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 2026 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 followed by the number 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 all for it. Good morning, everyone. Thank you for joining our first quarter 2026 earnings call. With me today are Ari Boosley, Chairman and Chief Executive Officer, Mike Fedot, Executive Vice President and Chief Financial Officer, Eric Sherbert, Executive Vice President and General Counsel, Katie Ward, Vice President, Investor Relations, and Gustavo Peroni, Senior Director, Investor Relations. Today, we will be referencing a presentation that will be visible Before we begin, I would like to caution listeners that certain information discussed by the management 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. As previously disclosed, we implemented a new segment reporting structure effective January 1, 2026, In conjunction with this change, prior period segment amounts have been recast to conform to this new report instruction. I would now like to turn the call over to our Chairman and CEO, Ari Neesby.

Thank you, Gary, and good morning, everyone. Thank you for joining us today to discuss our first quarter results. Acuvia delivered outstanding financial results, achieving record first quarter revenue and adjusted diluted earnings per share, that exceeded the high end of our guidance, reflecting solid top and bottom line performance. We are seeing continued positive year over year momentum across the portfolio with strong acceleration of organic revenue growth. In fact, year over year, our organic revenue growth rate in commercial solutions doubled and our organic revenue growth rate in RMDS tripled. On the commercial side, revenue growth accelerated as clients continue to launch new products and increase the breadth of services they utilize from IQVIA. We saw particular strength in patient solutions, which is the part of real world that remained in the commercial segment. Also, particular strength in analytics and consulting, which had the highest growth we've seen in three years, and strength as well in our commercial engagement services, which includes the former CSMS segment. We feel good about demand on the commercial side, with pipelines growing to record levels, and we think AI has something to do with it. AI is causing our clients to have more questions. It's causing them to increase their demand for IQVIA's differentiated AI capabilities and for the innovation we are embedding across our commercial offerings. On the critical side, we also delivered very strong performance in the first quarter with better than expected reported and organic revenue growth. We had solid bookings with double-digit growth year-over-year, both as reported and as recast. In particular, we had solid growth in net service fee bookings, that is, excluding pass-throughs. Net service bookings growth in the quarter were solid year-over-year, as well as sequential, both as reported and as recast. And I should note cancellations in the quarter were within the normal range. So why was our book-to-be ratio 1.04 in the quarter despite solid service fee bookings growth and no more cancellations? And no, AI has nothing to do with it. What happened was that pass-through bookings were unusually low in the quarter. simply due to the particular mix of indications of the clinical trials we booked in the quarter, which included more full-service trials with lower pass-throughs than usual. And I want to note that the proportion of FSP in our bookings this quarter was consistent with historic levels. Now, regarding the overall demand environment, Forward-looking demand metrics continue to point in the right direction. Our backlog reached a new record of $34.2 billion at the end of the quarter. And noteworthy is the amount of dollars from our backlog that will convert to revenue in the next 12 months. We have $8.9 billion out of our backlog, representing nearly 8% growth year-over-year versus the recast numbers last year. A qualified pipeline grew mid-single digits year-over-year, with notable strength in EBP. RFP flow grew high single digits year-over-year, driven by growth both in large pharma and in EBP. All of these comparisons are, of course, apples to apples, that is, versus prior year numbers that have been recast to reflect the new segment reporting. Finally, you may have noticed EBP funding was very strong in the first quarter, reaching $25 billion, according to Bayou World, which is almost double the funding in Q1 2025. Now, let's turn to the results in the quarter. We delivered outstanding revenue and profit results. Total revenue for the first quarter exceeded the high end of our guidance range, representing year over year of 8.4% on a reported basis, 6% at constant currency. First quarter adjusted EBITDA was up 5.5%. First quarter adjusted diluted EPS of $2.90 also exceeded the high end of our guidance range, and it increased 7.4% year over year. Let's now review a few highlights of business activity. Let me begin with an update on AI. As a quick reminder, IQVIA's AI solutions are built on our unparalleled proprietary data foundation. Based in class compliance with the privacy, regulatory, and integrity standards, healthcare-grade AI demands and are connected to our deep life sciences and healthcare expertise. We've been integrating AI into our operations and solutions at scale for nearly a decade. It's part of who we are and what we do. We already function as an AI native company in life sciences. A few weeks ago, we unveiled IQVIA.AI at NVIDIA's GTC conference. This is our agentic AI portal and marketplace, purpose-built for life sciences. It provides clients a single access point to their purchased IQVIA AI solutions, enabling centralized control with their internal user base, while also enabling visibility to a broader AI portfolio to support future solution adoption. Our deployment of highly specialized life science industry AI agents is progressing as planned. To date, we have 192 agents deployed in the field covering 64 use cases across both our commercial solutions and R&DF businesses. 