Q3 2021 ICON PLC Earnings Call
Good day, and thank you for standing by woke up until I can P. O C. A third quarter of 2022 in adults presentation.
At this time, all participants and listen only mode. After the speaker's presentation there'll be a question and answer session and to ask a question you don't need to press star one on your telephone.
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Good day, ladies and gentlemen, thank you for joining us on this call covering the quarter ended September 30th 2021 also.
I'll tell them to call today, and we have our C E O Doctor, Steve color and our C. F O. Mr. Brendan Brennan I would like to note that this call's webcast and that there are signs 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 and 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 business.
And listeners are cautioned that forward looking statements are not guarantee of future performance.
Forward looking statements are only as of the date, they're made and we do not undertake any obligation to update publicly any forward looking statement either as a result of new information future events or otherwise.
For information about the risks and uncertainties relating to these forward looking statements may be found in S. E. C reports filed by the company.
This presentation includes selected non-GAAP financial measures, which season, Brendan will be referencing and they're prepared remarks for a presentation of the most directly comparable GAAP financial measures. Please refer to the press really statement headed condensed consolidated statements of operations. Please refer to the appendix of the earnings presentation for reconciliation.
[noise] of non-GAAP financial measures to the most directly comparable GAAP measures to assist investors and analysts with year over year comparability for the merged business. We have included combined company information.
These measures include financial information that combines a standalone icon P. L. T N P. R. A health sciences information for revenue and adjusted EBITDA and other metrics as if the merger had taken place on January 1st 2020, with conforming adjustments to the current year presentation.
Specifically these financials represents represents a simple edition of the historical adjusted financials of each company. These.
These combined financials are not intended to represent pro forma financial statements prepared in accordance with GAAP Eregulation F X.
While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures. We believe certain non-GAAP information is more useful to investors for historical comparison purposes.
And the call today to one hour and would therefore ask participants to keep their questions to one each with an opportunity to ask one related follow up question.
Now I'd like to hand over the costs were CFO, Mr. Brendan Brennan.
Okay.
Four O three icon achieved gross business wins, all of $2.72 billion, a record of $346 million worth of calculations. Consequently, net awards on the border or a record $237 billion, resulting in an effort to bill of 1427 times.
Trading trouble Tibet spoke to bill of 1.3 times.
But the beginning of the third quarter consolidated backlog of six O six basis, but they seem put $1 billion. This backlog figure accounts for legacy I'll come back off at the end of Corbett too along with Toki back off from PRA. Adjusted to include Pus chose and keep it what I call with reporters backlog of methodology.
With the addition of the New awards and quarter tree, our backlog grew to a record $18.6 billion, representing an increase of 3% from closing of the acquisition.
Included in the press release in the earnings slides you will note that'd be included a reconciliation of non-GAAP measures adjusted EBITDA exclude stock compensation expect expense restructuring costs.
Foreign currency gains and losses amortization of the transaction on integration related costs and their respective tax benefits.
Adjusted revenue in the border three was $1.870 billion. This represents a year on year increase of holding 67% or 165% on a constant currency basis on a combined company basis adjusted revenue increase.
Increased to 25% from the comparable period last year.
One of the key strengths of the new I'd call in these are increased customer diversification.
<unk> representation across customer segments. The third quarter are tough customer represented eight 3% of revenue mentor five customers represented 28, 2% of revenue our top 10 represented $43 30, what our top 25 represented 64, 7%.
Adjusted gross margin for quarter tree was 27.9%.
And adjusted SG&A expense was 10.5% of revenue in the quarter.
The combined company basis, adjusted EBITDA was trailed at $25 million in the quarter or $17, 4% of revenue in the comparable period last year, adjusted EBITDA was $266 million or 17.7% of revenue on a combined company basis, representing a year on year increase of 22%.
Adjusted operating income for the quarter tree was $300.1 million a margin of 16%.
They just had that interest expense was $46.5 million for the quarter and the adjusted effective tax rate was 17% for the quarter.
We continue to expect that the effective tax rate for the fourth quarter will be 17%.
We continue to work through the expected changes on a go forward basis to our techs position given them recently announced OECD global tax deal unexpected increase the minimum corporate tax rate in Ireland, we plan to give an update on the new target tax rate when we issue of 2022 guidance at which point we will have.
More cars on the anticipated use tax changes that have not yet been finalized.
Adjusted net income attributable to the group for the quarter was $209.8 million a margin of 11.2% equation too diluted earnings per share of $2.55.
During the quarter. The company recorded 149 $8 million of transaction and integration related costs us GAAP income from operations 11, two $5.1 million or 0.3% of revenue us GAAP net loss attributable to the group with $94.3 million or a loss of one dollar and 17.
Per share compared to one dollar and 72.
Or a share of the equivalent prior year period.
That accounts receivable was $540 million at the towards the the September 20th 2021 does compared to a net accounts receivable of $417 formative targeted June 2021 on a comparable basis, they say, they're standing where 26 days at September 30th 2021. This compares with 43 days.
At the end of June 2021, and 64 days at the end of September 2020.
Cash generation from operating activities in the quarter was $299 million.
September 30th 2021, the company had a net cash bonds of $1.01 billion and desk of $5 $93 billion, leaving a net desk position of 492 brilliant.
