IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA third quarter 2024 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, Press the pound key. As a reminder, this call is being recorded. Thank you. I would like to turn the call over to Kerry Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Thank you, operator. Good morning, everyone. Thank you for joining our third quarter 2024 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer, Rob Roman, Executive Vice President and Chief Financial Officer, Eric Sherbert, Executive Vice President and General Counsel, Mike Fedok, Senior Vice President, Financial Planning and Analysis, and Gustavo Peroni, 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 in the events and presentation section of our IQVIA investor relations website at ir.iqvia.com. 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 risk 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 Busby.

Thank you, Kerry, and good morning, everyone. Thank you for joining us today to discuss our third quarter results. IQVIA delivered another quarter of strong operational results. Revenue came in above the high end of our guidance range, representing about 6.5% growth, excluding the impact of foreign exchange and COVID-related work. And we also delivered 14% growth in adjusted diluted EPS. As we expected, the environment for our short cycle businesses continues to improve. as our clients are launching new drugs and executing on critical commercial programs. In fact, TAS revenue growth accelerated in Q3 to over 8% year over year, with growth in all subsegments. This reaffirms the second half growth trajectory that we had anticipated for TAS since the beginning of the year. And we now expect TAS growth for the year at the high end of our mid single digit range. On the clinical side, the near-term market environment continues to be choppy as we've been discussing in prior earnings calls. None of this is new, but as you know, we've been facing aggressive competitive pricing and tougher negotiations. Additionally, the trend that started over a year and a half ago with large pharma reprioritizing their program portfolios as a result of the IRA has been continuing. And this has been leading to a higher than normal level of cancellations. And we expect this to be the case again in the fourth quarter. On the EBP side, Funding levels this year have improved, but as you know, it does take time for this funding to translate into actual RFP flows and even more time to translate into awards. Our bookings in the quarter included a substantial cancellation due to drug futility that impacted our quarterly net new business by approximately $350 million. for that one trial. The reported net book-to-bill was 1.06, but excluding this specific cancellation, the book-to-bill would be 1.22. Lastly, in late September, two clients notified us of their need to delay two mega studies that were already in startup phase due to client-related logistics issues. This affects our short-term guidance and Ron will share more about that later. While we navigate through these short-term challenges, it's important to remember that our CRO business is a long cycle business. The demand metrics give us confidence in the strength and resilience of our business. I'd like to share some details of what we are seeing. Firstly, as you may know, many large pharma companies have been running processes this year to reevaluate and consolidate their strategic partnerships. To date, we have successfully renewed every single large pharma strategic partnership. In fact, we've added new relationships, displaced incumbents, and expanded the scope in over half a dozen of our strategic partnerships with large pharma clients. There are two aspects to this successful performance by the RDS team. One is that our existing large pharma customers have reaffirmed their trust in IQVIA. And two, it opens up opportunities for us to gain greater share of wallet in future programs because these clients have consolidated their strategic partnerships. In the EBP world, biotech funding reached about $16 billion in the quarter, according to Bioworld. And that means that year to date, biotech funding was over $80 billion, which represents more than 50% growth in funding year over year. Now again, As I remarked earlier, it does take time, and it could take a year to a year and a half before that funding translates in actual awards. Three, our backlog reached a new record of $31.1 billion at the end of the quarter, and that represents growth of 8% compared to the prior year. Four, our trailing 12-month book-to-bill remains healthy. at 1.22. Fifth observation, our next 12-month revenue from backlog is up 5.5% year over year. Our quarterly RFP flow continued the same trend we saw in the first half, increasing mid-single digits year over year. And finally, our qualified pipeline in the quarter is up across all customer segments and it grew low double digits overall compared to the prior year and that is good now just to be balanced i should point out that in stronger market environments that qualified pipelines have sometimes been up in high double digits now let's turn to the results for the quarter revenue for the quarter grew 4.3% on a reported basis, and 4.2% at constant currency. Compared to last year, and excluding COVID-related work from both periods, we grew the top line about 6.5% at constant currency, of which just under 5% is organic growth. Third quarter adjusted EBITDA