IQV - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the IQVIA Second Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded today, Tuesday, July 24, 2018. I would now like to turn the conference over to Andrew Markwick, Vice President, Investor Relations. Please go ahead, sir.

Andrew Markwick

and everyone. lad, my you, good morning, Thank Thank Call. joining our XXXX Earnings Second Quarter you for today Ari Chief me and Counsel, McDonnell, Childs, With Eric are Vice Analysis; Executive Officer; Chief Senior joined Vice Michael and Executive Sherbet. we're President by Financial and President, Financial also Nick Bousbib, Officer; Planning Chairman General and Today, be referencing our visible for call this you we a on be will those webcast. during presentation that of will Presentations & of This call also on Investor presentation website our be this Relations Events will IQVIA following available the section at ir.iqvia.com.

to like begin, the I call Exchange caution we the Actual company's business, information Annual forward-looking including to from Before are associated changes risks revenue standards, certain and forward-looking company's or due the discussed include Report discussed management Form filings. would recognition results and and in conference with Security to this Commission, the uncertainties impact stated the of subsequent listeners accounting SEC which XX-K materially differ by our those during on that could statements. by with including implied filings will the statements

in supplement addition, press for, and of In discuss financial a non-GAAP on not the conference call, measures to GAAP. non-GAAP presentation. will these measures which in considered included be release a GAAP certain this substitute accordance prepared are financial should reconciliation measures measures with we to, A call comparable the and

to Solutions, Solutions we changes offerings press our the clarity changed that were segments. better more in renamed I only. provide CEO, segments. to Contract these been of changed to Sales and of over and name seen have These Medical our would of any within with been the Ari release Technology will respect now Integrated turn segments. and you Bousbib. call changed Chairman to are has the & Commercial Engagement our made our Services X Analytics Now reporting These Nothing Solutions. & composition to has has changes describe

Ari Bousbib

and the thank Earnings Well, operational you, performance. driven -- our morning, investments business over Andrew, and investments saw suite, our talking Investments and capabilities. our quarter the by was that everyone. generation real-world technology Quarter offering for technology and businesses. we've our expansion in good next I'm This real-world XXXX Thank our to been Call. another strategic XX buildout and report that R&D development accelerate, you across Second platform of the investments of R&D, especially strong We was Okay. pleased of financial joining past in of about our momentum and clinical the months, in QX

Okay, let's review the results.

was by from driven quarter at higher revenue; organic end pass-through upside associated in $X,XXX,XXX,XXX. Solutions Second three of expectations X%. contribution high third, our beat and the R&D Solutions our our second, our Technology both in above and with Solutions components, $XX revenue & Analytics This operational roughly of acquisitions. the million R&D equal came Growth tuck-in businesses; first, was the

a we're As revenue $XXX Mike $XX updated at time This we more million our million midpoint. year result strong notwithstanding by headwind guidance this later. last the performance, is provide of a detail the FX versus raising will full guidance.

on provide color Let growth businesses. some me our

first Tech quarter. the same & reported XX.X% X%, in about grew Solutions organic Analytics and at constant FX. Technology quarter revenue currency Second was XX.X% constant Analytics growth as & the

We our to new spoke have about last continued significant we win. quarter noted growth quarter studies, in single-arm good real-world We last a business. you seen in capabilities and

the suite launch, the positioning help of comes the of product from of This to of benchmark with the to capabilities, oncology optimal an the X time in a time the will this win, client's significant for top set arm of real-world at client. single-arm how data project molecule another had This understand here. the and pharma allow a care trial. to excellent retrospective we standard will results up market, quarter, This synthetic of play Europe example

Moving to our tech business.

We've know, that number seen Salesforce's marketing the recently current offering. machine new year. or within We've and Canada. you for the our U.S. and Fabre, offering, of investments launched is with such differentiated Recordati, artificial As was as various the deals we've OCE intelligence integrate EBP that as cloud other which been out commercial operations. and onto Engagement, commercial of already replatformed management collaborative applications making Orchestrated campaign CRM, the Customer Force.com in clients' We market point highly to in is utilizes gate tool OCE, well our significant innovation. great our in from SaaS learning a of exist and our functions won solutions OCE KOL marketing Pierre PruGen clients and last traction launched a December solutions. as in It

to am significant X Now pleased report additional in addition, I recent awards.