This compared to that cash $772 million at September 30th 2021, a net cash a traitor $59.8 million at September 30th 2020.
Capital expenditure during the quarter was $24 $4 million.
We ended quarter story with a debt to training 12 months, adjusted EBITDA, including synergies below four times.
The priority of deployment remains on debt pay down in the near term given a strong cash flow generation, our stated goal and expectations to reach two and a half tons of adjusted EBITDA by the end of 2020 tree remains unchanged.
With all of that I would now like to hand over the call to Steve.
Thank you Brandon and good day everybody.
Today, we are delighted to recognize another milestone in icons acquisition, Sierra Health Sciences, while reporting a first quarter as a combined organization.
The overall involved in clinical development continues to be robust is strong demand <unk> neutrals large farmer small to mid sized companies biotech and medical device companies throughout the quarter.
RFP growth has been solid and we continued to be encouraged by the healthy level of biotech funding used to date.
I am proud to haul out that <unk> has continued to either the advancement of several new drug approvals this quarter, which now total 27 to ease the date.
As seen by a strong performance.
And our customers are continuing to turn toward calm as the trusted partner in clinical development.
The response from customers to the merger has been excellent leading to increased engagement with new and existing customers across all segments and deliberately models.
Customers are eager to understand our enhanced offering that features increase scale innovative solutions in broad of service capabilities. We are particularly encouraged by the increased number of strategic partnership discussions that are currently ongoing across our service areas, which we expect will drive continue.
Q long term growth for alcohol.
During the quarter icon increased net business wins to a record $237 billion delivering a quarterly bill of 127, and Gronya backlog to $18.6 billion, an increase of approximately 3% since the close of the acquisition staff.
Quarter.
You Award activity was strong because all of our operating signals.
Revenues also increased 25% on a combined company bases and a backlog burn for the quarter increased to over 10%.
In addition diversity of our customer base, one of our key strategic merits of our combination was improved in the quarter with a notable decrease customer concentration.
I was also delighted with our cash collection efforts, which moved DSO down to 26 studies and reduced outlive routes to list and four times adjusted EBITDA, including synergies.
This should allow us to reduce the interest rate on our term loan quarter Fools.
We are pleased with the level of new wind secured from across selling initiatives across legacy organizations and are confident of the expected revenue synergies. These will drive in the longer term.
We have seen strength across a number of service offerings in particular central and specialty laboratory.
G R. A silicate sought network and in health in home Health services.
We have already seen great examples of the power of our combined resources in certain segments and regions, such as large farmer and Asia Pac respect.
Clearly displaying to customers are improved depth and breadth of talent and experience across our business.
Our integration is progressing smoothly several key accomplishments with highlight.
And the quarter, we completed a significant number of office integrations across several regions. The number more plan in the coming quarters.
Initiatives to enable a unified employee experience are underway, including an initial phase of benefits harmonization as well as enterprise level system planning and data centre coming Timothy.
You have United a number of teams across operational signals and global business support functions.
He continued to utilize the best of both approach to the integration of the legacy of organizations, ensuring that new icon benefits from the wealth of experience talent and optimal processes from both organizations.
Our priorities remain unchanged through these integration phase.
Continued focus on project delivery for our customers as well as employee retention and engaged.
We COVID-19 pandemic continues to present, new opportunities for our industry find ways to increase efficiencies and challenge the traditional model modem.
Of clinical monitoring.
The demand for a unique suite of solutions in areas, such as remote and risk posed military direct patient services and to Silicon in home services continues to remain at a high level.
While new icon has continued to contribute to the development of COVID-19, vaccines and therapies as expected a level of Covid work began to decrease as a percentage of total revenue in the quarter from quarter to levels as large vaccine trials wind down and treatment increases.
At the end of the quarter three COVID-19 related projects represented about 5% to 7% of our total backlog down slightly from the end of the second quarter.
While there was still approximately 15% of sites that remain restricted in some capacity due to COVID-19 across the globe. We saw this figured continued to improve over the course of the food.
Importantly, our customers interesting and adoption all enhanced deliberately solutions remain as high as changes brought on by the global pending have begun to show the value of deploying remote technologies and tightened since the services that can lead to increased efficiencies and continuity.
In the clinical trials.
Our enhanced ability to invest in and deploy such novel remote technologies and services at scale over the next few years will open.
The competitive advantage over smaller and midsize rose.
To that end, we have seen strong demand for a decentralized clinical trial solutions, which we believe will be the most comprehensive and integrated offering.
Our unique suite of solutions integrates all of the key components needed to run a hybrid all full DCT trial from patient concierge services to Wearables to a full service technology platform icons.
Icons offerings incorporates leading technology capabilities with the necessary operational expertise and delivery focus required to run these trials existence.
We saw evidence of significant customer interest in the quarter as iPhone engaged in a number of enterprise little partnership discussions with farmer customers and I'm pleased to report that one of these discussions has led to a leading biopharma company selecting icons DCT platform as the enterprise solution.
Across all of the decentralized draw.
As the marketplace continues to evolve we see a consistently to offer solutions that are more patient century and technology at night.
Estimates.
The new Oracle and has continued to invest and talented people technologies and innovation internally as well as with partners to disrupt traditional product development and delivery models.
