IQVIA Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVF fourth 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. Thank you. I would now 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 fourth quarter of the full year 2025 earnings call. Executive Vice President and General Counsel, Mike Fedok, Senior Vice President, Financial Planning and Analysis, and Gustavo Perón, Senior Director for Investor Relations. Today, we'll be referencing a presentation that will be visible during this call for those of you on the 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 would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Action results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with companies' 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 measures prepared in accordance with GAAP. It reconciliates some of these non-GAAP measures to the comparable GAAP measures included in the press release and conference hall presentation. I would now like to turn the call over to our Chairman and CEO, Haru Busi.

Thank you, Kerry, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2025 results. We close 2025 with a strong fourth quarter. resulting in full-year revenue growth of 6%, adjusted diluted earnings per share growth of 7%, and free cash flow of $2.1 billion, representing about 100% of adjusted net income. As I reflect on our accomplishments in 2025, I'm proud of the results delivered by the IQVIA team. Given that our industry faced significant challenges with heightened uncertainty around macroeconomic and government policy, as well as continued pressure from interest rates. This macro environment led to slower customer decision-making and tempered biotech funding. This impacted RMDF bookings and revenue earlier in the year. But as the year progressed, the environment stabilized somewhat. and demand indicators became more favorable, and funding increased. Despite the environment, we at IQVIA continue to invest in developing innovative offerings and more integrated solutions to advance development programs and drive commercial success. Examples of the depth and breadth of our clinical and commercial offerings and significant investments in 2025 include increasing our phase one trial capabilities to test new drugs in healthy volunteers with the acquisition of a facility in the UK. Expanding our site management organization with the acquisition of Next Oncology, a network of specialized sites serving patients enrolled in early stage oncology trials. Helping clients advance critical programs ranging from global phase three oncology and obesity trials to launching innovative treatments in and underserved patient communities. Seeing great demand among large and mid-sized pharma clients for our DAS plus solution, DAS data as a service. which provides AI-ready data as a single harmonized source, simplifying customers' data management and building a strong foundation for AI analytics. This offering integrates global to local data, highlighting Acuvia's unique ability to merge proprietary assets, data assets, with third-party data assets with a compliant, scalable framework. Advancing the digitalization of patient support programs to streamline workflows for treatment access and adherence with the recent launch of the IQVIA Patient Experience Platform, which already has six new customers on. Working with the Statin Vaccine Institute to provide more than 640 Marburg vaccine doses to Ethiopia. or a phase two trial during the nation's first mobile virus outbreak, partnering with local health authorities to evaluate safety and efficacy. We need our first full-service commercial outsourcing deal in Asia with a large pharma client. And last example, enhancing our capabilities in patient solutions and payer analytics. with the acquisition of Cedar Gate Technologies in the fourth quarter. Let us now turn to the results for the quarter. Revenue for the quarter came in above the high end of our guidance range, representing year-over-year growth of 10.3% on a reported basis and 8.1% at constant currency. Acquisitions represented about two points of this growth. Fourth quarter adjusted EBITDA increased 5% versus prior year. Fourth quarter adjusted diluted EPS of $3.42 increased 9.6% year-over-year. On a clinical side, net bookings totaled over $2.7 billion growing 7% year-over-year, 5% sequential. This resulted in a net book-to-deal ratio of 1.18, reflecting the continued improvement in customer trends, as well as solid execution from our sales teams. I should point out that in the fourth quarter, our cancellations, while in the normal range, were really slightly above the normal range due to specific idiosyncratic aspects of certain trials that had to be canceled. Key demand metrics for the quarter continue to be positive. A qualified pipeline is about 10% higher year over year, with growth across all customer sets. RFP flow grew double digits year over year, with growth across all segments, largest gains in large pharma and in EBP. Our win rates improved year over year, several percentage points. Backlog reached a new record of $32.7 billion at the end of the quarter, growing 5.3% compared to the prior year. And encouragingly, EVP funding was strong in Q4, reaching $33 billion, according to BioWorld. On the commercial side, TABS continued to perform very well in the fourth quarter, achieving better than expected results, despite the anticipated tougher year-over-year comparisons. We delivered growth in TABS of 9.8% reporting 7.1% at constant currency, highlighting the resilience