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 2025 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 star one again. As a reminder, this call is being recorded. I would now like to turn the call over to Kerry Joseph, Senior Vice President of Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Thank you, operator. Good morning, everyone. Thank you for joining our first quarter of 2025 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Mike Fedok, Senior Vice President, Financial Planning and Analysis, and Gustavo Torroni, Senior Director of 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 also will 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 AMI 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 Guse. Thank you, Gary, and good morning, everyone.

Thank you for joining us today to discuss our first quarter results. I'm going to start with the usual update on financial performance for the quarter. I'll then provide perspectives on the market, including our understanding of the possible effects of recent U.S. government initiatives, how we are well positioned to navigate these near-term challenges, and finally, why we remain confident about the industry's resilience and prospects. I'll close by highlighting a few important wins in the first quarter. So let's get started. We delivered strong revenue and profit results at the high end of our expectations, despite a continued challenging environment in RMDS. Total revenue for the first quarter came in above the high end of our guidance range, representing year-over-year growth of 2.5% on a reported basis and 3.5% at constant currency. And compared to last year and excluding COVID-related work from both periods, we grew the top line about 4.5% on a cost of currency basis, including about a couple of points of contribution from acquisitions. First quarter adjusted EBITDA increased 2.4%. First quarter adjusted diluted EPS of $2.70 increased 6.3% year over year. Let me share some details on the market landscape and the demand metrics we're seeing for each segment. Starting with us, the business continued the strong recovery trend we saw exiting last year as our clients are launching new drugs and are executing on their commercial roadmaps. It is in times like these where there is some uncertainty in the biopharmaceutical sector that we clearly see the value of the scale, diversification, and differentiation of IQVIA's portfolio of offerings. It's great that TAZ is contributing over 40% of our revenue. TAZ revenue growth actually came above our expectations at 6.4% reported and 7.6% at constant currency, led by double digit growth in real world evidence. On the clinical side, as we expected, the near term market environment continues to be bumpy. We experienced delayed decision-making by customers on new programs, reflecting the heightened macroeconomic and industry sector caution. In fact, our average time from RFP issuance to award in the quarter increased by approximately 10% both year-over-year and sequentially. We believe that this is the result of the sector uncertainty caused by the pronouncements of the new administration, the precise effects of which are unknowable at this point. Several of our clients are slowing or reevaluating programmatic decisions until there is better visibility. Also reflecting these same concerns, The funding environment for EVPs, especially for early stage, has deteriorated. While the RMDS business is experiencing some turbulence, our demand metrics remain positive. Our backlog reached a new record of $31.5 billion at the end of the quarter, growing 4.8% compared to the prior year. Our first quarter RST flow improved mid-single digits year over year and high single digits sequentially. Our qualified pipeline is up low single digits year over year, driven mostly by good growth in large pharma. Now, obviously, the demand environment is impacted by the proposed changes, that have been signaled by the new US administration. The White House's initiatives relative to our industry sector can be grouped into three categories. Tariffs, agency actions, particularly HHS and FDA related, and drug pricing. Starting with tariffs, when the president announced plans to initiate the reciprocal tariff program, the pharmaceutical industry received certain exemptions. Following the announcement, the Department of Commerce began a national security investigation of the life sciences industry, which may result in tariffs specific to the pharma sector. Now, IQVL's direct exposure to tariffs is limited primarily to certain supplies in our laboratory business and is immaterial financially. We understand that industry-specific tariffs, if implemented, may have a more direct impact on our customers. However, it is too early to assess what that impact may be. With respect to agency actions, HHS announced a number of initiatives, including NIH delays and cancellations of government contracts, along with establishing a 15% cap on indirect costs. Now, to be clear, IHUVIA has no clinical trial contracts with BARDA and no COVID-19 contract sponsored by the government. So our exposure there is zero. That said, we have excellent relationships with these agencies, including BARDA. TAS does have a minimal amount of business with the government, and we do not expect any of this to have any impact at all. The NIH funding cap relates to indirect administrative and overhead costs. It aims at aligning those indirect costs to the same levels as private foundations. This has no impact on direct costs for research funding, and therefore, zero impact on us. Regarding the FDA, there have been numerous restructuring actions announced which have impacted a significant portion of the workforce. These reductions enforce primarily targeted overhead and support functions such as planning, training, travel, communications, and records management. Importantly, core product review teams responsible for evaluating new drugs, vaccines, and medical devices, which are primarily funded by the industry, were largely preserved to maintain the FDA's essential regulatory functions. Today, we have no evidence of any trial or approval delays. Whatever anecdotal disruptions there may be in non-approval-related interactions with FDA staff, we expect this to normalize. FDA Commissioner McCary has announced his intention to reduce animal testing in favor of AI-based models and enhanced usage of