Through a patient data strategy, we continually look for ways to reduce the burden on patients clinicians and sponsors expanding access to treatment for prices, while ultimately increasing the overall efficiency of clinical trial execution.
In the third quarter, we expanded our partnership agreement with deep lens, especially software and services provider focuses on improving patient improvement in the community oncology.
Deep lens provides thoughts with an artificial intelligence platform that harmonizes EHR data unstructured data and genomic data to enable patient matching to trial inclusion exclusion criteria.
By combining icons vast data resources with deep lenses technology and community oncology network sponsors can readily gain access to difficult to reach prices that are eligible for their oncology drugs.
We're also getting significant interest from customers.
Tokenization tool that allows us to follow a clinical trial places on a long term basis.
Sponsor spend a large amount of the development budgets on long term follow up the trial places in the snow the tool in conjunction with a symphony data asset allows key information to be collected and utilized in a much more cost efficient manner.
Our partnership with deep lens and the rollout of Sonoma patient Tokenization to just a few examples of the many initiatives we have ongoing it on top of a truly differentiated solutions to our customers that drive forward outpatient data strategy.
Since the acquisition, we are continuing to refine and focus the innovation priorities with you icon on our customers call and needs.
Foster access the prices more efficient clinical development and diversity and key and inclusion in trial participants.
The new iPhone as well on the way to becoming the world's leading healthcare intelligence organization.
We are committed to continuing to investing and progress initiatives that are centered on these key focus areas in the industry.
We're excited about the progress with Mikey.
A new paradigm for bringing clinical research to patients by offering expanded capabilities and solutions to customers, while also delivery significant value to shareholders.
By continuing to invest in an innovative technologies talent a novel solutions, we expect to create significant long term shareholder value as we build on our markedly operational capability and best in class Global support services model.
With a strong performance in the third quarter, we are increasing our 2021 Apple with revenue guidance in the range of $543 billion to $5.53 billion.
And adjusted earnings per share guidance in the range of $9.55.
To $9.75 up 1.5% and 3.8% respectively from the mid tones of our previous ranges.
As we look forward to 2022 and beyond we continue to expect to deliver on the long term projects as we made earlier this year at the time of the acquisition PRA.
Revenue growth in the high single digits on a combined company basis.
Adjusted EBITDA growth in the low teens and EPS growth in the mid to high teens.
You've already made good progress on a synergy targets and I'm confident that we will achieve both our costs and revenue targets of $150 million and $100 million respectively over the next four years.
You plan to provide more definitive guidance of 2022 in January at the J P. Morgan healthcare.
Yeah.
In addition, we will look forward looking forward to holding and impose an analyst, which we intend to schedule in March of 2022.
Finally, we were delighted to be included as the only sorrow and Forbes is 2021 world's best employers list and I would like to thank the 38000 employees of the new iPhone across the globe for all of their dedication hard work and commitment during the quarter.
We look forward to the exciting journey ahead, as we continue to build the world's leading healthcare intelligence.
Yeah.
So all private whenever ready for questions.
Thank you.
Smile and I'd like to have that.
Even like to ask a question.
And one on your telephone and quite clear night.
Classic.
And one final questions you might have.
Request today is from the line of toxic dominantly.
Please go ahead.
Great. Thanks for taking my question Gus Steve mixed on kind of on the final points you have there in terms of the synergies can you talk about the revenue synergies opportunities and I would be open closed for a few months you certainly sound confident and that opportunity because you've been out talking to customers and you kind of have the companies together can you just talk about that opportunity.
And again, the confidence level and that number.
Continuing to move higher I guess.
Sure Patrick I.
I think we've been probably can saying about $100 million over approximately for use as our expectation I believe we are well on track for that we might similarly in roads business development group has has been out selling areas like the obvious areas are out a lab central and specialty lab legs.
Legacy PRA didn't have a lab. So there is a very obvious one there and we've been able to secure a number of of New awards for our lab through.
Or a legacy PRA group imaging group is also that they didn't have that we were able to we've I've been able to move that along.
Language services Axilla care of the of the <unk> network and the home health thing. So all of those areas really where there was no overlap at all we've been able to secure similarly.
Similarly wins.
And we feel like we're well on track for that $100 million annual revenue synergy number.
Not to say, we haven't got continue to work to do but I think our business development group and our operational folks have been have been strong and being able to get those out and on both of those offerings to customers, particularly in the in the biotech spice any customers that we hadn't as legacy iPhone I hadn't been able to access road through to some of those services. So I feel good about where we're at.
Great. That's helpful and then maybe just.
Briefly on staff retention, yeah, that's always a risk with mergers, particularly labor market insurance higher but can you just talk about any metrics you have there to kind of talk us through and then maybe on the back of that brand name just in terms of the labor costs themselves inflationary pressures, you're just talking about the moving pieces on the margin side, how you're managing.
Do that as we go into 22, Thank you guys.
So I'll, let Brendan comment on the on the margins solid solid.
There's no question is it's not necessarily merger related but.
The labor market really across the globe, but particularly in North America is challenging at the moment is is very tight and I think it's as we come out of the pandemic and.
Unemployment rates go up or down depending on the perspective.
This is a little bit of a new paradigm around the whole working opportunity working people working from home how much they work in the office working through challenges on that front.
Retention has been a little a little more elevated than I would have liked.
