SYNH - Earnings call transcript Q2 2018

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Operator

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

Ronnie Speight

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

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

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

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

measures the to appendix directly over most like with financial Alistair call comparable please non-GAAP would the presentation. our Alistair? of the to of [Operator refer the measures, reconciliation to a Instructions] For turn MacDonald. now GAAP I

Alistair Macdonald

should very truly in have landmark of that progress of anniversary morning. proud of Thank whole of unique organization. the made closing feel marked the Health the and Good first outsourcing a you, Ronnie. Syneos merger biopharmaceutical building our Yesterday, we we the

our second delivering our strong the sequential that quarter believe strongly commercial business a in with the growth. of clinical pleased to and We breadth I offerings and our resonating quarter, revenue, marketplace. momentum engagement report return we saw customers, the built we in is net awards of experience am great continued to to quarterly record plus

to are have continued relationships winning These neither We and with our awards organization businesses. our validate business new before large multiple that strategic customers our combined merger. could both model, won across mid- end-to-end

for Additionally, these progress terms our we I continued ongoing synergies efforts to delivery continue importantly, on term. both for and to business second our the in with and achievements, integration more will long of detail quarter how well, few to the provide operational of Today, a customers. more achieved regard strengthen

capitalizing net of billion X.XX our book-to-bill are pipeline of times. with overall on we opportunities, total robust First, $X.X and awards ratio of an

driven customers of business Our awards by delivery and across in platforms. strong of record a performance a our was broad mix diverse Clinical cross-section

were by strategic outstanding our performance fueled multiple relationships, awards, Clinical well Commercial Our as organizations new our by collaboration Integrated Group. included cross-selling and total and which by as an Solutions

with growth other sequential offerings. all awards strong our to the Secondly, Commercial growth consulting service offerings, pleased ongoing am I of start business, quarter the commercial in lines. since our connections with of year merger, driving drove Commercial in first growth Commercial our our which in particularly integration our is our the including revenue to

expertise from We insights are as tremendous leverage group. seeing traction also we commercial and Clinical our

being our savings, a capital that recently Thirdly, XX% balanced and and structure further will accounts costs, debt We receivable flexibility capital on approximately which a hedging rate interest facility, announced plans implemented approach manage in we interest rate. to fixed execute deployment. our provide program expense to and new continued our to that capital our securitization related now taking of results while

of repaid million our of own we quarter, debt second the during stock. and $XX.X addition, $XX.X In million repurchased

Commercial Focusing segment. on the

first favorable. Consistent quarter remains for the quarter with pleased lower ratio toward very our net are book-to-bill was at target year-to-date times. in $XXX year awards this year. a macro tracking but our call, million, our with seasonality are environment second highlighted with progress We ratio the The sequentially X.XX we of

approvals which a and the XXXX, was outsourcing similar drug level pressures, to the coupled since to to XXXX, capabilities. on highest are FDA broad the indicates desire given provide due pricing pace customer New we flexibility increase with feedback our

also Our healthy pipeline Commercial strong teams. and remains collaboration with by overall is ISG and well clinical our supported

at million, the and real our includes second ISG medical quarter, which device services. strategic evidence more example, was valued world studies in $XXX a team awarded X For commercialization relationship trials than plus

execution, hallmark and of are a full generation these partnership development, newly our commercialization. assisting with strategy regulatory We and integrated This evidence truly delivering global dossier customers model we trial the are nature is The end-to-end this and product full development of we solution. partner. model new our merger power demonstrates outsourced thesis, industry's of lab-to-life the as full the of our reinforces relationship only have integrated fully as

helped clients optimize results. commercialization In demand launch consulting product strategy addition, seeing Commercial we are their which for strong services, and our

other perspective management third subset you. a that a recently of row. only services customers in for a one of lead the Health services throughout was product our firms thank identify Congratulations development fastest-growing America's needs Syneos we team, lines of named the it business Although often These consulting they expanded to cycle. our from list help to to services, best Forbes' powerful life as development of year Consulting as and consulting our business. particularly are represents relationships for

segment. Now to Solutions Clinical moving our on

large book-to-bill growth the awards $XXX record our preferred to based strategic second elevates times new for XX compared performance for million ratio In a relationships trailing a This business quarter our and results represent X.XX about and XX-month the a quarter oncology of of XXXX. Clinical quarter strong both was of and Second a to approximately fueled of full for a broad XX.X% top This midsize pharma. pharma net net of in in we the by excited X.XXx. provider multiple secured are we particular, and relationship healthy portfolio company. service new

were were limited second the group policy. record in in will relationship that we also Importantly, of quarter, customer's employees a these strategic We commitment. revenue Syneos the to a expect long-term requirements able bookings studies awarded exchange for meet from development and additional bookings policy as therapeutic hire our Health our amount future a we awards of wherein awards the

added preferred Finally, also been in provider pharma Syneos to the engagements customers. realm, further has large several the penetrate Health functional as services enabling

required We continue better studies. services customers and with new of successfully their the to to the deliver work to these understand ramp staff

and in ongoing helping regarding Health increased us We result market share. strategic relationships. capabilities, is This of a presence also expand to the other engaged Syneos remain and continue scope of direct success discussions scale take our