19 of the top 20 pharma companies are already using IQVIA agents in some of their workflows, underscoring broad industry trust in IQVIA's AI capabilities. Let me now switch to client activity first in commercial solutions. This quarter, we saw clients increasingly selecting IQVIA to build AI-ready data foundations, which facilitates the incorporation of AI agents, including IQVIA's agents, into their workflows. These new services expand the scope of our partnerships with clients. A few examples. of wins in the quarter. The top 10 pharma clients awarded IQVIA a contract to modernize performance reporting on markets and therapeutic areas using an AI-driven analytics platform. The engagement replaces hundreds of disconnected reports and dashboards from multiple vendors with a centralized managed AI-powered IQVIA insight solution. IQVIA secured a multi-year partnership with a mid-size client to provide a scalable AI-ready data foundation. The win demonstrates IQVIA's plug-and-play capabilities within a client's multi-provider technology ecosystem. Pfizer and IQVIA entered into a strategic regional promotion agreement covering selected Pfizer products across 23 countries in Europe. This collaboration brings together Pfizer's scientific leadership with IQVIA's promotional expertise, market intelligence, and AI-supported technology to support long-term impact. We entered into a strategic long-term collaboration with Boehringer Ingelheim to transport the Global Commercial Intelligence Foundation. Boehringer selected IQVIA's data as a service TAS Plus platform as the core accelerator to harmonize and upgrade global commercial operations, enabling more scalable analytics and a single version of the truth across therapeutic areas and geography. This collaboration will support upcoming product launches and market reporting across 59 countries. IQVIA was awarded a multi-year agreement to serve as the primary patient information and analytics partner across an EVP's full portfolio, including our data as a service platform. This partnership is designed to drive strong visibility into existing grants, step change improvements in analytics, insights, and pipeline assets, and more intelligent commercial and portfolio decisions. Let me now turn to R&D solutions. Our strategy in R&D is has been to leverage our AI solutions to optimize trial design and execution to reduce timelines for our clients. Of course, we've been doing this for years through protocol optimization, site identification, and operational risk mitigation. We're taking this to the next level with AI agents, which leads to much faster study execution and increases quality by reducing errors and rework. For example, the AI agentification of the complex database setup process in a study startup, or the AI agentification of tasks involved in finding multiple documents in the trial master file. We are increasingly embedding these AI agents in our delivery model. Let me share a few examples of recent wins on the back of these capabilities. The top five pharma companies selected IQVIA to provide AI-enabled global medical safety and pharmacovigilance services, building on a decade-long relationship and strong performance across both FSP and clinical delivery models. The deal consolidates safety operations under a single, scalable model to improve efficiency and reliability while enabling ongoing innovation. A top 10 pharma client awarded IQVIA a multi-year agreement to serve as the primary partner for delivering full-service global clinical trials. We differentiated ourselves through AI-enabled innovation that accelerates development and improves execution quality. IQVIA won a contract on a global midsize pharma to deliver a phase three clinical study supporting a high-profile oncology asset. In this case, We were selected based on our experience running similar studies, as well as our ability to deliver AI-enabled trial design, protocol optimization, and site identification. A top 20 pharma company selected IQVIA to support a late-stage clinical program in asthma in overweight patients. The win highlighted AI-enabled clinical solutions, including in protocol and design strategy optimization, regulatory compliance, and study document finance. For an EVP, we are delivering a global late-stage clinical program that integrates clinical and laboratory services within a single operating model with a gentrified analytics embedded across site feasibility and selection, enrollment, and performance forecasting. Lastly, in the quarter, we announced a strategic collaboration with the Duke Clinical Research Institute to advance clinical research in obesity and related cardiometabolic conditions. The collaboration brings together IQVIA's global operational scale and execution capabilities with Duke's academic rigor and scientific leadership, creating an integrated end-to-end model for large, complex clinical trials. The partnership is designed to accelerate trial startup, improve execution efficiency, and support regulatory submissions and commercialization. IQVIA contributes deep expertise in obesity and metabolic disease, having supported more than 120 obesity trials and enrolled more than 90,000 patients, including work across all FDA-approved GLP-1 therapies to date. providing sponsors with a proven operational foundation. This partnership with Duke has already resulted in a significant pipeline of opportunities and a few wins in the second quarter. Now to Mike for more details on our financial performance.

