Q2 2021 IQVIA Holdings Inc Earnings Call
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Ladies and gentlemen, thank you for standing by at this time I would like to welcome everyone to the <unk> second quarter 2021 earnings Conference call. All lines have been placed on mute to prevent any background noise at the district of his remarks, there will be a question and answer session if you'd like to ask the question.
At this time, so first of all of that the number 1 all of your telephone keypad. If he would like to withdraw your question press the pound key.
This call is being recorded thank you Allen now, let's turn the call over to the Nick Childs Senior Vice President of Investor Relations and corporate Communications. Mr. Childs. Please begin your conference.
Thank you.
Good morning, everyone. Thank you for joining our second quarter 2021 earnings call with me today.
Ari booths be chairman and Chief Executive Officer, Ron <unk>, Executive Vice President and Chief Financial Officer, Eric Sherbet, Executive Vice President and General Counsel Mike.
Feed of senior Vice President financial planning and analysis, and Brian Stengel Associate Director Investor Relations.
Today, we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call and the events.
Presentations section of our IQ via Investor Relations website at IR day.
<unk> Dot com.
Before we begin I would like to caution listeners that certain information discussed by management. During this conference call will include forward looking statements.
Actual results could.
Could differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on form 10-K, and subsequent SEC filings.
Filling in addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for.
Financial measures prepared in accordance with GAAP a reconciliation of these non-GAAP measures to the comparable GAAP measure.
<unk> is included in the press release and conference call presentation, I would now like to turn the call over to our chairman and CEO.
Ari Boothby.
Thank you Nick and good morning, everyone. Thank you for joining today.
This morning, we reported second quarter results.
And with outstanding double digit growth in all key financial metrics.
Following the strong performance, we once again raised our guidance full year.
As you will recall, we are tracking the head of our pre COVID-19 the 'twenty 2 financial plan.
The health of the life Sciences industry continues to strengthen the.
New clinical trial starts are trending well above the recent historical figures.
They are up 22% versus 2012 levels.
And up 7% compared to 2019.
The pipeline of late stage molecules continues to expand to record numbers.
Indicating the large backlog of potential launches.
Some of which had been pushed to the right during the pandemic last year.
And finally the buyer.
The Youll take funding continues to increase significantly.
Holdings with the National venture Capital Association from.
Funding totaled $25 billion in the first half of 2021.
This represents an increase of 64% compared to the first half.
2020.
Which itself was already the of records.
First half year.
During 2020.
The pandemic disrupted execution of clinical trials and businesses requiring face to face interactions.
Got.
But at the same time it accelerates the change in the industry.
It created new demand for new services.
And of <unk> is uniquely.
The group position to.
To deliver.
Based on the differentiated capabilities such as data analytics advanced.
Hi apology offerings.
And of course, our deep scientific and therapeutic expertise.
All of which capabilities were highlighted to our clients during the pandemic.
We are confident that these capabilities will continue to drive strong demand.
And for both our clinical and commercial offerings.
In 2021 into 2022 and beyond.
As we begin thinking about our planned drilling 2022, I am pleased to announce that we will be hosting.
Since the Investor Conference in New York City on November 16th.
While we will update you on our V 22 progress.
And share our plans for the next phase in the acuity is the evolution.
Nick and the team will of course provide more details.
And once all the logistics are.
Set and available.
With that let's review the second quarter in more detail.
Revenue for the second quarter grew 36, 4% on the reported basis and 33, 2% at constant.
Currency.
This represents growth thus was $176 million of volume the midpoint of our guidance range.
The vast 40% of these beat came from.
Strong operational performance.
And the reminder.
From higher pass throughs.
Second quarter adjusted EBITDA grew 49, 5%.
The reflecting the revenue growth the drop through as well as productivity measures.
The $20 million of beat the evolved to meet the performance.
Guidance range was entirely due to the stronger operational performance.
The second quarter adjusted diluted EPS of $2.13 grew 18, 5%.
That was 8% above.
Of the new points of our guidance range.
And it was driven entirely by the adjusted EBITDA drop through.
And you provide a little more updates and color.
On the business during the quarter.
Starting with our real world evidence business.
It's once again performed well strengthening its leadership position.
This included a recent win with the top 20 pharma client.
To develop an ophthalmology evidenced platform for upcoming product launches the.
The platform integrates primary and secondary data.
And Les <unk> AI ml tools to monitor patient safety in the real tone.
This will allow these clients to add new products and indications to the platform without the sheet the new studies.
This of course will say typical amount of time and money, while also reducing the burden on.
And sites.
Turning to our commercial technology business. It continues to increase penetration among top 10 of life science companies and emerging Biopharma clients.
