Q2 2021 ICON PLC Earnings Call

[music].

Good day and thank the free standing by welcome to the icon plc quarter 2 results call.

At this time all participants are in a listen only mode.

For the speakers present feature and there'll be a question and answer session. The asked the question. During the session you will need good practice star 1 on your telephone.

Today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Jonathan Curtain. Please go ahead.

Thank you very much and good day, ladies and gentlemen, thank you for joining us on this call covering the quarter ended June 30th 2021.

Also on the call today, we have our CEO, Dr. Steve Cutler and our CFO, Mr. Brendan Brennan.

I'd like to note that this call and webcast on that there are signs of available to download on our website to accompany today's call.

Certain statements in today's call will be forward looking statements. These statements are based on management's current expectations on information currently available, including current economic and industry conditions actual results may differ materially from those stated or implied by forward looking statements due to due to risks and uncertainties associated with the company's business.

Listeners are cautioned on forward looking statements are not guarantee guarantees of future performance.

Forward looking statements are only as of the date. They are made we do not undertake any obligation to update publicly any forward looking statements either as a result of new information future events or otherwise more information about the risks and uncertainties relating to the forward looking statements may be found in the SEC reports filed by the company.

This presentation includes selected non-GAAP financial measures for a presentation of the most directly comparable GAAP financial measures. Please refer to the press release States statement headed condensed consolidated statements of operations U S. GAAP on orders as well.

Non-GAAP financial measures are not superior to or substitute for the comparable GAAP measures. We believe certain non-GAAP information is more useful to investors for historical comparison purposes, we will be limiting of the call today to 1 hour would therefore ask participants to keep the questions to 1 each with an opportunity to ask 1 related follow up question.

Now I'd like to hand over the call to our CFO, Mr. Brendan Brennan.

It's all of them.

In quarter, 2 icon achieved gross business wins of $1.316 billion and recorded the 210 million worth of cancellation. Consequently, net awards in the quarter were a record of $1.1 billion, resulting in the net book to Bill of 127 times on a trailing 12 month net book to Bill of 1.

134 times.

With the addition of these new awards, our backlog grew to a record of $10.2 billion. This represents a year on year of increase of 12, 7%.

Revenue in quarter, 2 was $871.2 million. This represents a year on year increase of 45% or 37, 5% on the constant currency.

And the C D O basis.

Our top customer represented 12, 7 percentage of revenue for the quarter compared with 1 in quarter..2 2020, our top 5 customers represented 49% of course the revenue in line with last year. Our top 10 represented 54, 2% compared to 54, 9% last year, while the top 25 represent.

The 72, 4% compared to 71, 3% last year of <unk>.

Note on a combined company basis, our largest cluster of Martin quarter, 2 would have been 7.3% of revenue.

Gross margin for the quarter was 27, 6% compared to 27% last quarter on 28, 1% in the comparable quarter last year on her adjusted SG&A was 10, 3% of revenue in quarter, 2 of which compared to 10% last quarter and towards the end 0.45.

In the comparable period last year.

Adjusted operating income in the quarter.

The in quarter, 2 was 100 and towards the $2.9 million of margin of 15, 3% as compared to 15% last quarter and 12, 1% in the comparable quarter last year.

The adjusted net interest expense was $2.2 million for the quarter on the adjusted effective tax rate the 13% for the quarter.

Adjusted net income attributable to the group for the quarter was $113.2 million a margin of 13% equating to diluted earnings per share up $2 on 12 cents. This compares to earnings per share of $2.06 in quarter. $1.2021 on a $1.20 in the comparable quarter of last year.

During the company during the quarter the company recorded $42.1 million of transaction and integration related costs U S. GAAP income from operations amounted to $112.9 million of 13% of revenue U S. GAAP net income attributable to the group was $73.9 million or of $1.38 per diluted share.

To the 19th.

Per share for the equivalent of prior year period.

Included in the press release on the earnings slides you will note that we included adjusted earnings per share of $4.46 for the force of the year. This excludes stock compensation expense I'm on.

The <unk> and transaction related costs on their respective tax benefits or the.

<unk>, we estimated the adjusted effective tax rate for <unk> 2021 with 15, 2%.

In addition, with respect of our guidance, we expect the fully diluted share count to be approximately $83.7 million shares for the second half of 2021.

Net accounts receivable was $417.4 million out of Turkey as of June 2021. This compares with the net accounts receivable balance of $465.6 million of trade.

The 1 March 2021 on the comparative basis day sales outstanding were 25 days of June shortly of 'twenty 'twenty..1. This compares with 39 days at the end of March 2021, 53 days at the end of June of 2020.

Cash generation from operating activities in the quarter was $128.4 million at June 30 of 2.

<unk> 'twenty 'twenty 1 of them the company had a gross cash balance of $1.057 billion and debt of $350 million, leaving a net cash balance of $707 million. This compared to net cash of $595 million at March 31, 2021 of net cash of $244 million at June.

As of 2020.

Capital expenditure during the quarter was $12.9 million.

As you know the PRA acquisition was funded through a combination of cash equity in debt over the course of May and June we engaged with couple of markets to secure long term financing, resulting in a number of our core outcomes worth sharing.

The first relates to our credit rating status, where we achieved the double b plus and be a 1 ratings from S&P and Moody's respectively. This represents only a 1 notch decrease from both agencies relative to our previous investment great position and we remain 1 of the highest rated the crows in the industry.

Secondly, we had a very positive process raising the 6 billion of debt required to finance the transaction.

This was broken into 2 instruments 5 point of $5 billion of floating term loan b notes over a 7 year tenor and half a billion dollars fixed high yield bond over a 5 year tenor.

Our term loan B offering was oversubscribed in excess of 2.5 times I think is the secure an all in rate of 3%.

Demand was also very high for our high yield bonds with subscriptions of over $3 billion, helping us to secure a rate of just the $2.87, 5%.

This all means we will have the current blended interest rate of just below 3%.

The phone the structural would allow us to maximize repayable of debt to do the have a quickie.

We completed the transaction with a debt to adjusted EBITDA on inclusive of synergies ratio of approximately 4.2 turns but a global sorry, but our goal to reach 2 and a half times adjusted EBITDA by the end of 2023.

In addition to this long term debt, we increased our revolving credit facility from $150 million to $300 million. This facility is currently on drawn.

Before I hand over to Steve I'd like to make you aware of the change in our Investor Relations Department, Jonathan Curtain, who has led dysfunction of for over 4 years will transition out of the Io of role to lead our commercial finance team alongside his existing responsibilities as head of our corporate Finance group.

I'm pleased to announce the Kate Haven, It was moving across from our corporate development team will succeed Jonathan as Vice President of Investor Relations.

Jonathan will be working closely with tape to ensure a smooth transition on I wish them. Both the very best of luck in their new roles and so with all of that said I'd like to hand, the call over to Steve.

Thank you Brendan and the good day everyone.

On July the first we were delighted to close icon acquisition of Prs.

Right.

This transaction brings together 2 high quality innovative growing organizations with similar culture and values to become the world's leading health care intelligence and clinical of CLO.

With the addition of PRA, the new icon will create a novel paradigm of bringing clinical research the patients.

Offering expanded capabilities and solutions to customers, while delivering significant value to shareholders.

The environment created by the COVID-19 pandemic has presented the industry, where the opportunity to accelerate changes in the clinical monitoring process.

The need for a more flexible and efficient approach to clinical monitoring and data review has emerged from this demand will fundamentally change the way in which trials are conducted going forward.

A key milestone for icon was the manner in which we help go live of the first COVID-19 vaccine to the market in record time, applying this agile and flexible framework to our clinical monitoring modal.

Our ability to execute these large scale projects has resulted in a very healthy level of business wins in this area.

And during the first half of the C. Both icon and the PRA.

So the influence of these vaccine trials on our revenue with a higher proportion of costumes relative to non COVID-19 work.

As we progress through the remainder of the we expect the pass through of mix to begin to return to a more normalized level.

In parallel we have seen an increased shift from traditional to hybrid models and we are excited about future opportunities and the decentralized trials space the.

The industry is poised for transformational change we are now in a position of significant strength with the combined market, leading skill sets and resources of both P alright and icon.

Moving forward the new icon will provide our customers with the integrated solutions required to execute on these novel delivery models, while making it easier for patients to be part of the clinical development.

Success will decentralized trials require on mobile site and patient centric technology to support Tele medicine.

<unk> resources to ease the investigator and patient burden in the home services to patients Central labs, the process and manage the testing and also direct to pricing capabilities to enable the drug distribution and managing.

I believe the new icon is is the unique position to be able to integrate these key components to create compelling and differentiated solutions for customers.

But icon and PRA have long histories of individual company success, and collectively we will be much stronger than the sum of our parts.

Our goal is to price the world's leading health care of intelligence.

Where customers will benefit from our broader service offerings and geographic footprint.

Deep of therapeutic expertise expansive health care technology innovation.

The function of talent and capabilities.

Integration activities are well underway and functional teams from both legacy organizations are collaborating well to ensure we have a seamless transition to a single company.

As we integrate our day to day focus remains on business continuity and the execution and delivery of our customers' clinical projects.

The complementary nature of our services will also prevent present revenue synergies across our broader customer base.

Already we are seeing interest from customers in the new icon.

The positive strategic partnership discussions being initiated and cross selling opportunities being generated in areas, such as central and specialty labs the.

Silicates site network home health services and imaging.

We are also actively pursuing our cost synergy target of $115 million and have already announced internally the consolidation of a number of offices that are situated in similar locations.

This will not only drive P&L benefits, but will also help our teams to do their best work as we return to the office post pandemic.

As the market price continues to evolve it will be important to remain focused on innovation that facilitates our core mission of getting drugs and devices to market faster.

Our new partnership with Allscripts paradigm aims to create the industry's leading E.

Based clinical research network reaches more than 25000 positions and 40 million patients across the United States.

Using varied on study source platform, which extends the existing EHR systems to include the clinical research alongside our proprietary E source technology and clinical research expertise. This net.

Work will enable physicians to offer clinical research is of care option to the patients driving efficiencies across the trial process and increasing patient accessibility and diversity of clinical trials.

In addition, we have seen growing interest from sponsors in clinical trial token organization.

<unk> enrolled clinical trial patients enables them to be followed within the real world data sitting in the D identified manner, increasing our ability to identify of long term outcomes and improving our reporting of key follow up data to sponsors and regulatory authorities.

You icon is the only organization that has implemented a customer friendly environment of multiple tokens to allow the linkages to of vast data ecosystem.

Client and <unk>.

Cure and 2 in approach.

Through our Symphony asset Sonoma.

Icon is data and analytic resources and expertise to translate token on the patient populations.

<unk> information for clients, which will support the ongoing product development registration and pricing goals.

Current customers include 3 of the worlds top 15 pharma companies since the initial launch in May 2021.

By utilizing the benefits of our partnerships alongside of our existing capabilities. We can deliver truly differentiate of trial solutions to meet growing customer needs and positively impact clinical trial development.

As we integrate these key components into our patient site and data strategy, we will be able to provide a compelling set of solutions to customers that will accelerate pace of the recruitment and retention increase participant diversity and shorten the clinical trial timelines.

Ultimately our goal is to create a sustainable competitive advantage over the medium to long term by actively investing in leading in the space where clinical development. He is heading.

On a standalone basis during the quarter icon increased net business wins to a record $1.1 billion the.

<unk> on a quarterly book to Bill 127, and growing our backlog to $10.2 billion, an increase of 12, 7% year on year.

Revenue grew 41% to $871.2 million and adjusted earnings per share increased by 77% to $2.12.

We were also delighted to see strong PRA business wins for the quarter of nearly $1.2 billion and the net book to Bill of 121.

This helps build momentum for the rest of the <unk> and beyond and demonstrates our customers confidence in the new icons continued operational performance and on.

Our commitment to deliver enhanced and innovative patient centric solutions.

We expect to create significant long term shareholder value by combining revenue growth from enhanced service offerings innovative solutions and increased scale with our best in class Global support services margin.

