SYNH - Earnings call transcript Q1 2018

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Operator

Good morning, ladies and gentlemen, and welcome to the Syneos Health First Quarter 2018 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Ronnie Speight, Vice President of Investor Relations. Please go ahead, sir.

Ronnie Speight

Good morning, everyone. Solutions. call Meggs, Alistair and our our of the Executive our Michelle on President Jason Officer; Chief Commercial me today Macdonald, are Chief Keefe, With Financial Officer;

update slide from the impact Securities of In the These forward-looking presentation Private SEC is year addition under Factors discussed company, Reform and on in at forward-looking about various constitute we these website the them. for statements revenue the of may provisions section XXXX Remarks Actual our press the result our and future XXXX, to other release, expectations, factors. available factors are corresponding of important our results plans the differ Safe standard. of those prepared indicated Act the Harbor of account Risk a XX-K to as materially Litigation we to remarks ended the that make changes by purposes any disclaim www.investor.syneoshealth.com. for Form the filings. a XX, our Including December to statements prospects for and recognition obligation

as addition, any forward-looking In views not views be date. represent as subsequent relied any upon our our representing and today as of statements should of

replacement results uses and these be discuss measures should measures we’ll presentation considered them complete During this and helps These reporting. of accordance as budgeting measures our outside understanding more with the believe company we decision-making supplement which for, measures, consider because combined be planning, prepared such measures in and gain of exclude a non-GAAP and the investors management call, We certain events financial effects to operating, providing financial non-GAAP transactions operations. GAAP. a not and our for non-GAAP to, financial core that a with of

of Appendix the with the reconciliation measures our non-GAAP refer the presentation. of directly to comparable measures, GAAP financial please For most a

one questions each that over the ask to call with we would today’s one to to As one I an follow-up turn to keeping limit Macdonald. we will to participants hour, question. opportunity Alistair request call be like now Alistair?

Alistair Macdonald

and Ronnie. earnings Thank morning, call. joining Good our you, quarter you thank XXXX first for

a to and Before by we and spearhead I of as already the to several together and two have understanding of many engagement levels while continuing Jason have start you CFO with to driving Meggs few had with Jason, forward worked I’d financial we expertise financial last and commercial congratulating permanent meet organization. for now deep and Health. SG&A someone know at a relationship. all I the clinical Jason have closely look He Syneos that positions, also of speak initiatives our begin, various months. in and over the decades of of like In chance I creation will both Jason businesses. years value

again, to So Jason. congratulations

Now turning performance. our to

well, the despite the Our previous on continues calls, but Biopharma to in outlined Despite the development midpoint. basis on essentially continuing and for few customers. revenue Today, flat opportunities and first are first compared business a how the our The progress we some new was the fourth highlights: long-term. key Model I XXXX first of temporary in and continued build. sequential momentum quarter our for quarter the to progressing quarter brand the us with strengthen were focus we within results first, Acceleration impacting creating A first below quarter, our the Syneos commercial unique guidance to during Commercial is our quarter. headwinds the Health for will headwinds range, existing

begin our X.X for market times. the book-to-bill the and pipeline and both net of quarter of to solid steadily million a had Group, with awards in Solutions well of million, overall book-to-bill these our in strength our business $XXX net X.XX growing position once were Commercial also resulting again. Clinical, a We awards Together first with a this Combined strong awards times. consolidated $XXX net us in Integrated

start business. second to quarter in a we Second, Clinical our awards seen have good

of since late continued particularly in has to pipeline the Our grow, quarter. opportunities first

first our of of modifications quarter lower-than-anticipated was and said, to third the in this Although modifications. from driven guidance our Clinical range, the results we by expect second quarters. below the in book were these contract being revenue customer midpoint majority That

manage and amendment. approach deployment. further term we capital taking some announced related our while Third, our re-pricing goals against have structure to costs key a recently loan delivered of This our balanced to debt includes progress

and positioned shares of and be capabilities. well debt are additional environment, new ahead strong repaid and breadth In selling program. and remains these we pipeline macro strength of levels. the capitalize business our segment, along to with I continue solutions to volume in year’s Commercial scale last previously also announced activity. market opportunities repurchased million see our given continue $XX.X have of our unmatched under Proposal increased believe We we the share wins repurchase to on

the solutions selling revenues of solutions longest business. segment. highlighted we Selling of As our segment awards typically, in leading Commercial XX% providing providing Commercial our Commercial critical toward selling of the are we performance last our contracts working net solutions the backlog and and within our related duration Commercial solutions business. coverage book-to-bill Therefore, for entire as and we as Solutions backlog most across been total is additional business. Accordingly, indicators driver Commercial for has well the have approximately represents quarter, segment this quarter,

Now, moving to segment. Clinical our Solutions

a its quarter reached net a trailing highest has contest in pleased to the pattern is resulting of growth with level particularly of and first opportunities, the in I’m growth since First is of the X.XX our quarter and the awards lower quarter, also merger. in This RFP while award since often compared $XXX as times other on unusual, our were seasonally net ratio closing XX-month basis. times quarter. flow the XXX, million quarters. pipeline of first ASC late pipeline of our maintaining for This under a not X.XX book-to-bill ratio representing X.X%

other Our level companies of opportunities engagement arrangements remains larger provider strategic and also preferred with high. in discussions pharma regarding

sales cycle the breadth this increased the and these Health. for arrangements, capability activity scale, Although longer of validates Syneos is

like updates provide to on strategic quarter. we of some last investments the I’d highlighted Next,

continued stronger insights. solutions our Commercial order faster leadership Chief in have increased media, to Strategy our across and strengthen a to team drive adding We cross-selling, and development digital Officer expanding to business commercial engagement

deploy have implemented new management commercial office support Additionally, Process delivery we and Trusted excellence. dedicated ISG to Commercial to module a project

expanding on potential our the Integrated services, also This opportunities Biopharma clinical full Acceleration capitalize the our on and market. commercial cross-selling in are to of We midsized for group Model. Group Solutions small particularly and capitalizes any to identifies

value our Specifically, client ensure lifecycle customers engagement team the we and assets. product throughout for are their of expanding adding to are the optimizing we strategists development

