Q4 2023 IQVIA Holdings Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Iqvia 4th Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
Ladies and gentlemen, thank you for standing by at this time I would like to welcome everyone to the <unk>.
Fourth quarter 2023 earnings conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige star one.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Nick Childs, Senior Vice President, Investor Relations and Treasury. Mr. Childs, please begin your conference. Thank you very much. Good morning, everyone.
As a reminder, this call is being recorded.
I would now like to turn the call over to Nick Childs Senior Vice President Investor Relations and Treasury. Mr. Childs. Please begin your conference.
Nick Childs: Thank you very much.
Nick Childs: Good good morning, everyone. Thank you for joining our fourth quarter 2020 three earnings call.
Nick Childs: With me today are.
Nick Childs: Thank you for joining our fourth quarter 2023 earnings call. With me today are, 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 in the events and presentation section of our Iqvia Investor Relations website at ir.iqvia.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. 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. I would now like to turn the call over to our Chairman and CEO. Thank you, Nick, and good morning, everyone.
Nick Childs: Ari Booz be chairman and Chief Executive Officer, Ron Bromine Executive Vice President and Chief Financial Officer, Eric Sherbet, Executive Vice President and General Counsel, Mike feedback Senior Vice President financial planning and analysis, and Gustavo Perone Senior director Investor Relations.
Nick Childs: 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 and presentations section of our IQ via Investor Relations website at IR Dot IQ via <unk> Dot com.
Nick Childs: Before we begin I would like to caution listeners that certain information discussed by management. During this conference call will include forward looking statements.
Nick Childs: Actual results 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 and cleaning our annual report on Form 10-K, and subsequent SEC filings.
Nick Childs: Uh huh.
Nick Childs: 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.
Nick Childs: A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation.
Speaker Change: I would now like to turn the call over to our chairman and CEO.
Speaker Change: Thank you and again good morning, everyone. Thank you for joining us today to discuss our 2023 results.
Ari Bousbib: Thank you for joining us today to discuss our 2023 results. Let me start the call by sharing the latest on what we are seeing in our end markets, along with our key accomplishments for 2020. On the critical side, demand from our RNDS clients remains strong, the second largest quarter in Iqvia history, representing a quarterly booked bill of $1.31. Our quarterly RFP flow was up 13% year over year, driven by EBP and Large Pharma, a qualified pipeline through double digits versus prior years. Emerging biotech funding was strong. According to BioWorld, fourth-quarter EBP funding was $21.6 billion, continuing the sequential improvement we've seen throughout the year for the full year. EBP funding for 2023 was $70.9 billion, up 17% versus the prior year.
Speaker Change: You saw that we had a good quarter.
Speaker Change: Let me start the call by sharing the latest of what we are seeing in our end markets.
Speaker Change: Along with our key accomplishments for 2023.
Speaker Change: All the critical side demand from our R&D as clients remained strong.
Speaker Change: Net new bookings for the quarter exceeded $2.8 billion.
Speaker Change: The second largest quarter in a cube yeah history.
Speaker Change: Representing a quarterly book to Bill.
Speaker Change: Of one point 31.
Our quarterly RFP flow was up 13% year over year.
Speaker Change: Driven by E B P.
Speaker Change: And large pharma.
Speaker Change: Our qualified pipeline grew double digits versus prior year.
Speaker Change: Emerging biotech funding was strong.
Speaker Change: According to bio World fourth quarter E. BP funding was $21.6 billion.
Speaker Change: The highest quarter in the last two years.
Speaker Change: Continuing the sequential improvement we've seen throughout the year.
Speaker Change: For the full year.
Speaker Change: E B P funding for 2023.
Speaker Change: $70.9 billion.
Speaker Change: Up 17%.
Speaker Change: As the prior year.
Ari Bousbib: And that represents the largest year on record, if we exclude the outlier years of 20 and 21, when there was dramatic outspending due to COVID, as we close 2023. We're proud of what we have achieved in RMDS. The business book, $10.7 billion of net new business, including record high service bookings of $8.4 billion; our backlog stands at $29.7 billion, and that's up 9% year over year. The Business Added nearly 400 net new customers in the year.
Speaker Change: And that represents the largest year on record.
We exclude the alkali your years of 2020, one when there was dramatic outspending due to COVID-19.
Speaker Change: As we close 2023 we proud of what we have achieved.
Speaker Change: In our Mds the business booked.
Speaker Change: $10.7 billion of net new business, including record high service.
Speaker Change: Bookings of $8.4 billion.
Speaker Change: Our backlog stands at $29 $7 billion, and that's up 9% year over year.
The business added.
Speaker Change: Nearly 400 net.
Speaker Change: Net new customers in the year.
Ari Bousbib: We made great progress with our clinical research strategy. We significantly expanded our R&D site network and management organization through strategic acquisitions that offer clinical research coordination, study feasibility, and patient recruitment capabilities. We further expanded the capabilities of the lab business, and we partnered with the Coalition for Epidemic Preparedness Innovations, CEPI, which enhanced the world's ability to rapidly conduct clinical research for vaccines and other biological countermeasures against emerging infectious diseases in underdeveloped countries.
Speaker Change: We made great progress with our clinical research strategies.
Speaker Change: We significantly expanded our R&D site network and management organization.
Speaker Change: Through strategic acquisitions that offer a clinical research coordination.
Speaker Change: Study feasibility and patient recruit recruitment capabilities.
Speaker Change: We further expanded the capabilities of their lab business through the launch of the new synthetic antibody discovery offering which is differentiated from the traditional animal derived antibodies that are used by our competitors.
Speaker Change: And we partnered with the coalition for epidemic preparedness innovations.
Speaker Change: <unk>.
Speaker Change: In our hands the world's ability to rapidly conduct clinical research for vaccines and other biological countermeasures.
Speaker Change: Against emerging infectious diseases in developed countries.
Ari Bousbib: Turning to TAS, the commercial side of our business continues, of course, to face the macro environment that we've described in the past as our clients remain cautious with their spending and their cost containment. Our results in the quarter were slightly better than what we had expected. However, discretionary spending has not yet rebounded to the levels that we expect it will, and it continues to be a headwind.
Speaker Change: Turning to the commercial side of our business continues of course to face the macro environment.
Speaker Change: That we've described in the past as our clients will remain cautious with their spending and their cost containment.
Speaker Change: Our results in the quarter were slightly better than what we had expected.
Speaker Change: Although discretionary spending has not yet rebounded to.
Speaker Change: To the levels that we expect they will.
Ari Bousbib: Fundamentally, leading market indicators do point to an upcoming improvement. For example, the FDA approved 55 new molecules in 2023, and that's almost 50% more than the prior year. And at the highest level since 2018, the spend on new drug launchers by our former clients is expected to be over $190 billion over the next five years. That's up over 25% compared to the prior five-year period. Frankly, in our own engagement with customers, in the recent past, we noted an improved customer sentiment during the quorum. In fact, the pipeline of opportunities remains strong, even as decision timelines remain elongated and negotiations more difficult, similar to what we indicated last call.
Speaker Change: And it continues to be a headwind.
Speaker Change: Fonda mentally.
Speaker Change: Leading market indicators do point to an upcoming improvements for instance.
Speaker Change: The FDA approved 55, new molecules in 'twenty, 'twenty, three and that's almost 50% more than the prior year and it is the highest level since 2018.
Speaker Change: The spend on new drug launches.
Speaker Change: By our pharma clients is expected to be over $190 billion over the next five years.
Speaker Change: That's up over 25% compared to the prior five year period.
Speaker Change: Frankly, no one engagement with customers.
Speaker Change: In the recent past, we noted improved customer sentiment.
Speaker Change: During the quarter.
Speaker Change: In fact, the pipeline of opportunities remains strong even as decision timelines remain elongated and negotiations more difficult similar to what we indicated last quarter.
Ari Bousbib: Based on these dynamics, we continue to expect demand to pick up, but not before the second half of the year. And as a result, we may see the 2024 sequential trend for PALS be the inverse of what we experienced in 2022. So you might see revenue growth in the first quarter that resembles the growth of the fourth quarter of 2023 and growth to gradually improve as we move to the back end of the year. Now, despite the more difficult macro environment.
Speaker Change: Based on these dynamics, we continue to expect demand to pick up.
Speaker Change: But not before the second half of the year.
Speaker Change: And as a result, we may see the 'twenty 'twenty four sequential trends for the Pas to be the inverse of what we experienced in 'twenty to 'twenty three.
Ari Bousbib: The TAS business had some significant achievements in 2023. We continued expanding our commercial technology and analytics offerings. We, in fact, added 33 new clients on our OCE technology platform. Additionally, we successfully introduced a first-in-kind medtech consumption offering that supports the complex journey that medical devices take as they travel from manufacturer to healthcare provider. And we acquired quality metrics to extend our suite of patient health measurement tools using clinical outcome assessment and patient reported outcome.
Speaker Change: So you might see revenue growth in the first quarter that resembles the growth of the fourth quarter of 2023 and growth to gradually improved.
Speaker Change: As we move to the back end of the year.
Speaker Change: Now despite the more difficult macro environment.
<unk> business has some significant achievements in 2023.
Speaker Change: We continued expanding our commercial technology and analytics offerings. We in fact added 33, new clients on our <unk> technology platform.
Speaker Change: We.
Speaker Change: Successfully launched a new software platform, which tracks the performance of $1 6 million drugs, covering 600 diseases across 93 countries.
Ari Bousbib: Let me now turn to the results for the quarter. Revenue for the fourth quarter grew 3.5% on a reported basis and 2.6% at constant currency. Compared to last year and excluding COVID-related work from both periods, we grew the top line approximately 6% on a constant currency basis, including approximately a point and a half of contribution from acquisitions. Fourth quarter adjusted EBITDA increased 5%, reflecting our ongoing cost management discipline. Fourth quarter adjusted diluted EPS of $2.84 faced the continuing headwind of the step-up in interest expense and the UK corporate tax rate increase. Excluding the impact of these items, our adjusted diluted EPS growth was 11%. Now, a few highlights of this business activity this quarter. Let's start with Doug.
Speaker Change: We successfully introduced a first in kind med tech consumption offering that supports the complex journey that medical devices stake as they travel from manufacturer to health care providers.
Speaker Change: And we acquired 40 metric to extend our suite of patient health measurement tools, using clinical outcome assessment and patient reported outcomes.
Speaker Change: Let me now turn to the results for the quarter.
Revenue for the fourth quarter grew three 5% on a reported basis and 2.6 at constant currency.
Speaker Change: Compared to last year, and excluding Covid related work from both periods. We grew the topline approximately 6% on a constant currency basis, including approximately a point and a half of contribution from acquisitions.
