Q4 2019 Earnings Call

Ladies and gentlemen, today's conference is scheduled to begin shortly please come to the standby. Thank you for your patience.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Puree Health Sciences fourth quarter 2019 earnings release Conference call.

This time all participants are in listen only mode. After the speaker presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone if you require any further assistance. Please press star zero. Please be advised the today's conference is being recorded.

I'll now like to hand, the conference over to your Speaker today, Tom Byrnes Vice President of legal Affairs. Please go ahead Sir.

Good morning, and thank you for joining us for the Prs <unk> Health Sciences fourth quarter of 2019 earnings teleconference. Today, Colin Shannon, Our Chief Executive Officer, and Mike Spinello, Our Chief Financial Officer will discuss our fourth quarter and full year financial results.

Following our opening comments, we will be available for questions. In addition to our press release and Investor supplement with additional financial information is available in the Investor relations portion of our website.

Are we begin I'd like to remind you that our remarks the responses to your questions may include forward looking statements actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factors included in our annual report on form 10-K filed with yes.

Do you see on February 28, 2019.

Risk factors may be updated from time to time in our filings with the ASCII <unk>.

Please note that we assume no obligation to update any forward looking statements.

Certain financial measures, we will discuss on this call our non-GAAP financial matters.

Believed that providing these measures helps investors even more helpful and complete understanding of our financial results.

Consistent with how management reviews, our financial results.

A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure calculated and presented in accordance with gap. This available in the earnings press release and Investor supplement included in the Investor Relations portion of our website.

I'd now like to turn the call over to our CEO Collinge Huh.

Thank you Tom.

Good morning, and thank you for joining the conference call covering a fourth quarter until year 2019 financial results.

I'm pleased to report, but our fourth quarter results produced solid revenue and down earnings growth.

Revenue for the fourth quarter was approximately.

$100 million, which represents an increase of approximately 10% year over year.

Adjusted net income was approximately $99 billion, an increase of 40%.

Adjusted net income per diluted share was $1.54 cents, an 18% increase when compared to the prior year.

I'm pleased that we continue to our objective of expanding our operating margins and also our double digit growth in adjusted net income and adjusted net income per diluted share.

Consistent with prior year in prior quarters, our client base continues to be well digests the fight with our top five clients, representing approximately 58% of revenue for the quarter I know single client representing more than 10%.

For the fourth quarter up 29 gene.

We did 40 $659 billion up net new business Awards, which represents a net book to Bill a 1.21.

For full year 2019, we had another record level of $2.7 billion of net new business Awards, representing I feel your net book to Bill at one point to see.

So your book to Bill inclusive of reimbursement revenue was 1.40.

Although our new business metrics have liked when compared to prior years I'm very pleased with your mind quality about your awards and in fact, we continued to significantly outperformed the models that were to stop weeks that the type of an IPO.

The addition of a fourth quarter New business awards resulted in an increase in our backlog up 11% year over year and 2% on a sequential basis.

Backlog, finishing up to approximately 4.7 billion at yearend.

Our full year 2019 financial results continue I trained up consistent and strong growth.

We reported solid revenue growth and improved our overall operating margins.

We delivered full year revenue of approximately $3.1 billion representing growth of approximately 7% at actual foreign currency exchange rate, an 8% on a constant currency basis.

Joining 2019, we continue to make investments in our business and enhance our service offerings.

We have I need a significant amount of new leadership talent and most of our business areas. During the year and the addition, we were able to implement key IP systems as planned.

We believe that we've established a foundation that well I want to provide long term sustainable growth and believe we are well positioned to offer a white, but I used himself as he's doing claims.

Regarding our data solutions segment as you're aware, we faced some challenges heading into 29 team and we ended the true teeth significant changes to enable the long term success of this business.

The leadership changes, we made in the first quarter copied and base by the tide organization I'd be continued to I'd talent to the team.

We also continue to evolve the business by investing in new offerings enhancing integration with the clinical research segment and continue to work opportunities to expand our service offerings.

We remain focused on the continued build up our commercial team and we believe we are not very good position to have a strong twentytwenty.

And our view then vitamin provision spending on Seattle outsourcing remain stable and be continued to see a healthy floor body of piece.

We believe with the management changes we made during 2018, we had enough positioning strains heading into Twentytwenty.

Moving onto our Twentytwenty cadence.

We are anticipating high single digit revenue growth and also we expect adjusted earnings per diluted share between $5 to 77 cents on $5.

97 cents per share.

Representing double digit growth when compared to 2019.

Mike will provide additional details about twentytwenty guidance.

In closing I'd like to sign Kinda type stuff not claims for their continued commitment to <unk>.

We have a very strong business I believe we are well positioned for twentytwenty.

I would never liked handover the call to my Spinel, our Chief Financial Officer, who will go through our financial results in more detail.

Thank you, calling and good morning, everyone.

For the fourth quarter of 29 team our consolidated revenue grew 10% booked at actual foreign exchange rates and on a constant currency basis.

