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IQVIA(IQV) - 2024 Q3 - Earnings Call Transcript
IQVIQVIA(IQV)2024-10-31 19:52

Financial Data and Key Metrics - Revenue for Q3 2024 grew 4.3% on a reported basis and 4.2% at constant currency, with COVID-related revenues at 20million,downfrom20 million, down from 100 million in Q3 2023 [34] - Adjusted EBITDA increased 5.7% in Q3, driven by revenue growth and cost management, resulting in 30 bps of margin expansion [20] - Adjusted diluted EPS for Q3 was 2.84,up14.12.84, up 14.1% year-over-year [20] - Backlog reached a record 31.1 billion, up 8% year-over-year, with next 12 months revenue from backlog up 5.5% [17][38] - Free cash flow for Q3 was 571million,with571 million, with 200 million spent on share repurchases [40] Business Line Performance - Technology & Analytics Solutions (TAS) revenue grew 8.6% reported and 8.2% at constant currency, with organic growth in mid-single-digits [35][68] - R&D Solutions (R&DS) revenue grew 1.9% reported and 2% at constant currency, with 6% growth excluding COVID-related work [35] - Contract Sales and Medical Solutions (CSMS) revenue declined 1.6% reported and 1.1% at constant currency [35] Market Performance - Biotech funding reached 16billioninQ3,withyeartodatefundingover16 billion in Q3, with year-to-date funding over 80 billion, representing more than 50% growth year-over-year [16] - RFP flow increased mid-single digits year-over-year, with qualified pipeline growing low double-digits overall [17][18] Strategic Direction and Industry Competition - The company successfully renewed all large pharma strategic partnerships and expanded relationships with over half a dozen clients [14][15] - The launch of IQVIA AI Assistant, a generative AI tool, aims to provide life science customers with real-time insights [27][28] - The company continues to differentiate in oncology, with several leading sponsors selecting IQVIA for global Phase III studies [23][24] Management Commentary on Operating Environment and Future Outlook - The near-term market environment for clinical trials remains choppy, with aggressive competitive pricing and higher-than-normal cancellations due to the IRA [11] - The company expects TAS to grow approximately 6% and R&DS to grow 5% for the full year, both at constant currency and excluding COVID-related impacts [43] - Management anticipates mid-single-digit growth for 2025, with TAS expected to grow around 6% and R&DS around 5% [50][51] Other Important Information - The company updated its full-year guidance due to delays in two mega trials, now expecting revenue between 15.350billionand15.350 billion and 15.400 billion, adjusted EBITDA between 3.675billionand3.675 billion and 3.7 billion, and adjusted diluted EPS between 11.10and11.10 and 11.20 [42] - The company plans to provide preliminary 2025 guidance at its Investor Day on December 10th [48] Q&A Summary Question: Thoughts on preliminary 2025 growth expectations? - The company expects mid-single-digit growth for 2025, with TAS growing around 6% and R&DS around 5% [50][51] Question: Details on trial delays and confidence in resumption? - The delays are due to client-related logistical issues, unrelated to financials or drug futility, and the trials are expected to resume in 2025 [55][56][60] Question: Timing and impact of cancellations on 2025? - Cancellations are split between reprioritization and drug futility, with reprioritization expected to peak by the end of 2024 [61][62] - Delays in trials will affect sequential growth but are not expected to be incremental to 2025 [65][66] Question: M&A strategy and financial profile? - The company spent 649milliononacquisitionsyeartodate,withafocusonsmalldeals,andexpectstocontinuedeployingcapitalforacquisitionsandsharerepurchases[68][69][75]Question:Pricingpressureandcostmanagement?Pricingpressureistoughacrosstheboard,particularlyinFSP,andthecompanyismanagingcostswhilenavigatingdelaysandcancellations[81][82][91]Question:Strategicpartnershipsandinterestexpense?Thecompanyhaslargelycompletedstrategicpartnershiprenewalsandexpectsinterestexpensefor2024tobearound649 million on acquisitions year-to-date, with a focus on small deals, and expects to continue deploying capital for acquisitions and share repurchases [68][69][75] Question: Pricing pressure and cost management? - Pricing pressure is tough across the board, particularly in FSP, and the company is managing costs while navigating delays and cancellations [81][82][91] Question: Strategic partnerships and interest expense? - The company has largely completed strategic partnership renewals and expects interest expense for 2024 to be around 625 million [94][96] Question: Conditions for R&DS growth in 2025? - Growth expectations for R&DS in 2025 are based on the resumption of delayed trials and the end of program reprioritizations [101][102]