But it's not it's not out of whack.
So I think in line without competitive and indeed, our customers and our customers certainly understand the challenges of the labor market that we have at the moment.
As with any business ended anytime there are certain parts of the organization that you see.
Tension being a little lower than you'd like it to be.
North America is probably our biggest challenge at the moment, but on the other hand Europe.
Plus.
Asia Pacific is in a good place.
Number of our functions are really settled down very nicely and very well India is in a good place. So it's patchy as always is and they're always things we can do to improve it and we're working hard to to make sure. We continue to improve that number when did you want to.
Yes, perfect. So I think as we as we go through the course of this year and you saw in my prepared comments the gross margin in the quarter coming of close to 27.9%.
A lot of the dynamics at play or obviously at some of the vaccine work that we've been working on uncertainty the cost base as a result of to Steve's point that the dynamics at play in terms of staff retention it'd probably be impacting more as we go into into Q4 I think overall the trend in our gross margin profile will still be solid as we go from Q3 and Q4.
So we still expect to see as the mix of passers contains come down on vaccine work at good progress from a gross margin perspective quarter over quarter I think it'll be interesting then I think that'll be a good jumping off point and a good marker in terms of gross margin profiled to set maybe more of a tone.
Four 2022, so we continue to see said good margin progression quarter over quarter, we do three Q4, and and not and probably be a good number to think about how we're thinking about some of those cost pressures.
As we go into 2022.
Very helpful. Thank you guys.
Thank you your next question.
From the line of.
Oh.
Based on that.
Thanks, very much Steve just to follow up on a couple of your comments.
I think you indicated good good uptake from larger smaller uneven device clients can you give us a sense about kind of the relative growth you're seeing across those three buckets.
So John I mean device is still relatively a small part of our of our portfolio I'd say growing pot, but it's still relatively small.
Large farmer customers, we had a very strong quarter in terms of wins in that front and then suddenly on the RFP front with a good solid growth in that area. The biotech Smith also we had a good quarter significantly up.
Revenue was the date they had a I had a good quarter in terms of New awards and a replacement.
I think I said in my comment really across the board with seeing a very strong robust environment as it is.
The pull out any one particular area, it's across the board of missing.
A lot of positivity in the in the environment in terms of Rfps in terms of awards and ultimately that's flowing through the revenues.
Sounds good thanks, and maybe another way to kind of cut that same question.
If you think about year awards and the quarter, maybe your new trial starts can you give us a sense about the uptake of some of these newer tools that you guys could capabilities and now like DCT or our homebase. Their site networks. Just curious how broadly those are being adopted in your in your New Orleans.
Yeah. It's interesting I don't think there are many trials that we start these days that don't have a car.
Component of a decentralized trot out.
There are very few that are completely decentralized.
Oh, the state that but there are very few that don't have some sort of component whether it be a risk by its monitoring component of wearables component of home health component.
So.
Customers.
Increasingly asking us to include these sorts of the decentralized taught components <unk>. Another one that's that's proven very helpful. In the in the vaccine trials, where you have many thousands of patients and many protocol amendments that would need to be approved.
By the patients and so having an electronic copy an electronic version has been extremely helpful. In that in that respect so the uptight.
I would say very good in terms of individual components.
I don't want to overstate it in terms of the completely.
Decentralized draw, they're still relatively rare animals, we do some of them and we had some of them are working well with some of them about it but they're not I wouldn't say anywhere near as common as perhaps as I said, the the normal approach, which is a more hybrid version.
Yes.
That's helpful. Thank you.
Yeah.
Thank you.
Question from the line of Elizabeth.
Some ethical please go ahead.
Hi, guys good morning, and thanks to that question.
I know you're tired.
Projects in 5% to 7% a backlog.
We should think how can they take about that to Kansas and maybe more vaccine base trials to my therapy based trials us as we said to think about the backlog, earning enter Avenue.
Well.
I think we've been.
Comments in terms of the awards from a Covid point of view in the past.
Those of suddenly come down this quarter.
I think they were around about 11% of our revenue this quarter going forward, we would expect COVID-19 related work and a lot of that's been vaccine, but a lot of the that will that will come down and requested that Luckily will Fortunately all thanks to a good work with seeing a good uptick in non COVID-19 related but I wouldn't.
I would caution there's no cliffy and we're going to see Covid work continue to be.
And part of that back a little bit of decreasing part of our revenue booting back low for some time it I certainly see COVID-19, becoming more endemic in the community going forward and those treatment type trials going to become more comment was certainly that's been an increasing part of our of our <unk> and.
In the recent in the recent quarter the big vaccine trials the days of the big Central probably limited if not other than maybe others coming forward.
Terms of second generation vaccines, and who knows in terms of new variance what might happen, but at the moment the way we see it as it will be more around treatment work. That's the way our backlog is evolving and a revenue will obviously follow within.
Within the backlog. So there's no question that the Covid related work is is decreasing but it will still be an important part I would say of our revenue.
Would think for another at least 12 to 24 months.
Okay. That's very helpful and maybe just jump on the back of John's question.
When he talked about starting the element of Decentralised house.
Can you cannot isn't the same sort of thing do people kind of dip their toes in with what you said like he can stand or some of those things and generally expand does that kind of the general momentum as I guess I am just trying to figure out how to think about that ramping opportunity maybe with some clients overall.