As a result of this acquisition, we are updating our 2021 outlook with revenue guidance in the range of $5.3 to $5.5 billion and adjusted earnings per share guidance in the range of $9.10 to.

The $9.50 sales.

Before moving to Q&A I would again like to welcome the PRA colleagues to the new icon and thank all of our teams of all the hard work and commitment during the quarter.

Operator, we're now ready for questions.

Okay.

Thank you.

Ladies and gentlemen, we will now begin the correct in an answer session. If you wish to ask the question. Please press star 1 on your telephone and recruiting to be announced.

Yeah.

Your first question comes from the line of Sandy Draper from kind of Securities. Please ask your question.

Thanks, so much and congratulations on a strong quarter as also and also getting the the deal done.

My question initially on really on the financial side, you talked about your targets for free.

For Delevering, the when I think about it or do you have a target for like a percentage of free cash flow to de lever or is it going to be the what sort of the the pacing we should be thinking about in terms of that deleveraging.

Yeah, so on and I kind of I called out on the the prepared remarks, there obviously, we want to try to get off of that 2.5 times.

Debt to EBITDA by the end of 2023, so we will stay focused on that in that interim period. So you've got 22 and 'twenty 3.

Save really opportune of small acquisitions are small elements of buyback will definitely be looking at most of our cash going towards getting to that target as on the in that timeframe. So it'll be on like we haven't set an exact percentage of free cash flow, but certainly a very high percentage on until we get after that.

The leverage point and from.

From that point on the then of course, it it'll be much more about managing debt at that level and really using our cash resources to continue to build out the organization as we know we will still have to do.

Okay. Thanks, Brendan on my follow up is also financially related I'll, let I'll, let others ask the smart strategic questions are on.

Are there any.

Future transaction cost debt on a cash basis over the next quarter or 2 or you pretty much done with the the 1 time charges and cash charges for the from the transaction most of most of the I'd like to say of Undrawn as Andy that sort of is unfortunately, not true we will take more a cash expenses in the toward.

Her but the vast majority will be taken the care of by the end. So there still will be a chunk of enough number to go not dissimilar starting the end, maybe even a little higher in the in the chart of order that we saw on the second quarter after that where a majority of the dawn.

Okay, great. Thanks, so much.

Yeah.

Your next question comes from the line of ease of that understanding from Evercore. Please ask your question.

Hi, guys. Thanks, so much of the question and congratulations on the on the transaction.

The completion.

I was just wondering on 2 things.

Could you talk about 1 any update on thoughts on kind of you know.

Our larger of overlapping clients incident their feedback and any early potential combined wind and then 2 could you also speak to our staff retention and the broader integration efforts from our inter.

Our non perspective.

Yeah sure Elizabeth in terms of <unk>.

Overlapping clients I think we've been public before and then we do have wanted to debt overlap to our 2 of our reasonable degree we've had a number of discussions with those customers on those discussions have been very positively received to the point, where you know.

We're not we're seeing less risk in those in those customers than we had anticipated before is as we kind of play to the transaction.

The.

The number of circumstance of a number of areas that on.

Embolden, we've we've had those discussion the there are in a good place we are both companies of delivering well for those customers in the looking to combine the offering and to make sure that we continue as a key part of those of those customers. So its been in general very positive and as I alluded to on like in my comments as well.

<unk>.

We've been we've had a number of the strategic discussions with with customers, who neither company has had a particularly strategic relationship with of.

Over the past few years in the they are also interested in what the combined entity can bring as well so net net very positive in terms of the.

Particularly large large.

The large pharma companies in the biotechs as well it's been a.

A strong positive customer response right across the board almost uniformly in terms of staff retention of attrition, we certainly seen a little bit of a tick up in retention in the <unk>.

Christian of staff over the last the.

It's probably the last 12 months really is certainly not necessarily I don't believe directly related to the transaction.

We believe the labor market, particularly in the United States is pretty hot at the moment on what frankly, the labor market.

Across the world is kind of restructuring as we come out of this pandemic. So I think there are a lot of moving parts going on in this and the law.

Labor market as such.

We've seen a little bit of of an uptick when we're addressing at the the various plans we have in place to bring new graduates into the people career paths are the obvious.

Make sure with the pine market salaries of Citrus Center I think you'll find the same the uptick in attrition with our competitors as well I don't think it's just a.

Related to the icon of what we've done and I certainly don't think it's directly related to the.

To the acquisition of until the transaction, it's something that we're seeing across the industry is there's a lot of money is being spent in clinical development. So we don't just competing with other <unk> the stuff, we're competing for with pharma companies and biotech companies as well. So it's the consequence of the.

Of the market the growing market the availability of capital to develop drugs and then the third we can't complain about the business development wins being being strong in the nutrition.

Same time, you have to probably take 1.

With the other as well.

Got it that's very helpful. Thank you.

Okay.

Your next question comes from the line of Erin Wright from Credit Suisse. Please ask your question.

Great. Thanks as it relates to your guidance what are what are some of the key changes relative to your prior expectations for each standalone business on a more operational basis in terms of what's implied in the outlet for the second half of the year have there been any meaningful changes on that Brian comes into play of it on the combined basis.

Okay.

And the not meaningful Erin I think the operational companies of our boat moving in a strong directions of the second half of year, we've kind of outlined that are there.

There are other elements of course in terms of numbers of the stock kind of as I made reference to the fact that would be about a $3.6 million or about $83.7 million shares of my apologies in the second half of the year that obviously has a bearing on the on the EPS number but the the underlying operating income on indeed EBITDA are moving solidly in both organizations.

In the right direction.

On where we're pleased with that and that we'll see good uptick quarter over quarter on indeed year over year. So I think predominantly we're moving the right direction, we'll start to see some of the synergies impacting but you know the work we're doing around the synergies it's sort of the long term of course on where.

We're putting the steps in place now that will really benefit all of us over the next number of years and of course, a little bit in the first 6 months, but certainly more thinking about 22 of 23 in that regard. So a strong operational performance rolling forward into Q3, and Q I think I think the only thing I'd add to that Eric.

We've been involved as a pair of right as I said with the large of these vaccine trials, which have had a significant pass through element in the firm.

First half of the C. Those those studies.

Coming towards the range that we still got still of lot of Covid work.

A significant part of our business wins. This this quarter, but the big those big parts of studies of Big vaccine studies of probably coming towards the end of it now which is which is sort of attenuating a little bit the very rapid growth in revenue we've seen over the last couple of quarters. So that's the only thing that I think would probably played into our guidance.

As well.

Okay, Great and that goes right into my second question, which is could you provide a little bit more detail on on the COVID-19 related of warrants today.

The businesses are on a combined basis in the percentage of revenue kind of in the quarter I think with Covid related work in.

And I guess, you commented already on sort of the dynamic throughout the year, but if you could give us a little bit of color on the COVID-19 trends on that front that'd be helpful.

Yeah in terms of of.

New COVID-19 opportunities coming in.

That's sort of flattened off a little bit, but it's still in the vicinity of in the high teens in terms of out of our Rfps are so it's still a significant proportion of our work Theres no non COVID-19 cliff I suppose is the.

The overall message here with the.

It's a high teens on on Rfps, New business, you know, it's a little bit higher than that.

And on that backlog, it's in the high mid single mid single digits. So it's you know it.

Covid work continues to be an important part of our portfolio is not going away. The other side of the big vaccine trial of those days of probably coming towards the end, but we're moving more towards treatment trials diagnostics as long term follow up trials, there's different patient population trials in the vaccine space.

So that work.

As I've said before it's going to continue for another couple of years, I think and who knows with the variance in all of the rest of it coming through booster of.

You know the requirement of potential the requirements for boosters.

That may also impact it as well, but it's a it's certainly.

Been a very positive environment from note from Covid work and even in the non covered work we've seen a.

A significant uptick in their rfps as well so if the COVID-19 sort of rfps have been flattening off of a little bit the non COVID-19 rfps have been growing quite substantially to replace that so it's a positive business environment.

Okay perfect. Thank you.

Your next question comes from the line of John Kreger from William Blair. Please ask your question.

Thanks very much.

Steve.

I know you are calling the new company.

The world's leading healthcare intelligence company clinical Crs can you just expand a little bit on the health care intelligence part of.

Or are we thinking about that primarily as the the legacy PRA Symphony business or broader just just tell us what you're what you're really thinking about what that part of the tagline. Thanks.

Yes.

And John I mean, we are thinking about the day to component of that and but not just the the data it's the.

Way, we use the data and the way we are able to analyze and.

And do things differently from the way, we interpret that data of Symphony is an important part of it I talked a bit about token of amortization. We think that's a very important part of being of healthcare intelligence organization being able to track track pricing in the D identified and compliant manner in the long term, if we've been able to do that on the.

On the the vaccine portfolios, we'd be able to answer a lot of the questions that are only really coming up there do we need another boost of what's the timeframe for the immune response to the wear out.

That's sort of intelligence.

And that sort of information that allows us to make insightful decisions and type of actions.

And support the not just the ongoing registration of the of our sponsors.

Products, but the development of those products in different indications and the pricing of those products as we see the value of those products from how the how the helping people in the in the.

The Saudi on the real World evidence basis. So the Symphony is a big part of it we've talked a lot of about a 1 view tool on how we're using that to identify the right thoughts since the like sorts out.

<unk> approaches will be going directly to price it and gathering.

That's what the data of our Wearables at it it's a variety of things around our patient site and data strategy, but the the intelligence side of things is really using technology and data in a way, that's perhaps a little bit more nuanced in the little bit more insightful than it has been used in the past and allowing us to ultimately deliver trials in a different way much.

More effectively and efficiently.

That's great. Thank you and maybe a quick follow up to elicit this question about staff.

Do you does this change your thinking at all on margins going forward or are you able to pass higher labor costs along in your beds.

Yeah.

There's certainly a little a little pressure on the on the wage line and we need to compete actively in the marketplace and as I've said, it's a very active marketplace at the moment. So in the very short term, we might get a little pressure. The I think we can handle that we certainly got closes within the hour contracts that allow us to adjust our pricing on the base of.

As of in flight and importantly, I think it's also soup.

Supercharging our efforts to move to the more efficient model, where we're doing more off site monitoring more remote patient monitoring and allowing.

Staff to be more efficient to allow them to.

Getting a better work life balance of essentially rather than being on a plane and go into thoughts physically all the time that they're able to do a fair bit of their work at the.

The desk on the on the computers, because we can do we can monitor the the.

Studies remotely, it's really moving those efforts faster and I think of forces are also buying into that.

We sold.

What we did during the pandemic and we got some tailwind from that this is labor market is also helping that as well. So we believe that will help us to offset any any challenges we have from of wage inflation and cost perspective, certainly in the medium to long term on the short term work.

In that room, we think we can handle it but the opportunities there's always opportunities in the sorts of things as well and I think that's certainly 1 of them.

Sounds good thank you.

Next question comes from the line of Eric Coldwell from Baird. Please ask your question.

Thanks very much.

A few but I think they are hopefully pretty quick first 1 in the prepared remarks, you said your largest customer on a pro forma basis was 7.

3% I think you set of of revenue in the quarter were you specifically, citing icon <unk> largest customer would be brought down to that level or looking at across the spectrum of both companies the largest customer would be 7.3%.

That's across the spectrum of boat company, it's Eric So that's our new customer base the top customer of the new customer base will be 7 bunch of a person.

That's great.

The second 1 I'm, hoping you can give us your thoughts on tax rate in the second half.

Yeah, we said we'd start of it and in the around the ballpark of 17% and work our way down from that Eric We haven't changed our mind.

Mindset on that 1 so we're at this stage, we'd be thinking of 17% for the second half of all of 2021.

And our next 1.

Don't know if you have this are you able to share at the PRA historically provided service level bookings the kind of a unique approach the they did transition and start adding in full bookings of about a year ago, but I'm curious if you would have that number at hand, just for comparable purposes for those of US who are tracking Perry in the past.

Not the Honda Eric.

My feelings on this 1 of the Amazon I'm a great believer in there's only 1 type of revenue and there's only 1 type of bookings, which is the fixed the fixed methodology. So that's where we'll be looking at as we go forward.