The top 5 pharma clients and third during the quarter new too.
The commercial agreements.
2 levers of the IQ the human data science cloud as part of the core data and digital strategy for 1 of the large therapeutic areas.
This line plans to rollout of this platform in over 50 countries.
To centralize all.
All of that fragmented data assets.
The data management complexity.
And improved speed to insight.
Our orchestrated customer engagement offering oce gained additional ground this quarter.
As 9 new clients adopted.
The platform for commercial operations, including 2 wins with large biotech clients.
1 of these the Oc biotech clients.
Has the potential for a global rollout to over 20 countries.
The other large biotech.
Biotech win represents a competitive of wind back of.
Of the customer facing team in the U S.
To date, we have 159 client wins for OCD.
Our critical technology solutions team continued our path to innovation.
In decentralized clinical trials.
With the introduction of <unk>.
Clinical data analytics suite.
Sure.
Thus.
The solution builds on our human data science cloud platform provides life science companies with new approaches to data use of <unk>.
Amortization.
As well as reducing AI ml and analytics based new sites.
On an open scalable cloud platform that seamlessly works seamlessly works with sponsors existing data archive systems.
We now have all of the top 10.
<unk> and.
<unk> 18 out of the top 20 pharma clients using at least 1 of the several modules within our clinical technology suites.
By connecting the right technology with the right data sources of <unk>, enabling customers to identify new opportunities.
To maximize product value get to market faster improve departmental and business alignment and reduce costs.
Switching to our <unk> business during the quarter, we continued to build on its strong momentum with over 2.5.
$5 billion of.
The net new bookings on.
From the COC 6 of 6 basis.
In the quarter.
We achieved a contracted net book to be the ratio of 134, including pass throughs and 1.
37, excluding pass throughs.
As of June 30 of our LTM contracted book to be the ratio was 145, including pass throughs and 140, excluding pass throughs.
Our contracted backlog in RMB.
<unk>, Inc.
Including pass throughs grew 16, 7% year over year to $23.9 billion as of June 32021.
As a result, our next 12 months revenue from backlog increase.
Greece to 6.6 billion.
Which is up 19, 6% year over year.
I want to highlight the lab business.
Which continues to be a key driver of growth and therefore will remain an area.
A strong investment for iqs yet.
You will recall that.
On April 1 we.
We completed the acquisition of the remaining interest in Q squared solutions from Quest diagnostics.
Following this transaction, we announced our plans to expand our laboratory operation in Scotland.
Bolster our investments in cutting edge technology, including next generation genomic sequencing and testing.
Also in the quarter, we agreed to acquire a myriad of BMO, adding.
Adding to our capabilities in the lab.
The and specializes in biomass.
Occurred of detection and quantification testing that supports early and late stage of drug development.
The key therapeutic areas such as oncology.
S and immunology.
This acquisition fits nicely into our strategy to develop specialized testing and precision medicine.
<unk> had support drug development with state of the art solutions.
These actions further demonstrate our commitment to advancing outcomes in this space.
And we are excited to continue to grow and innovate in the lab business the.
The myriad RV M. <unk> transaction is expected to close.
Sometime in the third quarter.
I'll now turn it over to Ron for more details on our financial performance in the quarter.
Yeah, Thanks, Ari and good morning, everyone.
Let me first start with revenue second quarter revenue of $3 billion $438 million.
<unk> grew 36, 4% on a reported basis and 33, 2% of constant currency.
The first half of revenue with $6.847 billion.
Growing at 29, 8% reported and 27% at constant currency.
The technology and analytic solutions revenue for the second quarter was $1.353 million that was up 22% reported 17.9 9% at constant currency.
For the first half Tech and analytics solutions revenue was $2.701 million.
Up 21, 3% reported 17, 5% at constant currency.
R&D solutions second quarter revenue of $1 billion $891 million was up 53, 1% at actual FX rates.
57% at constant currency.
Excluding the impact of pass through second quarter, R&D revenue grew 44, 6% year over year.
For the first half revenue and R&D solutions.
<unk> was up 44, 5% reported and 38, 5% at constant currency.
CSI.
<unk> revenue of $194 million in the quarter grew 9.6% reported and 7.3% on a constant currency basis.
And that brings the first half CSM net revenue to $387 million.
Up 3.8% reported and 1.
3% at constant currency.
And moving down the P&L and going to adjusted EBITDA that was $722 million in the second quarter, which represented growth of 49, 5%.
Bringing first half adjusted EBITDA to $1 billion of $466 million.
43% year over year.