RFP to our pipeline of pleased Clinical Integrated be flow driven and with our being Group. the including opportunities, continue Solutions those We by

investments. I'd some Next, like our ongoing of on provide strategic to updates

our Solutions additional and development to more Commercial business continue to activity organization ensure integrated service offerings, resources impeccable We drive operational to while delivery. our strengthen expanding

Solutions we Commercial Innovation and multi-business which solutions commercialization launched quarter, address second integrated the our line During to Group, tailored customer designs needs. specific

they to and are executed market for assets commercialize in-line brands. their alternatives a commercialization ensure dedicated XX whether enables This our added experience more planned team. options, or specific we traditional customers commercial support all commercial more a with of to Process integration the the our new our looking addition, full and years of than to projects This new efficiently to Trusted successfully. are to to lead executive commercialization, discipline promote utilizes In of beyond team

strategic execution of product Importantly, ISG this program secured includes team. development our the by

potential We our to continue end-to-end full to team on capitalize model. expand ISG the of our

particularly new demonstrate As model, attractiveness wins key I within the market. team biopharma midsized that is this of the highlighted earlier, our responsible small to for

to building time of We also have organizations. a opportunities identifying support Clinical the a Commercial opportunities while and diverse strong at for Solutions portfolio, broader ISG pipeline our incremental same

fuel biopharma data data acceleration model. and our optimize digitization enhance to our to continue We how strategy

or data technology the fit us most with analytics platform. and phases just single right third-party our for Our best synthesize to on and solution This We nimble, not about purpose believe data expertise deliver we of flexible strategy or option link and Big a without to data, can data technology. impacting is strategy better current to therapeutic all insights, development robust allows commercial multiple delivery. combining data, major enables patient-oriented by and us data investment remain drug Data. best-of-breed This reliance the rich architecture leveraging technology the advanced

shorten strategic and physicians behavioral The These ways value step therapeutic life. model reaching is behavioral a toward and reach people vision the Elligo and This to data real-world example to patient Our of another participating ability meaningful XX% clinical deliver is to to evidence in as ability demonstrate in brand infrastructure meaningful of efforts of trials. with new we patients synthesis. empower in recently lab of on our support define to generate further good distance our and insights real-world reach collaboration collaboration currently with not Elligo's from generate to real the announced the will ability with to our settings. leverage protocols physicians

in is team synergy making realized We second also goal total We realize million million to year-to-date synergies to work $XX and by on $XX activities. million of achieve our our of toward great confident progress savings during continue identifying to reinvestments. about $XXX integration our We our in very nearly targets XXXX. opportunities. on to and bringing $XX remain to the XXXX to approximately track million remain Our our $XX additional prior million strategic our quarter,

will this my our to particularly Health merger, XX,XXX express their transformative who those on my driven thanks Health let and have our everyone tirelessly colleagues make employees to the involved apart our my like of months. focus worldwide in their have TMO gratitude efforts. team engine these celebrate sets of old, and appreciation to from As dedication send all Syneos possible. the of both to deliver room I them rest. a we been for through this customers, the sincere to XX who Syneos in sincere new X-year merger, who My all me Their engagement, progress anniversary continuing

comments let to our on me turn performance. call the over Jason Jason? financial more for Now

Jason Meggs

and Thank morning, everyone. Alistair, you, good

an results Let on comparisons. the me period-to-period as if period facilitate prior adjusted period that X. merger current on discussing under non-GAAP periods, the be Consistent we will as Slide closed with standard of our to the defined or at the beginning earliest previous basis you remind revenue presented are the the results

a quarter expenses. comparisons to brief with ASC like we For will discussing reimbursable under summary these our service adjusted start results. of XXX, second would revenue, excluding I be

these quarter; delay billing for further in to growth opportunities, contract the and in stage record second new modifications our first future profile the were awards in our customers with driving and setting the made in from quarter, the As our that accounts not billings temporary represent Alistair only as of we for for few recovering lastly, year; continue land in startup A delayed organization I sets up quarter performance, of operational the am work and continued had our significant new on repayment I Our to business development, program, particularly facility, our and resourcing terms strategic capital highlighted, with the against believe progress include: we and management we share across relationships items hedging financial receivable which execution multiple solid collaboration progress entire us debt half goals of first key DSO improvement pipeline rate following securitization our with to evaluate with growth. a closely progress flow requirements; that interest but their the pleased drivers collections the cash repurchases.

