IQVIA Holdings Inc. (NYSE:IQV) Q1 2024 Earnings Call Transcript

IQVIA Holdings Inc. (NYSE:IQV) Q1 2024 Earnings Call Transcript May 2, 2024

IQVIA Holdings Inc. beats earnings expectations. Reported EPS is $2.54, expectations were $2.49. IQVIA Holdings Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Kerri Joseph: Thank you, operator. Good morning, everyone. Thank you for joining our first quarter 2024 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Mike Fedock, Senior Vice President, Financial Planning and Analysis; and Gustavo Perrone, Senior Director, Investor Relations. Today, we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events & Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements.

Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company’s business, which are discussed in the company’s filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Ari Bousbib: Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our first quarter results. We had a strong start to the year. We delivered top and bottom line numbers on or slightly above our expectations. Excluding the impact of foreign exchange and COVID-related work, our revenue grew 6%. We continue to see a favorable demand environment for our industry. On the clinical side, demand from our R&DS clients remain solid. Our backlog reached a new record and grew almost 8% versus prior year. Net new bookings for the quarter were approximately $2.6 billion, representing a quarterly book-to-bill of 1.23. This included a substantial cancellation in the CNS area that is in the public domain, and I’m sure many of you are aware of, excluding this large cancellation, which is well outside the typical cancellation size we see in a quarter, our first quarter book-to-bill ratio would have been over 1.3 actually closer to 135.

Our quarterly RFP flow was up 6% year-over-year, and that’s in value meaning in dollar terms, and it was driven by mid to high single-digit growth in all customer segments, again, in dollar terms. Our qualified pipeline grew double digits versus prior year, again, in value in dollar terms. Emerging biotech funding was very strong according to BioWorld, which we use consistently as a source. First quarter EBP funding was $47.1 billion, which is more than triple the funding of Q1 last year. Shifting to TAS, our commercial side of our business, revenue in the quarter grew as expected with the modest uptick in activity anticipated for later this year we continue to forecast an improvement in the back half of the year. We continue to see some favorable signs.

For example, our pipeline remains strong. In our conversations with clients, there is more clarity on budgets, and we are starting to see faster decision timing with some clients compared to the second half of 2023. As this said, the toll overall with our clients remains cautious. And the fact is that the uncertain macro environment persists as everyone can tell from the Fed remarks yesterday. Turning now to the results for this quarter. Revenue for the first quarter grew 2.3% on a reported basis and 2.9% at constant currency. Compared to last year, and excluding COVID-related work from both periods, we grew the top line approximately 6% on a constant currency basis, including just over a point of contribution from acquisitions. First quarter adjusted EBITDA came in at $862 million and first quarter adjusted diluted EPS was $2.54.

I’d like to share a few highlights of business activity. Let’s start with the TAS segment. You will have seen that we are expanding our global strategic partnership with Salesforce. The partnership will integrate innovation from IQVIA OCE with Salesforce’s Life Sciences cloud to provide customers with a new single end-to-end engagement platform, which is expected to be available late 2025. This is very exciting news for the industry as we expect to transform the engagement with HCPs and with patients with the next-generation CRM platform that’s built on OCE, and that’s powered by IQVIA data, domain expertise and advanced analytics. Separately, and as we discussed in the past, that continues to be an evolution on the way in how the industry manages HCP and patient engagement.

For example, there is an ongoing shift in HCP engagement from in-person to digital interactions. On the patient side, there is increased emphasis on direct-to-patient solutions through patient support and market access programs, including financial support, hub services, medical education. As you know, we’ve been investing in building out these digital capabilities, and we are getting good market traction. For example, in the quarter, the top three pharma client awarded IQVIA a contract for our smart engagement solution to understand the health care provider online journey across therapeutic areas and factor that in earlier into the drug development process. The top five pharma bought IQVIA’s Omnichannel Navigator solution to assess return on marketing investment, measure customer interactions and campaign performance and make data-driven decisions to optimize marketing strategies.

A global midsized pharma awarded IQVIA a multiyear contract to implement our commercial compliance solutions. These solutions will allow our clients’ interactions with health care professionals to be in compliance with transparency, regulatory obligations in over 30 countries. An EBP clients bought IQVIA’s patient relationship manager offering, which provides a comprehensive real-time view of the patient’s journey and helps maximize the impact of their patient support program. In general, the TAS segment is seeing more demand for our sophisticated technology-enabled analytics solutions. For example, in the quarter, a top 10 pharma client awarded IQVIA contract to streamline clinical operation data management processes. IQVIA’s technology provides real-time data sharing, eliminating unnecessary file processing and improving the speed of data updates.