We ISG outside focus. beginning see area throughout of regardless development cross-selling are already other of to of business teams, development their to multiple the of our services opportunities primary

terms road data Biopharma analytics inventory, In customers robust we nimble map, strategy organization’s and data evaluating with refining to to data most our legacy assets and Acceleration our of are digitization optimize strategic to overall our and our relevant finalized partner technology our need. what will Model. our combine efficient, how exactly each and strategy partners we design data our fuel our also be with Consistent the advanced capital and collective data with

data insights, deep enriched know-how Our science, when speed. solution to our patient-oriented and commercial that right relevancy, deliver is activate coupled behavioral to efficiency goal with optimize data and the

discipline the also by We making integration of applying significant project the drive our our Trusted strategic continue management to objectives aggressively activities, progress towards Process.

resource Our million transition managing of is milestones in a million with great total this We quarter and to approximately process quarter on synergy million optimization. achieve in outlined annually management we towards commitment $XX by to consolidation, expanded totals of key last start realized our is systems alone. million office $XX remain management of and all and XXXX. $XXX track our accelerated facilities XXXX, $XX This in

attracting to progress Beyond express and to continued possible, top with recent total employee We in process the sincere empowerment, an across XX,XXX also delivering to Both rates the Syneos closing, me my believe pleased our Syneos approach environment an averages. of will a focused our In employee we from inclusive talent let perspective. to focus attrition the Health ability clinical this key while culture my organization. to continue on developing on all collaborative Health to talent, gratitude voluntary the trend customers. company retaining quarterly and make our colleagues retention be integration employee remaining and favorably relative attract to are who worldwide value very

on me Jason to turn for our financial Jason? it Let more over comments performance.

Jason Meggs

Thank you, good morning Alistair, everyone. and

also XXX ASC current period on at the Since period-to-period Slide if the an we a in XXX on prior results Let in you retrospective or restated, periods FASB the ASC adopted earliest on commentary. presented as under On modified are period new comparisons me defined merger that we adjusted X, our the facilitate January basis. remind provide of the standard beginning closed standard, the revenue XXXX, non-GAAP X. to revenue our basis previous order results as are not

adjusted excluding guidance. our historical we existing and period For comparisons, these XXXX reporting expenses service will be revenue, discussing reimbursable with consistent

our comparison discussion Slide new that included our review quarter quarter the I ASC with two the it’s along guidance and solely the first, expected will have the within first to were of reference, standards, due differences of XXX adjusted to issues business. first core out under adoption. the midpoint, reminder we our a revenue these For range, in unrelated a point After of revenue X, impact to key of ASC on growth XXX guidelines. results, our between our guidance EBITDA but below But important temporary

to by modifications, million. favorable segment and $X First, revenue our less contract our experienced which adjusted lower-than-anticipated customer negatively revenue EBITDA impacted due mix approximately Clinical

However, related second to modifications quarters. the we during third revenue these expect book and to

for strong Second, well is environment segment our indicate the awards first as Commercial mentioned, as pipeline well quarter positioned and Alistair current growth. our that as

the to impact in the for We elevated situation, this accrual. at bankruptcy we any EBITDA bankruptcy have customer from recapture a seen final that impacted their negatively recognizing point due expense which company-specific Commercial related require this this of million by issues not ruling. we court expect and us going bankruptcy, leading prevented adjusted bankruptcies second of level is quarter forward. half was a to and to believe At once an indicators revenue time, least However, $X.X

our under quarter and On first our we ASC I’ll results. begin XXX both by reviewing discussing to XXX. ASC XXX, show Slide under but on X, results Now, ASC results

downsizing million, Our a million adjusted XXXX quarter million. the down quarter first driven of includes customer decline in service revenue million $XXX.X which due with to $XXX.X $XXX.X exchange and by to in XXXX $XX.X decline This business during XXXX. foreign to is first compared of in impact benefit lower of along was This fell service XXXX. XX% $XXX.X XXXX primarily in in X% The for wins new commercial million the adjusted from of was the our segment, revenue XXXX. for cancellations

first which I we As a quarter, experienced revenue commercial the reduced by million. also customer during bankruptcy, approximately highlighted $X.X earlier,

In relatively flat addition, was revenue experienced quarter. favorable our headwinds, sequentially Despite fourth compared the XXXX Commercial revenue quarter. we in less the the Commercial mix first to

our a to sees to trailing is because XX-month of renewals. and awards year our highlight commercial I reported typically first due XX% to book-to-bill, the allocations This be ultimately annual and these profile. represents half Regarding best Commercial basis a it the of budget would awards communications, in of significant which portion approximately due seasonal newly on look net at their that will awards annual segment,

can Therefore, we will in In addition, only these accumulate in significantly basis. trailing awards on metrics data, quarterly on a reporting awards starting XXXX. business solutions basis we begin selling a the as XX-month vary quarter-to-quarter

service in XXXX a of quarter segment the in first X.X% adjusted saw of million first Clinical the to million revenue from quarter growth, $XXX.X Our XXXX. $XXX.X up

the which service in As customer million midpoint $X Adjusted guidance, XXXX to from revenue declining from million, earlier, XX.X% approximately timing due for I to to EBITDA below of lower quarter modifications, of associated clinical said adjusted first was with margin $XXX.X $XXX.X XX.X%. adjusted solely the was XXXX revenue than decreased our from anticipated. the in contract million

relatively exchange our decline $X.X by offset realized in revenue the Further, as as were Clinical of quarter were negatively which first benefits discussed. as million of aforementioned flat. mix EBITDA bankruptcy the unfavorable Commercial Commercial in Adjusted less favorable business. the by expenses volume the in SG&A revenue The customer previously and in and the from mix for and related negative However, non-recurring benefits EBITDA margins segment our in segment. in impact synergies lower of segment, when as as our Clinical well solutions well in primarily growth normalized $X.X selling were foreign Commercial revenue impacted million margin in our were XXXX,