Second quarter GAAP net income was $175 million and GAAP diluted earnings per share was <unk> 90 <unk>.
For the first half we had GAAP net income of $387 million or $1.99 per diluted.
Sure.
Adjusted adjusted net income was $416 million for the second quarter and adjusted diluted earnings per share grew 85% to $2.13.
For the first half adjusted net income was $841 million.
Of $4.32 per share.
Let's turn briefly to R&D solutions.
As already mentioned, we delivered another outstanding quarter of net new business, we see backlog grew 16, 7% year over year.
The $223.9 billion.
At June 30th in next 12 months revenue from backlog.
At June 30.
<unk> at $6.6 billion up 19, 6% year over year.
Okay now onto the balance sheet at June 30 of cash and cash equivalents totaled $1.8 billion and debt was $12.3 billion.
Which results in net debt of $10.5 billion, our net leverage.
Average ratio at June 30, it came in at $3.74 times trailing 12 month adjusted EBITDA.
Cash flow was again strong in the quarter cash flow from operations was $539 billion million and Capex was the $145 million, resulting in free cash flow.
Of 394.
$4 million.
This brought our free cash flow for the first half of 2021 to over $1.1 billion.
Which is the material improvement over our 2019 and 2020 results.
In the quarter, we repurchased $45 million of our share is leaving us with 820.
$1 of share repurchase authorization remaining under our latest program.
Now on the guidance where range of raising our full year of 2021 revenue guidance by $275 million at the midpoint, reflecting.
Reflecting the strong second quarter and the continued operational momentum.
$2 million in the business.
Our new revenue guidance of $13.550 million of $13 billion $700 million.
Which is year over year of growth of 19, 3% to 26%.
I would note there is no FX impact versus our previous guidance compared.
Per the prior year FX continues to be of tailwind of 150 basis points to full year revenue growth.
Looking at the segments, we continue to expect.
Full year technology, <unk> analytics solutions revenue to grow low to mid teens.
And R&D solutions revenue to grow mid.
The high Twenty's, while we now expect the <unk> EMS business be up low single digits.
You saw that we also raised of profit guidance as a result of the stronger revenue outlook, we've increased our full year adjusted EBITDA guidance by $43 million at the midpoint.
Our new.
The guidance of $2.950 million the $3 billion.
Which represents growth of 23, 7% to 25, 8%.
I'm moving the EPS, we adjusted our adjusted excuse me, we increased our adjusted diluted EPS guidance by <unk> 18 cents at.
Full year <unk>, our new guidance range of $8.78.90.
Which is growth year over year of 35, 5% to 38, 6%.
Our full year 2021 guidance assumes at June 30 of foreign currency rates remain in effect.
For the second.
The mid <unk>.
Now, let's review the revenue guidance for the third quarter third quarter revenue is expected to be between $3 billion and $290 million and $3 billion $365 million.
Ah representing growth of 18, 1% to 28%, we expect adjusted EBITDA to be between.
<unk> hundred $10 million $730 million up 17, 5% to 29% and finally adjusted diluted EPS.
<unk> is expected to be between $2 <unk> and $2.13.
Growing 26, 4% the 37%.
700, and again, our third quarter 2021 guidance assumes June 30 of foreign currency rates remain in the fast for the quarter.
So to summarize we delivered very strong second quarter results, we had double digit growth in all key financial metrics.
We posted.
Growth of over 20% in our <unk> segment and over 50% in R&D at segment are.
R&D backlog.
Moved again to $23.9 billion.
16, 7% year over year.
Next 12 month revenue from that backlog increased to $6.6 billion.
That's up 19, 6% year over year.
We reported another strong quarter of free cash flow.
And given the momentum that we see in the business and our strong second quarter results were once again, raising our full year guidance for revenue adjusted EBITDA and adjusted diluted EPS.
The revenue.
So with that let me hand, it back over to the operator.
For questions and answers.
At this time I would like to remind everyone.
A question for Star then the number 1 all of your telephone keypad.
So just a moment.
On the to compile the Q&A roster.
Your first question comes from the line of Eric Coldwell with Baird.
Thanks, very much good morning, I have 2 questions Ron first congrats on the great.
Cash flow performance year to date I'm, just hoping you can give us some more details on where you're making the biggest gains changes supporting these improvements.
Any color commentary on your outlook for the future second question just COVID-19 related.
The typical standard ask.
If you could give any insights on.
Non COVID-19 revenue in the quarter bookings backlog thoughts on the tailwind of 2022 that would be helpful. As well thanks very much guys.
Sure to your first question Eric on cash flow. There are 2 principal drivers of our strong cash flow performance. The first of course would be our earnings growth which was quite.