Okay. Thanks, very much I appreciate it.

Next question from of the line of David Windley from Jefferies. Please ask your question.

Hi, Thanks, Good morning, good afternoon, Thanks for taking my questions.

On several of several questions of kind of gotten at the point of of the demand environment, but I was hoping you could perhaps add a little bit more color too not just RFP trends, but maybe also how your hit rate has evolved that stayed relatively stable or changed at all and then within that.

There was mentioned in the prepared remarks, Steve about hybrid models I'm wondering what you're seeing within the rfps or maybe the RP youre seeing or maybe the bids you're submitting if you're being more proactive about it with hybrid and DCT type of approaches to your studies, how is that creeping into the our people.

Sure.

Let me stop of the Rfps I think as I indicated.

It's been continues to be a very positive environment not just in the biotech space right across the spectrum right across the segments that we operate in large pharma biotech mid size. We're all in the high teens in terms of the annual increase in RFP.

So.

It couldnt be happier with the way that's that's moving forward.

And I think that's really across both organizations icon, the certainly say that in the.

And as as we've seen PRA also of saying soon.

Similar sort of.

The mid teens sort of increases in the in their RFP. So again by the thing that I think thats evidenced in the in the.

Awards in terms of hit right on I was pleased actually as I look this morning to see an uptick in the in the hit rate on a dollar basis.

Again across across the spectrum.

Particularly in our in our lifestyle business and our early stage business and this is all icon Standalone I don't have the detail for the PRA at this stage, but and on a silica of home health, we've seen an uptick in our win rates on a strike right. So again.

Along with the increased numbers of opportunities increased hit.

Hit rate has really put us in a pretty good position and I think it really does speak to the confidence that our customers have in our ability to execute but also our ability to the might be as integration go well in terms of hybrids in the hybrid trials with the only thing a lot of interest in that the.

As you would well know theres a lot of talk and Theres a lot of.

Discussion around how these trials work and how they're operating going forward I would say that the almost of the majority of the draws we proposed at the moment have some sort of hybrid sort of component whether it be of remote.

Monitoring sort of component or of wearable technology.

Or a data collection.

Area that relates to a direct to patient sort of of mode. So the.

They are very much hybrid and hybrid goes from.

1 into the spectrum right up to the to the.

All of the really down the full decentralized trial in the desert lots in between but the.

Vast majority of I'd say of trials that we propose really do have some sort of the hybrid component of some sort of decentralized component of that which we fund refund positive. It gives us something through the build on and it gives us an opportunity to deliver that component of the of the trial and then build on it for the next 1 to become a more of <unk>.

Hybrid or even a more more fully decentralized sort of approach. So it's the again our customers are.

I'm very much aware of it very much open to those discussions and particularly where it exited the trials on the budgets more efficiently spent a net.

We feel confident that we can deliver those sorts of the suite.

Charles.

It sounds encouraging. Thank you my follow up question kind of related to that.

You you mentioned in your prepared remarks also you touched on a number of the areas.

Our cross selling is the opportunity it seems to me that that some of those might be a little of the ability to go to market and offer those services. For example of example, central labs, the PRA client base might be more immediate whereas perhaps the integration of some of the technology capabilities and.

On the DCT trial approach might might require a little bit more integration and development before you go to market strategy might be ready.

I Wonder if you agree with that or if you could give us a sense for.

How immediately you might see from a revenue synergy opportunities from some of things versus others.

I would say I do broadly agree with what you just said I've certainly seen already some some wins on the lab front.

The revenue starting to flow.

It's certainly in the second half of the year, we'll see revenue starting to flow from those immediate opportunities language services imaging labs. That's happening we we have an expectation of around $100 million in revenue synergies on AR.

On a run rate annual run rate basis, and I think we're well on our way.

To that I'd like to think we could potentially exceed it in terms of the mobile health platform and some of the decentralized you're right I mean, the those things they've got to take a little bit more time to.

To come into play.

We're working very hard to build a unified platform, we have a number of platforms the dose.

Moving forward to the changing an.

Investing significantly.

Significantly in those platforms and having discussions with a couple of these things always take a little bit of time, but we believe as we get towards the end of this year into next year, we're going to have a unified platform ready to go which will replace the current platform that we have and will allow us to again further integrate <unk>.

Various aspects of out of our capabilities and resources into that decentralized approach. So that will take a little longer no question about that but.

It is not he is the way it's certainly I think within the next 12 months will be we'll be very active in that space in terms of implementing that sort of totally decentralized approach.

Excellent. Thank you very helpful.

Your next question is from of the line now Hydro Peterson from Jpmorgan. Please ask your question.

Hey, Thanks, Steve I kind of follow up on that kind of last line of questioning its great to hear about the revenue synergies and then kind of the hit rate I'm. Just curious, what's really resonating as youre out talking to customers. You know if we think about the third of the top 20 pharma customers, who don't currently do business with.

As you go to kind of pitch to them.

<unk> is it the new capabilities you bring to the table can you just talk a little bit about what's kind of resonating and.

Then another angle that you talked about at the time of the deal is accelerating patient recruitment through the shell of care network. How are you thinking about.

Can you debt as well.

Sure.

You know what I'd say is as we talk to customers.

It's all of those things of that the.

They want to talk to us about obviously, it's the usual scale capabilities resources therapeutic the depth and breadth of et cetera et cetera as.

It is important to them you have to be there and we have that but I think increasingly they're also interested in the silicon of home health network. The of silica site network, which gives us a different slant on how we bring patients to the clinical trials and then on the on our decentralized approaches as well of the token ization of us.

Some of these on the some of these strategic discussions the decentralized trials on the mobile health platform that we're developing is also creating a lot of interest in all of it theyre interested the heat.

What we're doing in that in that respect. So it's a combination of the you know the usual sort of scale and resources and capabilities, but increasingly also the technology of the data opportunities, we're bringing in the ability to really put together a solution. That's highly integrated in the clinical space I think that's what's going on.

The customers, particularly the larger ones are very excited about the.

About the new oil from in terms of the sale of care the the.

The network the slides.

It's really nicely without decentralized trial approach, we don't believe there's any Z.

Centralized trials you have to use the still going to be sites involved you still have to have that and we believe they can be the foundation for our decentralized offering the performing strongly both financially and operationally.

And it's an area that we continue to revisit we continue to look at what we're doing with those sites how fast the.

They're able to come up the speed at what the recruitment rates of like the quality of the data that we provide any of those sites has been really first class and they play the major role for us in our involvement with the big vaccine trials.

So there really are.

Im very pleased with the way the performing and particularly excited about the role of they're going to play in that more hybrid and decentralized approach as we go forward, we really feel we've got all of the key components of that decentralized approach to bring together salute.

Solutions that can be very exciting for customers I think that's really what's sort of getting.

These new customers, particularly our interest.

Moving about the real World data solutions part of the business that they bring obviously if there is a lot of focus.

With the pandemic and therapies being kind of a rush to market. How are you feeling about real market at this point.

We feel we're feeling like we're making good progress on the real world data the <unk> side of things interest. It introduces another aspect of of real world data that really has the ability to bring in data from disparate different sources from genomics data from lab data from the health record data to bring it together on our own.

Individual de identified patient bases and allow us to attract that so that's certainly another another arrow in our quiver from of real World.

<unk> and we feel that.

That along with some of the other areas that we've been already working down.

It gives us a non.

The story to tell on a nice operational delivery.

The process to put food on the real World front, we really do believe real world is a fundamental part of the future of clinical development.

The randomized controlled trial certainly played a major role over the last on <unk>.

He is now in the us, but going forward real world evidence and the ability to collect in the end to assimilate and analyze and really take direct insights real world data.

Absolutely going to be critical and I think we're seeing that as we come out of the pandemic with the vaccine and the patients who are in the vaccine the ports.

The portfolio is the ability to look at that data on an ongoing basis would be extremely value on these extremely valuable and so that's an area. We're very highly focused on and believe we have some real advantages.

The last 1 from me Theres, obviously, a lot of moving pieces in the space now is PPD being acquired parks on going back to the private equity, we'll see what happens on programs that labcorp how much of a focus is this from your customers as you go out and have discussions debt.

All of these assets of changing hands.

Uh huh.

That's a tough 1.

I think I think we talked to our customers about what we're doing in the project sort of.

Get too much into what the what I think about our competitors.

I'll be honest I haven't heard any huge.

Concerns from our customers.

About what's happening the industry that recognize where the dynamic industry. There are a lot of changes precipitated by what.

The things and.

And so on.

The Jimmy there sort of aware of it.

Where does those changes, but I don't get into too many discussions about the.

Our competitors with the.

With our customers I prefer to talk about icon on what we're doing.

Okay. Thank you very much.

Thank you and your next question comes from the line of Jack Meehan from Nephron Research. Your line is now open.

Thank you good morning, and good afternoon.

1 of them to start I was hoping you could give a little bit more color on the PRA results from the quarter.

I had a big sequential step up on the revenues just was curious if you could talk about any pass through dynamics or COVID-19 work that might have contributed there.

Yeah, Jack I think we alluded in our prepared comments.

I think we both saw.

Really significant amount of work in the first first half of the year and specifically in the second quarter from these large vaccine trials I think both companies were in a similar position the which led to the significant jump up in revenues predominantly because of the large pass throughs.

In those in those trials so no huge surprise.

We pulled it up because I think going forward. The those trials of the days of those trials of probably coming towards the end of the does not.

The follow on work there is no cliff, but the the.

The sort of I think we've hit the peak day and going forward, we're going to be doing more in the site treatment trial of diagnostic trials et cetera, and follow up on a smaller scale on those vaccine Charles but I think that was certainly a factor for the revenues on the PRA side of things as it was for icon.

Great.

1.

1 for Brendan just within the guidance I was wondering if you could give any color around the phasing in the third quarter and the fourth quarter of just you know.

There's obviously a lot of moving parts just any color around your expectations for building up to the full year number it would be helpful.

Yes, the drag.

As I said probably previously.

The other answers we do expect the growth the continued to be sequential Steve made the point around the the revenues.

Obviously on the first half of the year, we're very strongly of the consequence of a lot of the pass through revenue coming through that is going to dissipate somewhat in the back half of the year and I've kind of indicators in the guidance and setting the at the midpoint and the higher end even.

So you can see that sequentially.

You could probably work out the math on that yourselves, but the sequential.

On the op income, yes, absolutely continue moving in the right direction on it'll be it'll be even of pace I think we might even see a little bit of a pickup from Q3 into Q4, a little more so so.

And I think that's broadly broadly aware of that we do expect it to say, it's a good sequential progress.

Continuing to pick up as we get through the year.

Thank you.

Your next question comes from the line of Sarah <unk> from Barclays. Please ask your cost of them.

Hey, guys. Thanks for the question.

Steve I just wanted to get your take on that kind of a cliff comment so.

As we think about the the variance and adding.

The capacity for vaccines for kids in and under 18 and.

You know as the regular business starts coming back online.

I know that the different therapeutic indications, but is there enough of the industry capacity to handle all of this extra work that's going on.

Just would love to hear your thoughts on that and then how that kind of bakes into the soft landing versus of the cliff.

Yes, I certainly think there is enough. Let me answer the question directly look I think we've got enough industry capacity to do it is the way. We're doing these trials now I think is more efficient more effective the remote of talked about the remote monitoring.

We have some mega sites around the world and certainly some of our sale of care sides of my major contributions in terms of patient numbers. So while you have a lot of patients in these trials you don't necessarily have a huge number of sites.

Because you have a lot of patients at the sites that relatively low intensity type trials. It is that makes sense and theyre not oncology trial I'll put it that way.

I just have a large volume of patients with the lower intensity of work and you can't I do suit themselves very well very much to remote.

Decentralized type of the type of approach.

Very confident we have the capacity to do the work that we're going to be asked to do.

I did make the comment that I don't think we're going to be doing.

These very large 40.50000 patient vaccine trials.

In the future that doesn't mean decided we wouldn't be as I say doing the follow on studies the kids.