and results financial discussing under XXX. will under our detail. Now but our results more I'll XXX, On in begin review XXX by results show X, Slide both ASC ASC I we

in service benefit This mix. coupled The in to the the XXXX. in clinical second in of exchange million quarter by up for This a $XXX.X second increasing quarter of was That of sequential are to rate, quarter X% segment, quarter of to in mix foreign a driven million of million returned last second negatively grew revenue X% strong second quarter revenue of the which XX.X%. pleased in second million along from revenue first headwind to our said, $XXX to the unfavorable $XXX.X Commercial by was a quarter net offset Commercial mix for growth our a The is our Clinical XXXX increase from XXXX the XXXX the XX growth X% XXXX. by of was of clinical million. our in million, our increase accelerating were revenue offset the with second realized increase Commercial margins with decline for revenue EBITDA quarter total favorable segment the that Adjusted a net we foreign This in margin This of up Commercial which and selling exchange increased more $XXX.X in in our $XXX.X XX.X% of service EBITDA Our segment quarterly from of decline the revenue compared benefits adjusted million $XXX.X synergies, includes segment, revenue revenue associated with a Further, an million. $X.X XXXX solutions to awards decreased growth $X.X second adjusted in impacted from adjusted the $XXX.X in volumes. in $XXX.X compared segment, million with year-over-year months, XXXX. by in X% in XXXX, Clinical are segment the our the quarter business. XXXX. in driven to million favorable

by our net strategic of XXXX, rate the increased non-GAAP includes primarily to tax quarter the quarter reduction of interest second million Adjusted of quarter and to realization as our quarter by share XX.X% million repurchases XXXX. the XX% of from lower half Adjusted to first of the million EBITDA XXXX of XX% XXXX were for second growth. the the by during expense in adjusted to from impact increases $XX.X the for our quarter $X.XX For impact of synergies $XX of as XXXX. well year. EPS the $X.XX income drive the in driven These the second diluted grew the before of in second reinvestments $XX.X second

are the total This XXX. the On in lower billion, Adjusted quarter, Now and quarter second is for which million million The XXX than also billion, primarily to ASC life related to of I $XXX to periods. for was revenue quarter revenue Slides was first Commercial. $XXX.X customer current million premerger comprised in revenues total XXX revenue of second for XXX. reimbursable X.X% standard, revenue our some volume summarize recognized which ASC modifications lower the EBITDA period of related X. which through any higher $XXX.X ASC modifications, and contract. to XXX adjusted on adjusted new adjusted amounts larger by the contract variance recovered compared and $X.X million ASC the performed results expenses, $X.XX second total cover was year-to-date. premerger XXX, the than under was $XXX the over these includes year-to-date driven are remaining X want and between ASC in of revenue for Clinical X.X% basis, included ASC quarter Under less work a the Total of

was Although the and of net the second to million, year. modifications $XX in EPS XXX, resulting future of second during Under ASC impact quarter adjusted an decreasing for of adjusted the level activity, $X.XX. half a EBITDA have adjusted million variance reduced between these we quarter, the premerger include two second was a $XX methods contract income expect therefore

Moving to Slide X.

segment under leverage to solutions our XXX. related flow coverage Slide Commercial key our XX.X% is at You the X position. can of backlog XX.X% backlog for is XXX. ASC year provides that cash see selling metrics our The for and coverage XXXX clinical component full ASC the under

our operations was During the quarter from of cash on $XXX.X XXXX, an million as-reported second flow basis.

performance to expect cash quarter, outstanding billing year. billion. in half quarter improve quarter DSO record our days million temporary billing net had the ASC total of The we also operations we was we to second the the under as unrestricted and continued combined Since and on driven flow XX XXX. $X.XX second by DSO first the Our increased We in our of of the record $XXX.X highlighted to overcome debt call. cash from we collections collections with for delay ended continue quarter the the quarter for second was during

cash you part market want on we available repayment undertaken I repurchases, of provide balanced variety flow a initiatives capital to update on Turning our to determined committed Slide as as We continued with focus deployment. approach both remain by debt including a and deployment, of capital an and to conditions. debt have and to X. management share

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

During we milestones. significant achieved second quarter, several the

securitization to financing LIBOR our accounts an First, we facility to provide into basis loans. cost term at at plus XXX entered compared lower points receivable

in a limit X This on to hedging XX%. Second, of term into rate we our debt effort rate our variable swaps our new program an percentage interest exposure is approximately fixed entered rates loans. interest interest to to rate brings that up

to reduction approximately Third, during net million, repaid reduce total our end our closing our overall the merger debt term of second of to since $XX.X with our quarter, we Xx leverage XXXX. plan our bringing million loans, continuing by of $XXX.X the the to

second of average the weighted announced share. million outstanding previously, bringing year-to-date to Finally, repurchases $XX $XX.X we of a repurchased the at we our our per under program million total during shares quarter price $XX

be cash tax XXXX XX%, We XX%. effective of non-GAAP to rate continue tax for expect approximately for XXXX our to to a XX% with XX% to rate

tax Although cash any do rate our due actual may in and material the income, jurisdiction in outlay taxable to the expect taxes. of change cash allocation not we these changes fluctuate for the

Turning to on X. Slide outlined our now as guidance

interest We net foreign rates, rate. a and number cancellations currency our have current estimated delays taken factors, rate of on and guidance trends repricing, our is and including rates tax exchange expected Further, following backlog, sales based and account our into our reinvestments. pipeline, swap interest existing of synergies merger our transactions securitization current and expected

