Q2 2020 IQVIA Holdings Inc Earnings Call

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Black ladies and gentlemen. Thank you for standing by at this time. I would like to welcome everyone to the iqvia second quarter 2020 earnings conference call all lines have been placed on mute to prevent any background noise after the speakers remarks w a question-and-answer session. If you would like to ask a question during this time, simply, press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key as a reminder. This call is being recorded. Thank you. I would like to now turn the call over to Andrew markwith senior vice president investor relations and treasury Sister Margaret. Please begin your conference.

Thank you. Good morning, everyone. Thank you for joining our second quarter 2020 earnings school with me on the call today are Re-Boost be chairman and chief executive officer of Michael McDonald Executive Vice President and Chief Financial Officer. Ron Roman who will be my successor as of August 1st, Eric sherbet Executive Vice President and general counsel, Nick Charles senior vice president Financial Planning and Analysis and gentle check senior director investor relations.

Today we will be referencing a presentation that will be visible during this call. For those of you on our webcast. This presentation will also be available following this call on the events and presentations section of our investor relations website at.

Before we begin I would like to caution listeners to certain information discussed by management during this conference call will include forward-looking statements actual results could materially from those states that are employed by forward-looking statements due to risks and uncertainties associated with the company's business including covid-19 impacts, which are discussed in the company's name is with the Securities and Exchange Commission, including our annual report on form 10-K and subsequent SEC filings. In addition. We will discuss certain non-gaap Financial measures on this page, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with gaap a Reconciliation of these non-gaap measures to the comparable gaap measures is included in the press release and conference call presentation. I would now like to turn the call over to our chairman and CEO re-boot fee.

Thank you Ian Drew and good morning everyone. Thank you for joining our second quarter 2020 earnings call before we get to the results. I'm sure you all saw the announcement last night. And so this will be my last iqvia earnings call. And so I wanted to take the opportunity to thank him for his service and wish him well in his new role at Birth. I also want to thank Ron and welcome him back. He really never left. But I want to thank him for agreeing to serve as our interim Chief Financial Officer. When you start on a permanent successor many of you already know wrong, and I'm sure you are delighted to welcome him back to the CFO chair now to our results Revenue adjusted ebitda earnings old came in above our guidance ranges today. We are also updating our guidance for the year and raising birth.

Your Revenue adjusted ebitda and earnings Rangers before we review the number. Is it like to give you a quick operational update?

During the second quarter. We saw gradual Improvement in the accessibility of clinical research sites in the R&D Solutions business pretty much in line with with what we told you three months ago Global site access improved cell approximately 20% in April to 40% off the end of June average site accessibility for the second quarter was about 30% again in line with the assumption that we made when we bought said our second quarter guidance.

The progress of global site reopening is continuing into the third quarter and today it's at 53% I should point out that the Congress has been slowing somewhat in the past couple of weeks as a result of several localized covid-19 flare-ups in geographies around the world and especially in parts of the United States as sites have become accessible. We we've seen an improvement in the number of on-site monitoring visits home. In fact on site visits are now exceeding the number of remote visits and as a result remote visit have reduced from the peak in the second quarter, of course, wherever sites are still inaccessible our ability to deliver Solutions, like remote monitoring and virtual trials remains critical to ensure.

trial

Continuity now patients who are already enrolled in Trials have slowly begun returning for in-person treatment long as you would expect this varies by therapeutic area. For example oncology patients are returning at a faster rate than Dermatology patients may also the recent outbreaks in parts of the US have hampered the pace of recovery in the number of patients and rolled in Trials who are willing to come in fifteen percent treatment for trials that have not yet started the pace of sight start up and patient recruitment wage. Obviously been slow. It's improving but still slow for example patient recruitment for new trials, which had been virtually halted dead.

