of trials that were already in the backlog, not for COVID, for other things. And it just points to the resilience of our customers and their long-term view. They haven't... changed their priorities and they're still focused on the diseases that they were focused on before the crisis emerged. With respect to COVID-19 itself, we've won a wide variety of the trials ranging from small lab work or all the way to wide vaccine trials. A number of those are well publicized. There are a few large ones. Some of them are nominal fees relating to protocol reviews for small biopharma companies. There are multi-million dollar vaccine trials. There are currently two vaccine trials that are funded by the US government, so Operation Warp Speed, which we have won, one of which we mentioned. I mentioned in my introductory remarks, which is the one with AstraZeneca. So in terms of competitive wins, I think, you know, the crisis has shown that our unique capabilities are highly, highly differentiated. All I can say is we've become a lot closer to the customer base during this crisis. With many of them, we had weekly forums. We've got extraordinary feedback from our customers in terms of the criticality of the information we were providing them in real time for their own decision-making process. And we've continued to win at a very high pace. I believe that we've continued to gain market share and certainly we gained a significant amount of the overall COVID-19 work out there. And I want to point out that this COVID-19 related work is, you know, we are contributing as well to the resolution of the pricing. And so in many cases, because these are government-sponsored, we are discounting those. So they are important, and they are going to continue to play a role in the foreseeable future here. And they were a part of our bookings in the quarter. I believe they represent somewhere in the teens of our service bookings in the quarters. going to meet teams or so. And so it's not a negligible piece of our dollar, okay? But, you know, it's not, it wasn't a make it or break it kind of set of activities.

Thanks. And maybe if I could ask Mike a quick follow-up. And Mike, you're going to be missed there at IQVIA. Remote monitoring has played a huge part of the process as we've gone through the COVID crisis. I guess, can you talk a little bit about the financial implications of moving to the remote environment versus the on-site environment?

You're asking about the remote environment versus, yeah. I mean, look, as I said in my remarks, the remote monitoring, obviously, is where everyone went. And because we could simply not access the sites. I I think that as I said in my remarks on site visits have replaced. Are now are now overcome the number of remote visits. The the peak of those remote visits were sometime in the. May June time frame and now we have started. you know, accelerating in a steep fashion the number of actual visits. We still not to our normal pace, but it has dramatically increased. As I said, 53% of the sites are now accessible, and we are able to visit those sites. Bear in mind, while remote is helpful, And then we are using it mostly to meet obligations to patients and clients and to ensure their safety, etc. But again, it's important to know that in-person site visits are still required in order to meet the source data verification criteria. Each trial budget, of course, will have to be revised accordingly so we see this as more of a of an opportunity as well as we go back to to site thank you george thank you your next question comes from the line of tycho peterson from jp morgan your line is now open

Hey, thanks, appreciate all the color. I guess already on the reopening of site and just curious about how much risk you see in the flare up of cases, you know, heading into 3Q in the back half of the year and other implications, you know, to RDS and CSMS for your business and other steps you can take, you know, in anticipation of some of this to try to mitigate the impact.

Yes, a mess. Did you mention CSMS? Yeah, can you say that again? What's the question?

The question was about the flare-up of COVID cases and the risk heading into 3Q in the back half of the year, and if there are steps you could take to mitigate some of that in advance, and then just any, you know, where you would see more impact.

Was that Tycho as well? Was that George still?

No, it's Tycho.

Tycho, sorry. We're having trouble hearing on our end.

The question is about the flare-up in COVID cases and risks, you know, for 3Q in the back half of the year and other steps you can take, you know, to mitigate some of the impact as cases are going back up in a number of regions.