Ari Bousbib: A mid-sized pharma client awarded Iqvia a four-year outsourcing program to support their lifecycle strategy of converting established brands to over-the-counter sales in more than 40 countries. Iqvia won a four-year contract with a large pharma client to provide global market intelligence via a single globally accessible source of commercial data. In the quarter, we won a significant contract with a large pharmaceutical company in their dermatology, rheumatology, and oncology therapeutic areas. This program will allow our clients to access detailed prescribing patterns in local markets and Enhance HCP Targeting in 18 Countries.
Speaker Change: Fourth quarter, adjusted EBITDA increased 5%, reflecting our ongoing cost management discipline.
Speaker Change: Fourth quarter adjusted diluted EPS of $2.84 faced the continuing headwind.
Speaker Change: The step up in interest expense and the UK corporate tax rate increase.
Speaker Change: Excluding the impact of these items, our adjusted diluted EPS growth was 11%.
Speaker Change: Now a few highlights of this business activity this quarter.
Speaker Change: Let's start with cause a mid sized pharma client awarded IQ via a full year outsourcing program to support their lifecycle strategy of converting established brands to over the counter sales in more than 40 countries. Similarly.
Ari Bousbib: The CDC selected Iqvia to provide comprehensive monitoring services following the end of the COVID public health emergency status. Iqvia will support the CDC in analyzing data in near real time on the respiratory virus response, including for influenza and RSV, identifying at-risk groups, and improving overall population health. In the core, our patient services business, which is showing faster growth within our past segments, secured a significant contract with a large pharma that includes adherence monitoring, co-pay support, and at-home treatment administration in our real world. In addition, the National Health Service of England awarded Iqvia a large contract to deploy our privacy technology and to enable the NS8's efforts to ensure the highest standards of patient data governance and privacy control. Moving to R&D, a top five pharma client selected Iqvia as a key clinical FSP provider.
Speaker Change: <unk> you want a four year contract with a large pharma clients to provide global market intelligence via a single globally accessible source of commercial data.
Speaker Change: In the quarter, we won a significant contract with a large pharma, India dermatology rheumatology and oncology therapeutic areas. This program will allow our clients to access detailed prescribing patterns in local markets and then enhance HCP targeting in 18 countries.
Speaker Change: The C D C selected <unk> to provide comprehensive monitoring services.
Speaker Change: The end of the call.
Speaker Change: Public health emergency status.
Speaker Change: I will support the CDC in analyzing data in near real time on the respiratory virus response, including for influenza and RSV identifying at risk groups and improving overall population health.
Speaker Change: In the quarter, our patient services business, which is showing faster growth within our power segment secured a significant contract with a large pharma that includes adherence monitoring.
Ari Bousbib: Noteworthy here is that a competitor of ours had been the 100% sole provider previously. This partnership will help the client improve clinical trial oversight and manage costs more effectively. In Q4, another top 5 client awarded Iqvia a full-service phase 2 study on ALS, also known as Lou Gehrig's disease. Iqvia was selected due to our vast expertise in ALS, as well as our faster recruitment timeline. Indicor, a biotech client, selected Iqvia to conduct a complex trial for a promising cell and gene therapy targeting myocytes, which is an autoimmune disease.
Speaker Change: Copay support and at home treatment administration.
Speaker Change: In a real world.
Speaker Change: Business, the National Health service of England awarded a large contract.
Speaker Change: To deploy our privacy technology and to enable the English eighths, if full efforts to ensure the highest standards of patient data governance and privacy controls.
Speaker Change: Moving to Rds, a top five pharma client selected <unk> as a key critical FSP provider.
Speaker Change: Noteworthy here is that a competitor of ours had been the 100%.
Ari Bousbib: We were selected due to our AI capabilities that allow us to identify sites and develop an innovative trial strategy. Also in the quarter, Iqvia expanded its partnership with a major pharma company by securing six new global oncology trials consisting of a mix of early and late stage trials. We were chosen due to our expertise in oncology and our ability to efficiently manage large, complex trials. A leading biotech firm selected Iqvia to conduct a program comprised of three initial stage studies in cancer research.
Speaker Change: Sole provider previously.
Speaker Change: This partnership will help the client improve clinical trial oversight and manage costs more effectively.
Speaker Change: In Q4, but another top five client awarded IQ via the full service phase two study on L. S also known as Lou Gehrig's disease.
Speaker Change: <unk> was selected due to our vast expertise in areas disease as well as our faster recruitment timelines.
Speaker Change: In the quarter.
Speaker Change: Biotech clients selected acute yet to conduct a complex trial for a promising cell and gene therapy targeting myositis, which is an autoimmune disease.
Ari Bousbib: The client is expanding from local to global development and needed a large-scale partner like Iqvia in Q4. Iqvia was awarded a major contract from a top ten global pharma to become its primary pharmaco-vigilance platform provider. This multi-year program includes replacing the legacy systems with Iqvia's Drug Safety Monitoring Technology, which uses generative AI capability to automatically extract adverse event information from unstructured data sources.
Speaker Change: Were selected due to our AI capabilities that allow us to identify sites.
Speaker Change: <unk> developed an innovative trial strategy.
Speaker Change: Also in the quarter <unk> expanded its partnership with a major pharma company by securing six new global oncology trials.
Speaker Change: Shifting the mix of early and late stage trials.
Speaker Change: We were chosen due to our expertise in oncology and our ability to efficiently manage large complex trial.
Ari Bousbib: Finally, and before I turn it on for a detailed financial review, I would like to take the opportunity to acknowledge and congratulate our employees around the world for the nice recognition the company just received. For the seventh consecutive year, Iqvia was named one of the world's most admired companies in Fortune's annual survey. And for the third year in a row, Iqvia was named the number one most admired company in our category. Lastly, before turning it over to Ron, I'd like to specifically mention the prestigious recognition received by Christina Mack, one of Iqvia's senior leaders, who is the chief scientific officer for our real world business. Christina was named a 2023 Pharma Voice 100 honoree.
Speaker Change: A leading biotech firms selected IQ has yet to conduct a program comprised of three initial stage studies in cancer research. The client is expanding from local to global developments and needed a large scaled partner like a julia.
Speaker Change: In Q4.
Speaker Change: <unk> was awarded a major contract from a top 10 global pharma to become its primary pharmacovigilance platform provider <unk>.
Speaker Change: This multiyear program includes replacing their legacy systems.
Speaker Change: With a <unk> drug safety monitoring technology, which uses generative AI capability to automatically extract adverse event information from unstructured data sources.
Speaker Change: Finally, and before I turn into long for a detailed financial review I would like to take the opportunity to acknowledge and congratulate our employees around the world for their nice recognition the company just received.
Ari Bousbib: It's a peer-recognized, industry-wide honor. We're very proud at Iqvia of Christina's work and her passion for accelerating innovation in healthcare through the use of evidence-based decision-making. Let me now turn it to Ron for our financial review. Thanks, Ari, and good morning, everyone.
Speaker Change: The seventh consecutive year Ikea was named one of the world's most admired companies in Fortune's annual survey.
Speaker Change: And for the third year in a row <unk> was named the number one most admired company in our category.
Ron: Let's start by reviewing RAB's fourth-quarter revenue of $3,868,000,000, which grew 3.5% on a reported base and 2.6% constant current. In the quarter, COVID-related revenues were approximately $65 million, which was down about $125 million versus the fourth quarter of 2022, now excluding all COVID-related work from both this year and last. Constant currency growth was approximately 6%, and as Ari mentioned, acquisitions contributed about 150 basis points to this group. Excluding all COVID-related work, constant currency growth in TAS was 4%.
Speaker Change: Lastly, before turning it over to Ron I'd like to specifically mention.
Speaker Change: The prestigious recognition received by Christina Mack one of eight <unk> senior leaders, who is the chief scientific officer for our real World business. Christy that was named 2023 pharma voice 100 on a REIT.
Speaker Change: The peer recognized industry wide honor.
Speaker Change: We're very proud I think urea of Christina his work.
Speaker Change: And her passion for accelerating innovation in health care through the use of evidence based decision making.
Speaker Change: Let me now turning to run for our financial review.
Run: Okay. Thanks, Ari and good morning, everyone, let's start by reviewing revenue.
Run: Fourth quarter revenue of $3.868 billion grew three 5% on a reported basis and two 6% constant currency.
Ron: R&D Solutions' fourth quarter revenue of $2,151,000,000 was up 4.5% reported and 3.7% at constant currency. And excluding all COVID-related work, constant currency growth and R&D was 9% in the quarter. Finally, Contract Sales and Medical Solutions' (CSMS) fourth quarter revenue of $186 million grew 2.2% reported and 1.7% at constant current. For the full year, revenue was $14,984,000,000, growing at 4% on a reported basis and 4.1% at constant currency. COVID related revenues totaled approximately $420 million for the year. Excluding all COVID-related work from both years, constant currency growth was 9%. Full year technology analytic solutions revenue was $5,862,000,000, up 2% reported, 2.1% at constant currency, and excluding all COVID-related work growth at constant.
Speaker Change: In the quarter Covid related revenues were approximately $65 million, which was down about $125 million versus the fourth quarter of 2022.
Run: Now excluding all Covid related work from both this year and last constant currency growth was approximately 6%.
Speaker Change: And as already mentioned acquisitions contributed about 150 basis points of this growth.
Speaker Change: Technology and analytics solutions revenue for the fourth quarter was $1.531 billion up 2.1% reported and 1.3% constant currency.
Speaker Change: Excluding all COVID-19 related work constant currency growth and tax was 4%.
Speaker Change: R&D solutions fourth quarter revenue of $2.151 billion was up 4.5% reported and three 7% at constant currency and excluding all COVID-19 related work constant currency growth and R&D was 9% in the quarter.
Speaker Change: Finally contract sales in medical solutions, our C. S M S fourth quarter revenue of.
Speaker Change: $186 million grew two 2% reported and 1.7% at constant currency.
Speaker Change: For the full year revenue was $14.984 billion growing at 4% on a reported basis and four 1% at constant currency.
Speaker Change: <unk> related revenues totaled approximately $420 million for the year.
Speaker Change: Excluding all Covid related work from both years constant currency growth was 9%.
Ron: Currency in CAS was 6%, and R&D Solutions' full-year revenue was $8,395,000,000, growing 6% both on a reported and a constant currency basis. And excluding all COVID-related work, growth at constant currency in R&DS was 13%. Finally, in CSMS, revenue for the full year was $727 million, which was down 2.2% reported and 0.3% at constant currency, which was up 6.7% year over year. Fourth quarter gap net income was $469 million, and gap diluted earnings per share was $2.54. For the full year, gap net income was $1,358,000,000, or $7.29 in earnings per diluted share. Adjusted net income was $523 million for the fourth quarter, and adjusted diluted earnings per share was $2.84. For the full year, adjusted net income was $1,901,000,000, and adjusted diluted EPS was $10.20.