platform a made globally. standardize on OCE top client First, to pharma XX our the has decision

largely highlight fair player innovate, market. a incumbent intent capture to roll top has midsized invest deploy in is OCE in Top time. to for of a And by market that was to a countries. specialty long will this signed market. global XX a want When share out our we to I a pharma and a client that dominated XX company third, pharma deal has Second, X OCE pharma been decided an a this

want business. our OCE a have XX we see of mention work this very momentum do is X won excited here, end is team by to space. last do the I to starting at lot year, competitions in technology there to we out While in the since of The that of we're launched

In won of pharma X integrated side, are in wins with pharma XX just great X and top fact, covigilance we the management clients. awards drug global our for applications. growing These clinical risk newly on technology major market safety the suite

constant Solutions. X.X% acquisitions. R&D of X was including Moving and reported from at Growth points growth to X.X% FX,

this strong let's had Now about in new how the doing bookings talk quarter. we winning business. are and We marketplace

billion, contracted net as compared LTM the number excluding net business QX over contracted XXXX. new new which $X.XX LTM XX% growth of Our pass-throughs, to is of business, represents

with in business, a us dollar ever largest to awarded this awarded to fact, In was quarter. value respect bookings the of

wean to we've Now book-to-bill quarterly metric. ourselves the tried off

give We believe the meaningful. bookings our changes, help to I that book-to-bill metric given there continue that more XXX report just felt But every a been I that on going am this dollar not to do this quarter, continue with and at on that given to you overall is would a but comparisons. basis, accounting the competitors and to value lot a you time, XXX have basis. of both I this looking

revenue, derive a calculate quarter. XXX would X.XX as-contracted to were an including for the basis book-to-bill you if First, on pass-through that is you

clean the a whole bookings, I kinds on minute. as XXX pass-through in Second, given old This calculate you definition versus script and up, little let countries. Again, of without you lot precision. mix we are of quarter, if People the thing. here were meaning with all in as-contracted especially for X.XX the salt different Actually, to the in their and false stuff a the a pepper potatoes to a that pass-throughs, that you and of know. sack than lower basis XXX a emphasize include me a book-to-bill we there book-to-bill mix revenue. standard, metric, because many try as to And bookings for Furthermore, an operate imperfect and go XXX derive of off in of do approach different is quarter. would an want the accounting is

We than else. have anyone geographies different mix of

So just strengthened the quarter, just dramatically. can you know dollar example, if -- you FX, for the take that this

meaning been backlog, obviously our And the it's you very last the the rate at revalued the look so quarter, at of when of the FX quarter. day for end

for if market better different And book-to-bill to maybe So actually that's a because, of on way of again, share have look FX you north people would mixes of geographies. be XXX the impact the at the adjust backlog, X.X. X.XX

as of might okay, well brought and everyone, going to have I quarter went if book-to-bill, not. since in we're if well, Actually, basis you gauge for at, which look our a old tell look market of you terms with much of I was the FX an respect that basis, And not old competitors Well, you up at north back how still business share, calculating north to be awarded again, awarded doing to that kind it market for Now -- or X.X. say, of as-awarded most well better would well to the that's adjust whether on the X.X. in of of it been I'm how share. book-to-bill we might

trying great, great whatever I'm know a quarter we had lot here is look at a for way And of to point R&D numbers. I bookings. make Okay. it, the that you

I'm the Andrew, Eric, to you to go Mike, Okay. back script. can relax. going

the clearly choose you you ever is quarter this had. regardless book-to-bill, The is bookings single that important how here will that highest point to we've see measure dollar of

XX% work we next clients the technology made organization EBP in first The of legacy past. XXXX, business quarter new compared specifically, in clinical offering over and the generation and the during to space. very off. added R&D XXXX. business capabilities, development have over R&D relationships, with awards model, Our of with little go-to-market with clearly XXX Quintiles in done that gross the our our winning have investments We the the We're in customer are new were second half growth business paying over customers up XX% of analytics

new The generation excluding our in post-merger billion, awarded continues team again, the of pass-through accelerate. $XXX next-generation approximately next total of development about awards quarter, the with sequential ramp to business brings in bookings revenue. This the fact, this In development excludes which clinical pass-throughs. clinical associated $X.X million was to

and million Now currency. reported $XXX grew turning XX.X% profit. Adjusted to of EBITDA at XX.X% constant

margin tax McDonnell, the Officer. to discipline to $X.XX of Adjusted the cost-containment EBITDA $X.XX merger we of over expansion. for EPS over was another of $X.XX and solid me the with and strong synergies, than of our drop-through continue of our the quarter combined also provided Financial let beat that, Adjusted $X.XX delivered we had quarter. Chief the midpoint We comprised growth, XX%. -- diluted $X.XX turn guidance operate from are the efficiency. higher results with diluted With Mike it initiatives realization of from with adjusted the EPS and This