to our above stemming X.X% of grew non-GAAP partial senior the the by inVentiv first XX% million our first of For primarily the XXXX EBITDA in diluted redemption due XX.X%. of in driven Adjusted in strategic interest the of of expense as financing. quarter quarter to synergies, the growth. for to decline from of income drive the from XXXX $XX.X guidance part million the EPS realization of $XX lower $XX.X XXXX. our of net first income reinvestments quarter of first net the increased XXXX, Adjusted adjusted net million to of unsecured the the midpoint from includes in XXXX to reduction XXXX. increased $X.XX notes adjusted our This was Adjusted tax quarter the for merger first primarily quarter $X.XX of despite EBITDA by from rate

For standard, revenue $XXX.X XXX. Adjusted was are also of was than net first reimbursable approximately EBITDA Slides total X is $XX.X for summarize includes EPS the on completeness, million, lower to for Commercial. Adjusted our want first ASC under ASC $X.XXX revenue quarter, Clinical Total for which and was do which resulting the $XXX.X income X. million XXX and of results adjusted million of quarter an under I billion. included million adjusted $X.XX. XXX $XXX.X comprised This in expenses, adjusted the for ASC new total X%

Solutions also segment. Solutions provided Solutions Moving include metrics have Commercial of to and backlog component we our Slide for X, Selling the additional now Clinical

Selling that XXX. is backlog is the backlog XX.X% which clinical ASC Solutions and contracts segment. reporting the You Commercial for under Selling Solutions the visibility XX% the Commercial, coverage initial ASC improve segment, revenue The we are which can Slide XX. for XXX. component, Solutions cash for and also therefore into coverage this XXXX to at provides duration are X% In is and an backlog year coverage position. flow full longest backlog. has key related metrics effort from of under the also X component within to Selling providing for represents our our we backlog see approximately leverage our

million operations $XX of quarter basis. the XXXX, During of on our first used cash an as-reported

offshoring debt vary the resulting to largely billing billion. to in for DSO continue temporary and The time. was and in total forecast fluctuation increase over operations of and net mid-XXs by to flow the quarter-to-quarter collections the normalized, quarter associated and well with DSO cash our quarter second $XXX.X XX platforms billing and of flow certain levels as our the a XXX. will combined outstanding normal due million cash our to first of collections over under in integration Our of and our low lower DSO activities, of to the for from to financial in functions as cash days We we were ASC billings and lower operations the quarter primarily the expect and with flow range the consolidation ASC transition from XXX. ended unrestricted We expect the year driven first delay the and from $X.XX our quarters. normal third of in return to half cash Once course anticipated

This debt the $X.X pricing basis annualized interest we levels. both based on a a will to credit X, have on have Slide expense rate on XX variety debt whereby our that balanced by recently with structure loans an as report capital management we deployment. want approximately Turning provide to and continued to I to by amended million we current our our of a of term pleased focus of reduce you I’m the facilities, initiatives of variable part on undertaken update approach lowered points.

in of outpace to initial the during to expect the assumptions. remainder our XXXX, have of increases mitigate We this impact expected which LIBOR begun

manage We interest our are continuing costs. structure to work proactively to on strategies and capital

merger closing In of a to repaid of flow of our to addition, available target achieve the cash term leverage million during overall three our XXXX. the in of our reduction We order of total the to end utilizing quarter, our $XX.X portion since we intend by debt to operations million. approximately reduce continue our first $XX.X times from bringing our loans,

our first quarter for cash to committed million repurchased announced a discretionary We of both program conditions. remain and also we outstanding We available the capital repayment debt flow the through market remains authorized last million repurchases and $XX.X $XXX.X during XXXX. determined under the quarter. to end by shares balanced approach repurchases including deployment, of as share

to strategy review shareholder acquisitions value. tuck-in we that our long-term ability our continue believe We drive execute also to will and potential enhance

guidance of evaluate work Jobs related to we impact to continued Cuts previous we expect the XX% to or interpreted upon continued tax and advisers Act. this lower and to estimates, Lastly, have analysis latest related XXXX approximately XX% Based ongoing estimate. XXX our to our Tax with the refinement of non-GAAP basis now approximately for their points be rate effective our than the

now also will that be approximately believe rate XXXX our for XX%. tax cash We

on to Slide backlog, re-pricing our is Further, trends a factors, our into on X, our pipeline, and and transaction as foreign our exchange net number now rate Turning of currency outlined we’ve following estimated cancellations taken based rates delays rates, our reinvestments. and guidance and our tax existing guidance updated expected sales interest merger current of synergies expectations. current including account

upon based the to Our estimated excluding first guidance diluted is our any count, quarter. share also share subsequent repurchases

issued ASC updated the to an full under guidance XXX, We originally and have facilitate year of provided comparison guidance XXXX XX. on we solely to our view growth rates February

Slide billion $X.X X revenue and maintaining our EBITDA to expect improvement adjusted also adjusted $XXX resulting XXXX. from Solutions ranges revenue the XXX. from on billion due billion. our adoption EBITDA X% guidance includes EPS XXX. expected $XXX revenue our includes from ASC rate. previously for to year we to for XXXX, includes which we see, This clinical of our ranging billion we to $X.XX can our Solutions $X.XX the $X.X our $X.XX adjusted and you for expenses, range billion. full impact XXX, This raising $X.XX adjusted revenue from communicated Commercial to revenue ASC guidance total to the As ASC expect the this of in tax for guidance consistent standard, are million new to X% negative Under reimbursable to with expectations range and from ranging total billion new under million Under is

we $X.XX to full EPS period-to-period necessarily are Lastly, ASC on completion Under or of direct can quarter. some change provide expenses expect not to from from the $X.XX. initiations of reimbursable on I included basis. revenue to These the correlation want the revenue. only for also year of revenue, of range not closeouts, impact percentage to adjusted the based calculation of and complexity mix XXXX, on fee expenses do a XXX, fluctuate program the out-of-pocket but directional timing program and second color in in