Good bye.
But beyond that we have made substantial progress and continue to make progress in reducing our day sales outstanding we've got a real focus on that over the past year, bringing down past dues, improving our billing terms with customers.
Billing sooner because.
We have substantial unbilled amounts.
And all of that has contributed to strong collections.
The 1 caveat I would say is that some of the COVID-19 related work does come with some advances that will burn off over time.
So we're still targeting to have cash.
Cash flow in any given year in the range of 80% to 90% of adjusted net income now obviously substantially stronger than that so far this year I think it's probably about 125% for the first half.
And if we can beat that $80 to 90% range, great, but I think thats, a good kind of medium.
Term sort of target for cash flow.
In the normal environment.
But we're very happy with the progress we've made on cash flow and expect cash flow to continue to be strong.
The future, yes, I mean, Eric.
Morning.
Thank you for highlighting the aspect.
But the of outperformance in the second quarter of as you know we were not happy with our cash flow performance back in 2000.
I guess, Inc.
The team our total year free cash flow was $600 million.
So just barely half of.
Was the first half performance will issue.
2019, I think it was around the $800 million and.
And last year in 2020, we bumped that up to 1 billion from you a bit of doubts so resilient piece of our performance and just for the reasons that <unk> highlighted.
Especially.
Grateful to.
Of the finance team from focusing on the management of our receivables collections and generally.
The cash type of process improvements.
The collateral of efforts, but we think we continue to pay the dividends.
We also remember has committed to investors.
Through that we would reduce our leverage ratio.
From the mid to high fours from the net basis to 4 or less by the end of 2022.
Of note that for 2 quarters, the new role.
The low debt of 4.
Probably.
<unk>.
While again, we might see the average ratio move up and down depending on circumstances and I'll stand on M&A and share repurchases, but that's where we are and will vary from New York Pro forma. The second question you had was on Covid work.
And how much of the represents.
It's always probably best to look.
How much COVID-19 work using our backlog.
And.
I just want to say that the total the large COVID-19 vaccine trials, which have represented the bulk of our of our work in Covid.
Represent less.
Actually much less.
The funds.
Of our total backlog.
And so thats. So it gives you a sense in terms of.
Now, having said that we expect COVID-19 work to continue.
So the main part of our business for the foreseeable future. We expect the Covid studies 2.
Through our long sales through 2021, well into 2020 to win perhaps 2023, there will be a need for vaccines from multiple manufacturers, we still have in our pipeline.
Rfps for vaccine work from different companies around the world.
There are new vaccines, the developers for the variance.
They.
The alternative vaccines are the needed for adverse safety events quality issues manufacturing and then there are a bunch of novel treatment program of our forgetting the specific populations in conditions. So all of that.
As seen in our pipeline, but again the large vaccine work is less with.
And 5 percentage points of our total backlog in 2 new buses.
So any any other commentary you want to make on revenue or impact from the not months.
Well look even even if you are on the revenue side, if you were to.
The pull out all of the Covid related work, we still had very strong revenue growth.
Both the double digit revenue growth from both the tag segment and then the R&D at segment, So, yes, COVID-19 with the contributor in the quarter, but the underlying.
The non COVID-19 related work with growing strong and they also and of course of Covid is the reality of these days, it's part of the business. We wanted to participate in that work and we have been participating in that.
Work Okay.
Thanks.
Your next question comes from the line of Shlomo Rosenbaum of Stifel.
Hi, Good morning, Thank you for taking my questions.
2 questions..1 is more of the housekeeping thing Ron maybe you could provide the precise organic revenue growth.
Growth metrics for each segment th hasn't Rds and then secondly, I wanted to ask you a bit more about what we'd already started out with in terms of the growth in the real world evidence business whats the size of the business at this point in time.
Was the growth in the quarter, how is that contributing to the overall business growth in the.
Just more.
It seems like that's of significant differentiator for <unk> versus a lot of the competition that we can flesh some of that out.
Let me take the first question from online organic growth the contribution.
The acquisitions in the quarter to our revenue growth was insignificant.
If you look.
Back over the past number of quarters, you can see our acquisition activity.
Tailed off quite a bit and.
And it is the only recently beginning to pick back up so there is almost no contribution whatsoever.
Of.
Acquisitions through our growth.
Detailed of growth for all intents and purposes equal reported growth in those segments.
And then.
From on the railroad side.
That business is about a $1 billion as we've talked about before continues to grow double.
Double digits this quarter with.
So we're getting double digits again.
We continue to see very very strong results from that business and continue the.
The continued to deliver.
For us and drive the size growth.
Thank you.