Yeah, I mean, look, there's flare-ups out there, you know, Texas, Florida, California, South Carolina, around the world. I mean, Europe and certainly Asia is pretty much back up to not quite 100%, but not that far. The main issue here is in some parts of the United States, but again, we don't disclose exactly which sites are where, but you should know that it's not going to be that material, these flare-ups in the U.S. to our, you know, we have over 100,000 sites globally, and we've become very adept at transitioning to remote monitoring. So I think, yeah, I mean, we now, we now, I've been able during the second quarter to adapt and we have a number of workarounds using our remote capabilities and so we feel that these assumptions that we made for the third quarter I think are in a way better educated than the ones that we made three months ago when we were just learning to adapt to the crisis. I should point out that these assumptions that we made in April of 2020, many folks out there thought that we were getting ahead of ourselves and were maybe too optimistic about those assumptions. And the fact is the progression of site accessibility as a metric was exactly as we predicted. We based that on the course of the disease in China and other geographies that had been ahead of the rest of the world in terms of the disease. And we based that also on our own internal data and modeling that we are using to project our business. So once again, while people thought we were overly optimistic, it turned out we were exactly on target with respect to site accessibility. And in fact, not so optimistic. So I think I'm not suggesting that because we were right three months ago, we are right now for the next three months. But I think we, if anything, I believe we are a little bit more educated now and our models are even more precise than they were three months ago.

And then, Ari, one follow-up. You talked about a return to normal growth next year. You know, 15% growth off 630 would be to 725, essentially where consensus is. Is that the right way to be thinking about it for next year?

I don't know. I said that we were going to give guidance for 21 much earlier than before, than usual. That is, you know, not at the beginning of the year, but more this year for next year. And that is because, as you correctly pointed out, we have visibility. We have more visibility than usual. because we know of the work that should have been done this year that's still in our books that we need to progress, progress the work that we want this year so we have more visibility. I'm not going to give you any numbers. I'll let you speculate, but hopefully in a not-too-distant future. I mean, I don't know if we'll be able to do this in the third quarter, but maybe we should have that as a goal, okay? We are getting there in terms of our 2021 plan. Thank you. Okay, thank you.

Your next question comes from the line of Robert Jones from Goldman Sachs. Your line is now open.

Thanks for the questions, and yeah, Mike, definitely enjoyed working with you. Good luck in the next endeavor, and Ron, look forward to engaging. I guess maybe, Ari, just on that last line of questions, but maybe to put some numbers around it, you know, the second half revenue guidance looks like it implies about 2% year-over-year growth in total revenue over the back half of 2019. But you updated the NTM revenue expected to convert out of backlog is, I think, up 10% versus the last update with 2Q. Does that dynamic get at what you just commented on, that you have just better visibility into the backlog and what could come out of the backlog in the first half of 2021?

The next 12 months revenue from backlog increased considerably quarter over quarter. It was $4.9 billion at the end of Q1 and now sits at $5.4 billion. That's a large sequential move and I think that's the ultimate forward-looking indicator for future revenue growth and the trajectory of the business. We're very pleased with that. I think obviously we still want to dig into our plans, and we started that process, as Ari said earlier, and we're looking forward to providing 2021 guidance.

But I think... Yeah, but Bob, I think you're thinking about it the right way. You know, part of this is the fact that, as you know, we won, I believe, a disproportionate piece of the market over the past year or so. And those market share gains have translated into a big proportion of our backlog that's new wins that haven't started. And so a big piece, which is why you saw the revenue conversion being slower than usual, even without the COVID-19 crisis, that's because site startup activity is typically a little slower. patient enrollment is a little slower. The vast majority of our book of business is not in the sweet spot, so to speak, where the trial is ongoing. And so the COVID-19 crisis has added to this issue because when you think about the impact of the crisis on trials, for patients that were already enrolled and for trials that are in that space where you are really where you are really in the sweet spot and executing the trial and patients visiting sites, then we worked around that. You can work around with remote monitoring and now we're returning patients to sites, et cetera. But sites that had not started yet, site startup activity was much more difficult simply because people were just not at work and we weren't able to get the site up and running. So that has been delayed, and it's kind of slowed down a bit. Similarly, patient enrollment was more difficult and is more difficult. We are now enrolling, as I said in my introductory remarks, patients back into trial, but we still are only at 25% of normal baseline number of patients recruited per week. So it's going up, and we're catching up. And I think that's part of why you see more revenue pushed back into the next 12 months. That's kind of the pent-up, if you will, revenue that should have been executed that's now going to be executed. And that's in addition, of course, to the change orders for the work that needs to be done. I mentioned before we need to do on-site data verification. So despite the remote visits, a piece of the work Still needs to be done on-site, so that's additional. And then finally, we continue to book at a very high pace, as shown by our high book-to-bill ratios. And so all of that adds up to what we believe is the expected next 12 months revenue from backlogs.

