IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, I'd like to welcome everyone to the IQVIA fourth 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'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, 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 fourth quarter and full year 2020 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer, Ron Brauman, Executive Vice President and Chief Financial Officer, Eric Sherbert, Executive Vice President and General Counsel, and Nick Childs, Senior Vice President, Financial Planning and Analysis. 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 on the events and presentation section of our IQVF Investor Relations website at ir.iqvia.com. Now, you may have noticed that when we issued our press release this morning, we inadvertently missed the quarterly P&L due to an administrative issue. We apologize for this error. This P&L will be made available in our slide presentation, and that will be posted to our website momentarily. Before we begin, I'd like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to, and not a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Boosby.

Thank you, Andrew, and good morning, everyone. Thanks for joining our fourth quarter and full year 2020 earnings call. We will review how we close 2020 and discuss 2021 financial guidance. I'm pleased to report we finished the year with a very strong quarter. We delivered double-digit growth in all key financial metrics and once again reported results above our financial targets. This is all the more remarkable since last year's fourth quarter was so strong. As you know, throughout this difficult year, and as we navigated through the pandemic, we tried to be as transparent as possible and provide visibility to our expected financial performance. In such highly unusual circumstances, the default reaction would normally be to withdraw guidance and watch from the sidelines, but As you know, we tried our best to share with you what we saw. We did the same at the end of the third quarter when we decided to provide a 2021 outlook as soon as we had some visibility, which was a full quarter earlier than usual. Today, this outlook has become clearer and we've decided to update and raise that guidance. Let's start by reviewing our fourth quarter results. Revenue for the fourth quarter came in at $3,298,000,000, which was $108 million above the high end of our guidance range. A little over 70% of these beats came from strong organic performance, less than 30% from favorable foreign exchange. Revenue growth was 13.9% on a reported basis and 12.2% at constant currency. Fourth quarter adjusted EBITDA of $735 million grew 14.5%, reflecting our revenue growth and productivity measures. The $25 million beat above the high end of our guidance range was entirely due to the stronger organic revenue performance. Fourth quarter adjusted diluted EPS of $2.11 grew 21.3%. The beat here entirely reflects the adjusted EBITDA drop through. Our strong fourth quarter financial results were driven by numerous operating achievements during 2020. A little bit more color on those achievements, starting with technology. Demand for our technology offerings remained strong in 2020. 60 new clients decided to deploy OCE last year. bringing our total number of OCE client wins to 140 since launch. As you know, at the beginning of 2020, a top 15 global pharma client begun deployment of OCE in the US. This client has now decided to begin global OCE deployment for their medical teams, namely their almost 2000 medical science liaisons worldwide. The same client is also expanding its use of IQVIA technologies through our HCP engagement management platform. We launched this platform during 2020. HCP engagement management works in conjunction with OCE to ensure global commercial activities are executed in compliance with all global regulations. In addition to HCP engagement management, you will have seen that during 2020, we also launched OCE Optimizer. OCE Optimizer is a real-time math-based territory and sales rep alignment solution, which helps our clients plan their sales rep activity and improve their marketing plans. Switching to our real-world business. Our real-world business has been relatively well insulated from the impact of the virus, and it has strong growth for the year. The business is advanced in the use of secondary data, remote monitoring, and virtual research approaches, which help the team pivot quickly to working in the new remote world at the onset of the pandemic. Our rich clinical data assets are key to our real world differentiation. The team has continued to invest in these rich clinical data assets. And these assets now include over 1 billion active non-identified patients globally. And the team is busy integrating this rich clinical data into research. In 2020, we launched CARE, our COVID Active Research Experience Registry, to help communities and public health authorities better understand the impact of COVID-19 on the population. We're leveraging this platform along with our vast experience of registries and analytics to partner with the FDA to support a better understanding of how people are affected by exposure to COVID. This work will help identify what symptoms individuals experience, the length and severity of symptoms, and whether any medications or supplements they are taking affect the severity of those symptoms. It's a perfect application of our real-world capabilities. Similarly, we have become the partner of choice around the world to assist various governments and healthcare authorities with large-scale diagnostic testing and monitoring of COVID patients. This new series of offerings, which leverages our connected capabilities, contributed incrementally to the strong sequential growth in our TAS segment. Moving to RMDS. As you know, the R&DS team responded quickly in 2020 to support our clients with the development of vaccines and therapies for COVID-19. We've been involved in more than 300 clinical trials and studies for the virus, including four of the five vaccine trials that made it through phase three and were funded by the U.S. government in Operation Warp Speed. To help speed recruitment, we leveraged our direct-to-patient solutions, which include the use of patient registries and IQVS-sponsored advertisements. To date, we've recruited over 100,000 patients to COVID trials. The pandemic has accelerated the need for remote and risk-based monitoring in clinical research, which in turn has accelerated the adoption of our virtual trial technology. In total, we've won over 60 new studies using our virtual trial solutions across 10 therapeutic areas, including awards with five top 10 pharma clients. The technology suite combines e-consent, telemedicine, ECOA, and digital communication, and its platform on HealthCloud, the Salesforce platform that is purpose-built for healthcare and life sciences. This technology is being deployed to speed vaccine development and was an important factor in helping the team secure the two phase three full-service COVID trials that we are working on. The environment for R&D and outsourcing remains very healthy. Biotech funding remains strong with the National Venture Capital Association reporting a record number of deals for the year. The pipeline of late-stage molecules continues to expand and is at an all-time high. It is this healthy environment combined with our differentiated capabilities that has resulted in strong new business awards for the RMDS team. Our contracted backlog, including pass-throughs, grew 18.5% year-over-year to $22.6 billion at December 31, 2020. As a result, our next 12 months revenue from backlog increased to $5.9 billion up 13.5% year-over-year. We continued to build on our strong momentum in the fourth quarter with the team delivering a contracted net book-to-bill ratio of 1.41, including pass-throughs, and 1.42, excluding pass-throughs. We exited the year with an LTM contracted book-to-bill ratio of 1.53, including pass-throughs, and 1.44, excluding pass-throughs. We expect continued strong activity going forward as our pipeline of RNDS opportunities is growing double digits in both volume and dollars across a very wide range of therapies.