Yeah.
Yes.
Your next question comes from the line of John Kreger with William Blair.
Hey, Thanks, very much of that maybe just a quick follow up on railroad evidence I think prior of previously this year you had talked about.
Thanks from significant government, COVID-19 tracking where but that was expected to tail off of what are your current thoughts about.
The Durbin.
Heightened the of that program and sort of what are you. What are you assuming in your guidance for the year.
John we're expecting that work to continue through the balance of the year, but it will be less.
Contribution in the second half than the first half.
We will see whether it continues on into 2020.
<unk> not.
Yes.
That's sort of work tends to be.
Pretty quick burn and rapidly changing but we do expect some incremental contribution from the government COVID-19 related work through the balance of the year in particular, when you get into the fourth quarter.
<unk>.
Fourth quarter, when we had a substantial amount of it is going to be.
Okay, you know going to be negative, but you see overall for our.
Implied fourth quarter guidance that it remains very strong for the company as a whole.
Thanks, Thanks, Ron that's helpful and maybe a follow up.
Can you guys just talk a little bit about the status.
3 of the environment.
The line of out of labor shortage of Q.
<unk>, if you're seeing any constraints from your ability to recruit and hire and if that's driving any.
Pressure on margins.
Yes.
Look there's no there's no.
Staffing.
Given the given the strength of the industry backdrop.
There's obviously strong competition for talent.
And it's also the secret that when people need the highly qualified talent.
Income so I assume he accounts because they know we train people well.
Secretly get the broad range of.
Skills and training programs so.
However.
We are confident that we have continued to be able to attract and retain the talent.
Simply because we all of the Premier company in the industry.
And also frankly because.
We've been investing in our employees, especially during the pandemic.
We'd be looking after our employees, we didnt restructure we've continued to pay our people well.
Now that the cause.
So the amount of anxiety in the industry and the yes, it's true.
And does it cause some.
And with level of wage inflation, yes that is true.
<unk> also alluded to we're not seeking the attrition levels as a consequence of all of that all of that is true.
<unk>.
Again, we feel confident and we do not anticipate these to cause any significant.
We gained some level of a headwind to our margins, but we are assuming the programs and productivity measures and process improvement measures in place.
The we have confidence in.
Overwhelmed and you can see the our margins.
Have been performing very well and growing faster.
Than we had anticipated.
Yes, John obviously all.
Cost pressure, we're feeling it fully baked any of our 2021 guidance.
Great. Thanks, guys.
Okay.
Your next question comes from the line of Tycho Peterson with Jpmorgan.
Okay, Thanks, Ari almost $60.
7% backlog growth I'm, just wondering if you could provide any more color you know how much of this from your view of kind of pent up demand catch up work.
And then any kind of lingering concerns or outside of stability in the.
The various potentially impacting the conversion in back half of the year.
Obviously, you've got a compare issue from <unk>.
That's driving some of the.
Of those deals just unusually high growth rates.
Bob.
I think we.
We've got the combination of a lot of factors 1 catch up work Youre correct, I mean, theres a lot of.
<unk>.
Work.
Net.
It was done last year.
The remotely and we still need to have sight documents onsite.
The documents verification activities the nucleus take place so that's another.
The boost to our growth.
Thirdly the is.
The.
Super fact that projects that were supposed to get started last year were.
Pushed to the right.
And so that also as the demand of fourth we will be gaining market share with new saying it over and over again, adding the members of pretty clear.
Given our consistently higher.
Book to.
The ratios and the size of.
Of our revenues I think the math clearly would indicate that we are gaining share and we are now beginning to execute on all of these.
The projects that started with some delay last year and finally, the use of cover the words, so all of that contributes.
To these.
Strong growth rates that we have reported.
Your other question of which were operational metrics.
The access and so on.
Look.
The.
We.
All of essentially.
We could say about.
Various 80% or so or approaching 80% into the size of access.
Given the all of the flare ups.
Infection draws in different parts of the world.
Our guidance for 2021 takes a lot of factory to accounts, including sites site accessibility.
We also believe we are creating some cash.
Critical mass the hurdle was at 80% we can deliver with the convenient combination of different methods. We are protected in terms of remote visits and so on.
It's good to monitor the site access as a metric when.
And the general recovery.
But they don't correlate exactly with revenue recognition there is many other metrics we track.
The site startups, which have essentially returned to the baseline of 2019.
The patient recruitment, which are running at or above.
The 2019 averages.
<unk> visits which are essentially close to the pre pandemic levels. So all of those bottom line.
The metrics provide us with the confidence that the non Covid Cheyenne pipeline is not going to be awarded.