During the second quarter has resumed over the past few weeks and is now at about 25% of normal Baseline enrollment level. We expect this to continue to improve over time on DS Business Development activity has remained very strong with a few have not had any material cancellations of trials in our backlog due to covid-19 interactions with clients such as bit defensive back to you as clients adjust to working virtually RFP volume and value continue to hold at basically similar levels to 2005. And of course the are envious team has been awarded a wide range of covid-19 vaccines Therapeutics and related Lab dog.

Of course, you will have seen we announced that collaboration with AstraZeneca last week to accelerate development of a potential vaccine.

Covid-19 more broadly has accelerated interest in our virtual trials solution including study Hub rewards for a virtual trial solution have actually doubled or read of a relatively small base. We leveraging a virtual trial technology platform study Hub to deliver a seamless patient experience, as you know, the platform combines e-consent telemedicine and digital communication.

Moving to technology in analytics we continue to have very little interruption in data Supply or demand our data production centers around the world remains operational and our technology and analytics deliveries continue in the ordinary course selling activities have started to resume as clients have adjusted to working with virtually as well. There is still some delayed decision-making for ad-hoc services work, but we've had real good momentum in our fastest growing businesses such as real world and stick are we award business continues to expand even in this environment with strong growth in the quarter as a reminder the results about real-world business are reported in Our Stars segment. So unlike our peers this growth is not included in our results.

in the technology space OC

Has added 35 new clients so far in 2020 OC deployments continue to progress as schedule as a client's Loop to accelerate their usage and get up and running on the platform even faster. We now have 115 customers that have chosen a m e e and they represent over 60,000 potential users of the platform. Most of these customers are still in the early stage of deployment. So far are win rates in this segment when going head-to-head against the incumbent is approximately 70%

Find in our see SMS business with not experienced any material cancellations, although as expected. We've experienced soft wage demands fulfill reps, which of course impacts Revenue additionally Business Development has slowed considerably in this segment.

Let's now review the second quarter results.

Revenue for the second quarter came in at 2521000000 dollars which is $118 above the midpoint of our guidance range. Now forty 1 million dollars of these 118 million dollar be came from FX and pass-throughs.

Second quarter adjusted ebitda was 483 million dollars with a $25 million-dollar beat versus the midpoint of our guidance and this came entirely from better operational performance.

Second quarter adjusted diluted EPS was $1.18.

Second-quarter are and the S contracted backlog including pass-throughs grew 13.5% year-over-year to 20.5 billion month June 30th, 2020. We saw good growth in a Wars for our large farmer clients as well as our clients in the court. We had broad-based booking strength by offering with particular strength in full service clinical and in lab the contracted Netbook to be the issue including pass-throughs was $164 for the second quarter of 2020 and excluding pass-throughs. The second quarter contracted book-to-bill ratio was 1.60 the LTM contracted book-to-bill ratio at June 30th was 1.43 including pass-throughs and 1.42. Excuse me.

As we said previously we've continued to make every effort to preserve employment during this crisis and to the extent possible. We have not affected base wage for employees. Of course, we've worked to reduce other costs and discretionary spend and as a result of these actions our adjusted ebitda that came in well above our expectations.

You can see when you adjust for pass-throughs and effects that the drop through incremental margin on the revenue beat was over 30% off.

so far even considering several flare-ups around the world things seem to be moving in the right direction size are reopening globally am showing us to resume our critical work in our n d s

we continue to be cautiously optimistic and we anticipate a sharp recovery in the back end of the year.

Mike will review in more detail how we see the second half playing out finally a quick update on our 2021 planning process long as I have already shared with you. We started this process earlier than usual and our plan is to provide 2021 guidance before the end of this year.

Given the positive Trends we've seen in operation execution and client demand together with catch-up work and the associated change orders that we currently anticipate as well as the coffee towards we remain optimistic that in 2021. We will see a return to a previous growth trajectory. I'll turn it over to Mike for some more detail on the quarter how we see the second half of the year of playing out and the upward revisions to our guidance.

Thank you already and good morning. Everyone turning first to revenue.