Michael McDonnell

Thank and you, good morning, Ari, everyone.

the remind now an you, ASC on review for presented. Let's which, financials, are I'll basis all periods XXX

revenue XX.X% reported at FX revenue X.X% rates constant X.X% of and of Solutions at X.X% Technology Second revenue grew constant Analytics rates Medical grew constant $X,XXX,XXX,XXX declined of $XXX and XX.X% & currency. $X,XXX,XXX,XXX $X,XXX,XXX,XXX of revenue X% at Solutions and and currency. actual at grew Solutions million R&D XX.X% at reported at Contract Sales currency. constant currency. & FX XX.X% actual quarter

Moving the P&L. down

$XXX $X.XX. was of basis income a of constant constant currency. adjusted growth grew at million reported EBITDA, offset driven primarily discussed, net net grew per which was GAAP $XXX and share currency. of expense. basis higher million Adjusted XX.X%. as adjusted by XX.X%. $XX driven was points GAAP Adjusted Adjusted grew was net year-over-year. partially and well points XXX per by Year-over-year by higher diluted XX.X% margins basis EBITDA stronger earnings count lower diluted adjusted expanded million earnings $X.XX quarter reported share Second Growth XX XX.X% EBITDA which income on as the at income, I just and interest was share

year-to-date quick take Let's look revenue. a at

at of currency. & revenue of rates Technology currency. of reported grew constant Solutions Solutions at revenue and currency. constant X% half $X,XXX,XXX,XXX First X.X% XX% and XX.X% actual revenue Analytics million FX rate at grew $X,XXX,XXX,XXX $XXX declined actual Sales constant Medical at of $X,XXX,XXX,XXX and currency. XX.X% X.X% XX.X% revenue reported at & at grew Solutions constant R&D Contract and X.X%

easy net move to reporting bookings report which with derive me quarterly this let we we we bookings. will of quarterly, year. Solutions' our quarter, reporting business, including last how for are R&D Consistent are you backlog, remind it's pass-through, we Before you so to new

bookings XX, new the was old year-over-year June our XXXX, growth accounting to will to peer LTM the basis, for net strength are this you business to standard, continue group, XX.X%. representing of on our years. you business net contracted help billion, of assess $X.XX and on year, prior pass-through. addition, business report our this also compare This will new at whom LTM many In XXXX basis, excluding still we reporting new to allows an versus On

pleased to XX, months And is beginning now if billion. of over we very expect to $X.X to billion, at was of are our We June see the $XX.XX that acceleration and we include XX convert the the approximately reimbursed of expenses, revenue the next XXXX, bookings. backlog backlog amount closing

to turning profit. first Now half

was $XXX at currency. grew basis earnings EBITDA constant expanded EBITDA was First half adjusted and $X,XXX,XXX,XXX points XX.X% $X.XX. XX.X%. income XX of adjusted $XXX and of margins reported EPS $X.XX grew million share Adjusted and income reported net GAAP points and basis diluted diluted net Adjusted XX.X% of grew million at currency. GAAP per XX constant XX.X%

XX, spend sheet. of just in cash guidance, billion, At $XX.X review minutes $XXX balance equivalents net debt on million the resulting and $X.X we June totaled was a few and let's Before debt billion. about cash

trailing leverage free from flow Net X.Xx. gross million was cash of $XXX XX million. expenditures operating quarter. leverage was our ratio cash, Our $XXX flow Cash in the months X.Xx and second EBITDA. was ratio $XXX million, Capital adjusted was activities were

the repurchased we million currently our billion our second $XXX quarter, of We approximately share shares. repurchase under $X During remaining authorization. have