<unk>.
Exemplified by as illustrated by our strong bookings.
But also it's starting to be delivered many of the sites are enrolling the patients are enrolling and the patient visits are taking place.
So I hope that the.
Clarifies, where we are operational and R&D assets.
Okay. That's helpful. And then sort of follow up 2 quick ones I am wondering if you can update us on the orchestration of clinical trials rollout, how thats going and then secondly of the acquisitions I understand they're not big revenue contributors I'm just curious if the accretion assumptions have changed I think you've previously talked about 12.
Accretion from the <unk> acquisition I, just want make sure Thats the case.
You asked about the decentralized sites.
Okay.
The C.
Sure.
Yes, again on the acquisition.
Just to clarify on the 40% acquisition of the minority.
Square.
And of the lab that we didn't own there was zero impact on revenue and EBITDA since we already consolidated doesn't where 60% of owner.
There was the accretion.
On the accretion on the bottom line and all of the accretion of the exact number.
For the bus.
Yes.
For Q score 12 of them.
For the balance of the year of the barrels out of the area that into our guidance and thats been the guidance, yes that was already done that at the time.
So yes, nothing has changed now im not clear on your first question of worried about the decentralized trials of our <unk> splits about all of the orchestrate the clinical.
OTT the suite launch and how that's going.
Okay.
Fine so thats going well I mentioned in my introductory remarks that the.
Every single 1 of our of the.
The top 10 pharma clients.
<unk> is using 1 module of our clinic.
Clinical technology suite.
18 of the top 20, so we are gaining ground and making.
Our progress.
Yes.
The.
Essentially all of the suites have been launched the most new modules are.
<unk> are being used.
And the sales pipeline of continues to increase we see a lot of interest from our clients.
For the platform itself and also for individual.
Suites of Standalone modules, we're seeing interest from all customer segments I talked about the top 20, but.
It is also true for the medium EVP of demands from multiple products within the digital patient sweep some of that team.
The driving some of the growth that you saw in <unk>.
On the on the SaaS business.
The C.
Suite, which I talked about in my introductory remarks.
<unk> the clinical data analytic suite connect structured and unstructured data.
From clinical trials of into the central repository that creates the 1 version of the truth of it allows predictive analytics to be run et cetera.
Key benefits for clients, which as you know the big.
The issue in the healthcare is the.
Inter operability of data between customers between the people who run the.
The trials like acuity or in this case and various competitive applications and data sources. So the seed us product eliminates the need.
Need to reconnect individual applications from each other and instead these applications of the connect directly to see the us and enables too.
Harmonize the data and provide a new <unk> scalable solution.
Mark multiple clinical data sources enables us to use AI.
The ml layer.
Layers of analytics using the single data ecosystem. So we are very pleased with the progress our clients are.
The beginning to understand the value and we are beginning to penetrate the customer base.
Okay.
Your next question comes from the line of Jack Meehan with Nephron research.
Thank you good morning.
Ari I was hoping you could give a little bit more color on the progress of the oce. So now of 109 clients. What's the revenue base for this business and where do you think you are in the growth curve.
Stone of investment.
Or has the business.
Comparable at this point.
Right I don't think we disclose how much of it represents but we've said that.
So far in 2020, 1 we've had 19 client wins, which brings the total since the launch.
3 and a half years ago.
The 1 Harlan.
<unk> non client wins, while we continue to have of these proportionately.
Share of the wins I think it's 2 out of 3 and that has been consistent.
We are performing well with the launch.
Pharma deployments.
We talked about.
<unk>.
The grocery already has 15000 wholesale users.
In the deployments. So we haven't seen any slowdowns in the implementations that are the result of Covid, although the.
The new isolated the issues, which we dealt with.
We even see some deployments that are that have accelerated.
At the time lines.
So the feedback is overall positive the fewer reps are very engaged.
All of these.
Going.
Better than planned for the <unk>.
The launch of Athene, which I remind you of only 3 announced usable.
Great and then.
You started by talking about the strength of the funding environment in the BC activity going on.
Wondering if youre seeing any themes emerge from a therapeutic area of perspective, and how you thought <unk> be able the stacked up for that and 1 specific area I was hoping you could weigh in on his alzheimers and.
Just whether you think.
An area, where you can see new investments coming in.
I think look the undoubtedly the.
The area, where we see the most funding is oncology.
Especially those.
Categories of oncology.
It's been difficult to have.
The effective drug so people are pulling a lot of.
VC funds into oncology CNS either.
The other.
Area and the <unk>.
<unk>, Yes, we've got.
Quite a few things going on there.
The vascular strong growth.
As well.