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

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

$XX movement since of rate the headwind our call. maintaining an foreign driven adverse ranges our despite for first are previous in quarter million, guidance exchange incremental We revenue by

efficiency and updating EBITDA EPS diluted of our maintaining adjusted to our net expect operational to adjusted $X.XX also and $X.XX share the to improvements our income ASC Accordingly, for impact we and guidance cost XXX. ongoing reflect results our management in due under from EPS to guidance adjusted in actual and are We now repurchases. range

maintaining expect despite and to revenue under those ASC diluted XXX. EPS to $X.XX. to we We adjusted adjusted $XX now ASC an made making under and are income XXX $X.XX our EPS headwind XXX to We under ASC revenue updates incremental guidance FX million from also to range similar our net

expectations to our impact We guidance on, are based adjusted though we maintaining expense interest anticipated, the million for the $XXX merger adjusted weighted We our related synergies quarter results. second largely negative expect to originally before fully our the million strategic XXX previous XXXX of updated year things, will approximately expected attributable for $XX even guidance million, greater average our by EBITDA approximately ASC count which impact of than to of now million of a of vary investments full quarter. shares, for and of be among $XX share XXX.X EPS other diluted

Lastly, commentary I'll with EBITDA revenue high your growth. quarter. to expect provide mid-single to hand adjusted With growth digits to directional it digits on to that, we closing sequential to single ASC help for I you low see third and some Alastair sequential comments. models, the XXX, want Under back

Alistair Macdonald

This pipeline our are questions. prepared happy we to model. large believe large robust across relevance with remarks, we to any results and of the on quarter strong second second the a be completes are capabilities. our ISG lab significant had results answer and to our validates including customers, wins the of poised capitalize leveraging cross-selling Operator? integrated to successfully our further We both our and collaborative We've year. which life solid business deal, would SMID half pleased are in generate We

Operator

comes William line Our Kreger from first from John Blair. [Operator the Instructions] question of

Your question please.

John Kreger

a side place on this new sort provide you visibility earlier the system better you year in to Commercial of had the described business. Alistair, of

under that's you give got trajectory another Now belt, perspective, growth think that Commercial do? would my your working? can just longer-term how what And that, an update do follow-up from us can sort you've a you quarter of given on be

Alistair Macdonald

connects with what's of we in - our Michelle some in John. that the can Got of she we place commercial through, thanks, from system answers the coming to see help put that, so then of through, help Well, through as in to yes, how really so but we by pipeline out as visibility here our the we've well in it, is can coming what would connect well. put clinical a front can business putting somebody of chances and what perspective kind enhance our how people

So visibility, then rates provides sides conversion feeds see feeds then the expect it cetera. things which guidance, and like really into the that cetera, on just to into et different we work et of obviously

we fluctuates that in to QX, in book-to-bill we we We the look of end about anything for in kind see can target it in the at year? QX. talked seasonality we X.X then So year. to and the of Michelle, had to and that. had that through less teams respond pipeline QX because XX-month out can see that how that Commercial, add Again, trailing a what X.X, pipeline, the and the extra than great against we therefore, we also the drive of rest

Michelle Keefe

absolutely. Yes,

that metrics awards So business are and are, things. we a Commercial said, XX-month Two net Commercial selling of are we for providing solutions, being providing and we're awards of And right we trailing we're segment. the X.X. for as backlog now looking for net a the couple

into into pipeline of that achieve based the our done on X.X confident the conversion traditional pipeline, rates now, that and right that over time, consistently visibility have pipeline. we're visibility to how track when we're XX-month all on Commercial for those we book-to-bill that - we've So of trailing

how feedback on to year. So that we see able going we're are market from perform either XXXX over for through to to the we're of opportunities bullish bringing as that the a and to regards in we're be with the just the types perspective coming we'll they're the Group, that, ISG, achieve very, In Integrated the It's RFPs to to taking getting positive customers. time, well both that way Integrated level our we're there's a bringing by we're that buy lab getting to as in offering I call of what us Services. very indicators encouraged we're life that interest advantage Services small of to what that would that for integrated offering services, are we and high our mid-pharma, market, a fully to and say presenting us leading how different Commercial

really to so pipeline we want one think that to like, through. that's the it deals, like Obviously, are those So like we look we converting are that but have we close I think looks things feel that, things is more exciting. the that important coming the to

really, that's long-term think success being of able talked to our we've really that drive to I critical about the past. growth Commercial in the in

Operator

Our next Robert the comes line of from Jones from Sachs. question Goldman

Your question please.