We expense see accompanied in sequential among will due be under expectation approximately that $XXX expect expenses primarily high updated XX%. ASC other based approximately inclusion EBITDA interest our are our on, to Remember We of revenue. adjusted modest million an adjusted revenue, for and reimbursable EBITDA. lower single-digit EPS things, to adjusted to EBITDA growth year the margins margins full XX% of that the by growth guidance in in XXX,

synergies strategic related $XX considers million, of Our of merger guidance impact net $XX expected our to reinvestments. the million the of also

XXX.X to our average million approximately shares, vary will which quarter. share be fully for expect by XXXX We count diluted weighted

back to like Now, your over questions. would to Alistair? I comments take we for before some closing to turn Alistair it

Alistair Macdonald

Thank you, Jason.

for the most our who in pipeline, Syneos our be opportunities differentiated have the of on of our the focused ability and remainder customers, on the ahead to continue realizing I and and We milestones since creating for merger excited success recognized remain strength the by platform. opportunities keenly expressed, the integration synergies. value our proposition incredibly robust for new our have I reflected year, our goals the in of Health deliver to As

our again continue want who pride continued build As in and talented stronger culture their to collaborative once thank we to our Syneos for commitment to we Health, I a our excellence. take employees,

happy pace a completes well We are would the confident be questions. we of are pleased our progress Operator? and continue answer Health to and positioning we any be Syneos our This to prepared long-term. for with remarks,

Operator

question Jones Thank [Operator comes line the from Robert with Our you. Goldman Instructions] of first Sachs.

line now Your open. is

Robert Jones

appointment. XQ. know looking said the Guys, Jason, for at bookings, questions. just lower Thanks I the on Great. And in they’re congratulations clinical seasonally the you permanent

get think the I I like on were a little clinical results peers your they to but that, side. of many of bit the Any cadence seem maybe does why relative reason be your it you biotech. thinking seeing just And along I’m certain did in cohorts? same in than competition curious, others? those different I’m anymore specifically emerging would And lines, than then maybe you are historically later

Alistair Macdonald

numbers across lower – theme that With well as EBITDA few as contract for a Bob. a Good QX a two through I in executed, modifications a across about. bit little a that had is, difference Hi, customers. morning. talked Yeah, that particularly guess, it bookings overall coming rolling that’s made us we yield, to cascade we obviously the through, have of revenue would and here

terms is has in always a landscape. think and it very I been competition, of competitive

we sector that competitive an can with CROs I into where mid are is anyway. a seeing unlock lot now. area, small your to think take space. run we’ve those always value model, a in tremendous folks is It we It seriously very space more the other but

the quarter the grew uptick strong large we and get You of the it’s late in get noncompete shot very it do sectors. I all down think QX, a then very you one-on-one kind said, always CROs a that as and But through sector. very but into get been awards the space. in never with coming that a some that of space with We on when saw goal there, often pipe from are QX. in kind been competitive free We has in customer real into

that’s So shaping pretty how right the pleased now. with we’re up

Robert Jones

softness exactly little on comments you about That’s drove modifications. or you you and clinical helpful. Is those a share more those we And And book something the business course of coming revenue would those see just bit heard I I you Could of when on of modifications? what guess to normal this you follow-up if do made the bill contract quick just bookings? And from some unique? to then XQ? expect correctly, expect kind in one XQ

Alistair Macdonald

Yeah.

We the to significant contract Jason modification future where well. as also they’re business, somebody don’t we relationship different book rush want team one through that struggling I burn and but quarter. customer that normal one of there’s all up the to significant think about, and worked the end QX QX, got and from billings of need you and and in execute, talked the after way good a the backlog – of of scope, some there you’re the retrospective majority of little well And of is are course good, scope very We it a in to for of bit have That back, expect on future. when you pick number a a to the look on the that been into modifications revenue to in doing and I mean, quarter pushed executing they actually going those end them anyway. work so change identify to but that QX, immediately that very and jamming come QX. for the very have as see for are kind scope the then pretty into said large the would and for ours, contract a to of the much sake point begin of to there’s continue work QX, large, QX, we again no close the

Robert Jones

Great. Thank you so much.

Alistair Macdonald

Thanks, Bob.

Operator

you. Thank

William Our line of Kreger next question John of the comes from Blair.

your open. is John is now line line Again, Your open. Kreger, now

Alistair Macdonald

it’s unmute. Maybe lost maybe or

Operator

right. Please All check your mute button.

the comes Our Windley from line of Dave Jefferies. next question of

Your line now open. is

Dave Windley

guys works. you See line if Can hear me?

Alistair Macdonald

Hi, Dave.

Jason Meggs

Dave. Hi,

Dave Windley

Good Hi. morning.

stick I to want same. So, the on kind of

much you was to the it’s guess, expect Bob, and that. contract the get you’ve little to contract Bob, but much tangible of kind activities want described modifications, to that because – knew think, some How answered amount normally some I it light, to to of around kind on opposed modifications, want you I the like get as is modifications perspective. I you in that hear gets aggressive of ongoing guess of describe I your a sounds you as and on guidance? question of reliance Alistair, expecting that to about ask, contract the to would how I number hope a get were sounds you just those open-endedly you’ve didn’t them. clarification were On but