As cost due to previously we reported revenue of $800.2 million in the fourth quarter of 2019 compared to $729.6 million in the fourth quarter of 2018.

The clinical research segment reported revenue of $725.1 million for the quarter, while the data solutions segment reported revenue of $75.1 million increases of 11% and 2% respectively.

We derived 50, plus 6% of our service revenue from large pharmaceutical companies.

6% from small to midsize pharmaceutical companies.

16% from large biotechnology companies.

22% from all other biotechnology companies.

These concentration metrics exclude our data solution segment and reimbursement revenue and are in line with what we reported in previous quarters.

Total direct cost were $386.1 million in the fourth quarter of 2019 compared to $365.7 million in the fourth quarters 2080.

The increase in our direct cost continues to be driven by increased labor costs in our clinical research segment as we continue to add staff to support growth in the business increased data costs in our data solutions segment as we add more data assets and as we see slight increases in the renewal rates, we're being charged on our current data contracts.

Direct costs also include a favorable impact of $4 million from fluctuations in foreign currency exchange rates.

Direct costs were 48.2% of revenue in the fourth quarter of 2019 compared to 50.1% in the fourth quarter of 2018.

The decrease in direct costs as a percentage of revenue is primarily due to the favorable currency exchange rate fluctuations and increase utilization of our staff.

Selling general and administrative expenses were $103.5 million or 12.9% of revenue for the fourth quarter of 2019.

Compared to 13.2% for the fourth quarter of 2018.

The decrease in selling general and administrative expenses as a percentage of revenue is primarily related to our continued efforts to leverage our selling and administrative functions.

Adjusted net.

Glued certain items, just fluctuation from period to period do not correspond to changes in our operating results increased 13.6% to $98.7 million in the fourth quarter of 2019.

Adjusted net income per diluted share grew 18% to one dollar and 54 cents in the fourth quarter 2019 compared to $1.31 cents in the fourth quarter of 2018.

Adjusted net income and adjusted net income per diluted share include the impact of a reduction in our effective tax rate from 24% to 23%.

The decrease in our effective rate was Jim driven by the geographic distribution of our pre tax earnings.

For the 12 months ended December 30, Onest 2019, our consolidated revenue grew approximately 7% at actual foreign exchange rates and 8% on a constant currency basis.

We finished the year with approximately $3.1 billion of revenue compared to $2.9 billion in 2018.

Cash provided by operations was $187.6 million in the fourth quarter of 2019 compared to $131.2 million in the fourth quarter of 2018.

The increase in operating cash flow was primarily result of an increase in cash inflows from working capital driven by a decrease in our day sales outstanding.

Our net days sales outstanding was 18 days at December 30, Onest 2019.

For the 12 months ended December 30, Onest 2019 cash provided by operations was $253.6 million compared to $329.8 million for the 12 months ended December 31st 28 feet.

The decrease in operating cash flows was primarily due to the inclusion of $83.2 million related to the final earn out payment for Symphony in April of 2018, compared to a similar payment of $35 million in the prior year.

Capital expenditures for the fourth quarter of 2019 were $13.1 million compared to $15.8 million for the fourth quarter of 2018.

Capital expenditures were $74.3 million for the 12 months ended December 30, Onest 2019, compared to $55.9 million for the 12 months ended December 31st 2018.

As we've discussed in prior quarters, the increase in our capital expenditures continue to reflect our investment in information technology and the expansion of our infrastructure to support our growth.

Our cash balance at December 30, Onest, Tony 19 was $236.2 million of which $87 million was held by our foreign subsidiaries.

Net data outstanding defined as total debt less cash and cash equivalents at December 31st 2019 was $1 billion compared to $942 million at December 30, Onest 2018.

As we previously discussed during the fourth quarter, we finalized the refinancing of our 2016 credit facility.

Our new credit facility consists of a $750 million revolving line of credit and a 1 billion dollar term on both of which have a maturity date of October 28 2024.

The term loan have scheduled VIX quarterly principal payments of $6.3 million through September 2024, with the remaining balance due at maturity.

Regarding our currency concentration, excluding reimbursement revenue and expenses, 84% of our revenue and 61% of our expenses. We are denominated in us dollars, which is consistent with prior quarters in 2018 levels.

Or your exposure continues to be naturally hedged.

As we've discussed in prior quarters, we continue to have exposure to movements in the GBP, that's less than 1% of our revenue is denominated in GBP well approximately 6% of our expenses are denominated in GBP.

Turning now to our guidance for 2020.

We are estimating revenues between 3.23 billion and $3.36 billion, representing as reported and constant currency growth of 5% to 10%.

We are anticipating GAAP earnings per diluted share between $4 in one sense and $4.21, an adjusted earnings per diluted share between $5.77 and $5 in 97 cents.

Our full year guidance includes the impact of investments, we're making in new data assets.

Pricing increases we are anticipating on current data contracts.

The increased depreciation expense as we continue to invest in information technology and the expansion of our infrastructure to support our growth.