Also in the quarter, a large med tech firm bought the IQVIA offering that enables better stakeholder targeting and go-to-market execution, ultimately enhancing the clients’ ROI. Moving to real world. A top 10 pharma company chose IQVIA to conduct a comparative study of the effectiveness of treatments against the standard of care in patients with a specific marker across 10 different cancers. The goal is to help the client gain market access and reimbursement for their treatment, which can be used for multiple types of cancer based on a single biomarker. IQVIA was awarded contract by the top 10 pharma to demonstrate the effectiveness of a novel eye movement technology addressing a common symptom in patients with multiple sclerosis. A top 10 pharma client awarded IQVIA, a large real-world respiratory infection vaccine effectiveness study.

We were selected based on our strong epidemiologic scientific and therapeutic expertise as well as our global footprint to augment site identification and operational execution. And finally, to conclude my commentary on the TAS segment, I’d like to highlight the work we’re doing in public health. It’s been an increased area of focus for governments looking to extend life expectancy reduce health inequalities and improve overall quality of and access to care. Some examples of IQVIA’s work in this area, one of the largest UN health agencies contracted IQVIA to help with a major initiative to eradicate all types of polyoviruses in Africa, focused on children. IQVIA is deploying personnel to improve outbreak response with vaccines and to strengthen polio surveillance and response in hard-to-reach areas.

So far, IQVIA’s team conducted visits to more than 12,000 sites and trained over 122,000 health workers across 26 African countries. Another example of our work in this area, IQVIA was selected to conduct a large EU-funded project to create a national oncology network and database for one of the European Ministry of Health to improve the country’s low cancer survival rates. A single IT platform will connect national hospitals and the reimbursement fund in that country. The platform will leverage curated oncology data and analytics to manage patient risk and improve treatments in a cost-efficient manner. Lastly, on public health, the global fund selected IQVIA to support 13 African countries to improve the visibility of their supply chain performance, ensure the availability of commodities and services, mitigate service disruptions and provide stronger assurance through more frequent on-site spot checks.

The project focuses on pharmaceutical and diagnostics analytics from over 2,800 facilities for tracer health products in HIV, tuberculosis and malaria. This work is very important to us in public health. It’s also extremely important to our global pharma clients who are extremely active in this area as well. Moving to R&DS. Let’s start by highlighting two more distinguished vaccine development awards. The top 10 pharmas selected IQVIA to support the development of a novel respiratory vaccine, which could represent a significant breakthrough as the only vaccine targeting multiple respiratory viruses simultaneously. IQVIA laboratory secured a preferred strategic partnership with a top 10 pharma based on IQVIA’s unique expertise, innovation and delivery model.

As we discussed in the past, there is stronger demand for FSP services, and we continue to win our fair share in this segment as well. For example, in the quarter, we secured an extension of FSP data management services with a leading midsized pharma known for their innovative rare blood disease therapies. In the EBP segment, we secured two large awards where we displaced incumbent CROs based on our global scale and AI-enabled capabilities. We were selected by the US West Coast EBP clients to conduct two large Phase III oncology studies simultaneously. This is a big deal as the client is new to IQVIA and selected us based on our differentiated AI-enabled capabilities as the trial protocol includes complex inclusion, exclusion criteria and usually large patient cohorts and aggressive enrollment time lines.

We also won another large EBP full-service Phase III trial displacing the incumbent again by leveraging our AI-enabled startup, site identification activation and enrollment capabilities. With that, I will turn it over to Ron for more details on our financial performance.

Ron Bruehlman: Thanks, Ari, and good morning, everyone. Let’s start by reviewing revenue. First quarter revenue of $3.737 billion, grew 2.3% on a reported basis and 2.9% at constant currency. COVID-related revenues were approximately $45 million, down about $105 million versus first quarter of 2023. Excluding all COVID-related work from both this year and last, constant currency growth was approximately 6%. As already mentioned, acquisitions contributed just over 100 basis points to this growth. Technology & Analytics Solutions revenue for the first quarter was $1.453 billion, up 0.6% reported in 1% at constant currency, excluding all COVID-related, where constant currency growth in TAS was 3%. R&D Solutions first quarter revenue was $2.095 billion, that was up 3.4% reported and 3.8% in constant currency and excluding all COVID-related work, constant currency growth in R&DS was 8%.