There is sub populations in way of doing those as I indicated.

The RFP percentage is still in the the high high teens in the last last quarter. So it sort of it remains of the Covid work remains an important part of our portfolio of important part of our backlog, but I just don't anticipate that youll see the the.

The significant uptick in revenues and of course those pass throughs.

In future quarters as we've seen in the last couple of quarters.

What I was trying to get growth.

Yeah. That's helpful. And then lastly on the on the mix of the FSP work can you just talk about the how if there's been any changes in demand trends on the on those rfps with the mix of of FSP and then how you guys think about that going forward now with.

With PRA on the book.

But we feel very good about our FSP strategic solutions group, where the industry leader by some distance in that in that area. We have a very I believe of compelling offering in that space. We've had 2 extremely successful organizations coming together to make a really top notch, we believe functional services group. So we feel.

Very good about our position in the market and our ability to continue to.

To really dominate that market, we believe going forward.

Terms of demand, but we still see strong demand in the functional functional space. It is an important part of our offering and it supports our full service business as well. So it really is it's a double of them.

The benefit for us, it's a it's a market and a strong market and the growing market in itself, but it also allows us the ability.

To bring in.

The short term resources.

From our own from our own group and a relatively on a relatively fast and speedy basis.

So it has a number of benefits from our for our business both from a full service and of course as of as an entity alone and these.

Functional these functional opportunities are growing and not just in terms of pure of functional, but but more hybrids sort of of where we provide some data analytics. So we provide some project management on we will do it on a on a unit basis and take responsibility for the delivery of the outcome rather than just on the FDA, but this is an emerging.

And of developing evolving should I say.

Business and 1 that we are.

Feel very connected to and passion of the best growth.

Alright. Thanks.

Your next question on income from the line of Bob The Hooker from Keybanc capital Mark the tougher question.

Great a lot of questions have been asked here. So I just have 1 I was interested in this new paradigm tool this new partnership with all scripts.

The kind of.

What led the what's interesting to you about and earning of entering.

Entering of partnership with Allscripts and what what are they going to give you in terms of data and access that you didn't already have you of a lot of partnerships. So I'd love your perspective there.

Yes.

Liquidity.

This is really the PRA sort of EM business that's the.

It's moved into this.

But really it's the.

It's an opportunity to very much expand the capabilities of our clinical research network and keep you line. These of sites, where we are installing of helping to install software, which allows them to identify patients and then but those for the patients in the in the practice.

As to become candidates for clinical trials that are going on so.

So we are spreading the net.

<unk> and the use of trials it will probably be initially in the more late stage area of more simple sort of later stage trials because most of the sites. Many of the thought will be relatively research naive patient true people will go into the into the physicians who are part of this network will be offered 1 of the treatment they need for whatever they have bought the physicians.

We will know that there is the clinical trial available to them, which I can either refer those patients to a particular, so on or if the.

The circumstances the type of they can become a soft themselves. So we really introducing clinical researches of care option the patients, which I certainly believe is the is.

Is the future of clinical research, we know we have to get more people involved the only typically 3 to 5 percentage of people I've been involved in the clinical trial. This is 1 way to expand on we've talked about democratizing clinical trials diversifying.

The patient.

<unk>.

Of the need to diversify our patient population. This is the way.

Practically intangibly doing that allowing us to look at the electronic health records in the sites and fund the spices and then offer that clinical research is that as the.

On option to them. So it's an exciting area of 1 that I can take no credit for whatsoever.

The <unk>.

The Chief Innovation Officer.

Has driven this and he has driven a number of the sorts of initiatives, but we're excited about being able to.

The partner was the very low levels group sites, and really as I might be the option for patients.

Great.

Thanks for the question.

Good.

Your next question comes from the line of Patrick Donnelly from Citi. Please ask your question.

Great. Thanks for taking the questions guys Robin Lu on for you on the cost synergy side. It sounds like that's really very smart take shape from some near term opportunity can you just talk about how things are progressing there some of the near term opportunities and then the conference level now that you've got.

Under the hood of bit kind of kick the tires.

Yeah, No I think we're happy with the progress we're making there project.

We're starting to obviously get get into those numbers and really get a better sense of getting after that $1.50, which as we've said in the past.

We think is of very doable number on the looked exceeded of course.

Steve and I referenced the fact that some of the early actions. We've taken already is around the office infrastructure and we've announced some of the consolidation of the office infrastructure already and that will have certainly as we think of that 150, I would imagine probably about in the range of 20 or so percent.

Maybe even the highest 25% of of that 150 could be identified through 2 of those types of savings around facilities of facilities management.

That's an area that we're keen to do is we bring the 2 organizations together it makes sense from the from a cultural point of view to have folks in the 1 of us.

It's about the teamwork and also makes good financial sense. So that there are some of the day already piece. We're doing of course, we're looking at all of areas as well you know as an icon.

On to be very stringent cost managers on that that we will bring down the thought of discipline, but also you know the good models that we have from running our support services in terms of the efficiency of our enterprise wide systems and the onshore offshore models that we have had in the organization for quite some time now so.

We think we've been making good progress there early days, it's probably more of the.

Just had the sales these pieces.

Good good line of sight, and we will start to see that coming in as I said not so much in the back half of this year, a little bit certainly on the back half of this year, but obviously were putting on the building blocks ready for good progress on that in 'twenty 2.

No that's helpful.

1 on kind of the Covid work and then you talked a lot of Bonnie can you just talk about the margin profile from the back.

<unk> seen COVID-19 work I mean anything we should see a big share can you talk about the pass throughs obviously.

Get into things like next year on the mix shifts away from some of the large vaccine trials and from some of the non pay.

Vaccine Covid work of how should we think about the margin profile of some of that Covid specific work trial versus the market.

Yeah, well I think as we get into the the non vaccine trials, obviously that has a very beneficial mix in terms of the revenue would have the large pastures or certainly not to the same extent postures of course, but not nearly to the same extent as of 44000 patient trial or those series of that ilk.

And that will have a fairly significant positive mix element to our overall margin profile and so certainly as we come through this first half of the year, we've seen that impact on gross margin, particularly and we do expect that to start to significantly improve as we get into the back half of the year uncertainty into into 'twenty 2 as well.

That's helpful. Thank you.

Your next question comes from Boeing.

1 of <unk> from Bank of America. Please ask your question.

Alright, alright. Thank you for squeezing me in just 1 from me unpack synergies.

Giving back on as an Irish company, there is definitely a favorable components of the deal.

Can you give us your updated thoughts to see if there's been any evolution on on your thought process on the proposed global minimum tax and anti tax inversion reforms that are being proposed and whether or not the would apply to icon.

The second part first.

On on the Unhedged version rules no. We don't think they would apply the relative scales of the organization.

On the legacy PRA organization, where we're good obviously, we're the largest Florida company by market cap. So we don't we don't feel there's any risk rating around the anti.

Inversion rules and this particular transaction on the first part of it's probably too early to say.

To be absolutely honest of course, what we can say is that as we get on if we do see an agreed minimum global tax rate and the.

The chances are that proportionally like on the third benefit more than our public company peers.

And that are that are non the Irish faced effectively because the the different the the proportion of saving if you like what they'll be all of our savings as a result of our efficient tax rates will probably be still be larger maybe possibly than even they are now, albeit both might it move up from 1 of our parts of your thinking as you know we're thinking about 14%.

For the long run that's still what we're working towards the update about the legislation says on a call.

So there's going to be a lot of work on a lot of geographies before that starts to change. So we will continue to work for that certainly on an eye to that minimum global tax rate as time goes by.

Thank you.

Your next question comes from the line of the let me turn from Mizuho. Please ask your question.

Yeah.

Hi, Thank you Jeremy.

Yep.

Oh, sorry of anti <unk>.

Sorry about that.

Just a question.

I might have missed this but did you provide the combined backlog as of 630.21 of the time.

The company.

No not not yet on mainly because.

We're obviously looking at what's the right way to do that you know we report.

On our full contract value basis on a 606 basis.

On the left I would think about just.

The the PRA guidance sort of would not have included on the path. So we will be.

Talking about that probably at the end of our we're still closing of our balance sheets as you know and that takes a bit of time. So we're still working on that process and we will have that will have an opening at the closing reconciliation for you on the Q3 call.

Okay and then.

Maybe shifting to just the environment like I know the demand environment is very strong, but can you talk about the supply environment, especially on the CRA. So from everything checks suggests like the environment's getting much tighter on it.

So can you just talk about wage pressure with CRA and that any of the wage pressure you're seeing.

Yes sure.

It is getting tired of it yes, particularly in certain parts of the World North America, probably the.

The focal point there on the other parts of the World I think we're in good shape Europe's the.

Not so much of an issue I just not so much of in Asia, Latin America has a little bit of focus as well, but it really North America is where we're the.

At the tightening is on the salaries are increasing.

And we are putting in place I think I sort of alluded to earlier in the call of number of things that way of doing to promote people and Ah.

On a more timely manner to bring in new graduates.

The.

Truly put a focus on bringing in Houston.

On people, who are more on the sort of clinical trial assistant roll on to train them and all of the good stuff. So there's a lot of the things, we're doing to attenuate or limit that sort of pressure, but at the moment. It's a it's a fairly hot.

It's a fairly hot market in the Philly.

On the <unk>.

Strong demand from from a as I say from a from that point of view.

Alright, and 1 last question.

I know you're doing non-GAAP earnings.

Now with on price.

Could you talk about just what we should assume for stock comp expense and amortization of the combined company do you have the numbers yet.

It'll be a bit well, probably give you more granularity on that on in the next quarter.

The the amortization is obviously going to be pretty significant as the number of running through the P&L accounts, it's going to be in the ballpark of somewhere probably in the late $2, 50% of for hundreds of on an annual basis. Okay.

The stock comp will probably just be in excess of the.

100 million Mark so kind of in the yeah. The 110 on the $15 million, mark, albeit and that probably elevated this year a little bit as a result of some of the change of control provisions in the.

The 3 of array of contracts so.

We'll give you a better bear the clarity on that but those numbers are just kind of broad ballpark speeds of workloads.

Alright, great. Thanks, so much.

Your last question comes from the line of Dan Landmark from Wells Fargo. Please ask your question.

Thank you and just a couple of clarifications first off have you seen any changes or impacts from from Covid variance worldwide on on site availability of patient willingness to enroll in clinical trials, even over the past 4 to 6 weeks.

Sides of availability.

<unk>.

Yeah.

We've seen zone in terms of.

I'm interpreting your question Dan in terms of the available sources of any sort of trials because of the pandemic now sort of moving towards we hope it is and we certainly see about 15% to 20% of sites, having still having some impact from COVID-19.

But but recruitment of patients generally is back to I would've thought that the 90% margin point, we want to go on is it seems to be a bit of of sigmoidal curve. If that makes sense. When we kind of keep approaching the the top but we don't we're not quite there.

It might be a few more months or even into the into the winter before we actually before we actually get the.

That is that's the question that you're asking I think we're moving in the right direction, but it's still some some impact.

That's the exact question. Thank you and then my follow up.

Trying to think about framing 2022, I know you said Theres no COVID-19 class, but because there was a tough comp from uncover the vaccine trials. So does your high single digit revenue CAGR does that apply to 2022 when you consider on 'twenty, 1 base inclusive of PRA for the full year or is that more of a normalized comments beyond the the bump of Covid trial work.

But I think that's probably more of the latter than the high single digits. We you know we think is sort of post COVID-19 through the through into the more normal whatever normal is these days.

Maybe we'll get back to the some day.

We see that as the sort of cadence the business can sustain on a on a long term basis on that thing.

I think significantly above what the market will be at around we think around 6.7 maybe 8%, but we're going to be a little higher than that and we believe we can.

We can easily fulfilled.

Maybe not easily but we can certainly fulfill those sorts of the obligations or proposal.

Got it thanks for the clarification.

Okay.

Yes.

Hum.

Okay.

Alright.