Thank you, Ari, and good morning, everyone. As Ferry noted earlier, we implemented a new segment reporting structure effective January 1st, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this new reporting structure. Now let's start by reviewing revenue. First quarter revenue was $4,151,000,000 through 8.4% on a recorded basis and 6.0% at constant currency. Revenue growth includes about two points of contribution from acquisitions. Commercial solutions revenue for the first quarter was $1,000,000,000 $754 million, up 11.6% on a reported basis and 8.5% at constant currency. R&D Solutions' first quarter revenue was $2,397,000,000, up 6.2% on a reported basis and 4.2% at constant currency. Now moving down to P&L. Adjusted EBITDA was $932 million for the first quarter, representing growth of 5.5% year over year. First quarter GAAP net income was $274 million. The GAAP diluted earnings per share was $1.61. Adjusted net income was $492 million for the first quarter. And adjusted diluted earnings per share was $2.90, representing growth of 7.4% year over year. Now turning to RDS bookings. To provide an apples-to-apples comparison, the numbers on this chart for last year's Q1 2025 net new bookings and backlogs have been recast to reflect the real-world late phase and certain other real-world offerings that are closely related to the clinical trial business, which we moved from TAS to our REBS. On this new basis, R&D Solutions net new bookings in Q1 2026 was $2.5 billion, a double-digit increase year over year. RDS backlog at March 31st was $34.2 billion, which is an increase of mid-single digit year over year. And additionally, the next 12-month revenue from this backlog was $8.9 billion at March 31st, which is up high single digits first last year on a recast basis. Now, reviewing the balance sheets. As of March 31st, cash and cash equivalents totaled $1,947,000,000 and gross debt was $15,833,000,000 resulting in net debt of $13,886,000,000. Our net leverage ratio ended the quarter at 3.62 times trailing 12 months adjusted EBITDA. First quarter cash flow from operations was $618,000,000 and capital expenditures were $127,000,000. resulting in strong free cash flow of $491 million, which represents 100% of adjusted net income, a 15% increase year over year. And in the quarter, we repurchased $552 million of our shares, which leaves us approximately $1.2 billion of repo authorization remaining under the current program. Now turning to guidance. We are reaffirming our full year 2026 guidance for revenue and adjusted EBITDA, and we are raising the guidance for adjusted diluted earnings of a share. We continue to expect revenue to be between $17,150,000,000 and $17,350,000,000, representing growth of 5.2 to 6.4% or 5.8% at the midpoint. This revenue guidance continues to assume approximately 150 basis points of contribution from acquisitions and approximately 100 basis points of tailwind from foreign exchange. These assumptions are unchanged from the prior guide. We continue to expect adjusted EBITDA to be between $3,975,000,000 and $4,025,000,000, growing 4.9 to 6.3% year-over-year or 5.6% at the midpoint. And we are raising our adjusted diluted EPS to be between $12.65 and $12.95 of 6.1 to 8.6% versus prior year for 7.4% at the midpoint. Now turning to the second quarter. For Q2, we expect revenues to be between $4,280,000,000 and $4,340,000,000, which represents year over year growth 6.5% to 8.0%. Adjusted EBITDA is expected to be between $955 million and $975 million, representing growth of 4.9% to 7.1% versus prior year. And adjusted diluted EPS is expected to be between $2.98 and $3.08, which represents year-over-year growth of 6.0% to 9.6%. Both this guidance and our full year guidance assume that foreign currency rates, as of May 4th, continue to the balance of the year. So to summarize, IQDIA delivered outstanding financial results. The first quarter revenue and adjusted diluted EPS exceeding the high end of our guidance. We delivered strong acceleration of organic revenue growth in both commercial solutions and R&DF. RDS net new bookings grew double digits year over year with solid year over year and sequential growth in net service fee bookings. We continue to make very strong progress in the deployment of highly specialized life science industry AI agents, with more than 190 agents deployed covering over 60 use cases across commercial solutions and RDS businesses, with 19 out of the top 20 pharma companies already using our agents in some of their workflows. And the forward-looking indicators continue to point in the right direction for both commercial solutions and R&DFs. We repurchased $552 million of our shares in the first quarter, and we reaffirmed our full year 26 guidance for revenue and adjusted EBITDA and raised the guidance for adjusted diluted earnings per share. Now, with that, let me hand it back to the operator for Q&A.