Finally, Contract Sales and Medical Solutions or CSMS first quarter revenue of $189 million was up 3.8% reported and 7.1% at constant currency. Let’s move down the P&L. Adjusted EBITDA was $862 million. That’s growth of 1.3%. Our first quarter GAAP net income was $288 million, down 0.3% year-over-year and GAAP diluted earnings per share were $1.56, up 2% year-over-year. Adjusted net income was $468 million for the quarter, up 1.3% year-over-year and adjusted diluted EPS grew 3.7% to $3.54. Now it’s already reviewed, R&D Solutions delivered another strong quarter of bookings. Our backlog at March 31 stood at a record $30.1 million, which was up year-over-year, and next 12 months revenue from backlog increased to $7.7 billion, growing 6.1% year-over-year.

Let’s turn to the balance sheet. As of March 31, cash and cash equivalents totaled $1.444 billion. Gross debt was $13.536 billion, and the result of those two is net debt of $12.092 million. Our net leverage ratio ended the quarter at 3.38 times trailing 12-month adjusted EBITDA. First quarter cash flow from operations was $522 million in capital expenditures were $145 million, resulting in free cash flow of $377 million. Turning now to guidance. We are reaffirming our full year revenue guidance on a constant currency basis or adjusting revenue at actual currency downward by $75 million to reflect the strengthening the US dollar since we last guided. We now expect revenue to be between $15.325 billion and $15.575 billion, representing year-over-year growth of 2.3% to 3.9% on a reported basis.

Now this guidance now includes a year-over-year FX headwind of approximately 100 basis points. And I’ll remind you that when we last guided, we were looking for about 50 basis points of FX headwind. We continue to assume approximately $300 million of step-down in COVID-related work and about 100 basis points of contribution to revenue from M&A activity. We’re reaffirming our adjusted EBITDA guidance of $3.7 billion to $3.8 billion, which represents year-over-year growth of 3.7% to 6.5%. The impact of FX changes to revenue had a negligible impact on EBITDA. We’re also reaffirming our adjusted diluted EPS guidance, which continues to be $10.95 to $11.25, up 7.4% to 10.3% versus the prior year. Okay. Let me conclude by providing second quarter guidance.

For the second quarter, we expect revenue to be between $3.740 billion and $3.815 billion. This includes a year-over-year FX headwind of approximately 150 basis points, and we anticipate the second quarter will be the toughest quarterly FX compare of the year. As a reminder, the step-down in COVID-related work is weighted towards the first half of the year. Also, we continue to expect gradual improvement in TAS revenue growth in the back half of the year. For the second quarter, adjusted EBITDA is expected to be between $870 million and $890 million and adjusted diluted EPS is expected to be between $2.54 and $2.64. And all of the guidance I provided assumes that foreign currency rates as of April 30 continue for the balance of the year. So to summarize, Q1 was a strong start to the year.

TAS revenue came in as expected, and we continue to look for improvement in the back end of the year. R&DS delivered $2.6 billion of net bookings, bringing backlog to over $30 billion for the first time in our history. We continue to see favorable forward-looking indicators in the clinical trial business, such as strong RFP flow, strong qualified pipeline growth and strong biotech funding, and finally, we’re reaffirming our earnings guidance for the year, including adjusted diluted EPS growth of 7.4% to 10.3%. With that, let me hand it back to the operator for Q&A.

Operator: Thank you. [Operator Instructions] We’ll take our first question from Elizabeth Anderson at Evercore ISI. Ms. Anderson, your line is open. You may have yourself muted.

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Q&A Session

Ari Bousbib: Let’s move on to the next one in the queue, operator.

Operator: We’ll go to Shlomo Rosenbaum at Stifel.

Shlomo Rosenbaum: Hi. Thank you for taking my question. I wanted to ask a little bit about the large cancellation that you called out, you absorbed it into the numbers. Could you give us a little bit more specificity in terms of highlighting what kind of impact would be to revenue and also to bookings because you’re rolling the revenue due to FX, but you’re also absorbing an incremental cancellation that’s unusual and maybe that could help us a little bit with the context over there and then also on the booking side.