Now to guidance. let's XXXX turn

to growth year. We are $XX.XX February and guidance between adjusted for expected Revenue ranges and be to has EPS. billion X.X%. representing X.X% raising billion, year-over-year this the year EBITDA range time since guidance raised $XX.X our of for adjusted full diluted second now been revenue, is The

current the XX at into we was previous guidance, raising in growth at of points are account, $XXX that basis foreign rates, million. year over we included full this tailwind $XX by When you guidance note that some You for FX million midpoint. exchange have the about effectively approximately or the of take lost our should the

coming and EBITDA earlier The which year due the guidance, Again, reflect been revenue $X.XX current headwind of revenue bit represents growth XX.X%. which with come we guidance and the with beat, revenue flowing rest is the increase; and effect be has year-over-year as XX.X% and typically representing year of guidance line lower now organic represents pass-through higher the as of half to $X.XX adjusted R&D expect earlier, increase discussed and first, increase; to net tax three pass-through XX%. another adjusted acquisitions EBITDA billion X of has profit discussed very is areas to in rate. organic operational a $X.XX the Ari profit. EPS second, through expect the includes now foreign billion, which increase remain of the the the $X.XX, also to a X/X is than diluted between raised, in assumes third, about is which from increase currency this in FX and contribution strength, X/X from to on year. Now raised half solely Solutions of full I We of had rates Adjusted anticipated, higher year-over-year more be to about M&A. for X% to this diluted full between Adjusted EPS due comes little strength is we EBITDA as a been expected well growth first

expected be Our adjusted rate now book tax is approximately XX%. to

guidance Now let's review quarter. for the third

Assuming we second to the full and revenue foreign annual of this end in our in This impact growth which to is than be FX and growth lower half. the mostly year is levels through due rate guidance, X.X% first between billion billion, X.X%. of represents third half lower a the $X.XX remain growth at the the expect rates to currency to quarter, current $X.X compared

the we half. an to FX expecting in In year-over-year headwind growth second fact, are

expect tuck-in from contribution a lower We acquisitions. also

EBITDA diluted between be $X.XX EPS adjusted and expect to and between to adjusted $XXX We million million $XXX $X.XX. be and

adjusted quarter delivered for strong EPS XX%. EBITDA we summary, with and in EBITDA full currency. expectations. results points diluted constant in We guidance margins that consistent, revenue adjusted expanded revenue, our another profit over diluted XXX year Adjusted numbers came at raised basis EPS. So grew Adjusted above of and

of business with in $XXX the at for Our the the lines R&D $XX.XX. repurchase to continues with price billion total new average executed over to Q&A. And the LTM, contracted significant repurchases And services an will up operator wins we tech to I Solutions quarter. that, in grew XX%. open new business team share ask of bringing post-merger drive OCE net million the quarter, SaaS $X.X

Operator

[Operator from our line Instructions]. Goldwasser And the with Ricky first question of is Stanley. Morgan

Rivka Goldwasser

seeing that past, revenue change the inflection growth the half you the XXXX. in So this of on But the you Ari, about kind this demand like your point on based are revenue wins trajectory? quarter, in view second does talked the of the and being

Ari Bousbib

that question. it comfort seeing about Ricky, -- little a to this simply gives this, achieved I can more don't predicting want then. we talking still been and in little the bit lot that No. certainly, again, narrative bit lot Again, merger. be are little revenue better, inflection burn, faster, inflate the little bit I We feel Look, us the a but for to faster same uptick revenue growth a time here, bit. we've thanks your the think of since you we're a

'XX away. And so Again, it's a the far, could less not of bit that little we year do a earlier? middle than is

you. thank So

Operator

with question next Eric is Coldwell our from Baird. And

Eric Coldwell

what curious, First the they their just show contracts how curious, I'm just that that some one have, you biggest clients? could duration long about? through is I just rate think your on your of marketplace cycle And competitor you competitor do with there. OCE. by you maybe think, hit of maybe against I XX% some has the bids talked average I'm estimates, that more of and think

Ari Bousbib

share, the certainly greater to than Yes, XX%. look if you market XX%, is accounts, inching Eric. maybe Thanks, even at But large by some pharma.

the year about And and X impressive global for high. part costs most I talked the of top win there's phase countries is and the over is who the many the are provider. be it about, the But happens switching therefore, able hopefully, duration rollout. But therefore, X be it's the a significant a shortly. what X it XXX roll very here because to think It's But and years. it's contracts, so at it talk we the and -- on sponsor client out of pharma us, of years And can out. I we'll And part investment on a it's significant countries. typically, or or the takes roll could to technology it a time could say the to be more sometimes, that implementation be we a more as that

So compelling we the really, to extremely sometimes, to value be is here. pleased really proposition why are switch. And has it