No, that all makes a ton of sense. And I guess maybe just a quick follow-up, Ari, on TAS. Maybe just, I know you touched on some of the elements there in the prepared remarks, but clearly better performance than many expected. What are clients specifically utilizing within the segment? I know there's a lot of components there. Is it the analytics for virtual meetings? Is it more safety studies? Just trying to get a better sense of what was driving the performance in TAS.

Yeah, I mean, look, the usual thing, data, technology, real world as well. I mean, why don't I turn it around?

You want to? Yeah, yeah. Look, the strongest part of the TAS segment has been and remains real world. We've also seen continued implementations in the tech sector. That's gone well. analytic solutions actually has been strong, although there have been some delayed client decisions as a result of COVID. So I would say across the board, but the particular strength that we see is in real world.

And again, the weakness, as we said before, is the part of the business where we help clients organize face-to-face meetings with physicians, healthcare professionals around the world, the conference business that requires in-person, and that has essentially dried out. It's beginning, interestingly, to show signs of revival. People are scheduling conferences. you know, in the next few quarters. So that's going to come back. But certainly it's been largely brought to a halt, and that has created a halt in our revenue, which is why that doesn't perform as greatly. But everything else, I think, has done very well.

Yeah, everything but that. And data remains very solid. Very stable, yeah.

Thank you. Thank you.

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

Great. Thanks, guys. Maybe just a follow-up on the TAS question there. Certainly appreciate Real World doing well. Can you just give us a bit more color on OCE? You know, I know you kind of noted 35 new clients so far in 2020. Can you just discuss how that's trending relative to your expectations? And then again, maybe some of the feedback you're getting from customers that are either converting over to you or kind of competitive wins, what you're hearing about the offering there.

So, again, the team has really performed very well. We've crossed the 100 customer mark and now we are at 115 wins. We continue to see a lot of success. Generally, With a handful of exceptions, we're not seeing any slowdowns in implementation. There are actually, in many cases, accelerations of implementations. We went live for several deployments, including, by the way, in the midst of the crisis, I remember seeing, I think I saw an email somewhere from one of our large, large, large clients, congratulating the team for an amazing job they did on deploying in Spain, in the middle of the peak of the COVID crisis over there. So things have tended to go very well on our deployments. Generally, the demand for remote detailing continues to rise. You know, we've got a module within OC called OC Remote Detailing, which is the most secure compliance platform in the space. We also launched last quarter our compliance solution in the commercial space, the HCP engagement management, which already has four wings and a strong pipeline has been building. So I think it's all going very well according to expectations. And frankly, For OCE, we haven't seen any, you know, few, again, a handful of slowdowns in terms of some areas where we couldn't really deploy. But on the other hand, we've seen acceleration. So it's essentially going as well as we could have expected.

Okay, great. And maybe just one on the margin side. You know, you guys did a pretty good job insulating the bottom line from some of the revenue headwinds. You're pretty quick to do some cost controls. I know you talked about planning for 2021 already. I guess, how should we think about some of the costs that have come out? Are those going to come back in terms of your planning? Are you feeling good enough? To your point there, Ari, I think you talked a few times about the visibility. Now that you're more comfortable there, are you kind of easing on some of the cost controls? Maybe just help us think about the margin cadence when we go forward, the cost control measures that you have in place. Thank you.

Yeah. I mean, you want to run? Yeah, sure. Sure. Look, obviously, there's some margin pressure in the first half due to the drop in revenue and how quickly we could get costs out, more so early on than later on. We should see margin expansion in the second half of the year as the business comes back. We've taken a lot of costs out. I don't think all of it's going to come back. Certainly, we're going to continue to try to keep pressure on keeping T&E costs down, and I think naturally they will in this COVID crisis. And we're always looking to take out, you know, to improve efficiency wherever we can. You know, one of the things we've looked at very carefully other than T&E, which obviously has fallen off, is renegotiating vendor contracts, reducing third-party spend, and we're reassessing our office space needs, which I think a lot of companies are doing right now. So, I think that the cost trends will be positive going forward, as will margin progression.