So at the outset, resulting and of course immunology no new <unk>.
Wanted by the year would happen with the virus.
And Colby.
There's a lot of interest in immunology and that also would say of the fourth main area of funding.
Thank you.
<unk>.
Yeah.
Your next question comes from the line of Dan Leonard with Wells Fargo.
Thank you so hoping first you could elaborate a bit more on your decentralized trial offering and maybe update specifically on study study hub trends.
Yeah.
As we.
You mentioned the.
Decentralized.
Stronghold.
Opportunity was identified.
Well before Covid and we've talked about before we use the according to the virtual trials.
Hybrid trials, we've talked about it.
And we felt we were making great progress and then the pandemic happens and we saw how critical those capabilities worth.
And the that accelerated the developments.
Basically it's a combination.
<unk> of remote technology.
New and digital.
The possible of the.
The peak or sorry, the can be digitized so the suite for US combined Inc, consent, which you're familiar with.
Telemedicine.
Modules equal and of course.
<unk> the digital communication.
The basically obviously buying things in the Virtualized as the relationship between the local labs healthcare providers, when it's necessary the sort of establishes a virtual network of investigators and care professionals.
Welcome.
We do is that we agreed on.
On preset terms with the investigators that of Greek participate.
We have internally operationalize these of business and we have a separate team.
The decentralized trial team example, we've got the central as clinical trial clinical.
The loss of coordinator of that can support the sites.
The remote way hedged navigate technology.
This is new for all of the investigators and searching for the patients so we need.
We figure that the independents that we needed the centralized team to assets of sort of a kind of of help desk. If you will.
There are there's also so there's kind of a sort of a white glove service to help patients and sites through the decentralized strong process.
We also have.
The research nurses and phlebotomy solutions fee that.
<unk> built on our global network.
The court.
To support the decentralized studies, so again, we're moving to.
From remained from the pre 2020.
Piloting phase when we had I believe at the time of subtle.
60 or so.
The.
Great.
Small trials that the essentially were experimental in nature and people wanted to sort of try it out to a.
Maturing phase.
We have added the.
Many wins.
But we have so far.
<unk> 2021 of things, we have more than a dozen larger the.
Centralized clinical trials that were 1 we added new therapeutic areas. We are working with 5 of the top 10 launch from our clients.
And I would note that 1 of the reasons we.
So.
We were able to win so many.
So the bigger proportion than anyone else of the coating work, whether its therapeutic gate of therapeutic.
Trials or vaccine trials.
It was our more advanced.
The central Australia, our capabilities.
And again, we cover.
<unk>.
Panel so.
The pubic areas nephrology oncology psychiatry.
The CNS dermatology et cetera.
And the <unk>.
It's moving to a more mature phase and we will speak more about that.
In the future.
Again in the context of the very large R&D of the business. We have it's still not something thats kind of moving the needle.
In the numbers given the very strong growth that we have.
It is not materializing.
Materializing.
And just to put some numbers around.
And with Ari just said I think we had 81 trials now that are fully deployed on study hub and there.
Protein of 250 trials of our shallower that had some piece of study hub and at any given point in time, we'll have close to 1000 full service clinical trials going on and stuff.
It's a piece of our business.
Growing piece of our business, but still.
Not the majority of what we're doing.
Okay, that's very thorough and helpful and just a quick follow up to jacks question earlier.
First of all I'm curious, if you could frame and size the alzheimers opportunity for Ikea.
The I remember when something has to come out of backlog a couple of years ago. It was rather sizeable and wondering how sizable things coming into the backlog could be thank you.
Yes, I don't think that we said at the time I'll bucket was much smaller we came out it was sizeable but inc.
We didn't.
We didn't.
The seamless whenever felt it was not an issue at all.
Now the when it left nor win came back Boston.
So im not sure what you're referring to it's not a significant portion of non window, we disclosed that but it's not.
It wouldn't be material and would be in the round.
Given the size of our backlog, yes at the current Alzheimer's contribution of our backlog is not material now could there be more coming in the future share we hope the Reds, but we'll see.
Okay. Thank you.
Your next question comes from the line of Patrick Donnelly the Sydney.
Great. Thanks for taking the question guys Ari.
You touched on the M&A, a little bit and obviously with the cash flow performance, where the leverage is can you just talk about kind of the landscape what the pipeline looks like obviously a lot of activity of the space and then secondarily given some of the mergers and movements around the space or are you seeing any disruption opportunity for share.
The game, but any commentary from customers, suggesting.
This is an opportunity for you guys of the moment.
Yes.
The that's the bulk of your question refers to the.