Ari Bousbib: Yeah. Thank you, Shlomo. Well, look, we don’t normally speak to cancellations. As you know, we just provide net new bookings. I might point out, by the way, that we have a speak to it, but our gross bookings were the highest — the second highest in our history before cancellations. Now the reason we highlighted this cancellation is because, look, a typical cancellation is normally in the $15 million, $20 million kind of range. And this one is very, very large. It’s almost — it’s about $0.25 billion, okay? So we have done that in the past whenever we’ve had an unusual cancellation. This one has been in the news. I think everyone knows what we are talking about. And we wanted to reassure everyone that the underlying business continues to be very strong.

With respect to absorb it is, yes. I mean, look, we are a large company. We are at any given point in time working on around 2,500 clinical trials. These are staggered and staged through the year and revenue flows over several years for each one of those trials. So we are largely out global enough that we can absorb even such a large cancellation. No change to the guidance. And as Ron pointed out, and you reminded us in your question, the adjustment is entirely due to FX.

Ron Bruehlman: Shlomo, just one thing I would jump in there. I think you’re asking about revenue, too. And obviously, because with an ongoing trial, it does have some impact to our revenue in the current year. But we’re absorbing that in our normal numbers. And this is — this is a series of trials actually a program that would play out over many years. So there isn’t an outsized impact in this year.

Shlomo Rosenbaum: Thank you.

Operator: We’ll take our next question from Max Smock at William Blair.

Max Smock: Hi, good morning. Thanks for taking the question. Maybe just following up on or [indiscernible] as you saw in the quarter. You mentioned up mid to high single digits across all customer groups. I think last quarter, you had called out up double digits across all customer groups. So I just wanted to get a sense for whether what you saw in terms of RFP flows going into this quarter was in line with your expectations? And then any thoughts on how we should think about book-to-bill moving forward? Thank you.

Ari Bousbib: Again, I wouldn’t read a lot in the variation quarter-to-quarter, just as an example, the RFP flow last year was flat versus the 22% number. So we think this is very good. It’s consistent with our expectations. The large segment, the large pharma was up more in the high single digits in terms of RFP flow was a little bit higher than that at kind of mid-single growth depends on the therapies. We had a lot of bookings, infection diseases and internal medicine, which drove a lot of the growth there. The rules go well into the teens. So we often look at report contracted bookings, as you know, some of our peers report awards, which is at an earlier stage in the in the process. And maybe just to reassure you that we haven’t come down from what we said at the last quarter as a leading indicator, if you will, awards were up in the double digits and that was driven by large full-service trials, strong EBP as well.

We look at the qualified pipeline and the qualified pipeline is up double digits, actually very strong double digits. And it’s up again at a record high. So nothing here that has changed versus our expectations.

Operator: We’ll go next to Anne Samuel at JP Morgan.

Anne Samuel: Hi. Thanks for taking the question. In the TAS business, you talked about strength in the pipeline and some positive signs and maybe some more positive conversations there. As you’re moving through the year, are you seeing your pipeline convert kind of at the same rate that you had initially expected? And with the macro maybe slightly more stable, can you just maybe speak to any potential areas of upside as things are starting to loosen up there?

Ari Bousbib: Yeah. Well, I mean, I wouldn’t talk about upside here so far. And then the macro is not really stabilizing unless you call stabilizing the fact that we now know there won’t be a rate cut anytime soon. So look, the TAS business is exactly performing exactly as we expected it. Same type of performance that we telegraphed in our prior guidance, same growth rate that we anticipated when you exclude COVID and the currency impact. And we continue to see, again, based on our pipeline, based on budgets firming up based on the conversation with clients, continue to expect upside towards the back of the year, second half of the year and more in the back of the year. Large pharma companies, as you know, have introduced a significant cost reduction programs.

And that has driven a lot more cautiousness and scrutiny in the budgets than in prior years. And we’ve discussed this is driven by the overall macro environment, maybe some concerns related to IRA long term and preservation of margins long term and preservation of margins. As you know, our client base generally is doing fairly well and is reporting very good numbers. So we think that also is an encouraging sign and usually send money when they are doing well, and we see that they are doing well. So all of those signs are encouraging. I could give you a little bit of color on the business in as just for a perspective, the data business continues to perform exactly as expected. No surprises, they are flattish to up the low single digits. The real-world business, which we signaled in the prior quarter earnings call was slowing down, has actually gone from being a very strong double-digit growth performer to mid-single digits to then negative growth in rebounded somewhat and is now flattish.