Yeah, I mean, again, you can see we have a large cost base. And so, God forbid, the situation becomes worse. You know, there are many levers that we can use to mitigate impact to profit. And again, I want to emphasize, we have not taken any virtually no action with respect to employment. There are very, very small pockets really affecting a few hundred employees where there were furloughs or there were a few restructurings, but nothing out of the ordinary course, nothing dramatic, and we do not plan to do so. And the reason for that is, again, we are a people based business, we're a services company, and we want to protect our employees. We know they're going through difficult times. And then secondly, we do expect a V-shaped recovery and a very strong, well, here I go, I'm talking about 2021. I didn't want to, but we expect a strong 2021. And we are going to need our very talented employees. So we didn't take any any base compensation or restructuring actions as a result of the crisis. Great. Thank you very much.

Your next question comes from the line of Eric Caldwell from Baird. Your line is now open.

Thanks. Good morning. Mike, good luck with your future endeavors. A couple of quick questions here. First off, I heard in the Q&A a mention of particular strength in real-world evidence. Last quarter, I believe you highlighted that RWE could be a tale of two cities, prospective and retrospective work. With the prospective work looking more like trials, there could be some headwind. What changed there, if anything? Or what were the dynamics between the old IMS RWE and the old quintiles RWE business mix?

Well, that's very... Okay, I don't want to flatter you too much. It's a very thoughtful question, and you're right. You are understanding why here we're doing well in real world, and that is that the ability to use patient-level data, which I remind you is really an unparalleled asset at our company. We have now, is it over 800 million patient lives, unique patient lives, which have been extremely useful. The unique E360 technology capabilities enable us to conduct a lot of retrospective studies. And that part of the business has been extremely strong. The second factor is that while access to sites has also been restricted, but it is less restricted than clinical trial sites. To a degree, there are many real-world studies where the sites are actually doctor offices as opposed to hospitals, and those have tended to have, while restricted still, and many of them were shut down, as you know, but access, physical access was better than we would have thought. And the experience has proven that the site accessibility for real-world is somewhat better than for clinical trial sites. So as a result, real-world has done, again, better than we would have expected. Bear in mind also, when we report site accessibility metrics, we only report for clinical trials. And as you know, our competitors, our CRO peers, report those numbers in aggregate.

Yep. Helpful. Thank you. IQV is one of two companies in the space that reports authorizations on a contracted basis I think there was some speculation that you could have strong awards, but maybe contracts would be pushed out given the global uncertainty and clients putting out fires. Clearly, that was not a big headwind, but I am curious, what is the normal lag from award to contract at IQV? My hunch would be maybe a couple of months, but I'd love to hear your thoughts, and then How has that changed in this COVID environment? We know the COVID-specific trials are being contracted extremely quickly, but have you seen other changes in the duration between award and contract time?

Well, your general assumption is correct. Okay, you're kind of two months lag time. We're trying to reduce that. But that kind of 60-day period is a good assumption. The lag between booking and revenue could be up to 12 months. So the lag between award and contracting could be up to 60 days, 30 to 60 days, let's say, and the lag between booking and revenue could be up to 12 months, six months to 12 months, depending on the client, the study dynamics. So, of course, the COVID situation has pushed that lag between booking and revenue further simply because we were unable to get sites started. But we are getting back into it as we speak. And certainly in Asia we already back up to normal. And we expect that to happen, you know, with a three to six month lag in the rest of the world, Europe and the US. So yes, I mean it has created some delays in execution. On the other hand, as you suggested, COVID-19 trials are much faster burn, but it has partially partially begun to offset that.

Eric, just one thing. Both awards and contracted bookings were very strong in the quarter. Either way, you look at it.

Ron makes a good point. You remember the old way of reporting book-to-bills, which was basically on awards. If we had done that this quarter, It would be having significantly, materially higher than the 1.64, materially higher, on awards, on an awards basis.

Very helpful. Last one, just a clarification. There were some phone issues in one of your earlier responses. Did I hear you say that COVID work in total across therapies and vaccines accounted for mid-teens of your contracted awards? Yes.

Yeah, services, yes.

Yep, okay, great. Thanks, guys.

Okay, operator, I think we're up to the top of the hour now, so I think we've run out of time for the call. Thank you, everyone, for taking the time to join us today, and we look forward to speaking with you again on our third quarter 2020 earnings call. Jen and I will be available to take any questions that you may have for the rest of the day. And Mike and Ron. Yeah, Mike and Ron will join us as well.

Okay, thank you, everyone.

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