Speaker Change: Full year technology analytics solutions revenue was $5.862 billion up 2% reported two 1% at constant currency and excluding all COVID-19 related work growth at constant currency in tag with 6%.
Speaker Change: And R&D solutions full year revenue was $8.395 billion growing 6%, both on a reported and constant currency basis, and excluding all COVID-19 related work growth at constant currency and R&D was 13%.
Speaker Change: Finally in C S and mass revenue for the full year was $727 million, which was down 2.2% reported and 0.3% at constant currency.
Speaker Change: Okay, moving down the P&L adjusted EBIT Doc.
Speaker Change: With $966 million for the fourth quarter that represented 5% growth while full year adjusted EBITDA was $3.569 billion, which was up six 7% year over year.
Speaker Change: Fourth quarter GAAP net income was $469 million and GAAP diluted earnings per share was $2.54.
Speaker Change: For the full year GAAP net income was $1.358 billion or $7.29.
Speaker Change: Earnings per diluted share.
Speaker Change: Our adjusted net income was $523 million for the fourth quarter and adjusted diluted earnings per share was $2.84 for the full year. Adjusted net income was $1.901 billion and adjusted diluted EPS was $10.20.
Ron: Excluding the year-over-year impact of the step-up in interest rates and the increase in the UK corporate tax rate, adjusted diluted earnings per share grew 11% in the fourth quarter and 12% for the full year. Now, as Ari reviewed, R&D Solutions delivered another really strong quarter of bookings. Our backlog at December 31 stood at a record $29.7 billion.
Speaker Change: Excluding the year over year impact of the step up in interest rates and the increase in the U K corporate tax rate adjusted diluted earnings per share grew 11% in the fourth quarter and 12% for the full year.
Speaker Change: Yeah.
Speaker Change: I know, it's already reviewed R&D solutions delivered another really strong quarter of bookings our backlog at December 31 stood at a record $29 $7 billion, that's up nine 2% year over year and 31% over the last three years.
Ron: That's up 9.2% year-over-year and 31% over the last three years. Okay, let's turn to the balance sheet. As of December 31, cash and cash equivalents totaled $1,376,000,000, and gross debt was $13,673,000,000.
Speaker Change: Okay, let's turn to the balance sheet.
Speaker Change: As of December 31, cash and cash equivalents totaled $1.376 billion and gross debt was $13.673 billion and do the math that results in net debt at $12.297 billion.
Ron: And do the math, that results in net debt of $12,297,000,000. Our net leverage ratio at year end was 3.45 times trailing 12 month adjusted EBITDA. Fourth quarter cash flow from operations was $747 million, and capital expenditures were $179 million, which resulted in free cash flow of $568 million for the quarter. In the quarter, we repurchased $229 million of our shares at an average price of $195 per share, bringing our full-year share repurchase activity to just slightly below $1 billion. This leaves us with just under $2.4 billion of share repurchase authorization remaining under the current program. Now, as you know, coming out of the merger, we took advantage of the low interest rate environment and deployed a significant amount of capital for internal investments, acquisitions, and share purchases, which were quite accretive for our shareholders. Now, over that period, our net interest expense was relatively steady at around $400 million per year.
Speaker Change: Our net leverage ratio at year end was 345 times trailing 12 month adjusted EBITDA.
Speaker Change: Fourth quarter cash flow from operations was $747 million and capital expenditures was $179 million, which resulted in free cash flow of $568 million for the quarter.
Speaker Change: Now in the quarter, we repurchased $229 million of our shares at an average price of $1 95 per share, bringing our full year share repurchase activity to just slightly below $1 billion. This leaves us with just under $2 4 billion of share repurchase authorization remaining under.
Speaker Change: The current program.
Speaker Change: Nike now coming out of the merger, we took advantage of the low interest rate environment and deployed a significant amount of capital for internal investments acquisitions and share repurchases.
Speaker Change: Which were quite accretive for our shareholders now over that period, our net interest expense was relatively steady at around $400 million per year.
Ron: But at the end of 2022 and through the middle of 2023, we experienced a rapid and unprecedented rise in interest rates, which drove annual interest expense up by almost a quarter of a billion dollars, causing our adjusted EPS to be just slightly over flat in 2023. Now, as you saw in November, we successfully refinanced approximately $2.75 billion of our near-term debt maturity. The strong demand for Iqvia debt that we experienced allowed us to tighten pricing and lock in an average fixed rate below 4.9% for those issuances after swap. This refinancing extended approximately $2.75 billion in maturity.
Speaker Change: But at the end of 2022 and through the middle of 2023, we experienced a rapid and unprecedented rise in interest rates, which drove annual interest expense up by almost a quarter of a $1 billion, causing our adjusted EPS to be just slightly over flat in 2023.
Speaker Change: Now as you saw in November we successfully refinanced approximately $2 $75 billion of our near term debt maturities.
Speaker Change: The strong demand for <unk> that we experienced allowed us to tighten pricing and lock in an average fix rate.
Speaker Change: Below 4.9% for those issuances after swaps.
Speaker Change: This refinancing extended.
Speaker Change: Approximately $2 $75 billion of maturities to.
Ron: 2029 and 2031. Additionally, we reduced our interest rate risk exposure by locking in over 80% of our debt at fixed rates. Now, the forward curves point to a reduction in rates in the future. We've included the current March consensus in our 2024 guidance, and potentially open opportunities to refinance additional debt in the future. This includes approximately $300 million of a step down in COVID-related work year over year, and about 100 basis points of contribution from M&A activity, and further FX headwind of approximately 50 basis points versus 2023. Our adjusted diluted EPS guidance is $10.95 to $11.25. Now this guidance includes about $650 million of interest expense, approximately $580 million of operational depreciation and amortization expense, an effective income tax rate of just under 20%, and an average diluted share count of approximately 184 million shares. This guidance also assumes about $2 billion of cash deployment split evenly between acquisitions and share.
Speaker Change: 2029 and 2031.
Speaker Change: And we reduced our interest rate risk exposure by locking in over 80% of our debt at fixed rates.
Speaker Change: With this refinancing we now expect net interest expense to be approximately $650 million in 2024.
Speaker Change: At the forward curves point toward a reduction in rates in the future. We've included the current March beat consensus and our 2020 for guidance.
Speaker Change: Further reductions would lower our net interest expense more on a variable rate debt.
Speaker Change: And potentially open opportunities to refinance additional debt in the future.
Speaker Change: Yeah.
Speaker Change: Now, let's go to our 2024 guidance, which I'll review in detail.
Speaker Change: For the full year, we expect total revenue to be between $15.400 billion and $15.650 billion.
Speaker Change: This includes approximately $300 million of a step down in COVID-19 related work year over year, and about 100 basis points of contribution from M&A activity and further FX headwind of approximately 50 basis points versus 2023.
Speaker Change: Our adjusted EBITDA guidance.
Speaker Change: Billion $700 million to $3.800 billion.
Speaker Change: Our adjusted diluted EPS guidance is $10.95.
Speaker Change: To $11.25.
Speaker Change: Now this guidance includes about $650 million of interest expense.
Speaker Change: Approximately $580 million of operational depreciation and amortization expense.
Speaker Change: An effective income tax rate just under 20%.
Speaker Change: In an average diluted share count.
Speaker Change: 184 million shares.
Speaker Change: This guidance also assumes about $2 billion of cash deployment split evenly between acquisitions and share repurchase.
Ron: Finally, our guidance assumes that foreign currency rates as of February 12th continue for the balance of the year. Now, at the segment level, we expect TAS revenue to be between $6 and $6.2 billion. Q1 2023 was the last quarter that we had significant COVID-related revenues in Tasmania, so the COVID step down in Tasmania will be minimal for the balance of the year. As Ari mentioned, the guidance now anticipates an improvement in our commercial business towards the back end of the year, which will still result in low to mid-single digit year-over-year growth. RNDS revenue is expected to be between 8.7 and 8.8 billion dollars.
Speaker Change: Finally, our guidance assumes that foreign currency rates as of February 12th continue for the balance of the year.
Speaker Change: Now at the segment level, we expect TASS revenue to be between six and $6.2 billion.
Speaker Change: Q1, 2023 was the last quarter that we had significant COVID-19 related revenues in test. So the code stepped down a tad will be minimal for the balance of the year.
Speaker Change: As already mentioned the guidance now anticipates an improvement in our commercial business towards the back ended the year, which will still result in a year over year growth.
Speaker Change: Low to mid single digits.
Speaker Change: R&D as revenue is expected to be between $8 seven to $8 $8 billion. This guidance includes almost the entire 300 billion excuse me million dollars step down in Covid related revenue.
Ron: This guidance includes almost the entire 300 billion, excuse me, million dollar step down in COVID-related revenue. The guidance also reflects the latest phasing of pass-through revenue, which results in an additional headwind of approximately 100 basis points to RNDS year-over-year. Adjusting for the COVID step down in the pass-through ahead when R&D revenue growth in 2024 is expected to remain in the high single digits, CSMS revenue is expected to be approximately $700 million, which is down slightly year over year.
Speaker Change: And that represents approximately 350 basis points of headwind to the R&D S growth rate.
Speaker Change: The guidance also reflects the latest phasing of pass through revenue.
Speaker Change: This results in an additional headwind of approximately 100 basis points to R&D as year over year.
Speaker Change: Adjusting for the Covid step down in the pass through headwind R&D S revenue growth in 2024. It is expected to remain in the high single digits.
Speaker Change: C. S. M. S revenue is expected to be approximately $700 million, which is down slightly year over year.
Ron: Now let's review the first quarter guidance. For the first quarter, we expect revenue to be between $3,650,000,000 and $3,725,000,000. The decline in COVID-related work is weighted towards the beginning of the year, with the largest impact in Q1. Also, we expect more conditions in TAS to recover only in the back half of the year, as we've said. Adjusted EBITDA in the first quarter is expected to be between $850 million and $870 million, and adjusted diluted EPS is expected to be between $2.45 and $2.55.
Speaker Change: Now, let's review the first quarter guidance for the first quarter, we expect revenue to be between $3 billion $650 million and $3 billion $725 million.
Speaker Change: The decline in Covid related work is weighted towards the beginning of the year with the largest impact in Q1.
Speaker Change: Also we expect market conditions in cats to recover only in the back half of the year as we've said.
Speaker Change: Adjusted EBITDA in the first quarter is expected to be between $850 million and $870 million and adjusted diluted EPS is expected to be between $2 45.
Speaker Change: And $2 55.