So we see that we think that we bottom out there. And the tech business continues to perform as expected, good and strong. And the Analytics & Consulting business, which is our shortest cycle business ebbs and flows in the quarter. It had started to do a little better last quarter. This quarter, it went backwards, and that’s why we didn’t perform even better than our expectations in Ita. So all in all, real world doing better than we thought, and LT segment salting doing a little less more than we thought, but that’s to be expected. It has more variability by definition. And we still have a strong pipeline there. So we think that, that will continue to improve quarter-over-quarter. And that’s what gives us confidence that the back end of the year on TAS will be good.

again, upside, I don’t know. I can’t promise that.

Anne Samuel: Thank you, Ari. It was extremely helpful.

Operator: We’ll move to our next question from David Windley at Jefferies.

David Windley: Thanks. I wanted to transition you to R&DS. Ari, thank you for taking the question. You highlighted in your prepared remarks about some of the business wins you highlighted some FSP deals. I also heard you say though that your RFP flow was strong on the full service side. So — given that you’ve talked in the past about how that FSP does present some margin headwinds, I thought maybe you could update us on the state of play between those two models and maybe we’ve reached some kind of equilibrium there. So just your thoughts on FSP versus FSO? Thanks.

Ari Bousbib: Thank you very much. Yeah I mean, look, as a percentage of our total R&D revenue, FSP comprised about 15% — so now if you — that’s in totality. If you look only at the services portion of the business, meaning excluding pass-throughs, which, as you know. that typically is no pass-throughs. So that percentage is a little higher and continues. It’s a little less somewhere between 20% and 25%, I would say. And it continues to grow a point or two every year. So, of course, it has an impact on margins because FSP margins — FSP contract at lower margins but again we are large global company and that just puts more pressure on us to continue to operate with more efficiency, find new areas of productivity, contain costs and offset those margins, those mix — the unfavorable mix impacts on margins with cost reductions, and we continue to work well on our usual playbook, which is to grow our EBITDA faster than our revenue and consequently increase margins.

Operator: We’ll go next to Jailendra Singh at Truist Securities.

Jailendra Singh: Thank you and good morning, and thanks for taking my questions. I wanted to follow-up on the sales force partnership comments. Just curious if you can share any initial reaction from your OC customers post that announcement? Or is it still early? Also just curious like what were the conversations leading up to the partnership? Trying to understand what drove the decision to partner with Salesforce given what ITS, prefer for engagement in terms of digital marketing, et cetera.

Ari Bousbib: Thank you. Well, look, as you know, we’ve carved out a nice position in the global CRM market for Life Sciences, we came from behind much later in the game. I guess we entered the market more than 10 years after the large dominant incumbent in this market. And today, we have a footprint of over 400 clients and about 100,000 seats in the business, which is quite impressive in a few short years. Now what happened here is that the dominant competitor has announced a re-platforming of their product from Salesforce to their own in-house platform. Now OCE is based on a sales force platform. It’s the result of a strategic partnership that has been in the market for over five years. And we and Salesforce want to ensure that we continue to have the best product in the market.

And we’ve agreed that it is time to develop the next-generation product. We also agreed that it should be based on Salesforce’s new life science cloud, which is much more advanced and as it will be based on the current OCE application to be replatformed. Now it takes time to do that. It makes sense for Sesco to take the lead in developing this next-generation application, and it will be based on IQVIA IP. Our existing customers understand all of that. They will continue to be supported for at least the next five years, and we are very happy. I can even say yesterday, we won a very significant award on with a large, well-known clients, pharma clients, and we actually displaced the large dominant player in the space, which have been the incumbent for a long time.

So our clients are reacting very favorably. They understand the need for the next generation transition, and we are going to shepherd that process together with Salesforce. When the product is ready, the next two years or so, we will go to market jointly with Salesforce, with this new product platform and will help transition customers who wish to do so when they are ready to do so.

Jailendra Singh: I’m sorry.

Ari Bousbib: Strong and positive reaction from the customer base.

Operator: We’ll go next to Ann Hynes at Mizuho Securities.

Ann Hynes: Hi, good morning. Ari, wondering what surprised you on the upside most in the quarter and maybe on the downside? And just following up on the last FSP question. Thank you for that clarity, you gave us about its 20% to 25% ex pass-throughs, what do you think the MAX would be over time? Thanks.