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 request that you please limit yourself to one question so that others in the queue may participate as well. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Michael Tierney with Lerink Partners. Your line is now open. Please go ahead.

Good morning, everyone. Thanks for taking the questions. Maybe if I can just dive in a little bit more on the services versus pass-through bookings that you saw in the quarter. As you think about the demand dynamic, how should we think about that conversion of what you're winning, of a lot of the contracts obviously you went through, against the margin progression REI. I just want to make sure I understand, we all understand the push and pull on what's coming through across the, into the backlog versus how profitable that is relative to the core business, especially if these are a lot more full service oriented wins within the R&DS segment.

Thank you. Okay. I hope I understood your question well, but just, you know, the, you know, Service fees versus pass-throughs, you understand that pass-throughs have zero profitability drop-through, right? I mean, that's clear. So pass-throughs are irrelevant to profitability. We have to report them because that's an accounting requirement. We have solid execution in the quarter. We booked $2.5 billion of trials in the quarter. It just happens to be that the mix of indications was such that we had trials that have full-service trials that have less pass-throughs. Not FSP, just full-service trials that had less pass-throughs. In fact, if you look at the pass-throughs, I think, I don't know if we disclose this generally, but The first quarter was, you know, pass-throughs was like about one-third lower than the historic average. It's always within a range, but it was significantly lower. You know, again, had we had a regular mix of projects consistent with the long-term history and a consistent level of pass-throughs, then we would not be having this conversation. The infamous quarterly book-to-be ratio would have been quite significantly higher. So there's no impact on margins, unexpected margins. That has no impact whatsoever. I want to point out that on the pure service fee bookings, year-over-year and sequentially, we were up very significantly. Now, ignoring the pass-through issue, generally, Q1 NNBs is always lower than Q4, sequential. And if you look at our history, it's usually lower, 16%, 17%, Q4 to Q1. And this quarter, it was lower, less than that. I think it was 13% down. So it was lower as always, but a little bit less than usual. Frankly, we also have the most conservative bookings policy in the industry. You only book business when it's contracted. So if we are awarded a couple of trials at the end of the quarter, and the client board is only meeting on April 2nd, and that's when the contract is signed, then that's when we book it. It's not a first quarter win. So the influence this can have on the reported book-to-bill is very, very significant. Again, and I said this when we reported book-to-bill ratios of 1.3. I said it when we reported book-to-bill ratios of 0.9. And I'll say it again today. The quarterly book-to-bill metric is really a bad metric to predict future growth. I can point easily to many of our competitors who reported great book-to-bill ratios, and are going to have very negative growth going forward. I'll point to us. Last year, at this time, we reported a book-to-bill of 1.02. And if this were predictive of growth, this quarter, we would be showing really poor, anemic growth in our NDS. And yet, we're reporting very strong 3% organic growth. over 6% reported. So when we stream a couple of points from FX and about a point from acquisitions, our organic growth in RDS was 3%. Could you have predicted that from the 1.02 reported book to be last year? The answer is no. So again, and again, there's zero impact from AI in our bookings. I just don't want anyone to get the wrong impressions. I can report that the number of trials that we lost to anyone using Jean Paul or any other AI tool, the number of trials that we lost to any of these AI solutions is exactly zero. And again, no impact on margins whatsoever from the unusually low pass-throughs in the bookings this quarter. I hope that gives you enough courage. It's helpful context, Ari. Thank you.