Second-quarter Revenue was 2521000000 compared to 2740000000 dollars in the second quarter of 2019. First-half Revenue was 5875000000 dollars compared to 5424000000 dollars in the first half of 2019 second quarter revenue and technology and analytics Solutions was 1109000000 dollars compared to 1102000000 dollars in the second quarter of 2019.

First half check and analytic Solutions Revenue was 2226000000 dollars compared with 2177000000 dollars for the first half of 2019. RDS Solutions second. Quarter Revenue was 1235000000 dollars compared with 1435000000 dollars in the second quarter of 2019 first-half rev Solutions was 2676000000 dollars compared with 2851000000 dollars in the first half of 2019.

Second-quarter contract sales in Medical Solutions. Revenue was $177 compared with $203 in the second quarter of 2019. First half acre tract sales and Medical Solutions. Revenue was $373 compared to $396 in the first half of 2019.

Turning out of profit adjusted ebitda was $483 for the second quarter and 1 billion and $45 for the first half second quarter. Gap loss was twenty-three million dollars resulting in a $0.12 loss per diluted share for the first half. We had Gap net income of $59 or $0.30 of earnings per diluted share wage adjusted net income was $229 for the second quarter or $1.18 per share adjusted. Net income for the first half was $520 or $2.68 per share. Let's now turn R&D Solutions backlog.

Closing backlog grew 13.5% to 20.5 billion dollars at June 30th, 2020 new business winds remained strong and to date we've experienced no material covid-19 related cancellations. Let's now review the balance sheet.

At June Thirty cash and cash equivalents totaled one point 1 billion dollars and debt was 12.1 billion dollars resulting in net debt of approximately $11 as of June 30th, 2020 our net leverage ratio ticked up slightly to 4.8 times are trailing 12-month adjusted ebitda as a result of the covid-19 related impacts on our first half adjusted wage as a reminder. We continue to be committed to bringing our leverage ratio to a range of 3 and 1/2 to 4 times as we exit 2022.

Cash flow from operating activities was $472 in the second quarter and $635 a year to date capex for the quarter was 142 million M 283 million year to date and free cash flow for the quarter was $330 million or $352 year-to-date as you know, when the covid-19 outbreak became a pandemic in March, we temporarily suspended share repurchase activity accordingly. We did not repurchase any shares in the second quarter. And as of June 30th twenty we had approximately 1 billion dollars a share repurchase authorization remaining we will continue to evaluate the right time to reinitiate our share repurchase program.

We continue to have strong liquidity at June Thirty. We had one point 1 billion dollars of cash on the balance sheet. And our one point five billion dollar revolving credit facility was undrawn we also have over 1 billion dollars of ebitda cushion relative to our leverage and interest coverage maintenance covenants, even as our first-half adjusted Eva. Has sung a significant and unusual impact from covid-19. And finally, I would point out that we have a lot of flexibility with capital allocation which includes capex m&a and share repurchases.

and now

Remove the guidance.

On our first quarter earnings call. We outlined our assumptions regarding the global progression of the virus the percentage of clinical research sites accessible to us throughout twenty-twenty and our ability to interact with them to support Business Development activities these assumptions supported our 2020 guidance provided at that time during the second quarter it became apparent that the global spread of the virus would become more and more prolonged than we had assumed however, the percentage of sites accessible to us track in line with our expectations and business develop development activities have progressed better than our original assumptions.

We also had made the Assumption at the time that one hundred percent of clinical research sites would be accessible by the beginning of the fourth quarter. However, given localized flare-ups around the world. We now I see this happening more at the beginning of 2021.

But in spite of this we had been able to overcome restricted site access better than we initially thought through work around including the use of our remote capabilities.

Based on our better-than-expected performance in the second quarter the company's ability to execute in this environment incremental covid-19 trial work and evaluation current business conditions and outlook for the balance of the year. We are now forecasting better performance in art ad segment and better execution against our armed. Yes backlog than previously anticipated.