Robert Jones

deeper the strategic performance, arrangements modifications quarter. the on versus you discussed was those came some just maybe I Alistair. specifically that what you some into in you these remarks. guess, things from you contract last delve of new XQ the a and on touched you strength, saw Jason know I I the you maybe the discussed that recouping strength of But little prepared of of wondering in bookings a on can - if number touched

Alistair Macdonald

bit with both. we're got QX. Obviously, mods contract out just executed a those So of we say that customers through sorted and happy to

and good the to So of it was those get done way. out

a We're obviously. pleased that. we did very, rest, QX. the that strong have Then, so of is mean, performance from little bit it a And in I very with

ever best the I think it's done. we've

providerships. different of host whole a tables to bigger so from came full-service so that bigger Big Pharma, so win seats using scale our effectively, opportunities, at So

kind so preferred in us comes accounts allowed and hunting as not ourselves into adding go. hunt in give And a of more territory providerships we those those license establish so before, are to landscape. them have been to in the yet, work from us really nothing we to way we'd our those that preferred of Some provider

got, able to been the some we of take of Some it. awards big we've that

haven't in it all our line with of We policy. taken bookings

a So months in those it's and neat a about work now. had put accounts the partnerships, over starts we're come ISG, that the within SMID where the is what six is great the that model bit opportunity people performance little next in huge to from those in kind market the book-to-bill, the we following we've thing again. more the quarters. only We of the won with that a so

using it's So if to X planning Phase early environment customers X us. they're through a commercialization, Phase way want where to partner or one huge all an the in opportunity go for and work from

with it's customers that's as roll of more rolled that was interested manner model, kind do want a ISG globe. an we they across to award in thing across that. out this and we the out for approved quarter product that been are the now in commercialization really, Interesting So are seeing soft a

So we've it's that past. ISG awards had contingent the at those as of some not in

able So bookings that to you were of book some around our policy.

again the scale continue So used relationships. deals bigger see great model. the came you put we're in our performance SMID with see to out ISG to really delighted performance pharma to the all as the capability, and using happy where to as around, - in really we market, with end-to-end those then And starting really

across categories. broad pretty all So

Robert Jones

That's through growth question, into of math a more maybe puts EBITDA digits takes just helpful. ask for EBITDA you high sequential single would growth the XQ. of cadence you EBITDA super clarification like Rough walk growth some on us that If call Could in just said lot Jason, one could I I and XQ. the half? think back into the looks

Jason Meggs

to hit that Bob. understood, we just Once through backlog. going get that launch see a well in-house Yes, of in We bookings had clinical you obviously, spilling to and of the X- from terms period you're step you quarter. and ramping second that those what sure, that before Alistair some X-month in have on the Thanks. do and start

terms year, look we Clinical we say question. where there similar at adherence year what the the obviously, every pipeline some will in help off leverage the of the closed through communications but you've there that, of through get those selling us of visibility particularly as - scored some of every there's well the those out and side, early can here see. will the that, solutions push everything at Then, and year. Bob, terms quarter on and normal in in Commercial clinical then in to terms backlog the is to And under we sit year, on through and signed and us have pull QX, then are in then obviously piece, So you the that you side, that out, and normal got getting consulting everything that the have the in wants - the August. that up have do biggest there I we step of on the fiscal front the again when we through of everyone cost and again, sort base now business pipeline hands to as side. that's largest might in no down, in seasonal XQ opportunities when that of which XQ year, see they're our in when, end close there's of is we drive that we is if medication contract where do the even going And factor Michelle say the

that you'll on bump how of the help normal will that look drive that's we're the of And to similar you the through flow nature savings looking and So year, that we EBITDA sort have a EBITDA. and XQ. at things PTO of last resets it, if then sort in will see and

Operator

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

Your question please.

Erin Wright

of can in the seeking, also I that half how the speak to about trend and that kind could you that book-to-bill environment we you you're strategic of to think second And what's you the year? new should that alluding and just RFP relationships guess, those then too. speak you implied from those seeing? broader relationships to on follow-up and that were partnerships A spillover were

Alistair Macdonald

Yes.

So the let with start last me bit.

environment RFP seems pretty broader strong. Our

obviously, closed have we awards pipe you we high number, see but as a closed the the this was in the - lot still not as pipe of time very quite as QX. at strong QX in Our we that it so is in

and RFPs and the but because large FSP. months is amount of work hybrid through seeing We're and lot environment the ago, closed, of service from pharma X still So strong. we SMID that and of a still come both from full whatever, that

terms, some relationships, build preferred environment. So FSP they still them over of in In a quarters. broad the relationships, coming so slowly good there's the are will very strong

yet. looks Some that of what don't them like, them of we we some know

of QX, costed now QX know they looking backlog. what won't XXXX. we work probably half are right Some out. awards, and into of at through like, maybe even come are fit we book into until of we then hybrid, mix it the all some looks the how so the awards some of which costing Those the ones of first service and them larger And full

of those some in and We those bringing come will through awards as well. QX are through QX and

as there different. Erin, So it's you to all being bag, resources able the bit they is a of that they're sure a be make when service at through cascade hand have we uptick in honest. group all very work will sure bringing to and we to to looking how that we and be into we're saw a make to of because them We're mixed forward It's that in the because the-book-to-bill. deliver kind the of exactly say judicious hard careful resource

our that on make organization. to to it You just sure are to deliver that the as marks through we work starts got flow

Erin Wright

And our a anything from that's to if it over here. among I'm hearing Washington curious and decision-making all question at the drug relates customers scrutiny you're your customers. pricing greatest in broader if as influencing