Alistair Macdonald

a always modifications the contract of baked business. There’s into part

those mods As after or trial, you know, up. or tight you exclusion design gets and you shortened a a changes the are inclusion through – the environment or too get work it, expanded project clinical and contract come or gets

room. in have be So a finance to mechanism expect. expect good the robust business. where it’s that deal I for don’t and always pushing didn’t that. there we always a a there, customer would think hard On do. we we we what get that think And the to get a normally will natural occasion, want team. modification information a always that process, of quarter expect percentages didn’t you we from piece and very too through been to would give that come out I BD our contract this of a relationship, I It’s and don’t and expect certain we would we percentage very we with think operations your what have awards But burned it piece what of total

quarterly revenues the profile. filters It you that more doesn’t same burn the same that. got effectively. have will up Jason, same that that to It’s QX, revenue want change affects, guidance. add pick than you well So, QX, don’t that? the some retrospective We’ll revenue across to profile as still obviously the to into still that that up pick it change, cadence it in the comes we’ll when how nothing the do in through, but pattern

Jason Meggs

Yeah. that’s come just would the add and, circumstance to we that to then through It’s specific be referred look see at that likely, to expect down we It level – therefore, year-to-date. Alistair quarter that in we’re just resulted and that three being impact track. that be was I just will back the back this it would and to, but could where the we overall in performance, quarter two. and be

Dave Windley

dollars, give million, And the $X to more is but continue would the you it than scope the $X total if had like this correct? numbers a would in said, the quarter, of value a of guess, first I curve because number have Can that, on you added modification similar be I then the profile million signed, modification so dollar that that? understand revenue this gotten to you but to bigger

Alistair Macdonald

No, I don’t that to $X into think it’s I we wait through because bookings, million, think. than want for fill but higher significantly to so,

Dave Windley

leaves not been about of the to even the and the And then has incentive a question and but at maybe anybody years. you slower in than would understand year, more Bob’s air be of for any there perhaps is or that at cadence, the kind an that other cadence not the this business try clarify, out when in seeing we’ve I Syneos your causes common to first back force a and Okay. mean than asking the quarter notably Is lower companies of peers. seasonality what of the for something you’ve that sales a has called low? something quarter couple strives I rush that, clinical Like get last why the that just quarter is with do January kind to pull book-to-bill, year like I’m and Syneos’ so bookings now forward obviously back? in in to to you’re so structure want these that industry first seen is end February that in and X.X you of pocket come book-to-bill

Alistair Macdonald

comment. a then and that I any through I numbers. the team. in looked it X.X out mean typically don’t it that’s in a a we’ve in at just and on incentive of to had think have strive time. terms times to the book-to-bill rhyme years, five I we in execute packaging to don’t or structure we’ve I pipe see any saw lower where three we I get fair coming we’ve rebuild to reason or December January, think lower in it we QX pipe, but and BD QX. for had today, mean

mean looked FSPs, a not QX we see don’t or rhyme it. that. also of reason is I So We get pushed. the policy few it don’t execution see at the but times. for – bookings include some some any larger in There we’ve for which

booked mind that within So, overall doesn’t number anything award – Bear out X.XX overall current our start we six – bookings is in push months. policy. under

take on side, we just the So, year. FSP the first

six than people policy competitors, So piece are the within start FSP I future the our of that include a that’s lower book-to-bill, award. we bookings Q does – and of to going although months book sizable where for think – within anything don’t

Dave Windley

Got it.

Okay. Thank you.

Operator

Thank you.

Our of of Peterson question Tycho JPMorgan. the next comes line from

open. now Your line is

Tycho Peterson

then any Hey, book-to-bill I’m the comments to on the maybe Commercial. thanks. over by revenue and multiyear even with multiwins solutions? of X.X the driven wins? like issue Commercial how EBITDA mix little selling about Alistair, going on beyond shift that margins if more Can just for then, bit talk was could much there just pricing I’m in And Commercial the environment talk you a you FX, of – wondering were X-year

Alistair Macdonald

Tycho. Thanks, Yeah.

Commercial, I’ll shaping to the where you just up with We’ve added on leadership more the in We’re with We’ve to experienced for team. very EBITDA Michelle that. we Jason Michelle’s here start well. as that team. insight and are pleased added to hand Michelle let’s and off

good that from started Still work that’s and feeding ISG early structure, the QX. have into we running, well. very also appropriate is business days, implemented I result Commercial, We we an and a up in and have think development saw group

of that for It we be variation kind on Commercial. – seasonable X.X be will get a number. high I seasonal book-to-bill Now, too have in have within number. solutions think the don’t careful, selling to will There swings

the the As Jason a that of prepared first remarks, awards in happen communications half. said lot in

of you commitment in how development in first the that’s switch as to there of maybe of insight, XX the to that what and expect the part just the with the give see you a to remainder side. on we JPM Commercial in we Michelle, also made QX trailing variability But want address? pattern on and to give call, we more to be to more flavor So going trend experience to that you up build XXXX, clear book-to-bills. we we’re quarter, to business. throughout earnings

Michelle Keefe

things. Sure, of couple a

I the first, thank in Commercial want the So QX. team phenomenal had for they to performance

a of a One being think things. couple to us the between collaboration that’s Clinical benefit been of things is the real I Syneos Health of regards Commercial and in

and measure currently, collaboration with Commercial are just Clinical for business. our team to policy some to selling fact overall and to backlog get solutions the about we now the the us really between First, good able specifically, talk KPIs the really book-to-bill

the think the our sight most achieve about to that things Commercial now going excited a target. the of take is clear what I line is have of business financial to to we one that’s I’m

you can where identify the quickly opportunities So are.

run quickly course are sideways, can believe correct. been and now really you new that’s real having KPIs organization can going of I and a where think helping really us benefit way. much a that results drive with little maybe us And focused double more a us helping down this is of things can You the you policy, quickly in you business our where which

we As which communications a XXXX exciting digits the we’ve the in rate high get book-to-bill their to through going which we’ll into we’ll single XXXX to at of before business majority of is discussed QX, to ratio, nice awards the is QX growth return And gets mid-to-high we believe beyond. as that, the sequential communications quarter-over-quarter attributed XXXX. is and annual business in said, performing and

really feel we what take. visibility have So going we to good into it’s

been is the it’s add specifically it’s stronger stronger, than solutions that but stronger The is selling is ever our second our than thing been, at pipeline’s timeframe. year-over-year same overall, would pipeline pipeline our I

encouraging us for from XXXX. about So the to targets that our also was perspective financial us to the achieving turn Jason? financials. answer a of for over it question new CFO I’ll And

Jason Meggs

Thanks, Michelle. Yes.