Ron: Now, keep in mind that Q1 is the toughest comparison for adjusted diluted EPS due to the interest rate increases we saw throughout 2023. Now, as we mentioned, our guidance assumes that foreign currency rates as of February 12th continue for the balance of the year. Q4 was another strong quarter; RNDS delivered the second largest booking quarter in Iqvia history at over $2.8 billion, along with another quarter of double-digit RFP growth. For the full year of 2023, revenue grew 9% at constant currency, excluding COVID-related work. Our EBITDA margin expanded by 60 basis points, and adjusted diluted EPS was up 12% if you exclude the year-over-year impact of interest rates and the increase in the UK tax rate. Pre-cash flow was strong in the quarter at $568 million, representing 109% of adjusted net income.
Speaker Change: Now keep in mind that Q1 is the toughest comparison for adjusted diluted EPS due to the interest rate increases we saw throughout 2023.
Speaker Change: Now as we mentioned our guidance assumes that foreign currency rates as of February 12th continue for the balance of the year.
Speaker Change: So let's summarize.
Speaker Change: Q4 was another strong quarter R&D S delivered the second largest booking quarter in <unk> history at over $2 $8 billion, along with another quarter of double digit RFP growth.
Speaker Change: For the full year of 2023 revenue grew 9% at constant currency, excluding COVID-19 related work.
Speaker Change: Our EBITDA margin expanded by 60 basis points and adjusted diluted EPS was up 12%. If you exclude the year over year impact of interest rates and the increase in the UK tax rate.
Speaker Change: Free cash flow was strong in the quarter at $568 million, representing 109% of adjusted net income.
Ron: Iqvia was named to Fortune's 2023 list of the world's most admired companies for the seventh consecutive year and earned the first place ranking within our industry group for the third consecutive year. And lastly, we issued full year 2024 guidance with underlying revenue growth of five to seven percent, continued margin expansion, and a resumption of EPS growth with adjusted diluted earnings per share expected to be up 7-10%. Before we open the call to Q&A, I'd like to make you aware of a leadership change within Iqvia's finance organization. Nick Childs, who has led our investor relations and treasury functions very ably for the past three years, is moving on to become CFO of our North American business.
Speaker Change: <unk> was named the Fortune's 2023 list of the world's most admired companies for the seventh consecutive year and earned the first place ranking within our industry group for the third consecutive year.
Speaker Change: And lastly, we issued full year 2024 guidance with underlying revenue growth of five 7% continued margin expansion.
Speaker Change: And a resumption of EPS growth with adjusted diluted earnings per share expected to be up 7% to 10%.
Speaker Change: Now before we open the call to Q&A I'd like to make you aware of a leadership change within ITV its finance organization.
Speaker Change: Nick Childs, who has led our investor relations and Treasury functions very ably for the past three years is moving on to become CFO of our North American business.
Ron: He will be succeeded by Terry Joseph, who has served as CFO of that business unit for the past five years. Now, Kerry, who is a member of the Global Finance Leadership Team, has had many finance roles of increasing responsibility during his 20-plus years with the company. Kerry and Nick have already been working together to transition responsibilities, and Kerry will join Nick on our follow-up calls this quarter, so you all have a chance to meet him.
Speaker Change: He will be succeeded by carry Joseph who has served as CFO of that business unit for the past five years.
Speaker Change: Our carry who is a member of the global Finance leadership team has had many finance roles of increasing responsibility during his 20 plus years with the company.
Speaker Change: Carey and Nick have already been working together to transition responsibilities and Carrie will join Nick on our follow up calls this quarter. So you will have a chance to meet him.
Operator: Now, with that, let me hand it back over to the operator to begin our Q&A session. At this time, I would like to remind everyone, in order to ask a question, press star, then number one on your telephone keypad. We request that you please limit yourself to just one question so that others in the queue may participate as well. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Anne Samuel from J.P. Morgan. Your line is open.
Speaker Change: Now with that let me hand, it back over to the operator to begin our Q&A session.
Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Speaker Change: Request that you. Please limit yourself to just one question so that others in the queue may participate as well, we'll pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Anne Samuel from Jpmorgan. Your line is open.
Ari Bousbib: Hi guys, um, congrats on the great print. And thanks for taking the question. Um, my first question was just on TAS, you know, you spoke to expectations for a back half recovery in this business. You know, it seems like based on your comments and some of those from others at our recent conference that others in the life sciences, IT space are seeing some early optimism around that, and I was just, you know, wondering what you expect to be the early indicators that the recovery is happening in that business. And what part of your TAS business will maybe start to see the first green shoot? Well, thank you. And I mean, look, we were early last year expecting that things would turn around in the second half of last year. And, as you know, it didn't happen. Now, it's got to happen at some point.
Anne Samuel: Hey, guys congrats on the great print and thanks for taking the question.
Anne Samuel: My first question was just on <unk>, you spoke to expectations for a back half recovery in this business.
Anne Samuel: It seems like based on your comments and some of those from others.
Anne Samuel: Recent conference that others in the life Sciences space are seeing some some early optimism around that and was just wondering you know what do you expect to be the early indicators that the recovery is happening in that business and what part of your test business will maybe start to see the first green shoots.
Anne Samuel: Okay.
Speaker Change: Well, thank you and I mean look.
Anne Samuel: We.
Anne Samuel: Early last year were expecting that.
Anne Samuel: Things would turn around the second half of last year and as you know it didn't happen.
Anne Samuel: Now it's got to happen at some point. So we then fault well bye.
Ari Bousbib: So we then thought, well, you know, by the second quarter, much later, you know, at the end of last year's third quarter, I thought, okay, second quarter of 24. We are now expecting this to happen in the second half, and in support of all of this, I mentioned some data points in my introductory remarks. Look, the FDA approved 50% more molecules than last year, and it's the highest level since 2018. That really generally bodes well for the commercial business, as our clients prepare to launch those drugs into the marketplace. And those launches come with significant support from the type of services that we provide, whether it's data, you know, launch, consulting, planning, market access, pricing support, and so on and so forth. And in fact, our own market expectations of spend by pharma over the next few years compare very favorably to the prior period. Now, in our own conversations with clients, we're noting more optimism on the outlook for 2024. But perhaps because we've been born before, we've tried to be appropriately cautious in planning.
Anne Samuel: By the second quarter's months later at the end of the last.
Anne Samuel: Of last year's third quarter I felt okay.
Anne Samuel: Quarter of 'twenty four we are now expecting this.
Anne Samuel: To happen second half and in support of all of these have mentioned some data points in my introductory remarks.
Anne Samuel: The the FDA approved.
Anne Samuel: Is 50% more molecules than last year, and it's the highest level since 2018 that really generally bodes well for the commercial business.
Anne Samuel: As our clients prepare for launching.
Anne Samuel: Those drugs into the marketplace.
Anne Samuel: And those launches come for significant.
Anne Samuel: Support from the type of services that we provide whether it's data.
Anne Samuel:
Anne Samuel: Launch consulting planning market access our pricing support and so on so forth.
Anne Samuel: And in fact, our own.
Anne Samuel: <unk>.
Anne Samuel: Market expectation.
Anne Samuel: Expectations of spend by our former over the next few years.
Anne Samuel: Compares very favorably to the prior year period now in our own conversations with clients.
Anne Samuel: No team more optimism on the outlook for 'twenty, 'twenty, four, but perhaps because we've been burnt.
Anne Samuel: Before we've tried to be appropriately cautious in planning.
Ari Bousbib: And really, when we build up the forecast for our entire business based on the pipeline, I might note, I don't think we've said that before, or even if we report any of these members here. But, you know, we have a pipeline of opportunities with a very detailed methodology that's been proven over time. And I can tell you that our pipeline for the year, for the 2024 year, is higher than it has ever been for the task. So that gives us comfort that, you know, the forecast is appropriately built, and hopefully, we'll have, you know, upside favorability, you know, if things work out perfectly well, but we've built enough caution into the forecast here that we feel good about the task business for 2020-24 as we presented it. Now, a word of caution. You know, the business saw declining growth through 2023, with every quarter being worse than the previous one. We expect 2024 to be sort of a mirror image of that.
Anne Samuel: And really when we build up the forecast for that business based on the pipeline and I might note I don't think we said that before or even though.
Anne Samuel: <unk> November zero, but we have a pipeline of opportunities with the very detailed methodology that has been proven over time and I can tell you that our pipeline for the year for the 'twenty 'twenty four year is higher than it has ever been on the on the <unk> business.
Anne Samuel: So that gives us.
Anne Samuel: Comfort that the forecast is appropriately are built and hopefully will be.
Anne Samuel: We have upsides.
Anne Samuel: Favorability.
Anne Samuel: Things workouts perfectly well, but we've built enough caution.
Anne Samuel: On the on the forecast here that we feel good about about the.
Anne Samuel: <unk> business for 2024, as we presented at the World of caution.
Anne Samuel: The business saw declining growth through 2023, we've every quarter being worse than the previous one we expect 24 to be sort of the mirror image of that that is the first quarter to be more like last year's fourth quarter and the second quarter.
Ari Bousbib: That is, the first quarter to be more like last year's fourth quarter, and the second quarter more like the third quarter, et cetera, with a ramp-up through the year and, hopefully, building momentum as we progress through 2024. That's really helpful. Thank you. Thank you. And then maybe on the R&D side, I was hoping maybe you could just provide a little bit of color on just how to think about the cadence for 2024. I've just given you all the moving pieces. Thank you. Do you mean the cadence?
Anne Samuel: Third quarter et cetera, with the ramp up through the year.
Anne Samuel: Hopefully a building momentum as we progress through 'twenty four.
Speaker Change: That's right. Thank you. Thank you thank.
Speaker Change: Thank you and then maybe.
Speaker Change: On the R&D side I was hoping maybe you could just provide a little bit of color on just how to think about the cadence.
Speaker Change: For 2024, I'm, just given all the moving pieces. Thank you.
Speaker Change: You mean, the cadence and when I was in the cadence of revenue yeah, Yeah two points.
Ari Bousbib: Yeah, anyone has any? The cadence of revenue, yeah. Yeah, two points. Yeah, I mean, I think you, I mean, I guess I would tell you to look at the linearity that you've seen in prior years. We're not expecting anything to be, you know, any sort of drop-off or a significant pickup either. Great, very helpful. Thank you so much. Your next question comes from a line by Shlomo Rosenbaum from Stiefel.
Speaker Change: Thank you.
Speaker Change: I guess I would tell you to look at the linearity of that that you've seen in prior a year end number not adhering to anything.
Speaker Change: Any sort of drop off or a significant pick up either now.
Speaker Change: Great very helpful. Thank you so much.
Speaker Change: Your next question comes from the line of Shlomo Rosenbaum from Stifel. Your line is open.