Together these factors are expected to contribute to improved financial performance in 2020 versus the company's expectations on April 28th of 2020 as a result. We are raising our full-year guidance ranges for the full year. We now expect full-year Revenue to be between $11 and $11 billion and $100 billion dollars which represents an increase of approximately $290 million dollars at the midpoint of which approximately 20% represents a favorable FX impact based on exchange rates as of the end of the second quarter.

Please note that FX still represents a year-over-year headwind of 60 basis points on our average revenue guidance at the midpoint of the new guidance range the constant wage growth represents like growth year-over-year for full-year profit. We expect adjusted ebitda to be between 2295000000 and 2345000000 dollars a month and we expect adjusted diluted EPS to be between $6.10 and $6.30. This guidance assumes foreign currency rates at the end of the second quarter of remaining money back for the rest of the year.

Now turning to guidance for the third quarter of 2020.

Assuming FX rates at the end of the second quarter remain constant through the end of the third quarter. We expect Revenue to be between 2725000000 and 2775000000 dollars adjusted. Ebitda is expected to be between $564 billion and $580 billion and adjusted diluted EPS is expected to be between $1,000.47 and $1.55. So in summary, we delivered second-quarter Revenue adjusted ebitda and adjusted EPS all above the top end of our guidance Thursday. We are seeing encouraging signs of a migration back to normal business conditions by the end of the year. We are utilizing our unique capabilities to help in the fight against covid-19 family. We have raised our guidance for the full year and we are already planning for 20 21 in anticipation of a returned to our growth trajectory and finally as already mentioned at the start of the call.

This is my last earnings call.

Would like you via I am very grateful for the opportunity to serve as iqvia Chief Financial Officer since our merger. It's been a privilege to work with re in the executive leadership team. I have learned a lot over the past four years and I incredibly I am incredibly proud of what we have accomplished.

I firmly believe i q v is incredibly well-positioned to achieve its Vision 22 Ambitions. I intend to remain a shareholder in the company and will be rooting for its continued success and with them. Let me hand it back to the operator for Q&A.

At this time, I would like to remind everyone in order to ask a question the star then the number one on your telephone keypad will pause for just a moment to compile the Q&A roster page. First question comes from the line of George Hill from Deutsche Bank. Your line is now open. Good morning guys, and thanks for taking the question. I guess. The first question I would ask is have you seen any change in the competitive environment as it relates to covid-19? And I know you haven't had any cancellations in the wind rates been strong, but I guess just talk about how the selection process is going and whether you guys think you're taking share.

Thank you George. Good morning. The again what we refer to no material cancellations related to covid-19. We are speaking about cancellations of trials that were already in the backlog not for covered for other things and it just points to the Resurgence of our customers and their long-term view. They haven't changed their priorities and they're still focused on with the diseases that they were focused on before the crisis emerged with respect to covid-19 itself. We've won a wide variety of em, all of the trial, you know ranging from small lab work or or off.

Of all the way to White 16 trials a number of those are I mean are well-publicized there are a few large ones, you know, some of them are nominal fees related to protocol reviews or small bio Pharma companies that are multi-million-dollar vaccine trials. There are currently two vaccine trials that are funded by the US government. So operational group seeds, which we have one one of which we mentioned. I'm actually my introductory remarks which is the one with AstraZeneca. So in terms of competitive wins. I think you know, the crisis has shown that are unique capabilities are highly highly differentiated. All I can say is we've become a last name.

To the customer base.

During this crisis with many of them. We had weekly forums. We've got extraordinary feedback from our customers in terms of the criticality of information. We were providing them in real time for their own decision making process and we've continued to win money at the very high Pace. I believe that we continue to gain market share and certainly we gained a significant amount of the overall length of nineteen work out there. I want to point out that is Karin nineteen related work is you know, we are contributing as well to the resolution of the pricing and so in many cases cuz these are government-sponsored we are discounting those so dead.