Your next question comes from the line of Justin Bowers with Deutsche Bank. Your line is now open. Please go ahead.

Good morning. A two-parter, maybe one for Ari and one for Mike. So just in terms of... the winds you saw here, it's interesting to hear FSO, the FSO dynamics and that having less pass-throughs, but is that more of a function of how customers are the clinical strategy that you're deploying and or are you seeing any shift there from large pharma, either in the quarter or what's in the funnel? That's number one. And then part two of that would just be on the margins. Is that something that we would see this year or is that more of like a 2027 and beyond dynamic?

Thank you. Again, look, Again, I'm going to repeat again. One quarter doesn't make a trend. And one quarter of bookings, 2.5 billion of bookings that are going to be to revenue over the next four to seven years is not going to affect our margins one bit. Now, it's not indicative of any change whatsoever. It just happens to be that the trials that we won this quarter, had lower pastures. It had nothing to do with a change in customer dynamic. Nothing. It just happens to be that's the deck that we were served and that we went after. Some trials, like for example, your record vaccine trials, had enormous amounts of pastures. There are certain types of large cardiovascular studies require a lot of patience and a lot of procedures to perform the protocol of the trials may require more reimbursed expenses. That just wasn't the case in school. It's unusual that we would have lower pass-throughs, but that's what happened. Nothing more to it, and I wouldn't read anything about changing climate dynamics or or anything like that. Not at all. You're trying to understand the demand, which I think is the right question. And frankly, we see no change at all in the fundamental drivers of outsourced clinical development. The level of complexity in trials is rising. The need to execute trials globally is rising. The growing use of data and analytics, all of this point to the need to outsource more, not less. So in our conversations with pharma, we see a constructive demand environment. Yes, in the near term, we see that the environment has stabilized. And we see also that large sponsors are still taking a more deliberate approach to capital deployment. Recall that coming out of three to four years of policy-driven micro headwinds and all kinds of disruptions, so we still see perhaps a slower than we haven't returned to the decision-making speed that we saw before all of this period started. It's getting there, and we see things going back in the right direction. That's all our trauma. On the EDP side, I mentioned funding, which is growing at a very nice pace, which points to renewed confidence in the assets in the pipeline, in general in the industry. And as you know, it takes a year or a year and a half before funding drives an award and certainly into the backlog. But the demand indicators are quite strong. Do you want to address that other question?

Sure. Yeah, I'm happy. So firstly, just to reemphasize Ari's point about do not draw any sort of margins from one quarter booking. You have to remember that, you know, every dollar we book now burns over like five years. But I'll give you some more color on our margins and use T1 as an example. So when we reported 60 basis points of EBITDA margin contractions, all of that was due to non-operational headwinds, which are really sort of the effects and pass-throughs driving that. And we have a very, very strong productivity program. So when you look what happened operationally, right, obviously we're dealing with adverse mix in sort of our portfolio, but our productivity programs more than offset that mix. So operationally, we expanded margins actually quite significantly in the quarter. So it just further highlights the point to say, you know, when you look at sort of a quarter sort of bookings or even several quarters of bookings, you know, you can make no correlation to future sort of margins.