Operator: Your line is open. Hi Ari, can you talk a little bit about the significant contract signings in the quarter, the second largest in the company's history? Were there certain really large deals that maybe boosted it? Or were there certain therapeutic areas that might have boosted it?
Shlomo H. Rosenbaum: Hi, Thank you for taking my questions are are you could you talk a little bit about the significant contract signings in the quarter, our second largest in the company's history.
Shlomo H. Rosenbaum: There are certain really large deals that maybe boosted it where theres certain therapeutic areas that might have boosted it maybe just give us a little bit of.
Ari Bousbib: Maybe just give us a little bit of color about. Okay, well, thank you, Shlomo, for the question. There was no specific contract or particular award or anything like that. I would just say that by segment, the EBP segment was particularly strong. I mentioned funding was very strong in the quarter, highest on record. Again, if you exclude the COVID years.
Shlomo H. Rosenbaum: Color about that.
Speaker Change: Okay, well. Thank you Shlomo for the question there was no specific.
Speaker Change: On track or particular award or anything like that.
Speaker Change: I would just say that by segments.
Speaker Change: The <unk> segment was particularly strong I mentioned funding was a very strong in the quarter a the highest on record again, if you exclude the <unk>.
Speaker Change: The COVID-19 years.
Ari Bousbib: And so EBP was particularly strong. I'd say with, again, we don't talk about book-to-bill per segment, but the EBP book-to-bill, if you will, was higher than our 131. So comparatively, we had, and about, I would say about 25 percent, is that correct guys? 25 percent of our bookings in the year were EBP. So that, you know, that's a little bit of color that I can give you, but nothing, you know, no one-time big award or anything that skews the numbers, no, pretty, pretty strong across the board. Peter, Gary, we continue to excel in oncology and cell and gene therapy in complex clinical trials, no change. Right, correct. Great. And it's me for you, thank you.
Speaker Change: And so <unk> was particularly strong.
Speaker Change: I'd say with.
Speaker Change: Again, we don't talk about book to Bill per segment, but the EVP book to Bill If you will was higher than our $1 31.
Speaker Change: So comparatively.
Speaker Change: We had in it but I would say about 25% is that correct guidance, 25% of our bookings in the U R. E V P.
Speaker Change: So that you know that's a little bit of color that I can give you, but nothing nothing no one time big.
Speaker Change: A big award or anything that.
Speaker Change: Q did the numbers no pretty pretty strong across the board therapeutic area, we continue to excel in oncology and cell and gene therapy in the complex clinical trials no change by clients.
Speaker Change: Great and if maybe for <unk>.
Ari Bousbib: Is there, can you just comment on anything about competitiveness in the marketplace? Are there, have there been any changes? I know it's a long cycle business, but anything you could talk about either on TAS or R&D with any of the, you know, well-known competitors that are out there? Yeah, well, you know, I don't generally like to comment on competitors. But yeah, there have been a number of disruptions, you know, sort of companies being acquired or spun off, you know, in the CRO space. And that always introduces some level of disruption. I mean, some of these companies have been in trouble. You know, the fact that they've been acquired by private equity or, conversely, spun off in the public markets. Does that mean that they'll be more competitive, less competitive? You know, it's hard to tell.
Speaker Change: Is there can you just comment anything about competitively in the marketplace. So there has there been any changes I know, it's a long cycle business, but anything you could talk about either on <unk> or R&D as with any of the.
Speaker Change: Well known competitors that are out there.
Speaker Change: Well you know I don't generally like to comment on competitors, but yes, there have been a number of disruptions you know sort of the companies being acquired or spun off.
Speaker Change: You know in the CLO space.
Speaker Change: And that always you know introduces.
Speaker Change: Some level of disruption I mean, some of these companies had been in trouble.
Speaker Change: The fact that had been acquired by a private equity or Conversely spun off in the public markets does that mean that there will be more competitive less competitive you know it's hard to tell.
Ari Bousbib: It's disruption often happens, you know, if you take a longer view of this question. We believe that our merger seven years ago significantly disrupted the industry and led to a large number of subsequent transactions, which resulted from what we believe were reactions to the clear competitive advantage that we think we established that enabled us, over the past few years, to gradually gain market share. But other than that, I mean, I don't have any further comments. Thank you, Shlomo.
Speaker Change: It's disruption.
Speaker Change: Often happens.
Speaker Change: Take a longer view of this question.
Speaker Change: We believe that our merger seven years ago.
Speaker Change: Significantly disrupted the industry and led to a large number of subsequent transactions.
Speaker Change: But which resulted from what we believe was.
Speaker Change: Reactions to.
Speaker Change: The peer competitive advantage that we think we we established.
Speaker Change: That enabled us over the past few years to <unk>.
Speaker Change: Gradually gained market share, but other than that I mean.
Speaker Change: I would further payments thank you Shlomo.
Ari Bousbib: Thank you. Your next question comes from the line of P.S. Savant from Morgan Stanley. Your line is open. Hey guys, good morning.
Shlomo H. Rosenbaum: Thank you.
Speaker Change: Your next question comes from the line of <unk> from Morgan Stanley. Your line is open.
Speaker Change: Hey, guys. Good morning. So my first question here is on the R&D side of things.
Operator: So my first question here is on the R&D side of things. Ari, can you help us think through just the shift in mix and FSP versus hybrid versus full service work and the margin implications of that? And similarly, sort of any shift in the mix of work as you head into 24 and therapeutic areas basis and what that might mean, what that might mean for your backlog burn rates? The question was about the mixed shift in margins between FSP and full service, correct? That's right.
Speaker Change: Can you help us think through.
Speaker Change: Just to shift didn't makes an FSP versus hybrid versus full service work and and the margin implications of that and similarly sort of any shift in the mix of work as you head into 'twenty, four and therapeutic area basis, and what that means what that might mean for your backlog burn rates.
Shlomo H. Rosenbaum: Okay.
Shlomo H. Rosenbaum: Question was about the mix shift in margins between FSP and full service correct.
Speaker Change: That's right.
Ari Bousbib: Yeah. Look, FSP tends to be somewhat lower-margin than full service. Now, take into account, though, that full service comes with significant pass-through revenues that FSP doesn't. And so when you look at the average margins, including pass-throughs, they're not that different.
Speaker Change: Yes look.
Speaker Change: FSP tends to be somewhat lower margin than than full service now take into account, though that full service comes with pass through significant pass through revenues that FSP doesn't and so when you look at the average margins, including pastors, they're not that different but yes.
Ari Bousbib: But yeah, in general, there is some margin degradation as a result of the shift towards FSP. But, on the other hand, this shift is a very gradual shift that's going on. You know, you're talking about points of, you know, single points of shift, not huge, a huge flight to FSP. And it takes place over time. Remember, you know, the average trial is four plus years to complete.
Speaker Change: General there has been there is some margin degradation as a result of the shift towards that that space on the other hand. This shift is a very gradual shift that's going on.
Speaker Change: Youre talking about points.
Speaker Change: Single points of shift not not huge.
Shlomo H. Rosenbaum: A huge flight to FSP and it takes place over time remember the average trials four plus years that complaint. So there really hasn't been any dramatic impact on our margins as a result of that and of course, we're working all of that all the time too.
Ari Bousbib: So there really hasn't been any dramatic impact on our margins as a result of that. And, of course, we're working all the time to optimize and take costs out and do things to improve our margins, independent of whatever contracts we happen to be signing. So I would say there isn't a big impact there.
Shlomo H. Rosenbaum: Optimize and take cost out and do things to improve our margins independent of whatever contracts, we happened to be signing so I would say not not a big impact there and you've seen in our EBITDA margins, they've actually continue to improve overall and that's with R&D being over 50% of our revenue.
Ari Bousbib: And you see, in our EBITDA margins, they've actually, you know, continued to improve overall. And that's with R&D being over 50 percent of our revenue. Yeah, got it. I mean, look.
Speaker Change: Yeah got it I mean look.
Ari Bousbib: And then your second question. Yeah, my second question, actually. I'm going to switch to the TAS comments. Guys, I mean, are you encouraging to see sort of expectations of a recovery in the back half of the year? And you talked about sort of your detailed bottom-up pipeline bill there. But I just want to put a finer point on it in terms of just the timing of the recovery, right? So what gives you confidence that this comes through in 2H24 versus getting pushed to 25? Is it something related to sort of contracted work that you have a clear line of sight to versus work that could be sort of delayed? Or is it some large real-world evidence projects that you see coming through here in the back? Yeah, thank you, Vergas. No, it's not anything, any one contract or specific lever.
Speaker Change: And then your second question.
Speaker Change: My second question, Yeah. My second question actually I'm going to switch to the task comments I'm a guy who's I mean are you encouraging to see sort of expectations for a recovery in the back half of the year and he talked about sort of your detailed bottom up pipeline build out, but I I I just want to put a finer point on it in terms of just the pie.
Speaker Change: Of the recovery rate. So what gives you confidence that this comes through in two age 24 versus getting pushed to 'twenty. Five is it something related to sort of contracted work that you have clear line of sight to versus work that could be sort of delayed or is it some large real world evidence projects that do you see coming through here in the back half.
Speaker Change: Yeah. Thank you gave us no its not anything any one contra.
Speaker Change: Contract or specific lever is because I mentioned the overall sentiment.
Ari Bousbib: It's, as I mentioned, the overall sentiment, you know, you're bubbling up into a pipeline that I mentioned is the highest that we've had ever. Now, the pipeline doesn't always translate exactly as it is, you know, it's probability adjusted and so on and so forth, but that's a good indication from a metric standpoint that we should be up for the year, you know, and we've built some level of cushion here because we were burnt slash delayed, you know, last year. And so that kind of gives us a little bit of confidence, along with the conversations we're having with our clients. Again, I wouldn't say this is not like we're not seeing a sharp uptick all of a sudden, okay? Our clients, especially large pharma, are very, very focused on cost containment. They've all announced significant cost reduction programs. Some of them in anticipation of the really unknown impact of the IRA.
Shlomo H. Rosenbaum: Youll Bubbling up into a pipeline.
Shlomo H. Rosenbaum: As I mentioned is the highest.
Shlomo H. Rosenbaum: Though we've had ever.
Shlomo H. Rosenbaum: Now.
Shlomo H. Rosenbaum: The pipeline doesn't always translate exactly as.
Shlomo H. Rosenbaum: It is it's probably going to be adjusted and so on and so forth, but that's a good indication from a metric standpoint that we should be up.
Shlomo H. Rosenbaum: Before the year and we've built some level of cushion here because we've been a bit.
Shlomo H. Rosenbaum: Slash delayed.