Our full year guidance also includes a significant investment in our government contracting business as we are seeing an increase in our piece from governmental agencies and we need to ensure that our infrastructure is at an appropriate level to align with the number of awards, we are anticipating winning.

We also anticipate that our annual effective income tax rate will be approximately 23%.

Our effective tax rate may differ from this estimate if the geographic distribution of our pre tax earnings changes from what we've estimated or if there's changes in the interpretation analysis for for additional guidance issued by regulatory agencies.

Consistent with prior years, we're including Q1 guidance to ensure a sequential quarter earnings growth or in line with our expectations.

We are estimating revenues between $765 million and $787 million, representing as reported and constant currency growth of 6% to 9%.

Our Q1 2020 revenue growth is being impacted by cancellations that were taken in the fourth quarter of 2019 that we expected would be replaced however, the start of the new program has been delayed by the sponsor until later in 2020.

We are anticipating GAAP earnings per share between 59, and 69 cents per diluted share and adjusted earnings per diluted share between one dollar and five cents and $1.15 cents.

Similar to our full year guidance, we expect to our effective income tax rate to be 23%.

Our Q1 guidance also includes impact of the seasonal revenue in our data solutions segment.

Estimates, we're making a new data assets.

Increased pricing, we're expecting on our current contracts data contracts and investments, we're making our government contracting business.

It also includes the impact of Fortune first quarter recurring expenses, such as payroll taxes and employee benefits and expenses incurred related to internal organizational meetings that are annually held in the first quarter.

It should be noted that our guidance assumes the euro rate of 1.15 in a GBP rate of 1.3 you.

All other foreign currency exchange rates are as of January 30, Onest 2020.

Our process for determining exchange rates is consistent with prior years, where we use multiple bank resources to evaluate expected rate movements for the next 12 months.

That concludes our prepared remarks and now we're happy to take your questions. Operator, you may now open the lines.

As a reminder to ask a question you will need a press star one on your telephone to withdraw your question press the pound.

And the interest of time, we ask that you. Please limit yourself to one question and one follow up please standby well, we compile the Q and a roster.

And our first question comes from Eric Coldwell with Baird. Please proceed with your question.

Hey, Thanks very much. Good morning, guys. First question I think you might be the only CRB today not to mention Corona virus or any impact to in Q1 and less I just somehow missed that so I guess I'll start with that one now where do you seen in NAND any any color commentary there would be great.

Yes, we had two obviously can said the implications upside to enough Q1.

You know, we've obviously highs I just is on its everyone else being concerned about it and the effect on new business, but we.

Obviously adjusted I notice on our outlook for the for the knowledge. They first quarter, we try to gauge for the year.

Weve.

Why do you still stay fairly close contact with all employees. Unfortunately, everyone remains in good health and we've managed to avoid anybody being caught up with the divided so yeah. I know, it's something is top of mind for eyes, but obviously as we are looking forward for guidance. We've tried to weigh up on all of these issues and flight.

Q1 numbers.

So so calling is there something implicit in here because I didnt hear it mentioned in the list of things impacting Q1 did you maybe it wasn't such a huge meetings to I mentioned, a significantly because I know it and pipe to you know I was kind of that wasn't material enough to single out the other factors that we.

I mentioned hide some material effect and maybe talk maybe a little bit more to buy them.

Yes, certainly go ahead go there Oh.

Oh No go ahead, Mike in then I'll focus my my original question. After you Yeah. Yeah. I think you know we had pointed out you know kind of the three or four key things that are impacting the first quarter on a revenue side. You know those couple of cancellations that came through for Q4 that are resulting in the programs being pushed out.

And.

The data cost and the investment that we're making a from a government perspective, we're having a bigger impact in the quarter than we expected.

You know the data increase is about I'd say about four to five cents higher than we had anticipated as we were building 28, 2019 and working through 2019.

And there's about a three to four cents impact in the quarter.

From the our government contracting costs that were going to need to incur so that's why we had broken out separately because they were slightly.

Bigger from materiality perspective than the impact from the client of ours.

Okay. That's really helpful. My original question before the Q and eight or the management discussion was around Symphony actually definitely hear you on the data costs not a big surprise there but.

If we're not mistaken I think your fourth quarter gross margin and Symphony was was maybe maybe the best since the deal at least it was up if I'm not mistaken and I'm curious is that just due to fourth for Q revenue strength and and in some incremental margin there or is this a somehow you're offsetting these data.

Costs with the with with other through other venues, it's really the fourth quarter revenue a day, Eric that's driving that more being a worst we're seeing some renewals because obviously those renewals happened over the course of the year those renewals had less when impacting Q4 and are going to have more of an impact you know in the first half of this year.

And that is just I know so.

Okay and last year, we as you know, whereas a lot of changes we've made in Q1 and this year, we're starting with I'd rather new team. So we're seeing the beginning July stronger Q1 than we did and the Pos so but the flight to die as by building a Q1 outlook.