Eric Coldwell

fair put want words shouldn't our skates sounds ahead got a implement. you the don't you're I really will because year probably approach? as of you've over your like well next momentum. this too it bigger far time on that get capture we be as projecting needing good to clients or multi-year process to with but mouth, But a where happy in RFP are, so share Is

Ari Bousbib

approach. for good, actually just Yes, can But if it's fair a I frame that you.

here business. grow technology long-stated goal Our our is to

We are revenue a companies have than products and some out highly there. valued technology more actually company in aggregate. We technology of more those

Analytics attractive We a & what revenue and business. highly do, billion business, a business, we X it's but have, growth -- $X.X which our Technology but so is large, in in or data underlies

that's that technology so out, has mid-single-digit been, why double the in And pattern obviously for digits. of business our in, revenue grows quarter aggregate. growth quarter growth The business

trajectory investments, making that, We anticipate are inch gets you are those rolled correct, up for we But it's up. as year. next the and that technology not will mid-single-digit

Operator

Erin Suisse. question from with And next Wright is our Credit

Erin Wright

to some awards, to partners? more awards have next-gen speak of relates to meaningful it I the I to existing displace give as been with you seem guess, strategic all overall earlier. in And be those able where did win actually that momentum rate The the next-gen? to you've continuing the you metrics here, establish and been appreciate can preferred partnerships you nature able

Ari Bousbib

you just amount went with or dozen differentiation, so was established pharma. X you sorts, principle, where procurement matter Erin, just part because got of, dealing you've XX a partnership sponsors of or at to of a Thank it gain little trial. can't complex me, work time RFP, very reason Look, question. an to And of preferred your oligopoly with don't large here, of why just have forgive half it's a this and personally, because through like preferred concept you, of CROs XX competing sort Erin. and CROs a a finite every for but essentially, to time this go I The waste X, as answer partnerships,

going of likely. kind ones to X need the preselect you X to most or do you with are so business And that

the win generation us superior of preferred. time, on not whether very the capabilities, preferred, evolved we therefore, which offers. model believe single So want I of next towards preferred back clinical this to every development we or

respect that's So preferred. with to

status you're track speak Now having said disclose we really are, many industry move And doesn't or of the as you guys with of number some, the speak, large pharma we there Again, needle aware partnership. very all this, probably in a of well. preferred running that, I substitute can us. their I can't companies and you that to partners. for this are that tell prior it processes are the but preferred reviewing There are,

-- partners. are have other by way, the at as clients offering winning, We with at preferred next-generation people that

percent for rate positive X/X, the the that, happens XXs, us, for usually just in And your win next our it be generation, we question, So there clearly, it's With XXs about you in -- rate, we double that winning first in the track a in us also to higher some instances. Or maybe rate. of the the probably are though experienced very it's to and It's the will. is for respect hurdle win that right? rate, rate part is decision XXs. regular decision for the if decision

Erin Wright

U.S., for could I to. regulatory if all, any guess, And the broadly, Scott what at on and more how landscape? scrutiny trial the with with a of more your of instance, And to the aligned ask I we've on I the initiatives perspective, are administration, the FDA? some regulatory the efforts customers And is just and clinical guess, of new from, Gottlieb if have That's you seen a particularly, respond, drug here. great. initiatives broader And I'm from in a It's across seen referring the late follow-up pricing new landscape. question

Ari Bousbib

pricing our a lot strategic But drug, into the when to Erin. our there's are play. a the the factor, fundamental, the you, expected for advanced, once effectiveness molecule our on I approved, that The we through obviously, economics the actually of demonstrability gave That's example a major enriched are to clients, with of the Thank for business using building to in predictive because patient-level -- -- data. win trial, a of the anticipate the this that try put that model of point big and the Yes. based real-world a drug pricing whether they as here are single-arm is comes analytics. well. the question at looking and

So we we here are they the proving develop. the drug and to questions. demonstrate themselves have very that bring the clients point meaningful and in support reasonable is clients believe that capabilities asking that order make to to unique sophisticated it's marketplace, itself And pricing in to out the to achieve bear, the help want to and

right, question molecule, question the you're level, on -- strategic strategic don't more it's by drug So is the think drug. it's and a there level. I the by but molecule is are

the of real-world drugs constitute growth main course, would Erin. question the Of comes you, engine Thank and up in our bread-and-butter also business. market, for the that the