Shlomo H. Rosenbaum: Last year, and so that's what kind of gives us little bit of confidence along with the conversations we're having with our clients again I Wouldnt. This is not like a we were not seeing a sharp.
Shlomo H. Rosenbaum: The uptick all of a sudden okay. All clients are especially large pharma very very focused on cost containment they've all announced.
Shlomo H. Rosenbaum: Significant cost reduction programs.
Shlomo H. Rosenbaum: Some of them in anticipation of.
Shlomo H. Rosenbaum: Really unknown impact of the I R. A sawmill in anticipation of <unk>.
Ari Bousbib: Some in anticipation of, you know, some LOEs coming soon in the next few years or other variables. But the fact is, there are these large pharma. And given the life cycle of these sales processes as we know them, we are anticipating that those will concretize into sales towards the back end of the year. And Tejas, just one point of emphasis here, too: in the TABS business, particularly, there are hundreds and hundreds of projects, so you're not going to have any individual project move the needle there. Thank you.
Shlomo H. Rosenbaum: Some.
Shlomo H. Rosenbaum: And Eloise coming as soon in the next few years or or other.
Shlomo H. Rosenbaum: Or all the variables, but the fact is there are these large pharma.
Shlomo H. Rosenbaum: Plus discussions that we're having with clients as well and we are a significant vendor and therefore those conversations have tended to be.
Shlomo H. Rosenbaum: More difficult than they were in the past with respect to negotiations and pricing and so on.
Shlomo H. Rosenbaum: That is still there the number of opportunities the number of projects the number of compensations all of which translates into a pipeline the request for proposals and so on that we are having a clearly up.
Shlomo H. Rosenbaum: And given the lifecycle of these sales processes as we know them, we are anticipating that those with concretize into sales towards the backend of the year CAGR.
Speaker Change: Hey, guys, just one point of emphasis here too in the tax business, particularly it's hundreds and hundreds of projects that you are.
Speaker Change: We're not gonna have any individual project moved the needle there.
Ari Bousbib: Thanks guys, I appreciate it. Your next question comes from the line of Luke Sergott from Barclays. Your line is open.
Speaker Change: Thank you.
Speaker Change: Thanks, guys I appreciate it.
Speaker Change: Your next question comes from the line of Luke <unk> from Barclays. Your line is open.
Operator: All right, guys, confusion about, you know, where the weakness has been in TAS and where the strength has been and if there's actually any change or improvement on the side of, you know, like regulatory and medical writing, things like that, to give more confidence in that back half recovery that you're talking about. Yeah, well look, you know, we ourselves are, as I mentioned before, putting a fair amount of caution and, um you know conservatism if you want to call it that way in our own forecast because of some of the factors you mentioned that we've experienced last year, for their own businesses for 24. Now, we're not there because, as you correctly point out, some services that we sell are not exactly discretionary. So.
Luke: Hi, guys.
Luke: Can you talk about the you know we keep talking about the tax recovery.
Speaker Change: But.
Luke: And the next big pipeline that you guys have but can you kind of double click into.
Luke: What that looks like versus discretionary versus the sticky side I think theres a lot of.
Luke: Confusion about where the weakness has been in Taz and where the strength has been and if there is actually any change or improvement on the side of.
Luke: Like regulatory and medical writing things like that.
Luke: To give more confidence in that back half recovery that youre talking about.
Speaker Change: Yeah, well look we ourselves are all I think mentioned before.
Shlomo H. Rosenbaum: A fair amount of.
Shlomo H. Rosenbaum: Caution and.
Shlomo H. Rosenbaum: Conservatism, if you want to call it that way in our forecast because of some of the factors you mentioned that we've experienced last year.
Shlomo H. Rosenbaum: The business continues to grow the general environment. So far is consistent with what we were experiencing.
Shlomo H. Rosenbaum: At the end of last year.
Shlomo H. Rosenbaum: And you've seen you know all large cap.
Shlomo H. Rosenbaum: <unk>.
Shlomo H. Rosenbaum: Companies that operate in the same business actually.
Shlomo H. Rosenbaum: Forecast even declining sales.
Shlomo H. Rosenbaum: Before their own businesses for 24, now we know there because as you correctly point out some of these.
Shlomo H. Rosenbaum: Services that we sell are not exactly discretionary.
Ari Bousbib: Look, the data business, for example, continues to hold up well. It's never been a fast growing business, but it's holding up. We saw headwinds in the more discretionary part of the TAS segment, which is the analytics and consulting business.
Shlomo H. Rosenbaum: So looked.
Shlomo H. Rosenbaum: Look the data business for example continues to hold up well, it's never been a fast growth business, but it's holding up.
Shlomo H. Rosenbaum: We saw.
Shlomo H. Rosenbaum: Headwinds in the more discretionary part of the third segment, which is the analytics and consulting business.
Ari Bousbib: But I have to say that the business started to pick up a bit, with sequential improvements in growth in Q4 compared to Q3. So even this more discretionary side, we saw an uptick, again, not a steep curve up, but we saw positive movement, even on the discretionary side. Now, the impact on the discretionary project part of the real world business, which, you know, is a little bit of a longer cycle within time, a little bit longer cycle. We started seeing that in Q3, and it continued in Q4.
Shlomo H. Rosenbaum: But I have to say that the business started to pick up a bit.
Shlomo H. Rosenbaum: With sequential improvements in growth in Q4 compared to Q3, so even these more discretionary sides, we saw an uptick not again not a steep curve.
Shlomo H. Rosenbaum: But we saw.
Shlomo H. Rosenbaum: Positive movements, even on the discretionary side.
Shlomo H. Rosenbaum: Now the impact on the discretionary project part of the real World business.
Shlomo H. Rosenbaum: That is a little bit of longer cycle within das is a little bit longer cycle, we started seeing that in Q3.
Shlomo H. Rosenbaum: And it continued in Q4 and it did impact the performance of our real World business in Q4, So if I might summarize V.
Ari Bousbib: And it did impact the performance of our real world business in Q4. So if I might summarize it, the data business is holding up, maybe a little bit even better, doing a little bit better. The totally discretionary piece of analytics and consulting, little, little movement, and some haptics that we are perceiving. The real world piece, you've got the stuff that they need to do that hasn't changed. And then there is the stuff that's more discretionary.
Shlomo H. Rosenbaum: Data business, holding up maybe a little bit even better.
Shlomo H. Rosenbaum: Doing a little bit better.
Shlomo H. Rosenbaum: Totally discretionary piece of analytics and consulting me little little movement, and some uptick that we are pursuing.
Shlomo H. Rosenbaum: The real World piece, you've got this stuff that they need to do that Hasnt change and then there is established small discretionary because it's more it's a longer cycle the.
Ari Bousbib: Because it's a longer cycle, the deceleration impacted our numbers more in Q3 and further in Q4. So the issues we saw in analytics and consulting in the early part of the year, we started seeing in the real world in Q3 and Q4, and we expect that to continue in Q1. But I hope that gives you enough color here to get a sense of what we're seeing. It does, it does.
Shlomo H. Rosenbaum: The deceleration.
Shlomo H. Rosenbaum: In fact, it all numbers more in Q3 and further in Q4, so do the issues we saw in analytics and consulting in the early part of the year, we started singing real world in Q3, and Q4, and we expect that to continue in Q1, but if you I hope that gives you enough color.
Shlomo H. Rosenbaum: Here to get a sense for what we're seeing.
Speaker Change: It does it does and then I think your follow up.
Ari Bousbib: And then I got to follow up on the, you know, there's a lot of concern here. You know, some of your peers talked about biotech RFP slowing in 4Q. But just as you look at the actual step up needed to maintain the book to bills and the booking levels that you guys have had, do you see that level of RFP volume across all your segments? Is it enough to sustain it over the next six months, or could we see some softening here, maybe in the first Q? And you know, obviously, this is just more of a quarterly dynamic as the full year kind of paces out as what you're talking about, but just when you're thinking about the actual uh... bookings getting, You know, you're closing that sales cycle.
Speaker Change: On the there's a lot of concern here.
Speaker Change: Some of your peers talked about.
Speaker Change: <unk> rfps slowing in four Q, but just as you look at the actual step up needed to maintain the book to bills in the bookings levels that you guys have had.
Shlomo H. Rosenbaum: Do you see that that level of RFP volume across all your segments is.
Shlomo H. Rosenbaum: Enough to sustain it over the next six months or could we see some softening here maybe in the <unk> and you know obviously this is just more of a quarterly dynamic is as the full year kind of.
Shlomo H. Rosenbaum: Paces out is what youre talking about but just when you're thinking about the actual.
Shlomo H. Rosenbaum: Bookings getting.
Shlomo H. Rosenbaum: You're closing that sales cycle could some stuff got pushed out to more of the back half of the year.
Ari Bousbib: Could some stuff get pushed out through more of the back half of the year? And look, you've got a lot of hypotheticals here, which I know you're referring to a competitor's commentary. I didn't hear any of that, and we're not seeing that. Again, you know, this is interesting. People want to see badness and hang their hat on something. I would point to you that, you know, going back a couple of years, at least, and all CRO stocks suffered as a result of this whining. We kept telling the world that we weren't seeing it.
Speaker Change: I don't know if you've got a lot of hypothetical here.
Speaker Change: Your.
Speaker Change: You're referring to a competitor commentary I didnt hear any of that.
Speaker Change: We are not seeing that again.
Shlomo H. Rosenbaum: This is the interesting people want to see Buttonless and all that.
Shlomo H. Rosenbaum: On something.
Shlomo H. Rosenbaum: I would point to you that you know going back a couple of years at least.
Shlomo H. Rosenbaum: People were competitors quote unquote whining about EVP funding.
Shlomo H. Rosenbaum: And you know all the CLO stock suffered as a result of these whining, we kept telling the world that we weren't seeing it.
Ari Bousbib: We ended up being correct. There was no dramatic drop off in funding. It didn't happen.
Shlomo H. Rosenbaum: We ended up not being correct there was no.
Shlomo H. Rosenbaum: Dramatic drop off in funding it didn't happen if anything now as I mentioned, it's even growing portable at record levels. So it won't be as good as actually he was very very strong in terms of bookings and we see that trend continuing.
Ari Bousbib: If anything, now, as I mentioned, it's even going further at record levels. So EVP is good. It actually was very, very strong in terms of bookings. We see that trend continuing. You know, when things get funded in a quarter, typically, the bookings come in over the course of the following year. So I don't see that happening in the EBP segment.
Shlomo H. Rosenbaum: When things get funded in the quarter seasonally the bookings come in over the course of the following year. So I don't see that happening on the BP segment loss former yeah, there was a little bit of room.