increased 5.7%, driven by revenue growth and ongoing cost management discipline, and that resulted in 30 bps of margin expansion. Third quarter adjusted diluted EPS of $2.84 increased 14.1% year over year. I'd like to share a few highlights, as is our practice, of business activity. Let me start with RMDS, where we continue to differentiate with our therapeutic expertise, clinical technology, and public health offerings. IQVIA won a top 10 pharma partnership as a new preferred provider for central lab, as well as secured extension for several existing FSP engagements in clinical monitoring, data management, and clinical technology. We were awarded a strategic partnership to provide DCT solutions for a metabolic and cardiovascular program at the top 15 pharma clients. We're the only company that can offer these DCT services and technology without having to partner with third parties. Within oncology, which is, as you know, a key therapeutic area for our industry, we were selected by several leading sponsors in the core, including a U.S. biotech client to manage a large global phase three study for renal cell carcinoma for patients who have progressed after first-line immunotherapy combinations, a large pharma customer to conduct an early phase trial in prostate cancer, leveraging our expertise in dose escalation and dose expansion study designs. A biotech client to run a global phase three study for a biosimilar targeting multiple myeloma. This project aims to bring the first biosimilar for multiple myeloma to market. A biotech client, leader in cell and gene therapies. to conduct a groundbreaking phase three trial for reoccurring cancer in the lymphatic system. Across these awards, we differentiate with our ability to run global studies with dedicated teams, as well as our AI-enabled site selection solutions. Within clinical technology, in fact, we continue to expand our recently launched One Home for Sites offering. A biotech client selected IQVIA to increase clinical trial capacity by streamlining access to multiple vendor sites via our single sign-on platform. In the quarter, a large biotech client selected IQVIA to expedite the setup of a trial to deliver vaccines for mpox in Sub-Saharan Africa, addressing a critical outbreak in the region and significant unmet medical needs. Finally, IQVIA in partnership with the Coalition for Epidemic Preparedness and Innovations, CEPI, the Rwandan governments and the Sabine Institutes responded to an outbreak of the Marburg virus, a hemorrhagic fever with greater than 50% fatality in Rwanda at the end of September. Our organizations collaborated to mobilize and dose the first patients with an investigational vaccination within nine days of the outbreak. Moving to TAS, as you saw from our results, the business is recovering even better than we had forecasted. One area we continue to make great strides in is in building differentiating AI capabilities across our offerings. You will have seen we recently launched the IQVIA AI Assistant, which is a new generative AI tool designed to provide life science customers with quick and powerful insights through a user-friendly conversational interface. This allows users to ask complex business questions and receive comprehensive and reliable answers in real time. IQVIA AI Assistant is built on IQVIA's trademark healthcare-grade AI, which enables extensive privacy safeguards and provides expert validation of accurate, reliable outputs as is demanded by the healthcare industry. IQVIA was awarded a multi-year contract by a large pharma client to deliver our next best action offering, for sales reps across nine countries. This AI-enabled solution optimizes sales rep engagement activities and enhances their interactions with HCPs. IQVIA secured a multi-year contract with a North American biotech client to improve workflow efficiency through an integrated, fully connected intelligence solution that includes OCE, orchestrated analytics, and one key offerings. The top ten client shows IQVIA to improve HCP engagement for a new schizophrenia treatment, and in this case, we displaced the incumbent by offering a solution that will enable daily alerts based on near real-time inputs versus the incumbent's weekly frequency. A top five pharma client awarded IQVIA a multi-year contract to provide co-pay support for oncology and women's health franchises. This deal enhances patient access to medications and drives better health outcomes. A couple of examples in the real-world segment, a top five pharma client selected IQVIA to support the launch of a new GLP-1 asset targeting weight loss, based on European payer reimbursement models. The top five pharma clients engaged IQVIA to provide an evidence-based approach for a client's medical affairs team to optimize funding decisions and prelaunch activities in the North American market. A top 20 large pharma client awarded IQVIA a contract to support engagement with HCPs and KOLs. based on detailed share of voice analysis of scientific and clinical experts in nine countries across all core therapeutic areas for the client. Finally, and before I turn it over to Ron for more details on our financial performance, I'd like to invite you to our IQVIA Investor Day, which has been scheduled for December 10th. on the campus of our headquarters in Durham, North Carolina. Our investor relations team will be available to provide additional logistical details. Event information is already available on our investor portal.