They don't usually expand within the trial once you've planned the trial. It has a component of a sort of aware of all the consent component of a risk based monitoring or the home health.
That would tend to be said I mean, obviously that was not because as we've pivoted during the pandemic everything became and so there was some pivot but no we.
We get into more steady state now that new starts with saying have that component, one or more sometimes be more concerned plus a wearable plus a risk but.
Varies but it usually is set for the chalk.
It definitely expanded but let's see I think increasing interest in those components. Because we are I think I will increasingly able to provide evidence that it is a more efficient way of doing these trials and with the pressure on resources.
Bring in getting people is challenging for us we have a lot of work to do in prosecuting that work requires a thought and the ability to be more risk faced and remote with a monitoring is allowing us to be much more efficient with those monitoring resources and so those are the big incentive for us to drive forward with this.
And we're seeing customers increasingly interested in doing that that's sort of work, but so I would say it will increase there'll be more components of more trials become decentrally, but I think I would hesitate to say that in two years, Tom everything's going to be fully Decentralised. This is going to this is going to be a marathon noticed but it's.
Take.
Many many years for us to move to be and will probably never see.
Fully decentralised, but I think at the moment is probably one one O 2% of trials fully Decentralised I'd say.
Certainly and stops probably 70, 580% of our trials have some component of decentralization and I think going forward. The the number of components involved in those trials is only going to increase as we as we prove the model and we show how efficient and convenient of course as regulators.
And approve.
I think I have all thank you.
<unk>.
Yeah.
Question.
The line now.
I've taken Morgan. Please go ahead.
No.
Hey, guys can you hear me, yes can you hear me.
Yeah, It's Tycho actually.
So like I said.
A couple of questions.
Congrats it sounds like the integration is going fine. So far off can you give us any color on the PRA numbers, obviously to hit a ball out second quarter and I'm really just curious if you had the guidance increases more tied to the PRA side versus icon or just how it how it's been performing overall.
Hey, Tyco.
I hate to disappoint, but I'm going to say, where the new icon and we're going to present. Our number is a lot of places that I go forward I will say, though that there was good growth across boat organizations. I think if you look at the year over year growth that we talk to it wasn't dissimilar in both organizations. So we are really I mean, we always said we receive organizations coming from a point of strength and the combination would be a great one.
And that's what we've seen so yeah, we're very happy with how that's progress so far.
And the step up in backlog burn any sequentially eight seven to $10 for it is that just a function of.
The combination or the covered work rolling off or can you maybe just touch on it back Hawthorne.
Yeah, I'll take it all as well I mean, if it is I mean, it has more to do with the blended blending of the organizations and we're happy to say it in excess of 10%.
We were very happy with the combined backlog as we talk to April 18th one at the start of the quarter 18.6 at the end of the call from that of course reflects as we have always done the pasture elements coming into the historical PRA backlog on that entire piece being added to the historical icon backlog.
Yes, that's certainly that the range that we're thinking about.
Alright, and the last one for Steve It sounds like you're flagging. Some early wins here, which is great to see.
Are there particular things that your customers are hunting on any one of the things you talked about in the past is accelerating patient recruitment with a sell out Karen networking media can even step up a little bit with a combined combination. So can you maybe just touch on that aspect in particular outpatient recruitment.
Yeah Tiger.
Seeing a lot of interest in the patient include a particularly around via silicate network that business has been moving nicely force it.
Quite a major roll it out and our vaccine work and I think on the back of that we're getting some good publicity good good.
Reverification validation of that model.
A number of aspects into I talked about the revenue synergies the labs in the imaging and patients.
The home Health is also stepping up there's a lot of interest in that around particularly around the the decentralized trial basis. So the only Windsor really in those in those areas I do tend to be focused around the the efficiency aspect of the trials of home health of an ability to do risk by monitoring.
We talking to big customer around.
He over a large region around around they're monitoring area and applying some of our data analytics.
To the monitoring process and then the ability to identify how to monitor more effectively and more efficiently quite frankly.
The scale of the organization now brings too.
Customers is really starting to play out nicely in terms of the discussions we have.
The new business, we really are able to deploy a depth and a breath of skiles resources that allows us.
To provide a very efficient efficient are much more efficient.
Effective service, so that's where I'm encouraged on the on the business rooms.
And the last one are you finding any more indoors opening with all that kind of consolidation in the background or are you just starting to kind of see some some some of your customers shift away from some of the combined combinations.
Sorry, I didn't quite get the quick.
Question on all the consolidation in the background and this aerospace is that starting to kind of drive more discussions your way.
Oh yeah.
You know.
I hesitate to say that to be honest with you I think we're we're certainly not being hurt by the consolidation that we're putting together we've seen you saw the backlog increase since the closing of the acquisition, we've seen rfps or up.
Double digits over the year was we had a very good point and not just in terms of new business wins, but rfps.
Three numbers coming in so.
I think customers haven't necessarily expressed to me any concerns about the industry and the consolidation going on in the industry.
But so.
I don't get to worry about that I think.
Focusing on on what we're doing and we're not hearing.
Any concerns I think the evidence in terms of the data suggest that customers I'm not concerned it.
That's great to hear.
Your next question is from the line of I have a cold.
Bad. Please go ahead.