Ari Bousbib: Large pharma, yeah, there is a little bit of reprioritization of projects. You've heard that from us and others, you know, looking at different programs. But it's not like people are saying, oh, all of a sudden, we're not doing research anymore. There's a little bit of, at the moment, as we discussed earlier, Ron mentioned, a bit of a pendulum moving more towards FSP. But again, we play in that segment too. We play in every segment.
Shlomo H. Rosenbaum: Re prioritization of projects.
Shlomo H. Rosenbaum: You've heard that from us from others.
Shlomo H. Rosenbaum: You know looking at different programs, but it's not like people are saying all of a sudden we not doing research anymore.
Shlomo H. Rosenbaum: At the moment as we discussed earlier Ron mentioned you know.
Shlomo H. Rosenbaum: A bit of the pendulum moving more towards FSP.
Shlomo H. Rosenbaum: But again, we play in that segment too we play in every segment.
Ari Bousbib: But other than these dynamics, I don't see anything that would lead me to believe that all of a sudden, we have to be worried, quite the opposite, as I said. Our RFP flow was up 13% in Q4, and that's across the board, strong double digits in EBP and in large pharma as well. That was in Q4. Full year, same thing.
Shlomo H. Rosenbaum: But other than these dynamics I don't see anything that would lead me to believe that all of the southern we have to be worried quite the opposite as I said.
Shlomo H. Rosenbaum: Oh RFP flow.
Shlomo H. Rosenbaum: The up 13%.
Shlomo H. Rosenbaum: In Q4.
Shlomo H. Rosenbaum: And that's across the board.
Shlomo H. Rosenbaum: Strong double digits in EVP and in large pharma as well.
Shlomo H. Rosenbaum: For the that was in Q4.
Shlomo H. Rosenbaum: Four years same thing very strong and EVP, even stronger for the full year awards, which is.
Ari Bousbib: Very strong, and EBP even stronger for the full year. Awards, which is sort of, if you will, a leading indicator of bookings because, as you know, We and maybe a small number of others actually report bookings and bookings based on contracted orders. Some still report only awards, which is kind of before contracted, and awards are also at a record high level. If you look at our pipeline, the total pipeline is at high single digits, you know, very high single digits, again, at a record level. Qualified pipeline, which is, we look at, we have our own methodology to screen all the opportunities and come down to those that we think are the ones we want to pursue and are the The qualified pipeline is up strong double digits again across the board. So I don't know what else to tell you. I don't, you know. If you hear anything that I don't know, let me know. No, that's why I'm in my seat, and you're in your seat.
Shlomo H. Rosenbaum: Sort of if you will a leading indicator of bookings because as you know.
Shlomo H. Rosenbaum: Are we in a.
Shlomo H. Rosenbaum: A small number of others.
Shlomo H. Rosenbaum: Actually we report bookings and book to read based on contracted Org.
Shlomo H. Rosenbaum: Some still report only awards, which is kind of before.
Shlomo H. Rosenbaum: Contracted.
Shlomo H. Rosenbaum: And awards are also at a record high level.
Shlomo H. Rosenbaum: If you look at our pipeline the total pipeline is up high single digits.
Shlomo H. Rosenbaum: Very very high single digits.
Shlomo H. Rosenbaum: And at a record level.
Shlomo H. Rosenbaum: Qualified pipeline, which as you know we look at we have our own methodology to screen all the opportunities in <unk>.
Shlomo H. Rosenbaum: And come down we'll do those that we think are the ones who want to pursue and are the most valuable and the most likely to come to fruition. The qualified pipeline is up strong double digits again across the board.
Speaker Change: I don't know what else to tell you I don't.
Speaker Change: You heard of anything that I don't know, let me know now.
Speaker Change: Why I'm in my seat in your in your seat I. Appreciate it. Thank you alright. Thank you.
Operator: I appreciate it, thank you. All right, thank you. Your next question comes from the line of Elizabeth Anderson from Evercore ISD. Your line is open.
Speaker Change: Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Your line is open.
Ari Bousbib: Hi guys. Thanks so much for the color on the complexity of the demand environment. I had a question about the 4Q bookings. Can you comment on roughly what percentage was FSP?
Elizabeth Anderson: Hi, guys. Thanks, so much for the color I'm on the complexity of the demand environment I have a question about the <unk> bookings.
Elizabeth Anderson: Can you comment on sort of what percentage was F. S. P. I know you said that obviously with the revenue shifting its very incremental over the or the question yeah, but it would just be curious to sort of level set what what youre seeing in the current environment there.
Ari Bousbib: I know you said it obviously with the revenue shift is very incremental over the course of the year, but I would just be curious to sort of level set what you're seeing in the current environment. The question is, how much of our bookings were FSP? I think a little over 20%.
Elizabeth Anderson: The question is how much of our bookings with FSP I think a little over 20% is that correct, yes, guys low twenties.
Ari Bousbib: Is that correct, guys? About 20% of our bookings in the quarter, and that's for the full year for FSP. How much was EVP?
Elizabeth Anderson: Bookings in the quarter and that's for the full year for FSP, how much did you give any more color on how much was EVP.
Ari Bousbib: 25%? Yeah, the EVP, total EVP is about a quarter of our bookings for the year. Right. And I think that FSP is mostly large pharma, right? David, thank you.
Elizabeth Anderson: 25%, yet the EVP.
Elizabeth Anderson: Totally be piece about a quarter of our bookings for the year right and Fsp's most at large pharma.
Elizabeth Anderson: Yes.
Elizabeth Anderson: Is that meaningful.
Elizabeth Anderson: Yes.
Ari Bousbib: And then how would you comment on sort of the rate card as we think about 2024 in terms of both full service work and FSA? Yeah, I mean, look, there continues to be pressure from clients and tough negotiations. You know, that's been the biggest surprise for me over the past several years, and that is that you have a better mode, you have a better company, a better delivery system, better capabilities, and we should be able to actually charge more. But, you know, lo and behold, we have competitors. And as I said before, you know, customers are customers that we want to continue to have, to whom we sell a lot of stuff, and we have strong relationships. And when the client tells you, listen, when a CEO calls you and tells you, you know, I need you to, you know, lower the rate here on this because it's going to help me in my cost reduction program. You know, it's hard to say, you know, listen, I'm better than a competitor. And the answer is no. So we don't say yes to everything.
Elizabeth Anderson: No.
Elizabeth Anderson: And then how would you comment on sort of the rate card as we think about 2024 in terms of both full service work and FSP.
Elizabeth Anderson: Uh huh.
Speaker Change: Yeah, it's roughly about pricing you know I don't know rates call. It you know the rates labor and so on.
Elizabeth Anderson: I mean look this continues to be pressure from clients and negotiate and tough negotiations.
Speaker Change: That's been the biggest surprise for me.
Speaker Change: Over the past several years and that is that you got a better mode. You got a better company a better delivery system.
Elizabeth Anderson: Better capabilities than we should be able to actually charge more but.
Elizabeth Anderson: Behold, we've got competitors and as I said before you know.
Elizabeth Anderson: Clients are clients that we want to continue to have we have with whom we sell a lot to whom we sell a lot of stuff.
Elizabeth Anderson: And we have strong relationships and when the client tells you listen.
Elizabeth Anderson: Your calls you and says you know what I need.
Elizabeth Anderson: Due to.
Elizabeth Anderson: To lower the rates here on this because it's going to help me in my cost reduction program, you're always hard to say.
Elizabeth Anderson: Lisa.
Speaker Change: Better than our competitor and the answer is no. So we don't say, yes to everything but.
Ari Bousbib: But, you know, this is part of managing our own relationships. And I would hide the fact that we are having, you know, maybe more pressure than we had before, generally on pricing that's across the board. There's no secret there. Got it, that's super helpful, thank you.
Speaker Change: This is part of our.
Speaker Change: Of managing our ultra relationships and and we I would hide the fact that we are having.
Speaker Change: You know maybe more pressure than we had before.
Speaker Change: Generally on pricing that's across the board there's no secret there.
Speaker Change: Got it that's super helpful. Thank you.
Operator: Your next question comes from the line of David Windley from Jeffries. Your line is open. Hi, good morning.
Speaker Change: Your next question comes from the line of.
Speaker Change: David Windley from Jefferies. Your line is open.
David Howard Windley: Hi, Good morning, Thanks for taking my question, a little bit of a follow up to Elizabeth there.
Ari Bousbib: Thanks for taking my question. A little bit of a follow-up to Elizabeth there. The kind of decision cycle environment with, I think, principally large pharma. So I joined late, but I've heard you describe that your RFP flows look pretty good, your awards look pretty good, those things seem to be holding up, but you had described that, whether it was IRA or..., pending loss of exclusivity of important products or whatever, the clients were, you know, kind of mulling over their prioritizations and processes a And I suppose part of that is probably also a little bit of Elizabeth, your answer to Elizabeth's question around pricing and trying to meet, you know, budget cut targets and things like that. How would you, you know, I'd love for you to elaborate on that environment?
David Howard Windley: Alright, we spend in December or quite a bit of time talking about.
David Howard Windley: The kind of decision cycle environment with I think principally large pharma.
David Howard Windley: So I joined late but I've I've heard you describe that your RFP flows look pretty good your awards look pretty good.
David Howard Windley: Those things seem to be holding up.
David Howard Windley: But you had described that whether it was IRA or.
Elizabeth Anderson: Pending loss of exclusivity of important products or whatever that the clients were kind of mulling over their prioritization and processes a lot longer than normal.
Elizabeth Anderson: And I suppose part of that is probably also a little bit of Elizabeth you answered Elizabeth's question around pricing and trying to meet budget cut targets and things like that.
Speaker Change: How would you you know I'd love for you to elaborate on.
Ari Bousbib: And do you feel like you're closer to the end of it? Are we still in the middle of it? You know, when do we think large pharma will be back to business, so to speak? Well, again, you know, I want to make sure I mean, it's not like back to me.
Speaker Change: That environment and do you feel like your <unk>.
Speaker Change: Closer to the end of it or are we still in the middle of it.
Speaker Change: When do we think large pharma will be.
Speaker Change: Back to back the business so to speak.
Speaker Change: Well I'll begin.
Speaker Change: I don't want to I want to make sure I mean, it's not like back to visa like people are on hold and they are not doing anything again, I mean look at our hour.
Ari Bousbib: It's not like people are on hold and they're not doing anything again. I mean, look, our backlog continues to grow. The RFP flow is up double digits. You know, the second highest bookings quarter ever. Right. We had the second highest bookings quarter ever. And the first one that was the highest, which was last year, I think that was because we had a very big proportion of pass-throughs from a specific large award. That's why it was like over three billion dollars, if I recall correctly, in that quarter. So this quarter, we had what, two point eight. I mean, and that was like a regular quarter with nothing unusual, no, you know, big one-timer award or anything like that.