Yeah, I want to add, I didn't just take the opportunity to once again reiterate, we reported because you wanted this book to be a ratio. But it really, and we give you a lot of color on what's in our bookings, more color than anyone else in the industry. And all by the way, you know, our number two competitor is part of a larger conglomerate, and we know nothing about their numbers. And our number three competitor, we have no clue what their numbers are now or in the past three years. Not yet, at least. And our number four and five competitors are private. We have no clue what their bookings are or their numbers are. And that's it. There's no one else out there. We can't be compared to anyone else. And then you have two marginal competitors. So, you know, we are disclosing an enormous amount of information And it's not comparable to anyone else. So even from a competitive standpoint, frankly, there's very little rationale for us to give you so much cardinal bookings, A, because you derive conclusions that are really false and misleading, and B, because it's competitive information that we give to competitors who don't disclose anything.

All right. Thanks so much, Ari and Mike.

Your next question comes from the line of Luke Sergot with Barclays. Your line is now open. Please go ahead.

Good morning, guys. This is Anna Krasinski on for Luke. Appreciate you taking your questions. Wanted to talk more about the upside and commercial solutions. And I know you called out a few of those businesses that were really strong during the quarter, but would be great to hear more about maybe which areas were the most surprising versus your internal expectations. And then also, if you could remind us on the mix of the more recurring revenue offerings within this business versus what's more discretionary. Thanks again.

Thank you very much for your question. And, you know, our commercial solutions business is way, way underappreciated. And so I'm thanking you for highlighting the business. We performed very well in the first quarter. You will recall that when the industry went through difficulties over the past three years, the headwinds caused our large pharma clients to pause discretionary spending. As a result, our growth rate never went negative, but they slowed down to low single digits organic growth. We then started to rebound, and a year ago in the first quarter, our organic growth rate was, what, about 2.5%? Correct. Thereabouts. Our organic growth rate in commercial solutions this quarter was 5%. We reported, I think, what was the growth rate? 11.6%. At actual effects, as you know, we have a strong tailwind from currency this quarter. If you take that out, the constant currency growth rate is 8.5%. And we had acquisitions. And when you strip that out, the benefit of acquisitions last year, when you strip that out, it's 5% organic growth. So it's double the underlying organic growth year over year. What's driving this? You've heard me say in my summary remarks that customers have more questions than they had before because of AI. If I can speak generally, our work on AI on the clinical side is focused on creating efficiency and improve execution and reduce timelines. So we are embedding AI agents within our existing processes and workflows and helping our clients accelerate timelines, which is simply an evolution of what we've been doing over the seven years since the merger, which was predicated on utilizing data, insights, and intelligence to reduce timelines. On the commercial side, we are focused on innovation that is creating new offerings. And those are gaining traction with our customers. Customers are dealing with a massive amounts of data from us, from third parties, and generated by their own operations. They are also dealing with a legacy of disparate systems that have been built over the years. AI identification processes enable our clients to sort of bypass and leapfrog all of these systems and multiple vendors and data sources and have the ability to analyze information much faster to derive insights and to make decisions informed by AI agents at much higher speed. And we have been focused on developing agents that enable our clients to do precisely that. Our agents comply with the regulatory requirements of the healthcare industry. They are not generic solutions. They are tailor-made, what we call health-grade AI agents. And we found that our clients are very interested in those solutions. We have pipelines that have reached record level, in part influenced by the offerings that we put into the marketplace that we continue to put out. You know, a lot of concern was voiced by investors and analysts in the past few quarters, consequent on an article about how AI will replace services industries, nothing of the sort is going to happen. Quite the opposite. It creates new demand for our services. The part of our commercial business that theoretically would be most vulnerable to AI disruption is what we call analytics and consulting. And yet, we have a record pipeline in analytics and consulting. We have very strong growth, the best we've had in three years in the world, and we see this continuing in the balance of the year. The underlying demand in commercial solutions is simply fueled by the amount of new drug launches. For example, in Q1, there were 10 new drug launches. A drug launch is the bread and butter of our commercial solutions business. So I think last year at this time, we had about six or seven launches. So, and it's increasing because of the number of molecules that have been approved by the FDA over the past couple of years. Our win rates in the business continue to be strong. I think you asked about the balance of, you know, nothing's changed in terms of our outlook for the different parts of the business. If I can just summarize in the interest of time, our info, business is about 30% of the total, and we continue to grow low single digits. A little bit stronger than that because there's more demand for data that our own AI agents create. That's the slowest growth business. The fastest growth business within commercial solutions is what we call patient solutions, which is the pieces of real world that were left with commercial solutions, and those have very strong double-digit growth. And then everything else, analytics and consulting, commercial tech, and commercial engagement services, which includes the former CSMS business, by the way, now also supplemented with AI agents, those will grow mid to high single digits going forward. But I hope that gives you more call. Thank you.