Thank you.
I appreciate it. So my question is maybe a bit of a.
I'm not sure if postmortem is the right word, but a review of how what you've seen in terms of patient identification enrollment and retention.
Over the last call it.
At 18 20 months at least in the us since.
We had our.
National Emergency declared but I'm really globally I'm I'm, just curious have you with the waves of Lockdowns and oat Reopenings, how have you seen patient.
Enrollment and retention more over this time frame and the reason I ask is because there is there seems to be.
Two conflicting views in the market right now one view is that as the world opens up patients will be harder to identify there'll be back at work there'll be.
Getting back to daily activities and the other viewers that means sites will be open and people will feel and be able to more freely move around so I'm. Just curious how you are seeing.
These trends evolve this cope it opens and closes markets. Thank you.
Sure.
Sir.
I think it's it's almost a little early to fully answer that question as we come out of the pandemic hopefully we're coming out of out of the pandemic and we're not going to get back into it sort of lockdown situation I will say very clearly that when the pandemic happens enrollment non code withdrawals dropped off substantially.
That's that's not news to anybody.
And then Fortunately of course, we were able to enroll some very large COVID-19 studies, which which really helped to make up that shortfall in fact, overcompensated on a patient basis for that short I think as we as we truly come through it.
I'm more of a subscribe until your second.
X explanation that as the as the.
Economy.
Associated Society opens up again that patients and people will be more.
To move around.
We talk about about 15% of thoughts still impacted I think that's probably a number that might not change dramatically in the next year or so there's still going to be a component as we get through this is as I say COVID-19 becomes more endemic so I think that will be as of the hang over there, but I do think that with.
Starting to see enrollment in a non code withdrawals go up improve fairly substantially as those sorts of open and is at least as in certain parts of the world.
The economy is opened up again, so I'm I'm, a fully paid up subscriber to your second rather than rather than the first one I think that will happen I think as we combine that with some of the new technology. Some of the new data the opportunities that we have we will be able to to to accelerate that obviously.
Tokenization component is something that we've seen a lot of interest in terms of a long term follow up with patients the ability to follow those patients up.
And report on on the long term will be not just within the clinical trial I think it's something that we're excited about and I think as we we put in place those sorts of opportunities will continue to see the increased enrollment of places to drugs were very much on the clinical research as a care option to it and that's part of our.
Very dawn network and at the planes that were having patients who come into sides have clinical trials as an option. So we see ourselves being able to facilitate and drive recruitment not just as is trials happen within thoughts, but having identifying those patients and have them go.
To those sites that have them be be part of a clinical trial I have been giving them an option.
To be in a clinical trial as as opposed to being going and being prescribed some standard drug that they might.
May not be eligible for.
There is options, which we're trying to implement in terms of expanding the number of people and number of patients who get exposed to the opportunity to be involved in a clinical trial and we think that's going to be one of the ways to really drive up business in the longer term pickles.
Steve Thank you for that and Brendan I know there is reluctance to give too much detail on pastors, but it is.
They are hard to project and they're very lumpy in terms of revenue and then the impact on gross margin I'm I'm. Just curious if you can give us any sense, even if it's.
More qualitative on.
How pass through.
Bookings are coming in or what you see happening and I know you made a comment that the COVID-19 pastors will wind down a bit here.
As we progress through the year, but.
When you look at the total mix of work or the total pipeline are you seeing any big shifts and pass through versus.
Say pre Covid era periods.
And.
If you could give us any more color on on those statistics are what you are looking for as we move into 22 or beyond that would be I think very helpful.
I think Eric I would say, it's as you say that the cough complex question certainly the vaccine studies that we've had in the business has significant put a large are much larger proportion of of the pass through to the business in the first half of this year, certainly and to some extent to the back end of last year I do think we're tapering down those on those please.
So we are starting to see from the backlog and pasture item is a backlog pulling back to kind of where they were prior to the pandemic ours those vaccines and as we get into the queue for I think the revenue run rate and how it takes it all from Q3 to Q4 will be going to indicator of what kind of post to the big vaccine studies our revenues.
It looked like so again to the same margin point I made here in our own.
The margin point being much more reflective of executives call. It normalised levels of posture in queue for I think that's true of revenue as well, obviously, we will give you more color as we go into our 20 try to add guidance and obviously, Steve Steve spoke over the fact that we're still ambitious about the heightened got digit revenue growth that we talk to when we did the trial.
His action as we go into next year, but I think I think the lumpiness to your point will hopefully be.
Predominantly done by Q4, and hopefully we can see a more normal pattern on a quarterly basis they are upwards.
Thanks last one for me should be pretty easy do you have or have you provided.
Long term DSO go goal on a combined basis and.
Just a quick reminder to save us from having to track it down what is the what is the term loan interest rate drop in queue for if if you maintain this leverage below xxxx post synergy.
And on the DSO no. We haven't got a target area will have to think about it I'm just really pleased with the fact that I have good or or my colleagues legacy PRA air during their cash collection. So that's been an education to me and something that we're looking to pursue across the organization. So certainly we want to bring their skill sets to the best of both mentality to the whole company.
Hopefully we continue to see that at at DSO Tiger fall.