Operator

Evercore. And next from with Ross our question Muken is

Ross Muken

bookings maybe So the on side.

are guess, you biotech I I maybe think pretty from a we months trend some I got where there? do making what think in share XX inroads, what kind of versus we're Ari, you in seeing of of then ago? full-service, lines kind small And were difference FSP you're in or sort sort how of of the and versus pleased you emerging XX see the the about areas dynamic. is your with as commentary,

Ari Bousbib

question. It's great a

more merger, the what and back market. products, XXX% took you offerings we of of that, the Quintiles terms, et different a cetera, the that of types time, of organization who and lot at to realized work et step to kind type segmented recall, the legacy the a the market, was that with the be growth, with time cetera. looked proving to itself of We the the the couldn't board. We And segment under of a -- that needed admittedly, wanted the we what We more the concluded needed that that and with, margins, we what approach strategy leader after EBP and we address go choose meant said we pick aggressively. to engine just is at and want If of to in when marketplace across at out.

to we we've seeing the bookings lot doing never work in mentioned continue bookings. We development organization. growth even by trials. remarks heard of within clients in this XX% EBP I past prepared traction. in sometimes are these of with terms a the my extremely quarter see are the large good of clinical that in And We're way,

Just companies, know, extremely are small funded. you because they are well becoming they're, as

In the appealing. development next very of is offering clinical also fact, say, I might generation

awards about XX% with think I second the next-gen of were our clients. in quarter EBP

we And client so that's decide as have company And to The outsourcing again, a pick clinical point in a for and other. do might resourcing And some a choose. from we both are a can trial you from The very and correct that -- same full-service do to and in as cannot they at walked not you literally, parallel, well. EBP. With again, work. respect client to capabilities had said, FSP, particular whole and away, is possible of clinical to trial, resourcing go the at all the bells wants time, all both. same deal. And and the the for the core one with time, because, whistles type

to I does as of most FSP the part, approach. well. for that's have with our again, uptick comes It's healthy that work with kind this, long-term will won't say, know, we that not And clients a and you And different with changed not seen partners, have amount but that," therefore, our we've the to of so And pass-through requirements. lower we've it. different just constraints in just the margin. partners. as relationships as do It's, "Well, do I And no, want

So it has impact. an

a on the that, a of greater if our quarter, got meaning work you in book-to-bill bookings on than I actually in from XXX lot you quarter the here. is XXX might that fact, basis, very because derive point good In ratio a is we've full-service the fact the to can basis that "quality"

have we lot We also a more have of but a FSP, full-service work. lot

it's again, a mix. So

can't we've going both, going -- on just world got we've Thank got both world the the is You is or to you. and play FSP say fronts.

Operator

comes And question RBC. the with the George next Hill line from of

George Hill

as growth volume the of growth for much we in think us it you kind the charge continues guess, Ari, premium I we guys that walk you parse And from of business from think and to next-gen? about guess, how much to as mix kind in us comes price of about able incremental out able next-gen, the comes the grow. are should how I bookings that through next-gen of were how for to

Ari Bousbib

for George, price the and believe on question. premium. We'd to a generation, next get thanks price love deserve we we premium

However, assure you, pricing which is with for the the if stages here. that X, expected. we in as And always, perhaps, anything, is, these negative one our clients. is again, And have is And are, there reason I would can still what of highly it's competitive. a X, capabilities initial there deploying

that the because very is a in after drop that. deliberately highly to established. can are We be our preferred and order are it's very higher still work We being have not hesitate others. because high. displaced very Switching to won't -- going clients partnerships to that competitive And with is demonstrate market, do hurdle we want at do big deal. people costs a are and little displaced Relationships margin

now, approvals. the a capabilities. model, the is far, on more clients, they'll predictable times, more have for proposition And to not is, the patient expensive we do Right this trying, to faster because over as make the even said we timelines, want we enrollment, we're So where way. time, transition want what contrary, the deploying faster by many just we're

higher product then far, deliver to cost-plus a on move model that, the so cost a a As in structure little fixed more has to from pricing. from model pricing, result, might a work at is is will And we get than essentially on the that of lower which, us better any the allows cost and a they tremendously get savings that to in the marketplace will quality turn, cost. value faster, they discount our elements and

George Hill

portions significant in question, cost of Okay. progress follow-up fixed be, the my the contracts? you which the was were were -- quarter of going hit Well, a of bookings then, there. kind any bookings And the to

Ari Bousbib

But think increasing. That's say. I I almost Well, half. are all are should we we Yes.