Okay. That's that's helpful. Thanks, guys I'll cede the called others. Thank you.

Thank you and our next question comes from John Kreger with William Blair. Please proceed with your question Hi, Thanks, very much I just before we totally leave that front of virus issue could you guys give this a sense about what China would be as a percent of revenue I'm guessing that's quite small, but but maybe more broadly if you think about it typically.

Hello.

Trial, what percent of patients insights win with China reasonably represent if you happen to have that metric.

You know the bulk of our work in China has mainly through our strategic solutions and you know as you know we're we're reasonably small in China is one of the areas that we had been looking to expand I'm have been growing organically. So I think that's why it's been more neutral.

From a capacity south our competitors, who are much larger not area.

Got it okay. Thanks, and then comment you made some very interesting remarks about the strategic solutions plan kind of evolving can you can you just add to that if I recall back when you purchased Rps you were basically you know you had mandates with most of the large pharmas and the question.

Could you sort of lever that entered traditional awards is that's still the strategy and and you know can you talk about maybe whether or not the number of mandates is changed or the size of the typical mandates is changing just how does this strategy is likely to look going forward versus what it's been in the last few years.

No we actually we couldn't buy we wanted to make sure that there was we're seeing that to support the strategic solutions War and I'm actually not going I aggressively pursue ER product registration typical and.

Project work, because we wanted to support that declined that made these choices, but we also I wanted to offer these services, where appropriate and we saw that eyes with continued to make sure that relationships, we do day and opportunities to disguise.

See how this all things that we have a die spell Hopkins.

You know obviously, where.

Continued to expand the strategic solutions business.

This yeah, we I and we feeling very optimistic about you know a lot. The changes that we saw last year on the on recapitalizations of stock to other parts of the water Otis all happen.

We see the is it could expand this year, where we've been very modest or not I would add because you know there's.

You know a lot of potential things happening with big pharma and then the lights and year. So we've been wants to be to build leasing outlook. So we've been I'm looking at as a way of you know, we can see things and demand, but we what we ever just careful in about how much growth we're expecting throughout all in all that being pretty conservative enough Ryan.

Hi, and we still see obviously other opportunities arising from the relationships. We've we've had in that area.

Okay. Just add said so net net I should we view the strategic solutions to sort of a flattish business in 20 or growing that may be growing less than the overall.

Very modest growth.

Okay. Thank you.

Thank you next question comes from one I haven't Dano with Bank of America. Please proceed with your question.

Hi.

Thank you Collyn I believe you mentioned that including reimbursed expenses or pass throughs. Your net book to Bill on a trailing 12 month basis was 1.40.

That's correct.

Believes that this is much better than most of your see our peers. So so related to this crude could you could do share with us whether or not you your net bookings, including pass throughs have been growing at all.

And if so by how much.

Well, it's I see that is the fight and we as you know I feel like they Oh, six so five basis as much more appropriate in evaluating the growth levels of the business.

What we are using to model our growth for the year, but since everybody else is reporting we wanted to make sure we gave apples to apples comparison.

I think you're just how would you draw your own conclusions I'm just reporting I'd tell you to hot fill information.

What we've done as module guys are growth potential.

We out what we're seeing and you know in the marketplace, where slipped a strong add RFP flow and volume I. So we look all factors to consider where we're going to be a after the year and we want to de lever our good high single digit growth and in some about areas is.

Actually get into double digit and I think they the only area that we've been really modest in the growth whether it was our strategic solutions as I mentioned data.

Got it so on an apples to apples basis explicitly are you seeing growth in net bookings, including pass throughs on a year over year basis.

You'd be at one we should I don't have the exact number but we should be seen growth in those numbers yes.

What magnitude whereabouts.

I I don't have the number off the top my head so I'd I'd hesitate to give you that number because I don't Wanna mislead you.

Okay. Thank you.

Thank you and our next question comes from Jack Meehan with Barclays. Please proceed with your question.

Thank you good morning.

I wanted to stick with Nextera five because I agree with you call and I think that's been asked appropriate way to look the business and you know obviously, one quarter doesn't make a trend but now when we book at the past your New awards were only up 1% year over year. So I was wondering if you could maybe just talk about what you're seeing either in terms of RFP flow were.

Some of your strategic partnerships, whether we're at the whether there's been any changes and you know maybe just.

No what's going on in terms of the level of growth. It just seems surprising to me given the health of the end market that there hasn't been more growth in terms of New awards.

Well I mean I as you know I mentioned about a lot of five changes that we were going through and the our I am I doing a lot of leadership to augment our tons situation. So we were monitoring.

Good business, while adding a new business you know as we're looking in Q4, we had target T. A higher book to Bill.

We just weren't just unfortunately, one of the key things that we had the Pip bought in hard to team ready for a hot that protocol has been revised its not getting done known until mid fish and this year. So was one of the Pcs that shifted dramatically and I you know, but we.