So, hey, Tycho.

laid us did the that one bankruptcy the EBITDA, revenue the then in on of Slide hit on difference and side $X.X we us revenue have X. the on yeah, the million quarter on year-on-year EBITDA it prevented We expense So million out that and side. and from recognizing $X approximately

out there business, up as had you selling are also when that that was the solutions headwind we in sort reconciled you the XXXX, then large coming of captured. So termination and of wrapped and a them, cetera, those et fees cancellations

So XXX it’s experience in a that is again XXXX didn’t we headwind benefit of points. QX QX basis XXXX, also so a that

Tycho Peterson

Okay, to Can should you obtain and for sort big some I guess via what comment partnership? that’s of you’re expecting a helpful. Alistair be what we follow-up And on the on just you seeking partnership? have data then data strategy.

Alistair Macdonald

We than So, of a partnering agile more our historic policy on bit metadata, are. a specific with of sector the of nimble, as had relationship kind are we’ve to very technologies kind at around companies a in in that. long platform, view invested we’re with we that and data good of focused our sort the not we own never bill technology, that. and because

to We’re good We somebody at use execution. else’s technology. prefer

it feel inVentiv we inventory always used fits our cases, of working What companies had and – of looking We’re to to on is be that and give to data, does deliver. of companies. the that we’re the as as we’ve we legacy within the with of use together, trials, can we’ll specialist and access we now we – of us And as to all well how as the adherence provide, talking how bring. own always need is, of us searching data drive focus done kind service. kind call organizations kind for don’t had need like all that the patients in that and always future how they help looking can patterns available standard inVentiv and looking for. finished information we terms et they transformation data. ways, at kind a digital it look optimization We of like The and through partners what data that that with for always now selling the the side what access in couple in we been and a [indiscernible] which We’ve the of do used clinical that. like adherence have, at that for INC We’ve the that us processes. partnerships data cetera, things that We internally it and are solutions

whether don’t as think we right data. about Commercial as or need our for I think to Like that’s to You people, is, enables a a partner own software Clinical. that with solution has, a I solution what one the data the that us want build us to give challenge we service, all do that to of that’s said, customers

for use that data the at that time. I from think right and access sources data right solution we other can the

So we’ll be working on that.

first the and out out start for to I that the over next there. the remainder us coming then year think step putting see well, things was but go find those you’ll from from of had things as we – together, what really we the to on

Tycho Peterson

Thank Okay. you.

Operator

Thank Instructions]. you. [Operator

of Our Eric next line comes of from Coldwell Baird. question the

open. Your line is now

Eric Coldwell

are definitely much. first all pretty thanks pulling very let you me really think I results. just happy with these to great And and data, guys off say it Hey, this frankly, have together here

showing on traction. congrats some So

you those or EBITDA. The revenue, low just I And correctly, want you heard get confirm, I right? numbers, said second year-over-year? single-digit is if did quarter I single-digit quarter-over-quarter guidance, to high that

Jason Meggs

and Hey, Eric, comments. it’s those appreciate Jason, questions

we so the you that growth, then didn’t that and revenue sequential modest is So and it have correct. quantify EBITDA,

Eric Coldwell

the could of more the was Okay, hit on people that on peer people rates, headwind. pipeline great. momentum so And be specialty programs of an liaisons, the lot nature a are group, the are syndicated sales a actually on the drugs teams, look but a Kind of be you’re I like don’t group? targets. the fact getting coming the be why Michelle, approach? approved coming some teams, Maybe you small, how think medical in the we’re because Commercial or of then business, of these the showing And are the opportunity goal you into more the pulling interested Commercial gave would at get small right be the is dedicated you data now. now. science pipeline, new integrated would just these Is momentum would us? know, quite bookings you better, disruptions to and what’s the from, new and drug team this then the bookings, revenue has business approvals? more I sales that the Because front of been hoping have more forces opportunity better amount in seeing of growth I would a Are getting that specifics with to just getting shots with lot the the dedicating of concerned it

leave and So I’m the little actual I’ll more on fundamentals color a much. there. it just curious so for Thanks

Michelle Keefe

Well, thanks a all And it. bit above. Eric, it’s for of little appreciate I the the question,

address to the manner. I’ll in succinct try So that

level and with pharma idea biopharmaceutical really acceleration feed understanding of the is Commercial can very can I our high insights trial in new to or high you clinical whether a large true one occurring Commercial, key customers things Commercial that’s small-to-mid model having of it’s partner They to feed where to how taking the is this of are your think interest, take there’s the in clinical level So, design pharma model. insights and across-the-board interest from and us. they really

It’s reps. be Commercial have access, nurse of the a the which have That meetings, integrated. comms market to also to thinking really truly it’s Clinical about then but ad, The to right making traditional put part et support, a of what a the Yes, to to right specialist, I right communications, mix and solutions us we’re in reason this number ISG solution for a is in solution we the integrated. driving we right? think, think I one and within driven across these is high-level is big pharma. MSLs, sales two. really approach to business conversations is acceleration the or awards net Commercial. goals our are be the been for representatives, market not around a a a cetera. It’s is that’s would today reimbursement it’s of achieve together. integrated channel med service, driving lot early I able multichannel avenue customer very the your think, consulting, important pipeline. of broader you’re rare It’s and selling consulting very ISG clinical That’s sales seeing and point, point educators, what in specialty So, be It big, your lot reps that for the much might

I big the well. types that’s pipeline a and business in I the of because difference of that seeing growing, as think is we’re Commercial, think in So, that

capabilities how that little and is marketplace. a Nobody marketplace offering and the we thing else would them. think and I the doing is and can it we’re say bit that of above, So the our all it’s what have, the unique has a all in recognizing and that we’re is customers very with partner we in I interested

Eric Coldwell

Thanks on congrats very and much. I’ll leave the it there momentum.