Operator

next our is And Tycho from JPMorgan. Peterson, question

Tycho Peterson

to out margin? the increase. Can coming but million key $XX FX top up kind coming I maybe $XXX Why top was are raise isn't reimbursement only more, X of off expense at how question. is Understand with the want the much is start you million through impact, coming I a guess, part. line up call EBITDA of guidance line EBITDA that the

Ari Bousbib

we think want of do to it's in speak the... to I Yes, -- you mentioned, [indiscernible]

Michael McDonnell

Yes. yes, happy to Yes, that. I'd do be

increase million had look last you million guidance, if we really, Tycho, that $XX when loss talked of currency revenue over the in it's the $XXX at midpoint, the about $XXX million you benefit at So in the of quarter. factor

I'll half I'll So just pieces. does is with X organic, million. of break it. One down and $XXX call of that EBITDA that into that about And have the drop-through

around of $XX EBITDA that, the million call raised EBITDA, guidance the gets by and midpoint it, around million. $XXX So you we EBITDA, incremental

So that makes drop-through sense.

them they pass-throughs, make which the which X/X, the The drop pieces, smaller way the M&A. million; of is other in don't -- These through we of of the X/X the really up integrate we are incremental can when half associated M&A, much before other that, particularly them. $XXX about the and have much don't X with EBITDA buy them, initially, fully, profit, they companies

only. that it's piece So the incremental creates the organic really, EBITDA

Ari Bousbib

Yes, our -- I out. we make we investments of cost might in obviously to course, continue add, business. And continue, to and that take

XXXX up Again, we've message end offset. until That communicated to anticipate investments. an the make you. of those we is the been to there So has continuing

growth. By bit stopped in investing of the I'm the much higher, after we next-generation higher, the would that. and would in way, -- it the the first margin. sometimes a labor-intensive the basically generally And OCE and long can the no lot the take We it's hopefully, with when spend we very headwind the and existing client drop-through that's CRM into then our money carries before for we margin clients, we little technology implementation. be margin don't But want in SaaS win would our and to no more stuff, capabilities a be, as CRM obviously, first phase margin in contract, to make term. the put a phases That margin is burden because little to a yes, really there stuff if are much this get and or is an we of so sorry, for be OCE out work investing attractive in. margin more So we

wins bit with headwind of mix. the the again, our deployments a and little come in So do

Tycho Peterson

then follow-ups. quick And helpful. two that's Okay,

there just comment issue? on FDA remediation that been since to related there. up a data earlier. you it You FDA residual from has the any if the curious on Separately, had measures impact came I'm question can

Ari Bousbib

us. short obviously, were None. The We very is for and -- FDA critical is constituency important answer a no. the

many, We FDA. other add, with I agencies way, use our And might the good that or data have many or extremely services analytics. the relationships government by

work. that FDA X-point-something that in down else. or furnish used ingredient patches. that with it again, we kilogram exact anyone it's to FDA, We clients We're particular of And needs, have support way, the which improve for their of This to had of there know their clients. metric might analytics in by in any with to of our for communication. I has in was worldwide. to market the to the if service, address of our I at issue work corrected. and which, don't issue, one service that metric FDA X.X% of add, continuing ongoing interaction the and clients brings Obviously, the X capabilities, error other I the with to remotely, that that any continue U.S. U.S. active of research in fentanyl an provider type to even conversion percent by the our think was And regret audits national obviously, the amount the impact And

again, So impact business on we to do or financial not whatsoever results. this have expect any our

Tycho Peterson

on kind of around hacking? recently. data of thinking Have experienced they then, measures? up of I issues integrity. that do And I'm you kind separately kind how your LabCorp's I security just risk theft about and handicap mean, data step Okay. guess, to you had

Andrew Markwick

this, I sorry, so you well, move think as well? -- queue can George, get the can we have to as to somebody question, else repeat the to after going we're George, just in

Tycho Peterson

issues. data how Just integrity of I LabCorp what a mean, given experienced, mean, concern on much a question is that? I

Ari Bousbib

But of say that it's a hacking risk a measures, imagine. the all that night?" it. people it up and all that's cybersecurity and have as you stuff, if ask -- can concern. But -- risk obviously, me, that's And we an we do are you have manage we talk company. we and a global kinds don't can't imagine. I'd and everything part is Well, obviously, "What can, a We of big of keeps it's a you of at this control, you that for of about. area and at lot you we we long see And redundancies investments can and yes, that's a as our been we've and time, But infrastructure.

as meetings we've with We company. are, in you, and a said other technology significant interaction

Operator

our And with Sandy is next Draper from question SunTrust.