We had to make sure that we had the team and we could really be placed that so we we continue to sort of keep dot and watch as I've got my dog Minuses I you know, we've obviously been keeping a close I interviewed business I'm, making sure that we we've continued growth.

And you know, we're winning the rate that we can sustain I I to deliver some absolute key systems last year and the previous years, our growth how to take precedence because we are having to deal with things and I have for clients. A this pay more able to deliver these system.

And build the foundation to allow us to take advantage of out for future opportunities. We're already seeing not happening in Q1, we're seeing things like take you know so I feel like we are we've actually spent a lot of Titan really building up on infrastructure to get to the next level and I know others to start really focusing on.

More rapid growth.

Yeah, that's unfair.

I did want to just follow up on the strategic partnership side, you know last year. This time, there was a lot to focus on one of your big customers had a merger I'm. Just curious if you can talk about now there were a year in what.

If there's been any changes in terms of that relationship whether you're winning more business or you know if there's been any changes in terms of how that's impacting your awards or growth.

We we look caught I mean, I've tried to explain that that we have a very very well diversified book of business. You know we are so you know like 50, 50, <unk> biotech big pharma.

You know we find that.

We've got to maintain that diversity and we're still getting work from our popped out partners that match a bit have an impact last yes, absolutely.

They have expanded the number of Seattle is that they're working with which is absolutely I find with ours I. We continue to watch very closely with them, we have helped them strategically.

With a lot of that initiatives and help them, where they need to be we continued to support them I would continue and we will continue to support them into the initiatives or you know where were performing a lot of whats them. Just now and you know we're happy that we've continued to see new awards in our regular basis.

Thank you Tom.

Thank you and our next question comes from Sandy Draper with Suntrust. Please proceed with your question.

Thanks, very much and I apologize I don't think this got covered in the prepared remarks, but had to jump off and jump back on.

When I look at the the the growth and the the Reimbursables had been ramping up pretty substantially as we can go over the course of this year and have been growing faster than then the 65 or sort of net revenue numbers I'm. Just trying to think you know how should how should I think about that in terms of.

The trending is that an indication that net revenues can accelerate is that just a function of as you pointed out collyn, a 1.4 book to bill much higher with pass through revenue and so that's what showing up there I'm just trying to think if their trends that that we should be considering a as is that there's ramped up or is there anything.

You know that you can sort of call out until as to a to that and how it impacts. The overall net revenue I mean any of our revenue number going forward.

Well, we've actually noticed it's been really quite a rocky and you know and hock applying because I know from quarter to quarter, we're seeing quite about bunions and just in the type of studies coming through it depends on a number and Mike that should have the pocs that element I mentioned last quarter.

You know with quite a substantial divergence away from our traditional six so five book to Bill and that's this quarter. There was much less claims with with the quantum is 1.2 times.

So 1.25 was so it was it was actually quite a modest amount of reimbursables. This quarter. So odd quite a lot Syrians I think we called out the whole year, one because I think that God smoothies and allows us to with Tata is on an annual basis I'm not so any unusual items, yet so I think that we have with.

In pretty you know looking forward what being played it can sell the to the fades away what being taken a few on devices on but we know what they certainly, causing some feelings and sandy we you know from a from a guidance perspective, and what we're expecting to see in 2020.

No we've assumed at least at this point that that percentage of pass through revenue to total will stay basically flat in 2020, but as Colin said it'll it'll all depend on you know the the awards to come through in and what the relationship of those words or from a service component to the best of component to the total.

Okay, and so when you say percentage are you when I look at that number I do it on a reimbursables as a percentage of net revenue not the total revenues. That's about 30% is that the way you guys look.

Got it right okay.

Great. That's really helpful. Thanks, I'll jump back in the Q.

Thank you and our next question comes from Aaron Right with Credit Suisse. Please proceed with your question.

Great. Thanks, how should we be thinking about the quarterly progression of the data solution that can you remind us of the seasonality there and on the investment side in the data assets is that all related to send me or what else is and in that incremental investment there. Thanks.

Hi, the first Lady and progression it really starts ramping up two arms on you know they locked up part of Q3 and all of Q4.

We are where the clients are utilizing our end of your budgets to get analysis for the following years.

And once again, we saw that parts of the piece this year and you know what the team or not or looking to do is high to have more consistency quarter to quarter by you know eating into the service offerings and that's why we're always looking for new offerings that we can help support and I'm much more timely manner and instead of.

Waiting to the end of the via until we're seeing that in Q1 for example, where we've noticed that days that's obviously a.

Good improvement from last year, but that that got oak. So it's partly due to the Phil team been available from the south of the year I know distractions. So we're pleased to see that early progress instead of going to get off that could stop I saw a you know regarding investments on the data I did the data piece of our business yes.

The investment says obviously, our biggest I say they are as as buying data and we have you know many many many contracts that we renewed annually and we're seeing some place excavation and not part of the business. We're also looking to expand that international offerings.

