IQVIA Holdings Inc. (IQV) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Operational Results: IQVIA reported 5% revenue growth, excluding the impact of foreign exchange and COVID-related work, and 8.6% growth in adjusted diluted earnings per share.
• Healthy Industry Fundamentals: The industry's fundamentals remain robust, supporting a positive outlook for the business.
• Improvement in Commercial Side: Gradual improvements are observed on the commercial side, with faster decisions and a focus on mission-critical projects.
• Record Backlog: R&DS recorded good net new bookings of approximately $2.7 billion, with a backlog reaching a new record of $30.6 billion.
• AI/ML Offerings and Awards: IQVIA highlighted its AI/ML offerings and awards, showcasing its leadership in AI solutions for healthcare.

Pessimistic Highlights

• Budgetary Cautiousness: Customers continue to exercise budgetary cautiousness, impacting decision-making timelines and negotiations.
• Pricing Pressure: There is ongoing pricing pressure from clients, especially large pharma, due to their budgetary constraints and cost-cutting programs.

Company Outlook

• Revenue and EPS Guidance: For the year, revenue is expected to be between $15,425 million and $15,525 million, with adjusted diluted earnings per share between $11.10 and $11.30.
• Confidence in Full-Year Forecast: Based on forward-looking indicators, IQVIA remains confident in its full-year forecast for TAS, implying 6% to 7% growth for the balance of the year.

Q & A Highlights

• Q: Can you discuss the guidance adjustment, particularly the EBITDA guidance tweak? (Shlomo Rosenbaum, Stifel)

  A: The adjustments are minor and reflect the mix of business and slightly more favorable FX. The margin expansion is still strong, and the changes should not be overinterpreted. (Ari Bousbib)

• Q: How is the market environment in terms of price pressure from customers? (David Windley, Jefferies)

  A: Pricing continues to be tough due to large pharma's budgetary constraints and procurement practices. IQVIA is responding with increased productivity and AI deployment. (Ari Bousbib)

• Q: Could you provide more detail on the performance of different business segments within TAS? (Anne Samuel, JP Morgan)

  A: The data business remains stable, while other segments, particularly real world, have shown sequential improvements. (Ari Bousbib)

• Q: How do you view the burn rate in the back half of the year? (Elizabeth Anderson, Evercore ISI)

  A: The burn rate is influenced by the mix of complex studies in oncology and rare diseases. It's expected to be very similar for the rest of the year. (Ari Bousbib)

• Q: Did you quantify how much RFP flows and the qualified pipeline were up at the end of the second quarter? (Max Smock, William Blair)

  A: RFP flows, total pipeline, and qualified pipeline are up, with the qualified pipeline increasing by about 12%. (Ari Bousbib)

• Q: Can you talk about the recovery in TAS and the individual businesses within TAS? (Jailendra Singh, Truist Securities)

  A: Overall TAS is expected to grow in the 6% to 7% range at constant currency in the second half, with real world potentially reaching low-teens growth. (Ari Bousbib)

• Q: Can you discuss the strength in TAS and the outlook for the rest of the year? (Justin Bowers, Deutsche Bank)

  A: The improvement in TAS is driven by mission-critical projects for clients, more favorable comparisons, and seasonality. (Ari Bousbib)

• Q: How should we think about the potential revenue mix-shift to EBP versus large pharma? (Matt Sykes, Goldman Sachs)

  A: The mix-shift to EBP versus large pharma will not be immediate due to long cycles in the business, but more EBP funding could lead to a higher mix of full-service versus FSP in the future. (Ari Bousbib)