From where we are but I am delighted obviously with them what would happen to water and on the interest rate it'll be a bad about 25 bps, Eric on that interest rate as we go into Q1, I think we're into coming into an inflationary environment. So it might be interest rates pick up on the bottom line, but certainly in the in the immediate term, it's a tabetic orders.
Yeah fair enough. Thank you.
Your neck.
From the line I'll stay calm.
Please go ahead.
Hi, Good morning, Good afternoon, do you guys in Dublin.
I appreciate you taking my question I join a little late so I apologize for defending redundancy, but I believe Steve at.
At the end of your prepared remarks, you made a comment about.
Kind of enthusiastic about your your long term guidance construct and Brendan the answer you just gave Eric you kind of touched on this but I'm I'm wondering if if you believe that that long term construct specifically applies to 22.
Oh, I mean, yeah.
I think so David.
We've given I think we've talked about I single digits with the high single digits for revenue for the 22 and I think that goes on beyond that.
The teens only.
EBITDA or an EPS had been hot so we feel that.
22 is going to be a good deal we feel like we've setting ourselves up.
To be in a good position to really move nicely, whether it be burn right, whether it be new wins.
22 is shaping up as a security force.
Excellent I appreciate that separate topic and following up on the the decentralized trial commentary.
I guess I'm wondering as as you move into that and you see as you mentioned a high percentage of new trial starts that include something.
I'm curious on two points one is there a common theme and that's something or is it kind of all across the board.
And then two as you are pricing projects or or maybe more appropriately.
The rfps that come through that ask for maybe some blend of traditional and DCT type approaches.
Is that.
Revenue enhancing does the value of that project grow versus just a traditional approach or.
Do the DCT elements actually drive and efficiency into that that that shrinks the value of a project like for like.
Let me, let me take the first one in terms of common themes.
I don't have the data in front of me dive in terms of the space specifics there, but my.
My impression is that there are certain areas of a decentralized trial that we would commonly apply as a priority things like the risk based monitoring approach and remote monitoring I think would be one that would be we pretty much pretty much every draw. We propose now we have a component of it might not be.
Everything and it might not be in every region because certain regions have certain restrictions in terms of access to the atomic Hills records et cetera, et cetera, it more difficult in Europe of course.
And so that but that component in some in some in some shape way shape or form is probably the most common then you have things like wearables, probably a little less common but still regularly pretty regularly included the consent.
Very passionate about given our experienced with particularly with the vaccine trial. So he's a little variable and as I say, there's very few trials and have everything in there, but I would say, it's probably the the remote monitoring the risk based monitoring is doing that and in terms of the outlets impacting our pricing.
It probably having a fairly minimal impact on our pricing and overall price at the moment, but it is helping it is driving has to be more efficient and so I would say it's margin enhancing and then maybe a modest modest impact on reviewed it's pretty small, though at the moment really because it because of the sort of a hybrid approach and.
Because of the fact that as I said, even even if we do risk based.
It's rare that the whole trial at risk by students with the whole trial is remote so I would say margin enhancing modestly margin enhancing probably not driving up our revenues, but that's that's okay as well, we feel that our customers and can do more trials with the with the dos is I have so I would say overall benefit for us.
Certainly a benefit for our customers and offering it gives us an ability to to.
To be more effective and efficient for them and help them to ultimately the three I'll just get more shots on goal in terms of the draws I need to do that's where we want to be.
We don't we don't get worried about any sort of impact on revenue should be more efficient more effective at will.
Alright, very good I appreciate the answers.
Perfect.
Thank you Yeah. Our next question is from the line I'll smoke Sasha boxing.
Hey, guys. Thanks for taking my question here I'm just gonna go back Dan's first question on 22, I know you're not going to give the guide, but you talk about growing maintain constant comfortable in the high single digit growth.
Q is out there talking about 2% to 3% covered headwind, resulting in a soft landing.
When you guys are talking about that high single digit are you talking about that X. The Coca Cola with sorry, COVID-19 headwind or is that inclusive of it implying.
Slightly 4% to 5% growth.
To say the context and framework because it was the only question we're getting from investors right now.
Other than you could ever go that one as well, but also I think until mid to high single digits.
What we said and I think so we'd stick with that.
To me that includes everything that does include a something of a ramp down with the with the Covid work, particularly the large vaccine work is Brendan said the change in component with <unk>.
Pass throughs, it's probably gonna be revenue.
Margin enhancing even if the the revenues there was a little bit of a headwind I wouldn't disagree with the.
The revenue headwind, if that's what you want to call it but the the sort of qualitative gardens, where do we were giving their in terms of mid to high includes.
Any sort of a headwind we have expected from.
From Covid from cover from lower amounts that covered what we do expect there's going to be a continued amount of work the treatment. So the protocols.
Coming in the notice lodge they notice impactful.
Terms of your overall revenues, but there is a significant amount of work they're not as I said it will be an important component of what we do too familiar or at least the next to ease as we go forward.
I wouldn't disagree with that.
Look to your question there I mean, you're quite right. There's obviously outsized postural allenton and tried to 21, we won't see that and as I said I think will be more like a normalised free pandemic pass through element as we go into 22 that will have some impact certainly on the year over year comparisons I think that the direct fee and margin revenue generating.
Revenue that we always talk about and focus on.
And certainly in terms of our EBITDA profiles, and it's still going to be very strong as we go through year over year, and that's where our focus is in terms of making sure that we can drive that.