Alistair Macdonald

care through go much on put government, pricing that further for into we clearer the deal we We're be our about in that with European right - we'll model will what get merger mean, every actually just as don't you're pricing it's will comes you not to model wasn't clearer is and That's et from and it's customers achieve our approval, U.S. strategies, Commercial, cetera, key year health company think. were position cetera when money planning, we good you the reimbursement day, that market and pressure that end-to-end access to ago plays luck, a pressure more back it the be in insight life achieve, the I and working feel, us. so and it a before understand capabilities hope governments, also get further I we to with what it's us, but networks with merger, we the solve, And product. able on what built payers, to payout important into the companies and on - don't the issue together - cycle and on price some for product to your we've strategy, own, into to now But deal much such it pressure developing, governments, be gets pharma a it a et more its what able again, to that around Michelle market. the Yes, big but then the not any... more because, obviously becomes

Michelle Keefe

to deployment of to strategies with hurdles leading business a We're the that from more products discussions lots of, consulting access and growth to people and definitely opportunity regulation strategy due launch it opportunity. products team. through some them in Commercial hand, to as is and strategy having the seeing and the We're our have in Alistair get the integrated the these payers. our as a also and consulting market communications becoming around go an in around of more complexity business, control these shared, through which the It's of

being You're seeing in the more reimbursement field. specialists deployed

access, seeing PR strategies of value You're medicine. strategies around more the communication more around

can how so opportunity lot and new in we segment and really around our our more customers a And of more we're this it's conversations of creating environment. the business, in having Commercial support

Operator

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

please. question Your

David Windley

Clearly, different wanted in of lot business. I the I a visit visibility. avenues to a of lot of the momentum you're seeing qualitative the your I guess, appreciate commentary. of kind

each percentage of in year As than somehow reflected how And recognition that you could and of with case, I bridge in aren't should is that in than know about I study? the in have more that turn this ramp-up normal the and statistics lag quickly kick you of or backlog going quickly Slide terms revenue coverage between - your into wondered a was time selling look Clinical year. the there perhaps to the bookings or here last we of things are the commentary numerical qualitative was X, lower and outlook at you little year on the solutions, year last coverage are coverage it that

Alistair Macdonald

some formed into comment more there know large coming From the your we've pharma the because you been of more essentially over so, more down the bigger a We you pipe. in then, of visibility correct. the relationships think last we've that is about I - bit that. have successful as accounts, Yes, what's X or months

could So is those "Look, stands able here's This it that your what's coming to customers is are say, quarters." way right portfolio. But our how change. future This now. in

some Some things them. come replace new products things deprioritized, into on come replace back to get

kind that So difference foresight would that pipe well a we more the think Jason, of confidence but still into able percentage bit than traditionally insight we - future and on point, have gives have, point in a I that little to together although sales which raised that? us any

Jason Meggs

I we that mean things was you year, saw you at experiencing. one last Clinical delays the Yes, that so look we the when of - probably were recall

of last that's artifact some So year. an there that, are the over just

don't around to businesses gap, don't the help business that extent, the coming what the looking had backlog here. already of might And do visibility portfolio, on to selling said there moment are We the bonus some put prior add that that schemes that Commercial either we are you other in won that, at that the then the there specifically, that things improved give more what to what's July at have within are there items of us and sort that we business exactly on and we new teams that visibility perspective solutions in operational our that years. will have terms at things or my around momentum you they are then have certainly, in least us close metrics also is we and from see in are

sure. things out you remember there perspective March, X.X give points we've we from a having more gap in side, So that are we at shy and of closed were look or it for so when quantitative that us the if considerably. coming Clinical comfort And now

David Windley

the on trend burn question been The a time. for backlog Maybe around down for business more rate slide. industry long mix same the of there has

I downs oncology peers think to most studies the traditionally. length increasing being and recent are oncology also continued mix of of modest in attribution with the the step of seeing

if mix attention. and that be driving if catches a there's seeing that different ticked a which if that you're studies little Wondered Yours bit up that might - in my if or sustainable. quarter, this anomalous of - make that's

Alistair Macdonald

have seen Dave, Yes, same we so the on clinical I trend. side, think the

quarter we the had than were here, quarter X about in note contract you bit X. we a taken have higher would been As we talk care we gotten mods did in that of little

be So We if our out, you the see. a project sequentially lives Clinical. bit slowdown project you a flat see sort of of more bit a than of flatten little extension in little - in would life the of that did you -

remain. that hopefully will So trend

half because term. work be bit and However, the tick down certainly will the mathematically that the looking that bookings second it had and longer just out is do to with going a we're burn when to that we've rates, believe we

Operator

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

Your question please.