We're trying to do that mainly with partnerships and arrangements with although as you know parties and so that we got to minimize expands and I'll, let mark Klein could benefit from a combined service offering. So we feel like we're picking a good position. There would also expanding our client makes and looking although I am.

You know tangential types of organizations that are use data and so we're not houses governance ways of smoothing out the quarterly I am progression.

Most of it had a night doesn't get though.

Yes, I agree with I agree with that Aaron.

Back half of the third quarter in the fourth quarters, where you start to see the ramp and it would be consistent with what you saw this year.

Okay got it grade and then on the government agency business I guess it you alluded to can you elaborate on opportunities I'd say shifted spending in hiring on that.

Sure I'm for many years, we've actually been wanting to get and everything.

Organized tour that were completely validated to their government work and a primary contractor.

We had components of our business that I actually I already probably muddy government contract Theres, a and for clinical six. When example, but you know we've recently just being I've gotten a lot more volume and I you know its Nobel I.

Really kind of pushed us take salivate getting ready for it. So we're actually having to deal with that are getting finalized on Q1. So maybe if you wanted just consistently do yeah. You know we've historically been at least for those larger PR a business just generally subcontractors. So we're trying to get or self in position to be.

The prime contractor as Colin had alluded to a and it's mainly driven around making sure. We have the resources to make sure. We can pull get proposals repair appropriately we got the accounting systems set up appropriately because left and we want to do is being a position to not be cast compliant.

You know as these awards come through so we're making a you know the initial investment upfront. The majority of the investment is in the first quarter. That's why I pointed it out as a bearing on why or mid point of already PS is where it is what we expected the majority of that spend will be in the first half of the year end, a and then we should be in a good position to be ready whether these awards.

Come through.

Okay, great. Thank you.

Thank you and our next question comes from David Windley with Jefferies. Please proceed with your question Hi. Thanks. Good morning. Thanks for taking my questions I wanted to sort of kind of focus on revenue I guess.

Hi in light of the the cadence in strategic solutions going back a year or so.

My My thought was that your fourth quarter would have been against a fairly easy comp and that those would that would continue.

Into the first half of 2020.

Can you clarify for that so what I'm getting now does your comments that you only have modest growth how much did strategic solutions grow in the fourth quarter and am I right that you have some easy comps in the first half is it is it higher growth in the first half and then not much growth in second half for strategic solutions in 2020.

No you know the whole year I know, it's kind of mentioned that's a lot that we were seeing a lot of hires within the city solutions, but there wasn't much lower cost countries. We started to see that switch towards the end of the yet they didn't have a material effect and the growth.

And as were projected does this forward looking year, where where were seeing and you know well just chosen to do a modest growth for many factors on you know for slate.

Obviously, there's the there could be pricing issues arising from big pharma as we approach and I'm going into an election year. So we.

Could you have potential warranty later on India and the second thing Wise is that you know we've we've a voice they comps are maybe law, it's because the infrastructure to stalled out I mean, right now we're going to what we see where they walk is going to be I'd eat as we continue to expire on a they sell a city.

I'd solutions.

Part of the business, we are seeing demand pick up we've got a lot of outstanding vacancies and but not in.

Quite a geographical despair situation, yeah, Dave I think it you know we talked about strategic solutions previously it was after the Q2 call when we started to see.

Some of the shifting in the geographic distribution. So the back half of the year did have more revenue growth in 19 than it did earlier. So the first half of this year or at least in particularly in the first quarter, you would see a little bit more growth when Collins talking about.

Flattish growth for strategic solutions, that's for the whole year in total right understood.

So does that mean are you actually.

Expecting strategic solutions to be.

Down in the second half of 20.

No I'd say relatively flat.

Okay, and then what what growth assumption is embedded in your guidance for data solutions for 2020.

It's low double digits.

It is low double digits yeah yeah.

Okay interesting and then last question more conceptually.

I want ask this question a few quarters ago that Youre. Your gross bookings have been in you know in in a range and <unk> for a couple of years and.

I think you talked earlier about you would expect is the fourth quarter would would be a little bit better, but something slips how would you characterize.

The growth in dollars of RFP that you're seeing.

And your win rate against those opportunities would you say that kind of the inability to break higher in gross bookings is not seen enough RF piece or that your win rate just one thing.

No our win rate for and is and you know that though we categorized into opportunities not we thing or are obviously got strong chime selfies, winning and our win rate.

These opportunities are pretty high.

And you know, there's obviously when you're breaking into new claims there's always is as much more difficult and obviously with clients that we worked with.

I'm, sorry, I should mention to you the real big issue in the last year. So has been that strategic solutions has been very flight.

And you know it really has dragged down in the growth outgrowth in product registration I've been very very solid and saw the win rate for a typical product made the station work has been excellent and you know we continue to do that must continue to see I'm really good growth. So.

And you know I thought made that clear at a number of times that strategic solution has been lagging and are showing modest growth. This year, and it's really quite an overall and new business Awards.

Yeah, Okay. Thank you for the answers.