They are important and they are going to continue to play a role in the in the foreseeable future here and they were a part of our kingdom reporter. I believe they represents somewhere in the teams of our service booking in the core sort of mid teens or so. And so it's not a negligible piece of our of our dollar working. But you know, it's not it wasn't a make-it-or-break-it kind of a set of of activity and maybe if I could ask Mike a quick follow-up and like you're going to be there at iqvia remote monitoring is played a huge part of the process as we've gone through the Cove. Can you talk a little bit about the financial implications of moving to the remote environment versus on-site environment?

You asking about the remote environment versus yeah, I mean look, we as I said in my remarks the the remote monitoring obviously is where everyone went.

And you know because we could simply not access the the size. I I think that as long as I said in my remarks on site visits have replaced are now now now overcome the number of remote visits off the peak of those remotes visits were sometime in the may-june time frame and now Thursday, we have started, you know, accelerating in this fashion the number of actual visits we still not to our normal Pace, but it has dramatically because I said fifty 3% of the sites are not accessible and we are able to to visit those sites bear in mind while

remote

Is helpful, and then we are we using these mostly to meet obligations to patients and clients and to ensure their safety Etc. But but again, it's important to know that in person site visit are still required in order to meet the source data verification criteria off. The each trial budget, of course will have to be revised accordingly. So we see this as more of a of an opportunity as well we go back to to sites. Thank you Joe. Thank you.

Your next question comes in the line of Tycho Peterson from JPMorgan your line is now open.

Hey, thanks. I appreciate all the color I guess re on the reopening of sight and just curious about how much risk you see in the flare-up of cases, you know, heading into three Q in the back half of the Year another applications, you know to check and see SMS for your business and other steps. You can take, you know, in anticipation of some of this to try to mitigate the impact.

See SMS, did you mention see SMS or can you say that again? What's the question the question was about the you know, the flare-up of cases and the risk heading into you know you in the back half of the year and month that mitigate some of that in advance and there's any you know where you would see more impact.

with that psycho result

Was that George still having trouble hearing on our end? The question is about the flare up in cases and risks for three Q in the back half a year and other steps you can take, you know to mitigate some of the impact as cases are going back up and and you know a number of reasons. Yeah. I mean look at this place out there, you know, Texas, Florida, California South Carolina around the world and Europe and certainly Asia is pretty much back up to that quite a hundred percent off but not not that far. The main issue here is in some parts of the United States. But again, we don't disclose exactly which sites are aware, but you should know that that long it's not going to be that material these flare-ups the u.s. To our you know, we have over a hundred thousand sites globally and we've become very Adept at transitioning to remote month.

So I think yeah, I mean we we we now we now, you know, I've been able during the second quarter to adapt and Thursday. We have a number of workarounds using a remote capabilities. And so we feel that this assumption that we made for the third quarter. I think are in a way better educated than the ones that we made, you know, three months ago when we were just learning to adapt to the crisis. I should point out that these assumptions that we met in April of twenty twenties, you know many folks out there thought that we were getting ahead of ourselves and we were maybe too optimistic about those assumptions and the fact is the progression of sight accessibility as a metric was exactly exactly

as we predicted

We base that on the course of the disease in China and other geographies that were more they had been ahead of the rest of the world in terms of the disease and we base. Also on our own internal data and and and modeling that we are using to to protect our business. So once again a while people thought we were overly optimistic turned out we were exactly on target with respect to side accessibility and in fact not so optimistic so long, I think I'm not I'm not suggesting that because we were right three months ago. We are right now, but the next three months, but I think we if anything I believe we are a little bit more educated now off and on models are even more precise than they were three months ago.