In terms of the closing closing remarks I'd like to thank everyone for listening in today. There is these are certainly exciting times for us of the new icon on we're pleased to have delivered another strong quarter, demonstrating continuing progress and representing a strong platform of future growth. We also look forward to continuing our integration.

And the creation of the world's leading healthcare intelligence and clinical CRM and finally.

Want to take the opportunity to recognize our entire workforce.

Think of them for all their efforts over the past quarter. Thank you all and have a great day.

This concludes our call for today. Thank you for participating you may now disconnect.

[music].

[music].

[music].

[music].

Thank you very much and good day, ladies and gentlemen, thank you for joining us on this call covering the quarter ended June 30th 2021.

Also on the call today, we of our CEO, Dr. Steve Cutler, and our CFO, Mr. Brendan Brennan.

I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call.

Certain statements in today's call will be forward looking statements. These statements are based on management's current expectations on information currently available, including current economic and industry conditions actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with the company's visits.

Listeners are cautioned that forward looking statements are not guarantee guarantees of future performance forward.

Forward looking statements there are only as of the date. They are made we do not undertake any obligation to update publicly any forward looking statements either as a result of new information future events or otherwise more information about the risks and uncertainties relating to these forward looking statements may be found in the SEC reports filed by the company.

This presentation includes selected non-GAAP financial measures for a presentation of the most directly comparable GAAP financial measures. Please refer to the press release States statement headed condensed consolidated statements of operations U S. GAAP on outages, while non-GAAP financial measures are not spirit to or a substitute for the comparable GAAP measures, we believe certain non-GAAP income.

In Asia, it's more useful to investors for historical comparison purposes.

We will be limiting the call today to 1 hour would therefore ask participants to keep the questions to 1 each with an opportunity to ask 1 related follow up question I would now like to hand over the call to our CFO Mr. Brendan Brennan.

Jonathan.

On quarter to iPhone achieved gross business wins of $1.316 billion and recorded the 210 million worth of cancellation. Consequently, net awards in the quarter were a record of $1.1 billion, resulting in the net book to Bill of 1 of 2.7 times at the trailing 12 months net book to Bill of 1.

3 or 4 times.

With the addition of these new awards, our backlog grew to a record $10.2 billion. This.

This represents a year on year increase of 12, 7%.

Revenue in quarter, 2 was $871.2 million misrepresent the year on year increase of 45% or 37, 5% on the constant currency base.

Basis, and the CDO basis.

Our top customer represented 12, 7 percentage of revenue for the quarter compared with 1 and quarter 2 'twenty 'twenty on top 5 customers represented 49% of course the revenue in line with last year of top 10 represented 54, 2% compared to 54, 9% last year 1 of our top 25.

The 72, 4% compared to 71, 3% last year of.

Note that on a combined company basis, our largest cluster of light in quarter, 2 would have been 7.3% of revenue.

Gross margin for the quarter was 27, 6% compared to 27% last quarter and 28, 1% in the comparable quarter last year and our adjusted SG&A was 10, 3% of revenue in quarter, 2 of which compared to 10% last quarter and towards the end 0.45 percentage.

In the comparable period last year.

Adjusted operating income in the quarter.

The in quarter, 2 was 100 and towards the $2.9 million of margin of 15, 3% as compared to 15% last quarter and 12, 1% in the comparable quarter last year.

The adjusted net interest expense was $2.2 million for the quarter on the adjusted effective tax rate of 13% for the quarter.

Adjusted net income attributable to the group for the quarter was $113.2 million of margin of 13% equating to earnings per share up $2 of 12%. This compares to the earnings per share of $2.06 in quarter..1 2021 on a dollar of 'twenty.

'twenty in the comparable quarter last year.

During the company during the quarter of the company recorded $42.1 million of transaction and integration related costs U S. GAAP income from operations amounted to $112.9 million or 13% of revenue U S. GAAP net income attributable to the group was $73.9 million on a dollar of 38 cents per diluted share.

Compared to 90 cents per share for the equivalent of prior year period.

Included in the press release on the earnings slides, you'll note that we included adjusted earnings per share of $4.46 for the first half of the year.

This excludes stock compensation expense amortization and transaction related costs on their respective tax benefits as a consequence, we estimated the adjusted effective tax rate for H 125, 1 with 15, 2%.

In addition, with respect of our guidance, we expect the fully diluted share count to be approximately $83.7 million shares for the second half of 2021.

Net accounts receivable was $417.4 million of Turkey as of June 2021. This compares with the net accounts receivable balance of $465.6 million at 31 March 2021 on a comparative basis days sales outstanding were trading 5 days of January of 2021 as compared to return.

The 9 days at the end of March 2021, 53 days at the end of June of 2020.

Cash generation from operating activities in the quarter was $128.4 million of.

At June <unk> 2020 of them on the company had a gross cash balance of 1 billion of $57 million and the debt of $350 million, leaving a net cash balance of $707 million. This compared to net cash of $595 million at March 31, 'twenty to 'twenty 1 of net cash of 240 <unk>.

$8 at June 32020.

Capital expenditure during the quarter was $12.9 million.

As you know the PRA acquisition was funded through a combination of cash equity in debt over the course of May and June we engaged with capital markets to secure long term financing, resulting in a number of alcoa outcomes worth sharing the.

The first relates to our credit rating status or we achieved a double b plus and be a 1 ratings from S&P and Moody's respectively. This represents only a 1 notch decrease from both agencies relative to our previous investment grade position and we remain 1 of the highest rated zeros in the industry.

Secondly, we had a very positive process raising the 6 billion of debt required to finance the transaction.

This was broken into 2 instruments 500 point of 5 billion of floating term loan b notes over 7 year tenor and havent been in the fixed high yield bond over a 5 year tenor.

Our term loan B offering was oversubscribed in excess of 2.5 times I think is the secure an all in rate of 3% the.

Demand was also very high for our high yield bond with subscriptions of over $3 billion, helping us to secure a rate of just $2.87, 5%.

This all means we will have the current blended interest rate of just below 3%.

The final structure will allow us to maximize repayable of debt to do the have a quickie.

We completed the transaction with a debt to adjusted EBITDA on inclusive of synergies ratio of approximately $4.2 charters with a global sorry, what our goal to reach 2 and a half times adjusted EBITDA by the end of 2023.

In addition to this long term debt, we increased our revolving credit facility from $150 million to $300 million. This facility is currently undrawn.

Before I hand over to Steve I'd like to make you aware of the change in our Investor Relations Department, Jonathan Gordon, who has led dysfunction of for over 4 years, where the transition out of the IR role to lead our commercial finance team alongside his existing responsibilities as head of our corporate Finance group.

I'm pleased to announce the hate Haven it was moving across from a corporate development team will succeed John as Vice President of Investor Relations.

Jonathan will be working closely with <unk> to ensure a smooth transition on I wish them. The very best of luck in their new roles and so with all of that said I'd like to hand, the call over to Steve.

Thank you Brendan and the good day everyone.

On July the first we were delighted to close icons acquisition of PRA.

This transaction brings together 2 high quality innovative growing organizations with similar culture and values to become the world's leading health care intelligence and clinical CLO.

With the addition of the new icon and create a novel covered on for bringing clinical research the patients offering expanded capabilities and solutions to customers, while delivering significant value to shareholders.

The environment created by the COVID-19 pandemic has presented the industry, but on the opportunity to accelerate changes in the clinical monitoring process.

The need for a more flexible and efficient approach to clinical monitoring and data review has emerged on this demand will fundamentally change the way in which trials are conducted going forward.

The key milestone the icon was the manner in which we hope to live of the first COVID-19 vaccine to the market in record time, applying this agile and flexible framework to our clinical monitoring the model.

Our ability to execute these large scale projects has resulted in a very healthy level of business wins in this area.

And during the first half of the C at both icon and the PRA.

So the influence of these vaccine trials on our revenue with a higher proportion of costs.

Relative to non Covid work.

As we progress through the remainder of the <unk>.

We expect the pass through of mix to begin to return to a more normalized level.

In parallel we have seen an increased shift from traditional hybrid models, where we are.

We're excited about future opportunities and the decentralized trials space.

The industry is poised for transformational change we are now in the position of significant strength with the combined market, leading skill sets and resources of both the PRA and icon.

Moving forward the new icon will provide our customers with the integrated solutions required to execute on these novel delivery models, while making it easier for patients to be part of the clinical development.

Success will decentralized trials require of mobile site and patient centric technology to support Tele medicine site resources to ease the investigator and patient burden in the home services to patients Central labs, the process and manage the testing and also direct to patient type.

The abilities to enable drug distribution and manage.

I believe the new icon is in a unique position to be able to integrate these key components to create compelling and differentiated solutions for customers.

But the icon and PRA have long histories of individual company success and collectively we will be much stronger than the sum of our parts.

Our goal is to create the world's leading health care of intelligence, CLO, where customers will benefit from our broad service offerings and geographic footprint deeper therapeutic expertise.

<unk> of healthcare technology innovation, and functional talent and capabilities.

Integration activities are well underway and functional teams from both legacy organizations are collaborating well to ensure we have a seamless transition to a single company.

As we integrate our day to day focus remains on business continuity and the execution and delivery of our customers' clinical projects.

The complementary nature of our services will also prevent present revenue synergies across our broader customer base.

Already we are seeing interest from customers in the new icon.

The positive strategic partnership discussions the initiated and cross selling opportunities being generated in areas, such as central especially labs the.

The silicates site network home health services and imaging.

We are also actively pursuing our cost synergy target of $115 million and have already announced internally the consolidation of a number of offices that are situated in similar locations.

This will not only drive P&L benefits, but will also help our teams to do their best work as we return to the office post pandemic.

As the marketplace continues to evolve it will be important to remain focused on innovation that facilitates our core mission of getting drugs and devices to market faster.

Our new partnership with Allscripts paradigm aims to create the industry's leading EHR based clinical research network that reaches more than 225000 positions and 40 million patients across the United States.

Using varied on steady source of platform, which extends the existing EHR systems to include clinical research alongside our proprietary E source technology and clinical research expertise.

Network will enable physicians to offer clinical research is of care option to the of patients driving efficiencies across the trial process and increasing patient accessibility and diversity in clinical trials.

In addition, we have seen growing interest from sponsors in clinical trial token organization.

<unk> enrolled clinical trial patients enable them to be followed within of real world data sitting in a deal identified manner, increasing our ability to identify long term outcomes and improving our reporting of key follow up data to sponsors and regulatory authorities.

You icon is the only organization that has implemented a customer friendly environment of <unk>.

Notable tokens to allow the linkages to of vast data ecosystem.

The compliant and secure end to end approach.

2 of our Symphony asset Sonoma.

<unk> has data and analytic resources and expertise to translate token on price populations into actionable information for clients, which will support the ongoing product development registration and pricing goals.

Current customers include 3 of the worlds top 15 pharma companies since the initial launch in May 2021.

By utilizing the benefits of our partnership alongside of our existing capabilities. We can deliver truly differentiate of trial solutions to meet growing customer needs and positively impact clinical trial development.

As we integrate these key components into our patient site and data strategy.

We will be able to provide a compelling set of solutions to customers that will accelerate pace of the recruitment and retention.

Kris participant diversity and shorten clinical trial time lines on.

Ultimately our goal is to create a sustainable competitive advantage over the medium to long term by actively investing and leading in the space where clinical development is heading.

On a standalone basis during the quarter.

On increased net business wins to a record $1.1 billion deliver.

Delivering of quarterly book to Bill 127, and growing our backlog to $10.2 billion, an increase of 12, 7% year on year.

Revenue grew 41% to $871.2 million and adjusted earnings per share increased by 77% to $2.12.

We will also delighted to see strong PRA business wins for the quarter of nearly $1.2 billion on a net book to Bill of 121.

This helps build momentum for the rest of the and beyond and.

Constraints of our customers confidence in the new icons continued operational performance and our commitment to deliver enhanced and innovative patient centric solutions.

We expect to create significant long term shareholder value by combining revenue growth from enhanced service offerings innovative solutions and increased scale with our best in class Global support services margin.

As a result of this acquisition.