Your next question comes from the line of Shlomo Rosenbaum with Stifle. Your line is now open. Please go ahead.

Hi, thank you very much. Ari, I wanted to get just a view on the market in general. The commentary that you've had is that it's stabilizing, but we're seeing things like talking about analytics and consulting that you say is the highest growth in three years, that very often is a leading indicator that things are actually improving and we're seeing things uh get better i want to ask you where you could point to us where you're seeing things actually growth accelerating versus just stabilizing or getting you know less negative if there's anything like that and do you think that the performance that you have is uh indicative of market growth or are you noticing an improvement in the win rates of the business. I'm asking that in light of the fact that there is not a lot of data from other public companies, but just whatever you can see and comment on that.

Yeah. Well, look, I completely understand the question. I mean, it's a question we just had a moment ago, again, on the demand environment. And it's normal, right? We're coming out of a a period, you know, really three to four years of significant turmoil in the industry largely driven by, A, the post-COVID deflationary environment, the post-bottle decline, which constrained budgets, B, the IRA, you know, under the Biden administration, and C, all the announced or enacted policies the travel administration, the MFNs, the tariffs, the FDA changes, et cetera, et cetera. And all of that creates, constrains the demand environment, both on the clinical and on the commercial side. And so it's always, when we come out of a period like this, it's always difficult to evaluate, well, are we out there? Are these real green shoots or not? So I understand the concern. And frankly, we ourselves are surprised by how well we performed in the core. And I mean, on every single metric, I think we believe, and we strongly believe, it was an extremely clean quarter. We beat on every one of our financial metrics, pretty much. We, you know, surpassed our own expectations on both businesses. And, you know, the AI industry disruption concerns are actually, as we said, a tailwind for our business, and we are seeing it already. We feel confident that destruction will continue. So that's the overall kind of 40,000 foot perspective. Now, in our conversations with clients, large-form, as I mentioned before, is much more constructive, both on R&D and commercial. I would say a little bit more on commercial because large clinical trials, large capital programs always take more time to get started. And again, coming out of a long three, four-year period of more deliberate, slower decision-making, we have not returned to business as usual, cruising altitude, if you will, before all of this started. But we are much improved versus where we were. So the environment is more constructive in large pharma, not quite back to where we were on large pharma, but we're getting there. On the EVP front, EVP funding is reaching record levels. $20 billion in the first quarter is almost double what it was last year. Again, it takes time, but the fact that people commit very significant capital to specific programs in biotech is indicative of renewed confidence and higher comfort levels going forward. I think that we're going to continue to see this environment. Your question is, are we going back to where we were before next quarter? I don't think so. The balance of the year continues to be on the large pharma side. A little slower than it has been, much better than it was last year, much better than it was two years ago, but more deliberate thinking. A large pharma client told us actually, if I can share that anecdote, that they plan to double the number of molecules in their pipeline because they are using AI to identify more targets, meaning Most of what large pharma has been doing so far on the AI front is at the discovery stage. And that, and maybe that may be counterintuitive to some, but to us it's pretty obvious, that will increase the number of trials because that will increase the number of molecules that are selected. And large pharma are telling us directly that it will increase. And they are even asking us questions about capacity. How do we increase capacity to be able to handle a much larger number of startups? Bear in mind, there are a number of LOEs coming up in the four to five-year timeframe, and pharma has to replenish their pipeline. AI is used today, which again, 90% plus of what AI is using on the clinical side is at the discovery stage, is increasing the number of assets that are going to be pursued. When you feel you have a higher chance of success, then you are going to launch the program. And AI discovery stage enables you to identify more targets for such development. That, in my mind, increases demand for CRO services and not the opposite. Going forward in our conversation with us, pharma clearly indicate that is the case. They've been asking us, you know, what would it take to ramp up capacity? We're not talking next quarter, obviously, but in the meantime. So that's so clinical and commercial. I already commented on it. Thank you.