Michelle Keefe

Thank you.

Operator

Thank you.

Our question next line comes Suisse. Credit from the Erin of Wright of

is now Your open. line

Charlie Landry

new you the that toward for therapeutic little for bookings is Charlie taking any particular of about actually smaller, and large the nature the bit over Erin. talk guys. This category? they a Can question. biopharma skewed our Thanks broad-based on Hi across

Alistair Macdonald

This skew and we anything, is across spread to don’t across large much I pretty any saw Charlie, the broad-based. across think Alistair. pretty evenly really – therapeutics pretty in small, QX areas.

Charlie Landry

for the for guidance FX Okay, perspective? balance of the thanks. from a And imply year what your top-line does

Jason Meggs

the here. million a So, $XX Jason benefit. $XX Year-on-year, it’s guidance has million benefit,

Charlie Landry

Thank Okay. guys. you

Operator

Thank you.

Blair. question John William Our Kreger of next from comes the of line

is now line open. Your

John Kreger

hear Hey, thanks. Can you me time? at this

Alistair Macdonald

Hey, John. Yeah.

Jason Meggs

Hello. Yes.

John Kreger

that a about you. before. Jason, sorry for Hey, question

resolved where cycle year? delay, now, you flow it of bit about for a had when expectations broadly, that you give an but was just can what call, maybe, the on earlier and talked the more You a stands update your us are cash billing

Jason Meggs

Yeah.

centralized of So coming moving offshoring at to a Oracle to into – the of and the the are we jurisdiction. were on functions centralization the of things to that was ERP cause was delays at as together businesses clinical doing that did look that we year going some one low-cost able same well some as be we sort platform have of

So for some we this. plan of did

cetera, therefore, the actually adoption is lost was project days. the DSO and that, et the XXX having of or mechanics and additional and We team, by about that days. managers have on an we four actual up the our of ASO to anticipated finance to It we work and than impacted planned more that three XX go to adopting

caught of of up third have now, catching back on to remarks, billing I to come We XX the XX of this and be the days up collections. we that and days in sort out year. the we’re to said that the And quarter as expect and during

So to on get that what track are we we’re happened where of sort back. and

John Kreger

to cash give be willing flow you a full-year would And target? us thanks. Great, operating

Jason Meggs

that think this we’ve at I point. Yeah. we’re don’t – I don’t give to prepared think

John Kreger

Michelle, Cool. thanks bookings. the That then helpful. last very question, maybe, for much really And is Commercial one quick

this talk tend business multiple with awards duration, how we more sort to can of As policies you’re where into and be the headed, what of to awards one-year just Did some think around you kind is these bit backlogs years a it? be about about little year about talking we approaching, are put bookings for Commercial? of or of going actually just Thanks. gets

Jason Meggs

Yeah.

what year. that’s the anything full-service done six bookings just multiyear; like I where if think first with the that Commercial in we in we of that, booked anything and we’ve policies you flow consistent – kind starts within months Clinical, in

of want better we’re where across much organization, standard to both the picture pretty so make guys groups. we John, that a get So across you at it

we’re You chop where don’t kind have to of and at. change

Michelle Keefe

Absolutely. Great, yeah.

John Kreger

you. Thank right. All

Jason Meggs

John. Thanks,

Operator

you. Thank

Jack Our Barclays. of from of next question line Meehan comes the

now is open. line Your

Jack Meehan

of the inVentiv break thought how the Clinical at take Is versus or at of that one side Thank you. way, cut business. legacy wonder the I INC possible the the full-service have versus Good maybe out morning. FSP? another trends been it more

Alistair Macdonald

of makes I by scale nature, mean, things those FSP its things really, the Not lumpier.

to to number just little value going and of at a year-to-year and is got bookings year want from So, bit see you they is look take those why FSPs, them policy the which that evolve, to structure the lumpiness thing. as of you’ve kind get and you’re what in to a wise, time of at a those of the

in INC So, no inVentiv real difference, trends. I legacy terms don’t think, and of booking between legacy overall

Jack Meehan

looking through be Jason, line, than officially the it more expecting. are it lot of was specifically, year we Could and Is And great. the pulling there Great. little you a lower congrats bit I’m in at would SG&A on through a new Just of rest then the the synergy color the versus on trajectory role. any COGS? comment

Jason Meggs

Yeah.

what had about synergy, the million $XX of slightly and that quarter talked one ahead So the anticipated. we we in is

or a The is SG&A that that in bit. that but line, that we of quarter of synergies is So When might what their that managing – across and bit as SG&A and there we nothing a ramp a really trying forward obviously, start costs, note. one, sequentially, areas, to are our look but cost different for didn’t you expected, be and didn’t projects continue pulling up the we, else at and direct functional just things so across quickly see to will where it we of the leverage sales. that as doing feature

Jack Meehan

Great. Thank you, Jason.

Operator

Thank you.

next of of comes Our from Michael line Baker question the James. Raymond

line Your is open. now

Michael Baker

terms? contract approach Alistair, I seeing competitive any to lot. a Thanks changes or in wondering either Yeah. you’re dynamics, was if pricing

Alistair Macdonald

competitive but normalized our is in seen a model, to the And Covance, point, the drives again, versus drives good I behavior the spaces. it price a is think don’t which space, pricing unlocks the slight solution, competitive which real for you different see the think in value think see. operational model IQVIA change the differences we’ve I I any different different now

guys know, it’s fiercely a As competitive you market.

one time or against that real we global four or no been go five two change so another one no in very So dynamic. there’s –there’s able of – of competing competitors we’re every out,

Michael Baker

Thanks for the update.