Our updating our 2021 outlook with revenue guidance in the range of $5.3 to $5.5 billion and adjusted earnings per share guidance in the range of $9.10 to $9.50 sales.

Before moving to Q&A I would again like to welcome the PRA colleagues to the new icon and thank all of our teams of all the hard work and commitment during the quarter.

Operator, we're now ready for questions.

Okay.

Thank you.

Ladies and gentlemen, we will now begin the correct in an answer session. If you wish to ask the question. Please press star 1 on your telephone and wait for it.

To be announced.

Yeah.

Yes.

Your first question comes from the line of Sandy Draper from Clarus Securities. Please ask your question.

Thanks, so much and congratulations on strong quarter as also and also getting the the deal done.

My question initially on really on the financial side, you talked about your targets for free.

For Delevering, the when I think about it.

The target for like a percentage of free cash flow to delever or is it going to be the what sort of the debt.

Pacing, we should be thinking about in terms of that deleveraging.

Yes.

Can I call that on the prepared remarks, there obviously, we want to try to get after that 2.5 times.

Debt to EBITDA by the end of 2023, so we will stay focused on that in that interim period. So you've got 22 and 'twenty 3.

They've really opportune small acquisitions are small elements of buyback will definitely be looking at most of our cash going towards getting to that target as on the in that timeframe. So it'll be on like we haven't set an exact percentage of free cash flow, but certainly a very high percentage until we get after that.

The leverage point and from that point on the then of course, it will be much more about managing debt at that level and really using our cash resources to continue to build out the organization.

We know we will still have to do.

Okay. Thanks, Brendan on my follow up is also financially related I'll, let I'll, let others ask the smart strategic questions.

Are there any more.

The future transaction costs debt on a cash basis over the next quarter or 2 or you pretty much done with the the 1 time charges and cash charges for the on the transaction.

Most of the I'd like to say of undone as Andy that sales. Unfortunately, not true we will take more of a cash expenses in the toward the quarter, but the vast majority will be taking the care of by the end. So there still will be a chunk of enough number to go not dissimilar starting the end, maybe even a little higher in the in the chart order that we saw on the second quarter after that where a majority of the building.

Okay, great. Thanks, so much.

Your next question comes from the line of ease of Beth Anderson from Evercore. Please ask your question.

Hi, guys. Thanks, so much of the question and congratulations on the on the transaction.

Coming to completion.

I was just wondering on 2 things.

Could you talk about 1 any update on thoughts on.

The larger overlapping clients of their feedback and any early potential combined wind and then could you also speak to that Greg mentioned and the broader integration efforts from the internal perspective.

Yes, sure Elizabeth in terms of overlapping clients I think we've been public before and then we do have wanted to debt.

Overlapped.

On a reasonable degree we've had a number of discussions with those customers on those discussions have been very positively received to the point where we're.

We're not we're seeing less risk in those in those customers than we had anticipated before as we contemplate of the transaction.

So the so.

Number of circumstance of the number of areas that on.

<unk>, we've we've had those discussions there and a good place.

Companies of delivering wealth of those customers on the looking to combine the offering and to make sure that we continue as a key part of those of those customers how its been in general very positive and as I alluded to in my comments as well.

We've had a number of strategic discussions with customers, who neither company has had a particularly strategic relationship with.

Over the past few years and they are also interested in what the combined entity can bring as well so net net very positive in terms of the.

Particularly large.

The large pharma companies and part of it takes as well it's bit of a.

Strong positive customer response right across the board almost uniformly.

1 of the staff retention of attrition, we certainly seen a little bit of a tick up in returns in <unk>.

<unk> of staff over the last.

It's probably the last 12 months really it certainly not necessarily I don't believe directly related to the transaction.

We believe the labor market, particularly in the United States is pretty hot at the moment on what frankly, the labor market across the world is kind of restructuring as we come out of this pandemic. So I think there are a lot of moving parts going on in this.

The labor market as such and we've seen a little bit of a of and up to.

We are addressing at the various plans we have in place to bring new graduates into to the people Korea Pos the obviously to make sure where the pain market salaries et cetera, et cetera, I think you'll find the same uptick in nutrition with our competitors as well I don't think it is just.

Related to icon of what we've done and I certainly don't think it's directly related to the.

The acquisition of to the transaction, it's something that we're seeing across the industry is there's a lot of money is as the spanning clinical development. So we're not just competing with other.

Crows for staff, when competing for with pharma companies and biotech companies as well. So it's the consequence of the of.

Of the market the growing market the availability of capital to develop drugs and then the third we can't complain about the business development Wednesday being strong in the nutrition. They all have the same.

Tom you have to probably take 1.

The other as well.

Got it that's very helpful. Thank you.

Okay.

Your next question comes from the line of Erin Wright from Credit Suisse. Please ask your question.

Great. Thanks as it relates to your guidance what are what are some of the key changes relative to your prior expectation for each standalone business on a more operational basis in terms of what's implied in the outlook for the second half of the year has there been any.

The call changes on that Brian since you reported on income.

Okay.

And the meaningful Erin I think the operational company the boat moving in a strong direction to the second half of year, we've kind of outlined that.

There are elements of course in terms of numbers of the stock comments I made reference to the fact that we'd be about a $3.6 billion of $83.7 million shares my apologies in the second half of the year that obviously has a bearing on the on the EPS number but the the underlying operating income on indeed EBITDA of our moving solidly in both organizations.

In the right direction.

On where we're pleased with that and that we will see good uptick quarter over quarter on it.

The year over year, So I think predominantly we're moving the right direction, we'll start to see some of the synergies impacting but the work we're doing around synergies as part of the long term of course on we're putting the steps in place now that will really benefit all of us over the next number of years and of course, a little bit.

In the first 6 months, but certainly more thinking about 'twenty 2 'twenty 3 in that regard so strong operational performance rolling forward into Q3, and Q I think I think the only thing I'd add to that Eric.

We've been involved as the PRA as I said with the large these vaccine trials, which have had a significant pass through element on the first half of this year those those studies of <unk>.

Towards the range that we still got still of lot of Covid work.

A significant part of our business wins. This this quarter, but the big those big cost pass through studies of <unk> vaccines that would probably be coming towards the end of it now which is which is sort of attenuating a little bit the very rapid growth in revenue we've seen over the last couple of quarters. So that's the only thing that I think will probably tied into our guidance.

As well.

Okay, Great and that goes right into my second question, which is could you provide a little bit more detail on on the Covid related awards to date.

The businesses are on the combined basis in the percentage of revenue kind of in the quarter associated with Covid related work in.

And I guess, you commented already on sort of the dynamic throughout the year, but if you could give us a little bit of color on the COVID-19 trends on that front would be helpful.

Yes.

Of.

Of new Covid opportunities coming in that sort of flattened off a little bit, but it's still in the vicinity of the high Tech.

In terms of out of our Rfps. So it's still a significant proportion of the non COVID-19 cliff I suppose is the overall message here.

The high teens on Rfps, new business, it's a little bit higher than that.

And then on that backlog, it's in the high mid single mid single digits. So it's.

The Covid work continues to be an important part of our portfolio is not going away. The other side of the big vaccine trial of those days of probably coming towards the end, but we're moving more towards treatment trials diagnostics as long term follow up true.

<unk> is different patient population trials in the vaccine space.

And so that work is.

Said before it's going to continue for another couple of years, I think and who knows with the <unk>.

<unk> and all of the rest of it coming through booster.

The requirement of potential the requirements for boosters.

That may also impact it as well, but it's certain.

<unk>.

Been a very positive environment from note from Covid work on it and even in the non covered work we've seen.

Significant uptick in their rfps as well so if the COVID-19 sort of rfps have been flattening off of a little bit the non COVID-19.

The rfps have been growing quite substantially to replace debt. So it's a positive business environment.

Okay perfect. Thank you.

Your next question comes from the line of John Kreger from William Blair. Please ask your question.

Thanks very much.

<unk>.

I know you are calling the new company.

The world's leading healthcare intelligence company clinical Crs can you just expand a little bit on the healthcare intelligence part are we thinking about that primarily as the the legacy PRA Symphony business or broader just just tell us what you. What you are really thinking about what that part of the tagline. Thanks.

Yes. It is the question.

And John I mean, we are thinking about the day to component of that and but not just the data. It's the way we use the data and the way we are able to analyze and do.

Do things differently from the way, we interpret that data of Symphony is an important part of it I talked a bit about <unk>. We think that's a very important part of being of healthcare intelligence organization being able to track track patients in the deal identified and compliant manner in the long term, if we've been able to do that on the.

On the the vaccine portfolio as we'd be able to answer a lot of the questions that are only really coming up there do we need another boost so what's the timeframe for the immune response to the wear out.

That's sort of intelligence.

That sort of information that allows us to make insightful decisions and take actions.

And support the not just the ongoing registration of the of our sponsors.

The product, but the development of those products in different indications and the pricing of those products as we see the value of those products and how the how the helping people in the in the into Saudi on the real world evidenced bases. The Symphony is a big part of it.

We talked a lot of about a 1 view tool on how we're using that to identify the right thoughts on select sites out of patient approaches will be going directly to patients and gathering.

So the data of our Wearables at the site.

It's a variety of things around our patient site and data strategy, but the intelligence side of these is really using technology and data.

That's a little bit more nuanced and a little bit more insightful than it has been used in the past and allowing us to ultimately deliver trials in a different way much more effectively and efficiently.

That's great. Thank you and maybe a quick follow up to elicit this question about staff.

Do you does this change your thinking at all on margins going forward or are you able to pass higher labor costs along in your beds.

Yeah.

Certainly a little a little pressure on the on the wage line and we need to compete actively in the marketplace and as I've said, it's a very active marketplace at the moment. So in the very short term, we might get a little pressure. The I think we can handle that we certainly got closes within the hour contracts that allow us to adjust our pricing on the bases.

Of in flight.

Importantly, I think it's also.

Supercharging, our efforts to move to that more efficient model, where we're doing more off site monitoring more remote patient monitoring and allowing.

Staff to be more efficient to allow them to.

Gain a better work life balance essentially rather than being on a plane and going to sites physically all the time that they're able to do a fair bit of their work at the desk on the on the computers because we can do we can monitor the the studies remotely it's really moving those efforts Boston I think of sponsors.

We're also buying into that.

As we saw what we did during the pandemic and we got some tailwind from that as labor market is also helping that as well. So we believe that will help us to offset any any challenges we have from a wage inflation and cost perspective, certainly in the medium to long term and the.

Short term, we're working that through and we think we can handle it but the opportunity there's always opportunities in these sorts of things as well and I think that's certainly 1 of them.

Sounds good thank you.

Yes.

Next question comes from the line of Eric Coldwell from Baird. Please ask your question.

Thanks very much.

Have a few but I think they are hopefully pretty quick first 1 in the prepared remarks, you said your largest customer on a pro forma basis was 7 <unk>.

3% I think you said of of revenue in the quarter were you specifically, citing icon <unk> largest customer would be brought down to that level or looking at across the spectrum of both companies the largest customer would be 7.3%.

That's across the spectrum of boat company, it's Eric So that's our new customer base, the top customer of that new customer base will be 700%.

That's great.

The second 1 I'm, hoping you can give us your thoughts on tax rate in the second half.

Yes, we said we'd start off at in the around the ballpark of 17% and work our way down from that Eric We haven't changed our mind.

Set on that 1 so we're at this stage, we'd be thinking of 17% for the second half of 2021.

And next 1.

I don't know if you have this are you able to share at the PRA historically provided service level bookings.

Of a unique approach they did transition and start adding in full bookings of about a year ago, but I'm curious if you would have that number at hand, just for comparable purposes for those of US who are tracking PRA in the past.

Not the hand, Eric.

My feelings on this 1 of them on the.

The great believer and there's only 1 type of revenue and there's only 1 type of bookings, which is the fixed the fixed methodology. So that's where we'll be looking at as we go forward.

Okay. Thanks, very much I appreciate it.

Next question is from the line of the paid when Lee from Jefferies. Please ask your question.

Hi, Thanks, Good morning, good afternoon, Thanks for taking my questions on.