And then already one follow-up you talked about a return to normal growth next year, you know 15% growth off 6:30 would be to 7:25 and essentially were consensus. Is that the right way to be thinking about it for next year? I'm kind of like I said that we were going to give guidance 421 much earlier than before than than than usual, you know, not at the beginning of the year or more this year for next year and not because as you correctly point out we have visibility. We have more visibility than usual because we know of the work that should have been done this year that still in our in our books that we need to progress plus the work that we want this year. So we have more visibility. I'm not going to give you any numbers I'd like to speculate but hopefully in an odd future. I mean I know if you'd be able to do this at the in the third quarter that maybe we we we should have that have that as a goal. Okay. We are we are we are getting there in terms of our 20 21 plans dead.

Thank you. Okay. Thank you. Your next question comes to the line of Robert Robert Jones from Goldman Sachs. Your line is now open for the month. And yeah, Mike definitely enjoyed working with you. Good luck in the in the next Endeavor and Enron. Look forward to engaging I guess maybe sorry just on on that last line of questions, but maybe to put some numbers around it. You know, the the second half Revenue guidance looks like an implies about 2% year-over-year growth in total revenue over over the back half of of nineteen, but you know you updated the Page Avenue expected to convert out of backlog is I think up 10% versus the last update with two Q is that that Dynamic get at what you just commented on that you have, you know, a better visibility into into the backlog and what could come out of the backlog in the first half of 2021.

Yeah. Yeah, I mean, yeah, the the next twelve months revenue from backlog increased considerably quarter-over-quarter. It was four point nine billion dollars at the end of that one and now since the 5.4 billion as a large sequential move and I think that's the ultimate forward-looking indicator for future Revenue growth in the trajectory of the business. So we're pleased with that. I think obviously we still want to dig into our plans and we started that process has already said earlier and we're we're looking forward to providing 20-21 guidance, but I think yeah, but I think you're thinking about it the right way in you know, what part of these is the fact that

This has you know, we won I believe a disproportionate.

Speed of the market over the past year or so and those market share gains have translated into a big proportion of that backlog that's new winds that are having started and so a big piece which is why you saw the revenue conversion beans slower than usual even even without the covid-19 crisis. That's because site start-up activity is typically a little slower a patient in a woman's easily slower way the vast majority of our of our book of business is not in the sweet spot. If so, so to speak where the child on going home. I saw the covid-19 crisis has added to this issue because when you think about the impact of the crisis on trials for patients that were already enrolled Ed.

And for trials that are in that state where you are really where you are really in the in the in the in the Swiss package and executing the trial and and patience with insights. Then we walked around that with you can walk around with remote monitoring and now we're returning patience to sites Etc. But psycho had not started yet site start-up activity is was much more difficult simply because people were just not at work and we were able to get the site up and running off so that has been delayed and it's it's kind of slowed down a bit similarly patient enrollment was more difficult than is more difficult. We are now enrolling as I said in my introductory offer patients back into trial, but we still are only at 25% of normal Base Line number of patients recruited.

So it's going up and we catching up and I think that's part of what you see more Revenue pushed back into the next twelve months. That's kind of the the pent-up if you would rather than that should have been executed that that's now going to be executed and that's in addition, of course to the change orders for the work that needs to be done. I mentioned before I need to do on-site data verification. So despite the remote visits a piece of the work still needs to be done on site. So that's additional. And then finally we continue to book at a very high base as as shown by our high book-to-bill ratios. And so all of that adds up to what we believe in the expected, you know, next twelve months revenue from backroad.

No, that that'll makes a ton of sense. And I guess maybe just a quick follow-up on maybe just I need to touch them somebody elements there in the prepared remarks, but you know clearly better performance than many expected. You know, what our clients specifically utilizing within the segment. I know there's a lot of components there. Is it is it the analytics for for virtual meetings? Is it more safety studies? Just trying to get a better sense of what was driving the performance in TAS? Yeah. I mean look the usual think data technology real world as well. I mean what I can run you want to take a look the strongest part of the Tad segment has been and remains real world. We've also seen continued implementations and the tech sector that's gone with no analytic Solutions actually has been been strong. Although there have been some delayed client decisions as a result of Covent Garden.