Alistair Macdonald

you. Thank

Operator

you. Thank

Donald of comes next from Hooker Our question KeyBanc. of the line

is open. now line Your

Donald Hooker

Great. Good morning.

Alistair Macdonald

Good morning.

Michelle Keefe

Good morning.

Donald Hooker

question conversations deal, next pharma larger commented just relationships that are a side, the the would larger going? look around XXXX, big XXXX, revenue on how we You with with years, ask do guys synergies that? the and we strategic hope from largest It’s just like now, those as for you long company? mentioned, how CRO kind time think CRO ahead When Pharma. over I Big several one wanted around over the when about like – we to is a conversation of like

Alistair Macdonald

more that they you feels are at long tell bigger and longer, will the any too they I are because But are stage. always Don, they conversation Well, complex.

engaged those different We’re several at now, conversations they’re and right of stages. in all

from think INC, we and – are I take as we’re a lot that we history through we’re and through my different interest is the partners that were as never scale time. before potential have we never we in getting we current So of doors we’ve that new, certainly getting conversations created, doors we’re driving – the and approach had leading through getting before, in allowed they well

through, when not going on come tell I’m guidance give they that to expect any we we So complex to but to – you working on big say, they conversations, and are are I’ll kind see we’re you just it. longer a more of partnership

Donald Hooker

it. there Commercial Got to your what’s the Solutions ratio And my normal like growth for in mind get revenue then the single-digit bearing? high book-to-bill, just to get to book-to-bill

Jason Meggs

Jason it’s Yeah. Hi, here.

you because trailing duration and that that to clinical, drive I that get can XX-month and burn trailing the is thinking way basis we’re a around growth. mentioned view on look sort than the single-digit to when So, prepared to that, the lower in period faster it’s it, one a one, we the high it really in remarks mid of as shorter XX-month a of about at

Donald Hooker

Thank you.

Operator

line And you. question Bloomberg. our comes Thank from of the next Bowers of Justin

now line open. Your is

Justin Bowers

XXX, good XXX, Hey, comparability. and definitely appreciate the morning

Just between then FSP, difference of color at quarter? in clinical this in and get look that versus progressed there to of just offerings starting a versus during integrated year, the any the year there composition your if was last full-service, was how bookings any little – on new and with was kind backlog, hoping you

Alistair Macdonald

at big start Well, but there integrated think look that think Jason a I with the was will check. just of don’t mix and let offerings, difference in I mix, me awards.

integrated happy the the with On side, progress.

quarter. I in as That team continues as work and awards big lumpy, work some to well think would that to the into said continues Clinical. have that into we’re going be ISG business Commercial drive not sector every we to

– platform seem team. to kind that the want both into to that resonance some on we able be awards bookings to that mids some – with that expanding some sides. of So take we QX small ISG drive. of We booking to We��re that those good end-to-end of were of in in in

So, activity. I’m encouraged their by

the bringing We’re out. whether expanding about team from, product help now that already think how it’s strategists in how in being commercialized, lifecycle – their the that in it how product people clinical plays their or U.S. of can

clear that well. have a a they and use picture, So we data of analysis lot adherence of kind as for

QX anything the bookings? differences on Jason, So in

Jason Meggs

Yeah.

seen materially the for what is profile or of than we’ve in in past of changing terms backlog there’s So, nothing there’s – there the our different Justin the future. awards our

Michelle Keefe

been will both one Clinical I add ISG, side brought QX integrated business do thing working and holistically do that to great that outside us. we solutions I and and the is out a these these is going development that finding the opportunities learning on around our from is organically think of Commercial that function just how have

Syneos pharma We’re because team seeing in partnering the business Health. advantage folks that really it function, me happen in to a can of opportunity take which the day-to-day have development with is that exciting; larger of that that get means we

it’s business full development and beyond move of becoming now ISG let’s our behavior So, function. a

Justin Bowers

That you’re in sounds the XX the I for first Got what… in it. you just aiming And of quarter, synergies terms booked great. know

Alistair Macdonald

XX XX. to

Justin Bowers

XX Yeah. XX this year. to

Alistair Macdonald

Yeah.

Justin Bowers

that, you that of of terms guys Just rest related of the on this that? for are costs program? where much the transaction of integrated and is there to cost in the side the integration more and – How either year

Jason Meggs

Yeah.

on we in in an and are that line we with didn’t that. – update one, So we gave quarter

We of retention the higher are amount bonuses. through

to XXXX. the cetera. still But integration et more through certainly we incur We’re have clinical ERP in costs

sure of we permanently like it that with that coming in said at make this looking I’m XX% as speak, XXXX, that to broadly be and in we’re in we with and looks we’re be. believe line actually, XXXX – but will that’s we what think as it it, we comfortable about So that, will

Justin Bowers

Thanks for Okay. the update.

Operator

you. for the Thank Alistair questions no like call at back time. And I’d I’m hand any Macdonald further to closing remarks. this showing to

Alistair Macdonald

Okay, thank you.

conversion to Jason, work with have drive today momentum organization. Syneos So we team by per great think expectations our integration Congratulations, hard confirm front we very us you Commercial that into on pipeline, CFO. shows hard progress starting and strong that it progress, driving internally, to Health. pleased is very business that with obviously, pulling seen to Clinical to encouraged with as Commercial, and merger, the is is that lift synergies be you hopefully start heard the encouraging. to together. to great the that Very appointment the the the I way since exceeding driving the we’re and making fact that ISG that able development, are on that and year, whole

you, what we’ve been doing to Health you dedication outstanding. team their whole and in thank to I big call been your has your would again Health. a just being me, for For have attendance for thank And and Syneos and want and day. to of everybody interest great quite investment Thank once Syneos commitment a today. the the Thanks again, the on just

Operator

program. Ladies gentlemen, and you for thank today’s participating That does conclude conference. in today’s

great day. You have Everyone, may all disconnect. a

Syneos Health (SYNH) 9 May 182018 Q1 Earnings call transcript