Several of several questions of kind of gotten at the point of view of the demand environment, but I was hoping you could perhaps add a little bit more color too not just the RFP trends, but maybe also how your hit rate has evolved if that stayed relatively stable or changed at all and then within that there wasn't.

Mentioned in the prepared remarks, Steve about hybrid models I'm wondering what you're seeing within the rfps or maybe the RP youre seeing or maybe the bids you're submitting if youre being more proactive about it with <unk>.

Hybrid and DCT type of approaches to your studies, how is that creeping into the RFP flow.

Sure.

Let me stop of the Rfps I think as I indicated.

It's been continues to be a very positive environment not just in the biotech space could run across the spectrum right across the segments that we operating large pharma.

I would say mid size, we're all in the high teens in terms of annual increase in the RFP dollars.

It couldnt be happier with the way that's.

Moving forward.

I think then I think thats really across both organizations.

On the certainly say that in.

And as as we've seen PRA also of saying.

Similar sort of.

Mid teens sort of increases in the in their RFP. So again by the thing that I think thats evidenced in the in the awards in terms of hit right on I was.

Actually as I look this morning to see an uptick in the in the hit rate on a dollar basis.

Across across the spectrum.

Particularly in.

On a late stage business and our early stage business and this is the icon Standalone I don't have the detail for the PRA at this stage.

And on our silica of home health, we've seen an uptick in our win rates on our strike rate. So again.

Along with the <unk>.

Increased numbers of opportunities increased hit.

Hit rate has really put us in a pretty good position I think it really does speak to the confidence that our customers have in our ability to execute but also our ability to it might be the integration go well in terms of hybrids in the hybrid trials with the only thing a lot of interest in that the.

As you would well know theres a lot of talk and Theres a lot of.

Discussion around how these trials work on how they're operating going forward I would say that the almost the majority of the trials. We proposed at the moment of had some sort of hybrid sort of component whether it be of remote.

Monitoring sort of component or a wearable technique.

Or of data collection.

Area that relates to the direct to patient sort of.

The mode.

So the.

Yes, very much hybrid and hybrid goes from.

1 end of the spectrum right up to the to the.

The really download the full decentralized trial and there is lots in between but the vast majority of I'd say of trials that we propose really do have some sort of hybrid component of some sort of decentralized component of that which we found we found positive it gives us something through the build on and it gives us an opportunity to deliver that.

<unk> of the trial and then build on it for the next 1 to become a more of <unk>.

Library, or even a more more fully decentralized sort of approach. So it's the <unk>.

Again, our customers are.

I'm very much aware of it very much open to those discussions and particularly where it exited the trials on the budgets more efficiently spent.

I feel confident that we can deliver those sorts of issues.

The trial.

It sounds encouraging. Thank you my follow up question kind of related to that.

You you mentioned in your prepared remarks also you touched on a number of the areas.

Our cross selling is the opportunity it.

Seems to me the that some of those might be a little of the ability to go to market and offer those services. For example of example, central labs, the PRA client base might be more immediate whereas perhaps the integration of some of the technology capabilities in the DCT trial approach might might require a little bit.

More integration and development before you go to market strategy might be ready.

I Wonder if you agree with that or if you could give us a sense for.

How immediately you might see from a revenue synergy opportunities from some of things versus others.

I would say broadly agree with what you just said Dave we.

We certainly seen already some some wins on the lab front.

And revenue starting to flow.

It's certainly in the second half of the year, we'll see revenue starting to flow from those immediate opportunities language services imaging labs. That's happening we we have an expectation of around $100 million in revenue synergies on AR.

On a run rate annual run rate basis, and I think we're well on our way.

To that I'd like to think we could potentially exceed it in terms of the mobile health platform and some of the decentralized youre right. I mean, the those things are going to take a little bit more time to.

<unk> come into play.

We're working very hard to build a unified platform, we have a number of platforms the dose.

As of moving forward and the changing in the.

Investing significantly.

Significantly in those platforms and having discussions with a couple of these things always take a little bit of time, but we believe as we get towards the end of this year into next year, we're going to have a unified platform ready to go which will then replace the current platform that we have and will allow us to again further integrate various aspects of out of our cash.

The ability to the resources into that decentralized approach so that will take a little longer no question about that but yes. It is.

He is the way, it's certainly I think within the next 12 months will be we'll be very active in that space in terms of implementing that sort of totally decentralized approach.

Excellent. Thank you very helpful.

Your next question is from the line of Hydro Peterson from Jpmorgan. Please ask your question.

Hey, Thanks, Steve I kind of follow up on that kind of last line of questioning its great to hear about the revenue synergies and then kind of the hit rate I'm, just curious, what's really resonating as youre out talking to customers. If we think about the third of the top 20 pharma customers, who don't currently do business with.

You go to kind of pitch to them at scale is it the new capabilities you bring to the table can you just talk a little bit about what's kind of resonating.

And then another angle that you talked about at the time of the deal was accelerated patient recruitment through the cell.

All of care network, how are you thinking about.

Can you debt as well.

Sure.

I'd say as we as we talk to customers.

It's all of those things of that the.

They want to talk to us about obviously of the usual scale capabilities resources therapeutic the depth and breadth of et cetera et cetera as.

It is important to them you have to be there and we have that but I think increasingly they're also interested in the sale of care home Health network. The of selected site network, which gives us a different slant on how we bring patients to the clinical trial and then on the on our decentralized approaches as well of the <unk>.

It's creating a lot of interest around.

Some of these on the some of the strategic discussions the decentralized trials on the mobile health platform that we're developing is also creating a lot of interest in the theyre interested the what.

What we're doing in that in that respect. So it's a combination of the the usual sort of scale and resources and capabilities, but increasingly also the technology of the data opportunities were bringing and the ability to really put together a solution. That's highly integrated in the clinical space I think that's what's going on.

The customers, particularly the larger ones are very excited about the.

About the new offering in terms of the sale of the.

The network the thoughts.

It's really nicely with our decentralized trial approach, we don't believe that any of the.

Centralized trials you have to use the still going to be sites involved you still have to have that and we believe they can be the foundation for our decentralized offering the performing strongly both financially and operationally.

And it's an area that we continue to revisit we continue to look at what we're doing with those thoughts on how fast the.

They're able to come up the speed at what the recruitment rates of life. The quality of the data that we provide at those sites has been really first class and I, probably the major role for us in our involvement with the big vaccine trials.

Yes.

They really just say im very pleased with the way the performing and particularly excited about the role of they are going to play in that more hybrid and decentralized approach as we go forward, we really feel we've got all of the key components of that decentralized approach to bring together salute.

Solutions that can be very exciting for customers I think that's really what's getting laser.

These new customers, particularly interest.

Moving about the real World data solutions part of the business that they bring obviously theres a lot of focus with the.

Pandemic therapies being kind of a rush to market and how you're feeling about real more data at this point.

Yes, we feel we're feeling like we're making good progress on the real world data at the <unk> side of things interest. It introduces another aspect of of real world data that really has the ability to bring in data from disparate different sources from genomics data from lab data from the health record data to bring it together on it.

On an individual de identified patient bases and allow us to track that.

That's certainly another another arrow in our quiver from of real World perspective, and we feel that.

That along with some of the other areas that we've been already working down.

It gives us.

The nice story to tell on a nice operational delivery.

Process to put food on the real World front.

We really do believe real world is the.

Fundamental part of the future of clinical development.

The randomized controlled trials certainly played a major role over the last.

100 years now the.

But going forward real world evidence and the ability to collect in the end to assimilate and analyze and really take direct insights real world data is absolutely going to be critical and I think we're seeing that as we come out of the pandemic with the vaccine the patients who are in the vaccine.

The portfolio is the ability to look at that data on an ongoing basis would be extremely value on these extremely valuable and so that's an area. We're very highly focused on and believe we have some real advantages.

The last 1 from me there is obviously a lot of moving pieces in the space now with PPD being acquired parks on going back to private equity, we'll see what happens on programs that lab core how much of a focus is this from your customers.

You go out and have discussions.

The number of these assets are changing hands.

Is that the tough ones.

Yes.

I think we talked to our customers about what we're doing in the project sort of.

To get too much into what the what I think about our competitors.

I'll be honest I haven't heard any huge.

Concerns from our customers.

About what's happening the industry that recognize where the dynamic industry. There are a lot of changes precipitated by.

Lots of different things and.

And so it's.

Presuming, they're sort of aware of it.

Where are those of those changes, but I don't get into too many discussions about the.

Our competitors with the.

With our customers I prefer to talk about icon on what we're doing.

Okay. Thank you very much.

Thank you and your next question comes from the line of Jack Meehan from Nephron Research. Your line is now open.

Thank you good morning, and good afternoon.

1 of them to start I was hoping you could give a little bit more color on the PRA results from the quarter.

It had a big sequential step up on the revenues just was curious if you could talk about any pass through dynamics or COVID-19 work that might have contributed there.

Yeah, Jack I think we alluded in our prepared comments.

I think we both saw.

Fairly significant amount of work in the first first half of the year on specifically in the second quarter from these large vaccine trials I think both companies. We are in a similar position the which led to the significant jump up in revenues predominantly because of the large pass throughs.

In those in those trials so no huge price.

We pulled it out because I think going forward. The those trials of the days of those trials of probably coming towards the end of the does not.

The follow on work is there is no cliff, but the sort of I think we've hit the peak day and going forward, we're going to be doing more of the site treatment trial of diagnostic trials et cetera, and follow up on a smaller scale on those vaccine Charles but I think that was certainly a factor for the revenues on the PRA side of things as it was for icon.

Great.

1 for Brendan just within the guidance I was wondering if you could give any color around the phasing in the third quarter and the fourth quarter.

There's obviously a lot of moving parts just any color around your expectations for building up to the full year number it would be helpful.

Yes, the drag.

As I said probably previously.

Trying to get her on says we do expect the growth the continued to be sequential Steve made the point around the revenues.

Obviously on the first half of the year were very strong as a consequence of a lot of the pass through revenue coming through that is going to dissipate somewhat in the back half of the year last kind of indicators in the guidance and certainly at the midpoint and the higher end even.

So you can see that sequentially is it are you can you can probably work at the math on that yourselves, but.

Sequentially on the op income, yes, absolutely continue moving in the right direction on it'll be it'll be even of pace I think we might even see a little bit of a pickup from Q3 into Q4, a little more so so.

I think that's broadly broadly aware of that we do expect it to say the good sequential progress.

Continuing to pick up as we get through the year.

Thank you.

Your next question comes from the line of Sarah <unk> from Barclays. Please ask your question.

Hey, guys. Thanks for the question.

Steve I just wanted to get your take on that kind of a cliff comment so.

As we think about the.

The variance in adding.

The capacity for vaccines for kids in and under 18 and.

As the regular business starts coming back online.

I know that the different therapeutic indications, but.

Is there enough of the industry capacity to handle all of this extra work that's going on.

<unk>.

Just would love to hear your thoughts on that and then.

That kind of bakes into the soft landing vs. The cliff.

Yes, I certainly think there is enough. Let me answer the question directly look I think we've got enough industry capacity to do it is the way we're doing these trials now.

I think it's more efficient more effective the remote of talked about the remote monitoring.

We have some mega sites.

The world and certainly some of our silica sides of made major contributions in terms of patient numbers. So while you have a lot of patients in these trials you don't necessarily have a huge number of sites.

Because you have a lot of patients at the sites. They are relatively low intensity type trials is that make sense and theyre not oncology trial I'll put it that way.

I just have a large volume of patients with a lower intensity of work and you can't I do suit themselves very well very much to remote.

Decentralized type of the type of approach.

Very confident we have the capacity to do the work that we're going to be asked to do.

Yes, I did make the comment that I don't think we're going to be doing.

These very large 40.50000 patients vaccine trials.

In the future that doesn't mean decided we wouldn't be as I say doing the of follow on studies the kids.

There is sub populations and we're doing those as I indicated the <unk>.

RFP percentage is still in the the high.