Those numbers with local talk to earlier on in terms of the the double digit growth.
Alright, Great and then I guess, just one here one last one on FSP.
PRA you got there a large business you guys also had another large business can you give an update on.
On appetite here demand, how that's been progressing pricing and any ability to pass on some of the wage inflation.
Sure.
Continues to be a significant part of our business it's growing nicely.
The top line as.
The other multiple service components of our business Luke So we're happy with the progress that businesses Mikey.
In terms of passing on we've been insignificant negotiations with a number of customers around.
Some of those challenges and let's be honest customer to be accommodating I would say generally this.
Customers don't always like to hear about.
Labour challenges and.
Wage inflation, that's beyond what we expect in terms of normal inflation, but they've been I would say receptive to those sorts of discussions and we've made progress on a number of a number of fronts. So I'm encouraged by our.
Our customers understanding of those sort of challenges in our ability to mitigate any margin pressure that we have in that business, but theirs.
Lots of work to do in that space and it remains one that we.
We continue to do the work either.
Alright, thanks for the questions.
Okay.
Thank you and next question is from the line of attack me from.
Go ahead.
Thank you good morning and afternoon.
Was hoping maybe just a little color.
On what.
Synergies may have already been recognized the first quarter out of the gate.
Look at the pro forma Kashi EBITDA was up 7% sequentially versus the pro forma revenue, which was down to 5% sequentially suggest maybe talk a little bit through the dynamic there would be helpful.
Yeah, where I'll be Jack with the progress we're making.
And.
We're obviously.
Pretty pretty good cost controllers, and the icon organization and that's obviously a strength will bring forward as we go into this and so they can further into the new icon as we get into accused foreign into uncertainty into 22 I mean.
Not not materialistic quick answer Jack in terms of the first quarter, you know you're talking about mid single digits and tens of millions of dollars.
In terms of the actual synergy benefits in the quarter, we've got good visibility to how we're looking at the $150 million as we've outlined before.
Actually a lot of items around that will certainly help the progress of how that comes through inter P&I accounts over the next number of years for now I'd still tell people to I'll have to think about that in the same way that we talked about when we did the transaction I think as we get to the guidance in Q1, we might be able to give it a bit more color in terms of finding how we think that timing will impact.
On the overall cost base.
Great. Thank you and then another follow up for Ya Brendan you reference some of the changes in tax regulations globally now you're going to give us more thoughts from 2022, but just was curious your philosophy just.
Any high level thoughts as to what this can mean up down versus the prior.
Okay, you talked about any type of magnitude you're thinking.
Actually there are so many moving parts here add Jack at the moment in terms of what's going through the Congress and the United States, which obviously, we have a big impact on there has been talk about different tax rates. There I'll Corporation tax rates mistakes, we started off with a higher number I believe it I was back down.
It also impacts on the on the guilty rates as you guys know that the amount of work that you do outside of the United States. We had a big piece. That's impacting of course is the Osce rules around this new 15% global tax rate.
Our minimum global tax rates, the Irish Corporation tax rate previously to 12, 5%. So quick math, obviously, there is two 5% of an impact there if you consider our historic tax rates.
Versus versus that base Irish right. So that's a piece of it obviously, but it's not the whole story and I suppose one of the reasons were saying, we'll talk more of that that in January hopefully that will have better visibility as to what's going to happen or shake out a little bit more at least in terms of use tax legislation. So I think yes, probably it probably will be increasing a little bit of.
<unk> is still pretty competitive versus.
Yes.
Thank you.
Thank you and.
Question from the line of Donna Okay from coupons.
Please go ahead.
Great. Thank you for squeezing me and I'll just ask one I was curious if you all would be willing to elaborate on the comment you made I think in the prepared comments around one large biopharma company selecting.
<unk>.
D C T platform as its enterprise solution I am just maybe trying to sort of understand that is that a and my thinking of that as like a technology. Sandler you were finding sort of a set of technologies that they are running clinical trials on or is this part of a full service.
Solution embedded in your embedded in your full service listeners of some sort of stand alone technology. So.
It's not a standalone technology so.
Donald but.
Does involve services as well but.
Essentially it's.
Hybrid I mean, we we will be providing the platform and services, but they will be able to use the platform for their own internal trials as well. So so that's the way it's working out of a moment, we're very encouraged.
By that as an endorsement of our platform and this is a very significant organization. So having the involvement with it we think is going to be a real positive for us from Ah.
From a platform and a platform development point of view, but it does involve services as well as well as the technology.
Yeah, but just just to be clear you mentioned they might they might use your like <unk> for instance, or in monitoring tools for studies that they're not outsourcing to you as well right.
That option is available to them should they wish to take.
Okay. Thank you.
There are no further questions continue.
Okay. Thank you O'brien. Thank you everyone for listening in today, we are pleased to have delivered another strong quarter and our first the new iPhone. So we look forward to further progressing our integration and building the world's leading healthcare intelligence organization continuing to help our customers before the development of drugs and devices and finally I want to thank you.
Take this opportunity again to recognize our entire 38000 people.
Around the globe for their commitment and efforts over the past quarter. So thank you all and have a good rest of the day.
And that concludes the presentation today, thank you for participating.
Alright.
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