of our broader commercial portfolio. And now a few highlights of business activity in the report. We announced the strategic collaboration with Amazon Web Services, naming AWS as our preferred agentic cloud provider to accelerate the industry's digital transformation. With the world's largest pharmaceutical companies already relying on Acuvia and AWS, we believe this partnership will make AI more readily available across life sciences, medical affairs, and healthcare analytics, and enable faster delivery of lifesaving treatments to patients worldwide. Acuvia was recognized by Everest Group for our AI leadership, the only clinical research organization to receive the number one ranking for generative AI leadership in life sciences. You will recall that we started on this AI journey quite a while ago, and specifically, a little more than a year ago, we announced a partnership with NVIDIA, with whom we have been working for over a year to build agents into our workflows, both in clinical and commercial. And we have made significant progress to date. In commercial, demand for our AI-driven innovations is gaining momentum with our clients, especially in large pharma. A few examples. The top 20 pharma clients selected IQVIA to provide comprehensive AI-enabled information and analytics solutions for a major US gastroenterology franchise. The top 15 pharma clients chose IQVIA as the strategic partner for a multiyear program to deliver analytics and agentic AI solutions across the enterprise. Another pharma client selected IQDIA to deploy our AI-enabled patient relationship management solution for rare disease hub services, improving patient engagement and therapy adherence. On the clinical side, in our MDS, I'll share some key wins in the portal focusing on large pharma and biotech companies and focusing on AI capabilities. The top 15 pharma clients selected IQVIA for a major respiratory development program, where IQVIA's ability to integrate AI-driven planning tools to accelerate timelines and improve efficiency was key to secure the win. A large pharma client chose IQVIA to manage a large full-service program of MASH studies utilizing AI-enhanced planning tools and advanced recruiting strategies. And Julia was selected to manage a pivotal oncology study with end-to-end services and leveraging tailored AI-enabled technology solutions including patient randomization and drug supply optimization. Now, I'd like to take a minute to share how we are simplifying our organization in 2026 to strengthen collaboration, enhance efficiency, and support continued growth. Our goal is to better align our teams with how our operating model has evolved to adapt to the new ways our clients are purchasing our capabilities. In the clinical space, Clients are incorporating real-world evidence earlier in clinical development programs. In the commercial space, as I mentioned in prior calls, we are seeing clients increasingly looking to outsource integrated commercialization programs that use IQGIS suite of capabilities from analytics to field-based sales and medical forces. Against this backlog, we implemented a simplified organization that consists of two reporting segments, commercial solutions and RMBS. Under this new reporting segment model, the CSMS segment, which has become more closely integrated into commercial offerings in the TAO segment and represents $788 million in 2025 revenue, is incorporated into the TAO segment which is renamed Commercial Solutions. Additionally, certain offerings currently reported in the TAS segment, consisting of real-world late phase, as well as certain other real-world offerings that have become more closely related to the clinical trial business, are moved to the RNDS segment. The business dynamics and growth pattern of real-world late phase, and these other offerings mirror those in the clinical trial business, they represent 674 million dollars in revenue in 2025. So, simply put, commercial solutions is bad, plus the CSMS segment, minus the clinically-oriented real-world offerings that were moved to RMDS. This new segment reporting aligns with industry evolution and the company's operating model. It has a negligible impact on segment growth rates, as you can see on the chart. We believe our broad and differentiated capabilities position us well to pursue enterprise-wide partnerships across these two segments as clients continue to consolidate I want to take another moment to acknowledge and congratulate our employees around the world for the ninth year in a row IQVIA was named one of the world's most admired companies in Fortune's annual survey. And importantly, for the fifth year in a row, IQVIA was named the number one most admired company in our category. Finally, This is the last earnings call for our longtime CFO, Ron Brunman. I want to take a moment to acknowledge Ron. I've been working with Ron for the last three decades. He's a proven, extraordinary world-class leader who played an instrumental role in shaping and executing our company's financial strategy and transformation. Ron's steady leadership and long-term strategic vision have been essential in building a high-performing global finance organization, and helped Acuvia remain resilient through unprecedented times. On behalf of the entire Acuvia team, I want to thank Ron for his exceptional service. And the good news is he is not going anywhere, and only transitioning into a senior advisory role, assuming he returns from his upcoming trek in Nepal. to Ron for more details on our financial performance.