Word, but the particular strengths that we see is in real world and and again the weakness as we said before is the part of the business.

Where we help clients organize face-to-face meetings with with with with with with Physicians Health Care Professionals around the world the conference business that requires in person and that has essentially dried out it beginning interesting you need to show signs of Revival people are scheduling conferences, you know in the next few quarters, so so that that's going to come back but but certainly it's been largely brought to a halt and that has created a whole you know, which is white that doesn't perform as as greatly as everything else. I think is I'm very very thing that that and data remain very solid very stable. Yeah.

Thank you. Thank you.

Your next question comes to the line of Patrick Donnelly from City your line is now open.

Great. Thanks guys. Maybe just a follow-up on the task question. They're certainly appreciate real world doing well. Can you just give us a bit more color on you know, I know you kind of know that 35 in the clients so far in life twenty years discuss how that's trending relative to your expectation. And then again, maybe some of the feedback you're getting from customers that are either converting over to you or kind of competitive wins what you're hearing about the offering.

So again, the team has really performed very well and we've crossed the 100 customer market. Now. We are at 115 wins. I used to see a lot of success generally with a handful of exceptions. We're not seeing any slowdown in implementation. The actual many cases accelerations of implementations. We went live for several deployments including by the way in the midst of the crisis. I I remember seeing I think I saw an email somewhere from one of our large large large clients congratulating the team for amazing job. They did on a throwing in Spain in the middle of the Christ of the of the peak of the coffee crisis over there. So things have tended to to go very well on on our deployments.

Generally the demand for remote detailing continues to rise. You know, we've got a module within let's see Call Log remote detailing which is the most secure compliance platform in the space. We also launched last quarter our compliance solution in the commercial space off the hcp engagement management, which already has four wins and a strong pipeline has been building. So I think it's all going very well according to expectations and frankly month. We see we haven't seen any, you know few again a handful of slow down in terms of some areas where we couldn't really deploy but but on the other hand we've seen acceleration, so it's essentially going as well as as we could have expected.

Okay, great. Let me just one moment.

On the margin side, you know, you guys did a pretty good job insulating the bottom line from some of the revenue headwinds are pretty quick to to do some cost controls know you talked about planning for 20 21 already. I guess how should we talk about some of the costs that have come out, you know those going to come back in terms of planning you feeling good enough to your point. There are I think you talked a few times about the visibility now that you're more comfortable there. Are you kind of easing on suck cost controls? Maybe just help us think about kind of the margin Cadence going to go forward to cost control measures that you have in place. Thank you.

Yeah, I mean you want to run you one of those sure look obviously there's margin pressure in the first half due to the you know, the the drop in Revenue agent and how quickly we could get costs out more. So and early on than later on we should should see margin expansion in the second half of the year at the business comes back. We take a lot of cost out. I don't think all of it's going to come back. Certainly we're going to continue to try to keep pressure on keeping PG&E costs down and I think naturally they will a food crisis and we're we're always looking to to take out, you know to improve efficiency wherever we can you know, one of the things we've we've looked at very carefully out any which obviously has fallen off is renegotiating vendor contracts reducing third-party spend and we're reassessing our office space needs which I think a lot of carbs.

Doing right now. So I think that the cost Trends will be positive going for adds will margin progression. Yeah, I mean again you can see we have a large cost base. And so am God's will be the situation becomes War worse, you know, there are many livers that we can that we can use to mitigate impacts across and again, I want to I want to emphasize we have not taken.

virtually

No action with respect to employment. There are very very small Pockets really affecting the few hundred employees where you know, they were fake or the War, uh a few restrictions when nothing out of the ordinary course, nothing dramatic and we do not plan to do so long. And the reason for that is again, we are a People based business we're services company and we want to protect our employees. We know they're going through difficult times and then second, we do expect a v-shaped recovery and a very strong. Well, he here I go. I'm talking about twenty Twenty-One. I didn't want to but we expect the strong twenty Twenty-One wage and and and we are going to need we are going to need our our very talented employees. So we didn't take any any base compensation or or or or dead.