Thank you and our next question comes from Patrick Donnelly with Citi.

Question.

Great. Thanks for the question, maybe still the booking split between biotech and pharma I think it continues to trend around 50 50 <unk>.

A shift towards biotech person historic trend can you maybe just talk about the internal focus to increase that exposure on the biotech side.

Because either last quarter, a couple of quarters ago, you called out the biotechs going a little faster to move forward with on time starts large pharma has been shifting things around does that continue to be the case out there I would I'd dies and business development team I've really been focusing I know not because.

You know, we're finding night at biotite, it's moving faster and obviously I mean, one is one of the thing that they split was a big biotech, but you know protocol design, an exact answer I mean, you're still dealing with FDA and you still need approval. So things can happen. It can cause alterations. So we're not happens obviously can cause delays, but we're finding that.

My take drugs move a lot faster and you know we've continued to really focus or not it's actually been <unk> core strength of eyes for many many many years and we continue to utilize I spend to make sure that we we continue to look at not more innovative side of that ive walking with within the business.

Okay, and then maybe just on the M&A side on the pipeline I know assets tend to be running a little bit expensive in the current market, but how active the pipeline. What are you seeing in terms of one of the cost of attractive assets out there.

You know that there's always lots of things going on we always we're always working on you know things are quite expensive just eyes. So obviously were but if I proceed with caution.

But we certainly see a lot of really interesting things and you know we've been focusing on a little tuck in things on that you know and last year, we had to pass up on <unk>. So quite a loud wave stays opportunities just on the you know we're looking to really buy in strong leadership and we saw that.

They opportunity to dovetail and with all our data solutions business, we saw that it would what really nicely, but we just at a time when we decide you just to really focus and on building a leadership team and making sure that we we didn't we strive to anything because we really hard to focus and getting everything babies.

And I'm getting the infrastructure in place before we do expect anything of major importance.

How should we think about that as a priority versus repurchasing and Tony Tony.

Yeah, The party, saying.

We always say listen to our investors and last year, and we did actually with pets, some dry powder and the ban of anything happening in the marketplace that you know, whether we move into recession, something happens allies the opportunity to to take advantage of that situation. So we.

Did that dry powder, and we continue to explore ways to enhance our offering and meet the growing I innovative needs to some of our clients and we've obviously got wait where we're focusing on some of the they used to hybrid trials using our.

Our mobile technology platforms, and you know what continued to see success. They are I'd be a long time before it becomes mainstream but we continue to expand and look for ways that we can actually get things done any much more cheapening quicker ways to get approval.

Great appreciate it.

Thank you and your next question comes from Dan Brennan <unk>. Please proceed with your question.

Great. Thank you for taking the question I guess, the first question cone would be around the new management hires in the infrastructure investments.

That are going to enable you to improve your six so five net bookings growth could you just review kind of these key hires I mean within them all but like what are what are the key ones you know what what evidence maybe some early evidence that they're having an impact and then as well and the infrastructure investments can you provide a little more color on what these are in the impact are expected to have.

Sure well I mean at age we went really across the board because you know I had mentioned that at the end golf I was a and when we got today November 2018. It was the end of a five year period with KKR were all about and employee options based fees and a lot people last the cash then and so.

We had to do a lot of rebuilding work and 29 team you know, we obviously stock the and that process and the somewhat of 18 anticipating that happened because we had been warmed kicked yahoo. Dikes meetings that there was able to mention to is what we see that's with every company that goes through that will be.

Yeah, I Wanna, well, but those are the you know a long non compete that we hired to and so we're seeing huge Stephens I mean, obviously, where we both men team. We've got a lot of Hollander, we chose to make sure that we could retain that people that were going to help drive is to identify stages as well. So we're about 90 to our current base with.

New hires and so and I say and many division. So if you want to strategic solutions, we I'd and a couple of new a very senior executives to help really take not and drives that forward with bringing and lots of experience a new connections to help I looked at not business and even though.

A little was chosen and.

To food cost more this growth, we see real opportunity there and we want to really explore it using using your senior executives to help drive new business, but it may take a little bit of time a these these types of opportunities typically take you know there those are long lead time and getting them close.

On the product registration Syeed, we if I didnt, new executives, but more importantly bodied a number of new key hires across.

Many of the areas we've completely revamped a you know certainly it is within our organization where body.

On key leaders within a product registrations and general partners good operations, well, even I'd to asked you need functions, including I.T. overhauled and various other areas. So we've we've really strain the end a lot of various bio betting on existing talent and an hiding where we needed to really get ready for future.

Our growth. So we are feeling in a much stronger position I have with I'd also coupled out by mentioning some key systems that we implement these that were really essential for 11 years I've next phase of growth. So yeah, I feel really solid the by all the additions with hide with Weve.

Hi, good crashed into even I must be able to hire some of the tall.

Business development teams, who are coming onboard and add up west competitors, because they see the opportunity here I'm. So overall, we feel very strong position, we had our annual sales and leadership meeting just a few weeks ago.