The consolidation and I'm, assuming that from going to be the only 1 standing here that's in the present, but we.
Look the.
Generally the clinical trial.
This is an attractive area it's of high growth area.
Something that's well into the long some of them to deliver superior returns, we believe in the industry and that is attracting a lot of.
Interest from buyers.
Whether it's private equity or other large entities that want to.
The search of accelerate.
The 52 accelerated the revenue or profit growth. So that all of that is good news for our industry in terms of what are the consequences of strategically operationally I think.
It's pretty clear of that.
From.
The first of all we don't need to participate prudent growth. Obviously, we look every time and most of these companies of being shopped to us obviously.
We look.
Of these companies and.
The cases.
We passed the because we think the evaluations.
Our ability to gain share does not require us to provide or to participate in this.
In the M&A.
<unk> trend.
<unk>.
No.
It's hard to gain a lot when you acquire the foreseeable to acquire another CLO.
I mean there are.
Opportunities to complement the capabilities, whether its therapeutic wise of geographic wise.
It could be areas the business.
The preclinical phase 1 phase 2 phase III.
The complementary strengths.
So again these are the 3 dimension of the geography therapy areas.
For the stage in the the drug development process.
The lend themselves to more or less complementarity of overlap.
The.
The consolidation has taken place does provide the opportunity.
As you know I've said before we have been gaining share significantly.
So we don't need to do that.
It is the fact that when the reserve large merger of acquisition. There is disruption we believe the it ourselves.
So there is generally.
Generally the loss of balance, but we are seeing it.
For the coming from others.
There is generally.
The.
The desire of our customers to keep 2.3 or 4 providers and so.
Providers overlap when is.
The servicing customer you can expect that the.
The sponsor will look to further diversify the.
Provider base. So all of this is true.
Look we both talent and customer are present opportunities, but we're not.
The real focus on these we just we're focused.
Just on executing on our strategy towards so far where the company will continue to work.
Other acquisitions, obviously, we're looking at things as or whether there is a rich pipeline of auto as you've noted and we havent done much last year, where we are.
All of the margin is just so far of sales for the 2 square the acquisition.
By noting acquisition.
But we are looking at all of the things and always in the technology space.
And.
We are of reached pipeline interest, it's a binary thing acquisition at the end of that won't happen.
Can you talk a.
A bunch of about that.
No that's helpful.
And maybe just a quick follow up CSM doesn't get the most of airtime, but it was nice to see the recovery ongoing I think you bumped guidance from low single digit declines of low single digit growth can you just talk about the market recovery going on there and the outlook.
Yes.
Luke.
A lot of clients did not cancel contracts.
Last year is because they didn't know how wrong. This was going to last and while our field reps werent able to actually be in the field.
But many of them remain on the bench with contracts kind of suspended or we renegotiated.
Of that caused some disruption and we.
I'm, turning the business around but.
So it flipped and went back into the Red Inc.
Terms of revenue growth, but now we're seeing that we are going back and I mean look this is never going to be the double digit grower I don't think so.
The best it's going to be low single digit growth.
We have the kind we are managing it it's becoming less of a.
Flashpoints CPB clause in the size of our company and the growth of the rest of the business is becoming.
Relatively small now.
Luke you will recall that we true shortly after the merger nearly 5 years ago, we tried to sell it as a whole. We then found that.
He wouldn't fetch.
Much of of the value and therefore, we put the business integrated it into our regions. It's very.
Integrated now into our commercial operations that our contracts some of which is very useful in fact, I've mentioned before the decentralized trial business, where we are using nurses.
Debt from the CFM is business to how it would be.
Of virtual aspects for the for the going to visit patients of <unk>.
So there is a.
Kind of an added value, it's not going to move the needle.
1 way or the other assets used to be in New York Quintile of the days or in the early Ecu the updates.
That's helpful. I appreciate the Ari.
Thank you very much okay.
And so last question last 1 here.
Our last question comes from the line of Sandy Draper with <unk> Securities.
Alright, thanks, very much of this should be a pretty quick 1.
Ryan just when I look at the step the third quarter guidance looking out sequentially I just wanted to from I would say.
That is because of the expected decline of pass through revenue R&D.
Is there anything else.
That's really the driver you're correct Sandy.
Okay.
Thanks Congrats.
Thank you guys.
Okay.
That's helpful.
Thank you Aaron.
Thank you everyone for joining us today, we look forward to speaking to all of new again on our third quarter call.
Many of the team will be available later for any follow up calls.
The follow up questions, you might have and look forward to it and talking to you. Thanks, everyone.
Yeah.
This concludes today's conference call you may now disconnect.
Okay.
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Okay.
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