real-world evidence in the approval process. We applaud this, and we see these actions proposed by Commissioner Macchiari as benefiting our industry. It will enable clients to move prospects faster into clinical trials. The increased use of real-world evidence, not only in preclinical work, but also in Phase II and Phase III trials, plays to IQVF strengths. Ultimately, this is positive news for EVP companies, which develop over 50% of the drugs in clinical trials. Finally, on drug pricing, the U.S. administration recently issued an executive order regarding the role of PBMs, pricing transparency, and Medicare costs. These initiatives are still in their early stages and some provisions may require congressional approval. The impact of these potential actions is difficult to ascertain at this point because the specifics have not been determined. But there are two aspects that could actually be very positive for the industry. First, the proposal to do away with the so-called pill penalty provision in the IRA which subjects small molecule drugs to CMS pricing review after only nine years versus 13 years for large molecule drugs. This is key for pharma clients as 50%. 50% of the drug's value is realized in years 9 to 13. Second, the focus on drug pricing, treatment value, and comparative effectiveness drives the need for earlier clinical results, and more real-world evidence. So in summary, some of our customers have slowed down their decision-making processes, as you would expect, and we experienced delays in RFPs moving to contracts in the first quarter. An unusually high number of EBP awards that were contracted in the quarter were not included in our bookings because funding had not been secured yet. Now we are confident that our industry will successfully manage this period of uncertainty and we'll find ways to adapt. The life sciences industry has consistently demonstrated its resilience, overcoming macroeconomic obstacles and thriving in changing environments and IQVIA is particularly well positioned to navigate this marketplace. We believe when everything is said and done, key decision makers will recognize the industry is a strategic sector for the US that deserves to be strongly supported. US companies in the biopharmaceutical sector have maintained strong global leadership in biomedical discovery and clinical research. Our sector serves as an extraordinary engine of innovation It was responsible for 46% of the 634 novel drugs approved globally over the past decade, confirming strong US leadership. The US is responsible for 61% of global pharmaceutical sales of branded drugs, which is up from 56% a decade ago. The sector invests almost $200 billion annually in research and development and drives economic growth, contributing $1.65 trillion of economic output annually. It supports direct and indirect employment of highly skilled, highly educated workers and growing nearly 5 million people at an average of $157,000 annually, which is double the national average. In fact, many non-US large pharma companies have moved their primary R&D centers to the US to take advantage of the talent pool. And of course, the biopharmaceutical industry provides substantial societal benefits by improving health outcomes and extending life expectancy. Now, before I turn it over to Ron, let me give you a little bit of color on business activity in the quarter, and I'll be brief here and just mention a few salient examples. As the revenue numbers show, TAS did quite well in the quarter. We won a number of partnerships with clients that are launching new products. For example, the last project for an important EBP client that's launching their first product and the first ever treatment for low-grade serous ovarian carcinoma. We also won a launch partnership with another EBP leveraging our AI-powered patient relationship manager platform for groundbreaking treatment for a rare condition in an underserved patient community. We were selected to support a midsize pharma client with an omnichannel campaign that includes KPIs designed to improve patient engagement. Our commercial technology suite continues to be successful in the marketplace. Our award-winning SmartSolve offering, which is a proprietary quality management system, displays the incumbent at an EBP client. In the MedTech space, we secured a significant contract to deploy an integrated information solution to help our clients streamline operations and decision-making. Let me skip a few more of these and move to RMDF. We achieved notable wins across customer segments. As you recall, last year, we renewed all 22 of our strategic partnerships with large pharma clients and we expanded the scope in half a dozen of them. We are being awarded significant contracts from these partnerships. For example, in the quarter, a top five pharma client that had selected IQVIA as a preferred partner awarded us four early stage studies under the new model. IQVIA was selected by a top 20 pharma client to support a phase three obesity program across eight studies. our best-in-class clinical trial technology solutions, and industry leading expertise were key factors in securing this deal. The top 10 pharma clients selected IQVS Pharma Covigilance offerings to achieve a significant reduction in case processing time, enable efficiency, and manage the increasing volume. We secured a contract with an EDP client to run a phase two trial for an innovative treatment for patients with pulmonary hypertension associated with interstitial lung disease. The customers selected IQVIA due to our deep technology expertise, delivery model, and partnership-focused approach. Lastly, Mike mentioned our progress with AI. You may recall we announced our collaboration with NVIDIA earlier in the call. We are progressing as planned to deploy highly specialized industry AI agents. So far, We moved over 20 agents into production, covering three use cases in each of the commercial, real-world, and R&DS segments. We are seeing positive results and productivity gains in areas where these AI agents have been deployed. For example, one agentic system in commercial allows us to reduce delivery time by two-thirds, from 12 weeks to four weeks. with a net 30% cost reduction. We plan to scale up from these three use cases to 12 by the end of the second quarter and 40 use cases by the end of the year. And now to Ron for more details on our financial performance.