Thank you.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is now open. Please go ahead.

Hi, guys. Good morning and thanks so much for the question. I was wondering if you could comment on sort of the drivers of the margin, particularly on EBITDA, as we move through the year. Obviously, I think the second quarter guide implies a little bit lower EBITDA margin versus consensus. I'm wondering if that's a sort of right sizing of some of the mixed impact, and then how do we think about that, perhaps, as you're thinking about the back half of the year? Thanks so much.

Sure, Elizabeth, I'll take that one. So, if you look at our EBITDA progression that's implied in our guide, it's pretty consistent with history. So, I think there's nothing noteworthy to call out there. I think just to add a little color on the margin side, as we mentioned when we gave our Q1 sort of guidance, Q1 has the largest FX tailwind, and you'll see that start to moderate as we go through the back end of the year. Given the previously mentioned strength in our productivity programs, you know, we're very confident that we'll see the reported margins sort of flip to positive as we progress through the year.

Okay. Thank you.

Your next question comes from the line of Eric Coldwell with Baird. Your line is now open. Please go ahead.

Thanks very much. Uh, good morning. So I'm going to start going back to the bookings. Um, maybe look at it a little differently. You exited 25 with about 10 billion of total net awards. Um, I don't know what the normal exact pass through mixes, but if I use a, I don't know, a swag of 30%, that would be about 3 billion a year of pass through bookings. about $750 million a quarter. A third below would be about $250 million. And if we add $250 million back to reported wards as if pass-throughs were normal, that would get us to about a 1.15 book to bill. I just want to make sure that that logic and thought process is, you know, somewhat consistent with what you're trying to express today.

And maybe that leads to... Eric, you're amazing. The answer to your question is yes.

Ari, just tell my wife and kids that I'm amazing. Write you a letter. So I was going to insert it.

And by the way, if in addition to that, our revenue in RMDS would have been what we planned as opposed to the strong bid because we converted faster, we burned faster in the quarter, then it would have been all of that. I'll let you figure it out.

You do well at math. Yeah, so I guess I won't insert my joke of what is the book to billing Q2. I do have one other serious follow-up. Can we get the constant dollar organic growth in both segments? I know you did give some proximate details on commercial. Maybe you could solidify that. you know, we could solidify those comments for us and then give us the RDS numbers on a recast basis.

Yeah, absolutely. Absolutely. Okay. I'm going to say from memory, but you just tell me. The growth on RDS reported is 6.2%. Is that the number? Correct. Right. Two points of that is FX. One point is acquisitions, right? And so therefore, organic growth for R&DS in the quarter was 3%. A year ago, it was 1%. On the commercial side, reported is 11.5%, and then the FX impact is 3 points, and the acquisition impact is another 3 points, or a little bit more than 3 points, right? So organic, On the commercial side, it's 5%, which is double what it was last year. So about 4% over offer advantage. Right. So again, 3% organic for NDS, 5% organic for commercial, 4% for the enterprise.

Thanks very much. Keep up the good work. I thought it was a good quarter. Excellent. Thank you.

I appreciate that, Derek.

At this time, Mr. Joseph, I turn the call back over to you.

Thank you, operator. Thank you, everyone, for taking the time to join us today. I look forward to speaking with you again on our second quarter of 2026 earnings call. The team will be available the rest of the day to take any follow-up questions you might have. Thank you. Have a good day.

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