And the last last quarter. So it sort of it remains of the Covid work remains an important part of our.

The portfolio are important part of our.

Our backlog, but I, just don't anticipate that youll see the the.

A significant uptick in revenues and of course those pass throughs.

In future quarters as we've seen in the last couple of quarters, that's really what I was trying to get growth.

Okay. That's helpful. And then lastly on the on the mix of the FSP work can you just talk about how if there's been any changes in demand trends on on those rfps with the mix of of FSP and then how you guys think about that going forward now.

With PRA on the book.

But we feel very good about our FSP strategic solutions group, where the industry leader by some distance in that in that area. We are of very I believe of compelling offering in that space. We've had 2 extremely successful organizations coming together to make a really top notch.

We believe functional services group. So we feel very good about our position in the market and our ability to continue.

To really dominate that market, we believe going forward.

Terms of demand, we still see strong demand in the functional functional space. It is an important part of our offer and it supports our full service business as well. So it really is the double a double benefit for us, it's a market and a strong market on the growing market in itself, but it also allows us the ability.

To bring in.

Short term resources from.

Our own from now on group and a relatively on a relatively fast and speedy basis.

So it has a number of benefits from our for our business both from a full service and of course as of as an entity alone in these funds.

Functional these functional opportunities are growing and not just in terms of pure of function of open but more hybrid sort of of where we provide some data analytics. So we provide some project management of it we'll do it on a on a unit basis and take responsibility for the delivery of the outcome rather than just on the FTE based on this this is an emerging.

In the developing evolving should I say.

Business and 1 that we.

Feel very connected to and passionate about growth.

Alright. Thanks.

Your next question on income from the line of Bob The Hooker from Keybanc capital markets. Please ask your question.

Great a lot of questions have been asked here. So I just have 1 I was interested in this new paradigm tool this new partnership with all scripts.

The kind of what led the way what's interesting to you about and earning of entering.

Entering of partnership with Allscripts and what what are they going to give you in terms of data and access that you didn't already have you of a lot of partnerships. So I'd love your perspective there.

Yes.

Liquidity.

This is really the PRA sort of EM business as it's moved into this the better.

But really it's the.

It's an opportunity to very much expand the capabilities of our clinical research network. If you line. These of sites, where we are installing of helping to install software, which allows them to identify patients and then for those for the patients in the in the practice.

As to become candidates for clinical trials that are going on so.

So we are spreading the net.

<unk> and the use of trials it will probably be initially in the more late stage area of more simple to the later stage trials because most of the sites. Many of the sites will be relatively research naive patients people will go into the into the physicians who are part of this network will be offered 1 of the treatment they need for whatever they have bought the physicians.

We will know that the clinical trial available to them, which I can either refer those patients to a particular thought or if the.

The circumstance of the type that can become assad themselves. So we really introducing clinical researches of care option, the patients, which I certainly believe as the.

Is the future of clinical research, we have to get more people involved the only typically 3% to 5% of people I've been involved in the clinical trial. This is 1 way to expand on we talked about democratizing clinical trials diversifying.

The patient.

The conscious of the need to diversify the patient population. This is the way we are practically intangibly doing that allowing us to look at the electronic health records in the sites and find these patients and then offer that clinical research is that as an option to them. So it's an exciting area of 1 that I can take no credit for whatsoever.

Okay.

The Chief Innovation Officer.

Driven this and he has driven a number of the sorts of initiatives, but we're excited about being able to.

The partner was the <unk> group's thoughts and really as I make this the option for patients.

Great well thanks for the question.

Good.

Your next question comes from the line of Patrick Donnelly from Citi. Please ask your question.

Great. Thanks for taking the questions guys Robin Lu on for you on the cost synergy side. It sounds like that's very very smart to take shape.

The near term opportunity can you just talk about how things are going to progress there of some of the near term opportunities and then the conference level now that you've got under the hood of bit and kind of kick the tires.

Yeah, No I think we're happy with the progress we're making there project.

We're starting to obviously get get into those numbers and really get a better sense of getting after that 150, which as we've said on the path.

We think is of very doable number on the look the exceeded of course, Steve My reference to the fact that some of the actions we've taken already is around the office infrastructure.

And some of the consolidation of the office infrastructure already and that will have certainly as we think of that 150, I would imagine probably about in the range of 20 or so percent, maybe even the highest 25% of of that 150 could be identified through those types of savings around facilities of facilities management.

And that's an area that we're keen to do is we bring the 2 organizations together it makes sense from the from a cultural point of view to have folks in the 1 of us to develop.

About the teamwork and also makes good financial sense. So that there are some.

On the R&D piece, we're doing of course, we're looking at all of areas as well.

On the icon to be very stringent cost monitors on that that we will bring that discipline, but also the good models that we have from running our support services in terms of the efficiency of our enterprise wide systems and the onshore offshore models that we've had in the organization for quite some time now so we.

We think we've been making good progress there early days, it's probably more of the the.

Just had the synergies pieces.

Good good line of sight, and we will start to see that coming in as I said not so much in the back half of this year, a little bit certainly on the back half of this year, but obviously were putting on the building blocks ready for good progress on that in 'twenty 2.

No that's helpful.

1 on kind of the Covid working on you talked a lot of Bonnie can you just talk about the margin profile from the line.

Vaccine Covid work I mean, we should see a big share can you talk about the pass throughs obviously.

Get into things like next year on the mix shifts away from some of the large vaccine trials into some of the non <unk>.

Vaccine Covid work of how should we think about the margin profile of some of that COVID-19 specific or trial versus the market.

Yeah, well I think as we get into the the non vaccine trials, obviously that has a very beneficial mix in terms of the revenue would have the large passengers or certainly not to the same extent that posture is of course, but not nearly to the same extent as of 44000 patients rely on or are those series of lot of Elk.

And that will have a fairly significant positive mix elements to our overall margin profile and so certainly as we come through this first half of the year, we've seen that impact on gross margin, particularly and we do.

<unk> debt to start to significantly improve as we get into the back half of the year uncertainty into into 'twenty 2 as well.

That's helpful. Thank you.

Your next question go ahead the line.

1 of ran Dano from Bank of America. Please ask your question.

Alright, alright. Thank you for squeezing me in just 1 from me unpack synergies.

Back on as an Irish company. This is definitely a favorable component to the deal.

Can you give us your updated thoughts to see if there's been any evolution on on your thought process on the proposed global minimum tax and on high tax inversion reforms that are being proposed and whether or not they would apply to icon.

The second part first 1 on the Angi inversion rules no. We don't think they would apply the rise of sales of the organization.

Ourselves on the legacy PRA organization.

We're good obviously, we are the largest Florida company by market cap. So we don't we don't feel there's any risk rating around the anti inversion rules and this particular transaction on the first part it's probably too early to say.

To be absolutely honest of course, what we can say is that as we get on if we do see an agreed minimum global tax rate. The chances are that proportionally icon with the benefit more than our public company peers.

And that are that are non the Irish faced effectively because the the different the the proportion of saving if you like with Dolby or savings as a result of our efficient tax rates will probably be still be larger maybe possibly than even they are now, albeit both might move up from 1 of our parts of your thinking as you know we're thinking about 14%.

For the long run.

What we're working towards the fill up the legislation says on a car.

So there's going to be a lot of work on a lot of geographies before that starts to change. So we will continue to work for that certainly on an eye to that minimum global tax rate as time goes by.

Thank you.

Let me turn from Mizuho. Please ask your question.

Hi, Jeremy.

Yes.

Oh, sorry of anti <unk>.

Sorry about that.

Just a question I might have missed this but did you provide the combined backlog as of 630.21 of the timber.

The company.

No not not yet on mainly because.

We're obviously looking at what's the right way to do that you know we report on our full contract value basis on a 606 basis.

On a laptop or think about just obvious.

The PRA guidance sort of would not have included that in the past so we will be.

<unk> about that probably at the end of our we're still closing of our balance sheets as you know and that takes a bit of time. So we're still working on that process and we will have that will have an opening at the closing reconciliation for you on the Q3 call.

Okay and then.

Maybe shifting to just the environment like I know the demand environment is very strong, but can you talk about the supply environment, especially on the CRA some of them right.

Check suggests like the environment is getting much tighter on.

Can you. So can you just talk about wage pressure with CRA and that any of the wage pressure you're seeing.

Yes sure.

It is getting tired of it yes, particularly in certain parts of the World North America, probably the.

The focal point there on the other parts of the World I think we're in good shape Europe.

Not so much of an issue or you're just not so much of in Asia. Latin America has a little bit of focus as well, but it really North America is where where that that tightening is on the salaries are increasing.

And we are putting in place I think I sort of alluded to earlier in the call of number of things that way of doing to promote people and Ah.

On a more timely manner to bring in new graduates.

To really put a focus on bringing on.

On people, who are more on the sort of clinical trial assistant roll on to train them and all of the OLED <unk>.

Good stuff so the.

There is a lot of the things, we're doing to attenuate or limit that sort of pressure, but at the moment, it's a fairly hot.

It's a fairly hot market the affiliate.

The strong demand from from.

The say from the from that point of view.

Alright, and 1 last question.

I know Youre doing non-GAAP earnings.

Now with on price.

You talk about just what we should assume for stock comp expense and amortization of the combined company do you have the numbers yet.

It'll be a bit we'll probably give you more granularity on that on in the next quarter.

The the amortization is obviously going to be pretty significant as the number of running through the P&L accounts, it's going to be of not ballpark of somewhere probably in the $3.50 of into 4 hundreds on on annual basis.

The stock comp will probably just be in excess of the.

100 million Mark so kind of in the the 110 on the $15 million, Mark, albeit and that's probably elevated this year a little bit as a result of some of the change of the total provisions and the.

The 3 of re contracts so.

We'll give you a better bear the clarity on that but those numbers are just kind of broad ballpark speeds of workloads.

Alright, great. Thanks, so much.

Your last question comes from the line of Ben Landmark from Wells Fargo. Please ask your question.

Thank you and just a couple of clarifications first off have you seen any changes or impacts from from Covid variance worldwide on on site availability of patient willingness to enroll in clinical trials, even over the past 4 to 6 weeks.

Sides of availability.

<unk>.

Yeah.

We've seen certainly in terms of.

I'm interpreting your question Dan in terms of the available to do any sort of trials because of the pandemic now sort of moving towards we hope it is and we certainly see about 15% to 20% of sites, having still having some impact from COVID-19.

But but recruitment of patients generally is back to out of about 90% of all I want to point, where we want to go on is it seems to be a bit of of sigmoidal curve of that makes sense, we kind of keep approaching the the top of window.

We're not quite there.

The people months or even into the into the winter before we actually before we actually get the if that's the question that you're asking I think we're moving in the right direction, but it's still some some impact.

Yes, that's the exact question. Thank you and then my follow up.

Kind of think about framing 2022, I know you said Theres no COVID-19 class, but there was a tough comp from some cover the vaccine trials. So does your high single digit revenue CAGR does that apply to 2022 when you consider on 'twenty, 1 base inclusive of PRA for the full year or is that more of a normalized comments beyond the the bump of Covid trial work.

I think thats, probably more of the latter than the high single digits. We think is sort of post COVID-19 through the through into the more normal 1 of the normal as these days.

We will get back to the some day.

We see that as the sort of cadence the business can sustain on a long term basis and that thing.

I think significantly above what the market will be at around we think around 6.7 maybe 8%, but we are going to be a little higher than that and we believe we can.

We can easily fulfilled.

Maybe not easily but we can certainly fulfill those sorts of the obligations or proposal.

Got it thanks for the clarification.

Okay.

Yes.

Hum.

Okay.

Alright.

In terms of the closing closing remarks, I'd like to thank everyone for listening in today. There is a disease of certainly exciting times for us of the new icon on we're pleased to have delivered another strong quarter, demonstrating continuing progress and representing a strong platform of future growth. We also look forward to continuing our integration.

And the creation of the world's leading healthcare intelligence and clinical CRM and finally.

Want to take the opportunity to recognize our entire workforce.

Think of them for all their efforts over the past quarter. Thank you all and the have a great day.