And where we had the whole company together and you know we felt like everybody was bonding all of the divisions were coming together. So we're talking about the end to relationships between all the different offerings. We had a substantial number of people coming along from our Symphony health and you know they and compare them to spur.

First with all of the team so they get the force real feeling I'll add to scale and magnitude of what PRT has to offer I think it went a long way to help make you know what I'm. Realizing that we haven't had this been paper business with a different culture. So overall, we come out about meeting feeling very very positive very optimistic.

And we're seeing a lot of drive for 2020.

Great. Thank you for that and then and then maybe as a follow up just entre teaching solutions and you know your product registration full full service offering what would what are the full service order product registration business growing 19, and then maybe just related to just due to solution.

We'll take a lot of issues there have been as you just alluded to like your own staffing issues. So I was hoping you could just maybe sue mountain given some color about that market kind of what's your overall market growing at and how would you characterize the competitive dynamics of pricing situation. Thank you.

We don't actually break that down and and publish that I've just been giving you a wave bought off what's going on in the business East.

Well I pointed out last year, you know, we noticed that that trend of the switching of all of the strategic solutions that the hiding was and be changing to different geographies I. We've been up zapping that and then saw the it was just becoming you know what I was a number of clients all shifting and it caused.

Flattened out a lot of growth and you know, we're seeing that got caught I Lewis and I mean, obviously.

It's been continue would not be grow they did change, but obviously the staff has been retained in these areas. So.

We know we're still supporting a a low cost areas. You know so looking forward. It was ace is kind of <unk> made you want to maybe I didn't know good and Dan will be phone or or 10-K right. After this call that will have all our segment disclosures in there so you'll be able to see what the clinical research.

Segment grew and what the data solution segment grew year over year.

Got it Mike. Thank you for that and then and then just kind of sorry, the last one I <unk>.

It is the environment getting more competitive for strategic solutions in terms of pricing or kind of how would you characterize the overall kind of competitive dynamics in that thanks a lot.

I I mean, that's always X really value pricing and productivity and we'll have caught how can we effect.

Adopt dynamic in all cases, you know, we we've been able to utilize a lot of our tools and systems with developed in product registration to augment somebody to things that we're doing and strategic solutions.

Oh, So remember that you know we started off with the very analog space and because Rps was what was the one of the leaders and that's what was the whole business. So when we acquired I. It was a very significant portion of our business, which is I I loved space to grow from and so when we.

Good sell all these changes were probably more affected and others.

Which actually is why well as were looking out for the year, where well be modest snuff projections for the growth.

Thank you and our next question comes from Robert Jones with Goldman Sachs. Please proceed with your question.

Great. Thanks for taking the question and Colin I know you you've commented on this a bit but as I've heard your answer I just want to make sure I understand you know the bookings on a 65 basis. You know you know probably a little lower than what people were expecting if I'm hearing you correctly. It sounds like maybe a large portion of that is coming from the lack of a replacement of a large.

Cancellation from one of your top clients in less so from you know missing out on RF peas competitively.

Versus versus your peers is that the right way to think about you know kind of what played out on the new business wins in the quarter, yeah, and the quarter ever be <unk>, we expect a good teams radian your mouth sort of pick what indication and I. It was an expectation that we you know with everything done and succeed on but it was one of these unfolds.

We saw some signs he's died that decline guide just wasn't ready to do the award because it's still hide the guy I. Some substantial protocol amendments falling or somebody that is always that came through so we couldn't precede and two to actually ensure that we were getting.

What we're trying to obviously make sure that would keep these well qualified personnel available to them because I'm, obviously its guy as it's been a long time down a very very long tail <unk>, we'd be working with and we want to make sure that that we actually get them that its or sees that they need to conduct a trial.

No.

I was just I. It was one of these things that is unexpected but I'm you know it could've made up like a big difference.

No no me.

No no. Thank you know that makes sense, that's I guess just to stick with the larger customers. You know you mentioned Collin again, no one client makes up more than 10% of revenue you guys. I think last quarter were nice enough to share that at the top client represented 9.5% a revenue I'm. Just curious is that still around the same ballpark as we think about.

For Q, and and probably more importantly, 2020, and I guess, maybe within that has has the top client changed over the last year or is expected to change in the coming years, it's still.

Kind of the same rank order as far as your largest customers the year that you're working with.

I would say that you are correct on the 9.5% that's the the range should it saying I think its own it is 9.5% to be exact and in terms of I think our top client has been the same but we still continue to see a fluctuation within the rest of the top five so people kind of moving in and out depending on.

We're working through their studies on a quarter to quarter basis.

Got it okay. Thanks.

Thank you and I'm not showing any further questions at this time I'll now turn the call over to Colin Shannon for any further remarks.

Well. Thank you everyone for participating in our call today, a few if any additional questions. Please feel free to contact US. We hope you have a great rest of your day. Thank you.

Ladies and gentlemen. This concludes today's conference. Thanks for participating you may now disconnect.

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