Jack Meehan

of the whether into an reinvestments back hoping was you're could I and some related you'd there any are point the you on investments. there give Alistair, highlights making out update us to that business data

Alistair Macdonald

drive more digitally to to are we constantly the we better the in in the capabilities model built outcomes improving across drive talent, Process, technology, helping us best obviously it earnings in Commercial talent, said in so investing goes invest a approach predictable Trusted to to so Commercial. ISG, based we growth in business as new investment in in end, bringing continuing reinvesting end that and that Yes, the investing

are the way. lot a those of investments on So ongoing

pretty people are that. day, great about arriving so excited we're customers, New every which engagement with is and

about comes I effectively It talks as be continue the with we to to what And is same we evidence the that that sets they trials same whether a fast smart trial trial you study, data that's you evidence-based. deliver to possible, in to asked, our to solution different real-world real-world looking don't as and trials, we X side, and able data what path whether one those think we're kind are data the the for compared more to that no looking full clinical and the I enable Phase as of believe, patients it's complex. partnering. there's us the for same to When look a solutions, for questions is partnership working get oncology very the general, that's in On believe, issues. basically the that's with all of to solve announced to We're follow somebody Elligo. solution

the us nimble provide the the right data, people space. the right be we our to want questions the for who with with solutions we answer to customers' and challenges questions data to provide want to So right right can to partner

latest continuing efficient more the partner, that way so nimbleness the think raw much we had be I can and the could same So stay to we've cost than more where it's collaborations, bring to historically, with us edge with we current organizations as who it. than It's always the to investment ever much on enables want in from the leading in technology partnerships more enables rapidly industry. that working do innovation it, strategy to space, strategic pretty

Jack Meehan

the revenue follow-up full-service I The some quarter, you one margin segment. also more. that some of any the on Maybe color Jason else just benefit Or but I on little mix, know would the be on had expansion gave there already flagging I bit orders? the well? change that's can Clinical color. That you FSB in for to a just was was anything as worth great hoping was it was great. unrelated versus drill

Jason Meggs

actually. both it's Yes,

be piece prudent So of billable of you leverage to too. then cost the side getting house, within SG&A then the the just continuing on based of items the fixed and and the out fixed mentioned clinical and the

Operator

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

please. question Your

Tycho Peterson

Alistair, couple a you about about down wins? you on that And Commercial? kind in on just XXX can it comment with was of basis the then start on of commentary pricing Commercial. multiyear of point Can also just sequentially. points comment comment was appreciate at though. and can are the on I on XXX follow-ups burn. backlog It down year-over-year sequentially I'll book-to-bill - you how this much the

Alistair Macdonald

Jason Yes, - some I'll that. on color I you give think

we're amount on a changing bit little with I helping the on think the burn which dynamic an increase in side, commercial, to what on us it's - we're the seeing communication rate. is doing the

the about starting really in right tenants So in the about, talked business script, of the group, all to the of communications, consulting, the But we the expansion we're new in through pleased connections head Commercial all elements which I think filtration, direction. Jason?

Jason Meggs

Jason. It's

was On the one, actually was into primarily and signed until second the an done got March base cover was half. it Commercial, - an the in one burn that extension that opportunity put revenue rate backlog. But it's we expansion and the in that doesn't extension

So scored the history historically, the on in here. that would probably quarter have been second based

So that second makes it's to if little relative sense. the pop kind in that quarter of a forward up pulling bit that things little and first a the quarter, applying bit of our policies

Tycho Peterson

you points EBITDA old extent back, think commercial of comment you what bounce do to these down under basis. expect can basis were And wait To XXX for kind margins? the then about lower on target cost while to might I try would synergy talk additional you Alastair, cost abate? that from? the you to I and those you think, impact Where Can alluded awards net to levers? also maybe drive. some cancellation come on they

Alistair Macdonald

Yes, I'll start those with first.

further that cost for look to the continue potential We really have across synergies. business

announced. have clear We we pretty previously now for that a path once I think find

of smaller the as to of also processes, down terms the revenue control terms kind both just in business, processes. be that cetera. how of through And systems et of looking beyond continued layers, of in around digital delivering do look span more use to in as the well we management efficiently, organization, more effective continue at assessments We SG&A further running general, consolidation

the a I little more the So and little helps tends bit thing just first think it a time the right of us us making Commercial the do is Trusted often. also Process implementation - across that make with to because bit

the because saw historically if Trusted It that first than just than we often able loops tended INC the to a some us years there's margins margins high implemented things you drive ago. time that. less the side made system bit rework right more remember, more Process efficient on when many and pretty in do We clinical we So when do the you to others. we're little

remember I So half of can't the the question. other

Jason Meggs

to just volume year half on feature beyond, a in other hit of first coming with just there's some were the back and of out I'll through. To the extent, of an Commercial sheet some of have there. and things half nature things that. that in of the contracts come down it that and add some merger lapping coming the as margin we'll just expansion here things items terms to were But to So needing of just the you and second that large fees obviously, to termination last end some balance some in and the are also get come and prior

as That combined there. look when offset cost it's you little at headwind year-on-year, on So it bit is Alistair a doing of by a mentioned. being the what we're side

Tycho Peterson

One that's under $XXX know we left million so the final I given the capital we one. from differently repo assume thinking million standpoint priority? AR the that, should Anything just securitization? that deployment be you've should $XXX about a about got

Jason Meggs

the that the overall opportunities we to and perspective. times the to the of end like talked we next remains available growth continue down on M&A there repurchases fact to the having And is getting facility when that we've around continue for is to from the across company. focus by feel help Certainly, so beneficial at round year priority. So the about X drive the opportunistically that to our debt dislocation out we strategy look then

think we've past. in I everything said So the what is consistent with

Operator

question SunTrust. next from line the from comes Your Sandy Draper of

Your question please.