Alexander Draper

fewer thoughts And -- bit we nothing for is made longer questions been really or driving but Your guys' a little A Just that about to Is lumpiness? comment, lot follow-up fewer or just a think, maybe are should really the changing? focusing less of contributions around this. I thoughts. of valuations -- revenue sort is normal Mike appetite Or my expected any have Just on getting it what's already, any term? tuck-in the just acquisitions. be believe, high? I from asked

Ari Bousbib

it we've We there's if CapEx. many invest acquisitions, an capital to acquire low always at better we don't stages. felt, -- had early invest said, no expenditure. look, No, constraints. We minute innovation very a in Thanks. a attractive that would lot, in We cases, at we was Yes. are we

of bets, not we in it's that's an our investments. accounted because differently those for investing. It's tool But strategy acquisition. our and it's the just But Sometimes, we and in expenditure, were we it's right, sometimes It's make capital were a wrong. it's -- now innovation way our binary.

very We always, potential we buy at should. acquisitions have we pipeline, and healthy And as XXX a X. look we

extremely With to away to be a things Valuations, disciplined. number, hard you because correct. are you So even if it's we just we question? small valuations. trying buy -- have we predict. one liked would want it's to from only of more Do And are have yes, moved

Alexander Draper

That's very helpful.

Andrew Markwick

more -- the question then yes, more. after and think, we'll one it up let's we're coming the I on as end hour, top take of one --

Operator

is Our Jack from next Meehan Barclays. with question

Jack Meehan

seeing on hoping was could mid-cap just you what in biotech. elaborate you're I

start customers the I the new really It's think healthy I heard you obviously year. added front. on to XXX been IPO

doing maybe win be elaborate you And business? that great. differently are to just on would Just what

Ari Bousbib

XXX includes mean, as I large thanks. number Okay, pharma the well.

begin include well. with, aren't there as it large that there out companies to does pharma Now many pharma large but

bulk, We've are change, -- and leverage Asia organization, are relationships midsized talking the with pharma those in is model funding C-Suite IMS go-to-market a extremely the level. We've EBP been been the doing distributed we model, about the Although differently? large small are world, or people are IMS of good local number you It that essentially go-to-market changed. correct, the Italy, relationships. in so in companies has legacy this biotechs at around got presence relationships, midsize. Hungary the historical the What

leveraging lot in this was of are that believe and the we've I essentially. really trying what that about we And and we increase in and and part. talking proactive, that that technology go-to-market. mean, page, the but model And technology, sales to invested on type developing a and power a technology bear is, of on antiquated a second our brought none trial development, CRAs, to more the of it kind capabilities, in analytics we of whether we've get force takes had again, put when we their to clinical people clinical know, even the it to everyone There's big we're here are with precision, change all our more present the training was heretofore essentially obsolete internally, efficiency, computer a was you combination which that on then As technology frankly, to the is mentioned with that takes and It of haven't recruiting is space, do still way been ourselves in people, they can were is paper, the generation e-consent considering it of whether and the was client, optimization. next of a business that see to to that and It they level, it, the business. for it to way lot benefits apps want analytics more open do mobile that okay? and done. combination time. development to process focus our you of whether Again, on tools, of in

like the And are, so to it the are that change, it very beginning we've but shoots sorry merger, we that time. been talking expecting. we and are overnight, bit a we it time. that see we And and all here to is green pleased would years little about very X.X are after I takes be over taking

Andrew your good concluding So all for questions. remarks. it to turn for thank I'll And you

Andrew Markwick

for taking for might hour, Yes, have. we're at today. the the rest to time any you you so top forward with Call. everyone questions of we'll And then, us be look we'll the we on Earnings think speaking again Thank our for I the available the join Thank again to follow-up XXXX Third call. Quarter of day end you. And

Operator

of ladies your you disconnect you our And great day, for conclude your may line. We a have call participation, everyone, your conference that and and today. thank for gentlemen, does rest

IQVIA (IQV) 24 Jul 182018 Q2 Earnings call transcript