You know the restructuring actions as a result of the crisis.

Great. Thank you very much.

Your next question comes to line of Eric Caldwell from Baird your line is now open. Thanks. Good morning. Mike. Good luck with your future endeavors a couple of quick questions here. First off. I heard in the Q&A. I mention of particular strengths in real world evidence last quarter. I believe you highlighted That rwe Could Be A Tale of Two Cities prospective and retrospective work with the prospective work looking more like trials. There could be some headwind what changed there if anything or what were the Dynamics between off the old is quintiles business mix. Well, that's a very it's a very

Okay, I don't want to flatter me. So very thoughtful question and you're right to you understanding why you were doing well in real world. And that is that the ability to use patient-level data, which are remind you is really an unparalleled asset off our company we have now we did over 800 million patient lives unique patient lives, which I am extremely useful the unique e360 technology capabilities enable us to conduct a lot of retrospective study and that part of the business has been extremely strong the second factor. Is that while access to sites dead.

Has also been restricted but it is less restricted than a critical trial-size to Thursday. We there are many real world studies where the sites are actually doctor offices.

As opposed to a hospitals and those have tended to have while restricted still and many of them were shut down as you know, but access uh, physical access was better than we would have thought and the experience has proven that the site accessibility for real world am somewhat better than four k e court trial sites. So as a result real world has done again better than we would have expected bear in mind. Also when we should support site accessibility metrics, we only report for clinical trials. And as you know, our our our competitors are cro peers report members in aggregate. Yep, helpful. Thank you is one of two companies in the space that reports authorizations on a contract basis dead.

I think there was some speculation that you could have strong Awards, but maybe contracts would be.

Out given the the global uncertainty and and clients putting out fires. Clearly. That was that was not a big headwind but I am curious. What is the name from award to contract at i q v, you know, my hunch would be maybe a couple of months, but I'd love to hear your thoughts and then how has that changed in a in in this office environment? We know the The Cove it's specific trials are being contracted extremely quickly. But have you seen other changes in the duration between award and and contract time?

Well, your general assumption is correct. Okay, you're kind of two months like time. We're trying to reduce that but I got 60-day period is the good is a good assumption the lag between booking and revenue could be after 12 months off. Okay. So the line between award and Contracting could be up to 60 days 30 to 60 days. Let's say and the Light Between booking and revenue office could be after 12 months six months to 12 months depending on the client. The study Dynamics are of course, the current situation has a has pushed that that that that the lack between booking and revenue further simply because we want unable to get site started.

But we are going getting back into it as we speak and certainly in Asia. We already back up to normal and we expect that to happen, you know with the bulb three to six months lag in the rest of the world Europe and then us so yes, I mean, it has created some some some delays in execution on the other hand as you suggested cuz we nineteen trials are much faster burned. So it has partially partially began to offset that correct one thing toward and contracted bookings were very strong in the quarter. So either way you look at it it yeah wrong wrong makes a good point. I mean, I don't want to do you remember the old way of of of reporting Book 2 bills, which was basically on the wards and if we had done that

This quarter should I say what it would be having significant materially higher than the 1.6 for materially. Hi.

On towards I mean the walls be very helpful last one. Just just to clarification. There was some there was some phone issues in in one of your earlier responses did not hear you say that covid-19 in total across therapies and vaccines accounted for mid-teens of your contracted Awards. So it's Services. Yes. Yes. Yep. Okay. Okay. Great. Thanks guys. Okay operator. I think we're up to the top of the hour now. So I think we've run out of time for the call. Thank you everyone for taking the time to join us today, and we look forward to speaking with you again on a third-quarter 2020 earnings school and I would be able to take any questions that you may have for the rest of the day and making one. Okay. Thank you very much.

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