Sandy Draper

primarily questions have follow-up on commercial the but side. a of Michelle my for Most maybe been asked

- better. Just your execution's thoughts obviously, business on gotten - your the

X.X. You're that targeting

beat If Is generally the variance? movement is it, to trying continued business. in some cause on that that's in ability execution or execution market terms that to it understand Just stability not? or more deterioration going it improvements dependent Syneos' of the or or about miss about marketplace the or or specific hit you that the in stability more and/or think to company improvement in

Michelle Keefe

question. for the you Thank

of it's little So I think everything. a bit

is think on the execution. first Syneos' thing, which the hit So first, I you

number. to ability XX-month our that book-to-bill strategy numbers is the against trailing X.X think I execute one the us around gives our thing confidence

are integrated, that's As it's the place the I that I the around executing said, think we're opportunities rigor putting so truly I think in first thing. against

thing also And The think fact like that how relationship we Commercial. they can organizations an for across feedback of the with from lot continue, think to pharma that conversations with the a not there's are so in vendor been there. our started differentiator fashion. as amount to about resonating critically conversations interest qualitative, mids, with to high-level them fact we're work end can getting Clinical I about which customer. been pleasant of model, our a has there's of positive are can again, larger we I it's which is that is really surprise we're that take do talking we're confidence and our for the us in large offering. a small end from integrated advantage what us second enterprise just a traction and and more qualitative things things unique went the getting, happening lot very is but having which It's integrated we're for And multiple pharma in small organization, those giving more of around we that And talking that was mids important,

the the proposition. to So responding value market execution it's and

Operator

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

question Your please.

Donald Hooker

question help what the sort side What's should Solutions businesses? business expect that I that I'll the the the Maybe and time? us of guess segment. high different here pretty there. turn, in model on So going dramatically. impacts of margins the segment over margin of just Commercial one varies sort company, the ask between are in and low would that we to Mix, forward obviously, mix up down the

Jason Meggs

where So - back I sort time, look XX%. north we it be to of the can of don't range, bookends in are we XX%, are think But up I guidance specific and Commercial. over obviously, sort of going XX% you go for provided that margin haven't when

path range. now. of little I the don't But that So want marching It's see when based early that the might happen, that's call don't to to. indicate upside on more of that to that what want too I we on Don. timing a we're

Donald Hooker

with sort and the be, low assume of thinking I just would range was a think sort I would of guess, range the now I sales, here, mix we're we're what years. the generally higher of over might pretty bookends yes, you of, multiple like speaking, And right on contract

Jason Meggs

Yes.

Operator

final Our next the question our Bowers from comes Bloomberg. Justin line question, of from

please. question Your

Justin Bowers

on sounded like clinical. offerings? one on just maybe mostly wondering like there know ones, quick - QX. looked service bulky two And some approvals there then I portfolio It like just bad it there. FDA the what you force more to out relative commercial, in of were were to And environment sales the in date is seeing the actors high touch some, Just QX, since light of pricing kind are those or there out accelerating of opportunities some XQ

Alistair Macdonald

didn't Commercial, and any the see On pricing trend QX on I no, continues. any difference QX marketplace. the side, Clinical specialty acting I I think so Yes, there terms between don't towards of in recognize bad the out marked in pharma behavior.

sales don't not well, - sales into sales see some are so see any... big yes, we as teams, don't the the couple generally teams and we Michelle XXX occasionally anymore. days reps nurse mixed educators, MSLs, a mix the that predominately, science really hundred higher is rep which but between these the So see there

Michelle Keefe

much integrated model among are customers which we that in stickiness will multichannel Yes, to long the the excited which with traditionally with because to greater to this to tied a over us about backlog be feel are our we're teams, past. believe going is We was what solutions, we're more help stickier, approaching diversify number variability way with pipeline larger in going clients going the able where actually the is which of business term. create is we're that the it

of with do towards different multiple services, moving and with more types resources. I of field think it's specialty non-field So deployments of integrated types

Alistair Macdonald

whole specialized, a is solution, providing a solution. that's but the to I Yes, we're more just a Rather solution the we're way a get multichannel think about of customer. than providing smaller, bringing it one great teams think to piece get

in like not backlog in So more sticky. make I think more it because much resilient, we huge that of Commercial that see building And more stratified a tremendously teams. we're on will It's the Clinical. diverse a over we like couple fact it's reliant

Operator

of back program. program I'd session the Alistair the today's further conclude Macdonald hand question-and-answer for does like This to any to remarks.

Alistair Macdonald

you. Thank Okay.

everybody, for you. Thank day thanks, great company. today interest a continued attendance and investment be So and good. Have our your and in

Operator

you, participation ladies the for today's Thank conclude program. your in This and does conference. gentlemen,

now Good day. disconnect. may You

Syneos Health (SYNH) 5 Aug 182018 Q2 Earnings call transcript