Speaker Change: Our backlog continues to grow the RFP flow is up double digits.
Speaker Change: Second highest bookings quarter ever right, we had the second highest bookings quarter ever and the <unk>.
Speaker Change: First the one was the iOS, which was last year I think that was we had a very big proportion of pass through some of the specific laws Award. That's why it was like over $3 billion, if I recall in that quarter. So this quarter, we had what 2.8.
Speaker Change: And that was like a regular quarter with nothing unusual no.
Speaker Change: Big one timer award or anything like that.
Ari Bousbib: So it's pretty easy, you know, the numbers are the numbers. Now, the conversations are more difficult, longer, and involve more negotiations. But the volume.
Speaker Change: So it's a pretty you know them.
Speaker Change: The numbers all the numbers now the conversations are more difficult longer more negotiations, but the volume.
Ari Bousbib: The answer to your question is think the volume and the number of opportunities keep going up. And, again, EBP funding is very strong, at an all-time high. We saw particular strength in EBP, and we see that continuing. So, you know, not like we're on hold and thinking about when we're back to business. That's perhaps a question we were asking ourselves in the TAZ segment.
Speaker Change: The answer to your question is I think the volume and the number of opportunities.
Speaker Change: It keeps going up.
Speaker Change: And again, he BP funding very strong all time high we saw particular strength on MVP and we see that continuing.
Elizabeth Anderson: This year so.
Elizabeth Anderson: Not like we are on a hold and thinking about when are we back to business.
Elizabeth Anderson: That's perhaps a question we were asking ourselves on the title segment.
Ari Bousbib: And that we are in the middle of, and we see some signs or green shoots, as Elizabeth told us before, or Anne, I think, was the one who used that expression, some green shoots on the commercial side toward the back end of the year. But on the R&D side, we're experiencing the pressure, the more difficult environment with respect to pricing and negotiations and so on. We are in those conversations, but no one is saying, "I'm on hold, and I'm not doing anything."
Elizabeth Anderson: And and that we are in the middle of and we see some sign of Green shoots as Elizabeth told us before.
Elizabeth Anderson: Or and I think was the one used that expression is some green shoots on the commercial side to the back end of the year, but on the R&D side.
Elizabeth Anderson: We're experiencing the pressure the more difficult environment with respect to pricing and negotiations and so on we are in those conversations.
Elizabeth Anderson: But no one is saying.
Speaker Change: I'm on a hold and I'm not doing anything.
Ari Bousbib: Again, the numbers show it, the numbers of RFPs, the pipeline at an all-time high, the qualified pipeline, strong double digits. And again, across the board, it's not like there's one segment or another. So I would say quite the opposite. I think the number of opportunities, and the environment is very fertile in terms of chasing opportunities and responding to requests for proposals. We are very, very busy. Okay, so if I could follow up, then to go the next step, and Ash.
Elizabeth Anderson: Again, the numbers show it and Theres, a rfps that pipeline at an all time high the qualified pipeline.
Elizabeth Anderson: Strong double digits.
Elizabeth Anderson: And again across the board, it's not like there's one segment or another so I would say quite the opposite.
Elizabeth Anderson: I think go to the number of opportunities. The the environment is very fertile in terms of chasing opportunities in the.
Elizabeth Anderson: And responding to requests for proposals.
Elizabeth Anderson: We are very very busy.
Speaker Change: Okay. So if I could follow up then.
Speaker Change: To go the next step and ask.
Ari Bousbib: Perhaps what might be the factors that are influencing the disconnect between a high single-digit to double-digit RFP award, page, with a below mid-single-digit revenue growth. So I understand part of that is TAS. I'm gonna try to head off a little bit at the past.
Speaker Change: Perhaps what might be the factors that are influencing that.
Speaker Change: The disconnect between a high single digit to double digit RFP Award.
Speaker Change: Pace.
Speaker Change: <unk>.
Speaker Change: Below mid single digit revenue growth. So I understand part of that is passed I'm going to try to head off a little bit in the past part of that is taz I know that sort of set that aside.
Ari Bousbib: Part of that is TAS. I know that, so we'll set that aside. And I know you also attribute some to COVID, but COVID is now small enough that it is like any other big project that you would see come to a conclusion in any given year and transition those people to a new project and ramp that up. And it would seem that you're at a point where the backlog growth should be translating to R&DS revenue growth, and there's a disconnect there. So to what would you attribute that? Yeah. Yeah. If you take our NDS, it's not COVID; it's not like one, you know, project like any other. But that's not the case.
Elizabeth Anderson: And I know you also attribute some to COVID-19, but COVID-19 is now small enough that it is like any other big project that you would see come to a conclusion in any given year and.
Elizabeth Anderson: Ramp transition those people to a new project and ramp that up so.
Elizabeth Anderson: It would seem that you are to a point, where the backlog growth should be translating to R&D as revenue growth and theres a disconnect. There. So what would you attribute that yeah. So so so so again.
Elizabeth Anderson: If you take our ideas.
Elizabeth Anderson: It's not it's not like one.
Elizabeth Anderson: Projects like any others, it's not the case, we really have you know.
Ari Bousbib: We really have, you know, COVID revenue is very specific. It takes specific resources, it's specific projects, and in 24, you know, it's coming down by $300 million. That represents a direct headwind to growth of 350 basis points for RMDS growth. In addition, and this is more of a mixed issue, I mentioned in my introductory remarks a number of wins, and we continue to win in the oncology area. We're happy about that because that's the fastest growing therapeutic area, hands down, all around. It has been for a while and will continue to be. And we are winning in oncology. The issue with that therapeutic area is that the burn rate is much lower. It takes time, and it's more difficult to recruit patients.
Elizabeth Anderson: Clothing revenues very specific it took specific resources at specific projects and are in 'twenty four.
Elizabeth Anderson: It's coming down by $300 million.
Elizabeth Anderson: That represents.
Elizabeth Anderson: Direct headwind to growth of 350 basis points to R&D as growth 350 basis points.
Elizabeth Anderson: In addition, and this is more of a mix issue I mentioned in my introductory remarks, a number of wins and we continue to win in the oncology area. We are happy about that because that's the fastest growing therapeutic area hands down.
Elizabeth Anderson: All around the has been four wall and will continue to be and we are winning in oncology the issue with that therapeutic area is that the burn rate is much.
Elizabeth Anderson: Lower it takes time.
Elizabeth Anderson: It's more difficult to recruit patients, it's more complex and therefore.
Ari Bousbib: It's more complex, and therefore, it transfers into revenue slower than anything else. And we have a disproportionate share in that market. A third reason in the mix.
Elizabeth Anderson: It translates into revenue slower than anything else and we have a disproportionate share in that market.
Elizabeth Anderson: Third reason in the mix, we do have we happened to be and that's just a consequence it it's hard to explain but some years, we've get tailwind from pass throughs and some years we have.
Ari Bousbib: We do have, we happen to be, and that's just the consequence, it's hard to explain, but some years we've got tailwinds from pass-throughs, and some years we have headwinds from pass-throughs. As you know, pass-throughs are, I'm not going to say irrelevant, but they come with no profit, they come with, it's just an artificial accounting add to our revenue. But the fact is that in our build-up forecast for 2024, pass-throughs will be a headwind to RNDS growth, and that represents 100 basis points, approximately, of headwind to top-line growth of RNDS. Again, inclusive of the past. So if you add 350 basis points of headwind from COVID due to the step down in COVID and 100 basis points of headwind from the pass-through mix, that's 450 basis points.
Elizabeth Anderson: Headwinds from pass throughs as you know.
Elizabeth Anderson: No pass throughs are I'm, not going to say irrelevant, but they come with no profits they come with.
Elizabeth Anderson: It's just the.
Elizabeth Anderson: And artificial accounting.
Elizabeth Anderson: Add to our revenues, but the fact is that in our buildup.
Elizabeth Anderson: Forecast for 24.
Elizabeth Anderson: Pass throughs will be a headwind.
Elizabeth Anderson: R&D is growth and that represents 100 basis points approximately of headwind to top line growth of our NDS again inclusive of pass throughs. So if you add 350 basis points of headwinds from Covid.
Elizabeth Anderson: The step down in Kobe and are harder to basis points of headwinds from.
Elizabeth Anderson: The pass through mix, that's 450 basis points, so youre right.
Ari Bousbib: So you're right. But if you add it back, This, and you normalize that our underlying business is growing high single digits, very high single digits on the R&D side. So I think that's the reconciliation. You're right, Dave, you're a smart analyst, and you point to the apparent disconnect between the strong growth of our bookings and the reported growth in 24, which, again, we hope to be out of in 25. It certainly bodes well. 25 should be a sweet year. I don't want to put sanctions on 25 years. We're barely talking about 24, but I think, based on everything we're seeing, we should certainly be behind all of those issues.
Elizabeth Anderson: But if you add back this and you normalize our underlying business is growing high single digits.
Elizabeth Anderson: Very high single digits.
Speaker Change: On the on the R&D side. So so I think that's the reconciliation youre right Dave you're at your you know your smart analyst and you pulled that you point to the apparent disconnect between the strong growth of our bookings and V.
Speaker Change: The reported growth in 'twenty, four which again, we hope to be out of that.
Elizabeth Anderson: In 25, certainly bodes well 25 should be with suites here I don't want to put it.
Elizabeth Anderson: Sanctions twenty-five yet we are only talking about 24, but I think based on everything we're seeing.
Elizabeth Anderson: Should certainly be behind.
Ari Bousbib: But thank you, Dave, and I think that was the last question. Thank you. Thank you. This ends our question and answer session. Mr. Childs, I turn the call back over to you. Thank you very much and thank you everyone for joining us today. We look forward to speaking to you again on our first quarter earnings call in April. The team and I will be available the rest of the day to answer any follow-up questions you have. Thank you very much. This concludes today's conference call. You may now disconnect.
Speaker Change: All of those issues, but thank you on it David I think the last question. Thank you. Thank you.
Mr. Childs: This ends our question and answer session. Mr. Childs I turn the call back over to you.
Speaker Change: Thank you very much and thank you everyone for joining us today.
Mr. Childs: We look forward to speaking to you again on our first quarter earnings call in April.
Mr. Childs: The team and I will be available the rest of the day to answer any of any follow up questions. You have thank you. Thank you very much.
Speaker Change: This concludes today's conference call you may now disconnect.
Speaker Change: Please wait.
Mr. Childs: Will begin shortly.
Mr. Childs: [music].
Mr. Childs: Yes.
Mr. Childs: Okay.
Mr. Childs: Yes.
Mr. Childs: Yeah.
Mr. Childs: [music].
Mr. Childs: Yeah.
Mr. Childs: [music].