Ari Bousbib: What was the first part?

Ann Hynes: What surprised you on the…

Ari Bousbib: I hate to be boring. I had zero surprises this quarter. I mean, for lack of better words, I think this was a boring quarter. It was exact. It came in exactly as we thought. Look, the nature of business is pretty predictable. The large cancellation was kind of — it’s based on really — on the results and on the assessment of the environment by the clients. It’s always been very well reported. And so it usually takes time to unwind the study. And so we knew it was coming. So those the exact timing, all of this will be finalized, but it was in the quarter. But other than that, frankly, no surprises upon everything came in pretty much on expectations. They’re all moving parts, but this was of the most boring quarters I’ve seen nothing no drag.

That’s the way we like it, by the way. In terms of your FSP question, it ebbs and flows. I remember my first contact with this business now almost eight years ago, I was told FSP is going to be replacing full service. Clients are shifting to FSP. And indeed, there was very similar tool today, an effort by some of the large pharma companies, many of them to bring project management in-house and to essentially shift to these types of models. So I think it’s a pendulum. It swings back and forth. In a highly specialized studies, it’s very hard for a client not to do full service because they don’t always have all the competencies in-house. Again, I think we’re seeing eight years ago. What we’re seeing also might be to add a little bit more to this.

We’re seeing a trend towards what we call hybrid models where the client starts out with one thing an FSP program. And as we progress in defining the parameters of the study, we end up taking on more of the tasks. And it’s kind of in between full service and it’s not fully outsourced, but in that, they are 100% FSP either. There are parts of the program that we continue to manage. So it’s really more integration with the client and it becomes more of a closer partnership. So I don’t see this as a long-term permanent trend the point where, theoretically, it will become 100% FSP. I don’t see that happening. Plus remember, FSP is virtually nonexistent for EBP or midsized pharma.

Ann Hynes: Great. Thank you.

Operator: We’ll take our next question from Michael Ryskin at Bank of America.

John Kim: Hi, good morning. This is John Kim on for Mike. I appreciate the SSP comment there. I’ll just ask a quick one. On that swing pendulum comment, do you expect that percentage to go down at some point — and in terms of the RFP flows that sounds great, solid, solid flows. But is there anything that may hinder or delay that turning into sales in the second half. Thank you.

Ari Bousbib: Okay. Thank you. Well, on the FSP comment, I don’t know when these things will — this is a long-cycle business. I remind you that it takes an average four, five years to execute a contract. So we have a very large book of business. I think in our backlog, what is the proportion of that pen our backlog? Is it also about 15%? Yes. So our backlog is over $30 billion and about like somewhere worth $4 billion, $4.5 billion of that $4.5 billion of that is FSP. So you see the vast majority of the revenue we’re going to deliver over the next four or five years is going to continue to be full service programs, and it’s not about to influence 1 way or the other. It’s a slow moving business. It takes a lot to move the needle one way or the other.

We’ve been continuously on an upward momentum and that’s the way we like it. So no, I don’t see that happening. And then certainly the same similar type of commentary on your question about affecting the second half, it is just too short horizon to have an impact. These swings will have an impact for years from now.

John Kim: Got you. That make sense. Thank you.

Operator: We’ll go next to Charles Rhyee at TD Cowen.

Charles Rhyee: Yeah. Thanks for taking the question. Ari, you mentioned earlier about winning a decline that’s going to do two simultaneous studies in oncology. And I’m curious whether decision to do two trials at once could be a function of terms in the IRA that kind of benefit companies to do — the local trials that want sort of to maximize revenue before potential negotiating on pricing with Medicare. I’m curious if that could be part of the reason. And in general, I guess, as you think about the structure of do you foresee more companies engaging in multiple trials at the start? And how do you think that could be benefiting for IQVIA in the future? Thanks.

Ari Bousbib: Yes. Well, I mean that’s a clever thought here why it was material studies, but it happens to be not the case over here. But I see what you’re thinking about, but that’s not the case here. It’s addressing two different diseases with different — I think it’s different molecules. Again, we can give you in post call, some more color on this, but I don’t think it’s because of the IRA Look, what is true is that clients are with respect to the RA are trying to accelerate time lines because one of the possible impacts of the IRA is that it will reduce the period of time during which protection will apply intellectual property protection will apply. And as a result, you want to maximize the revenues then that, if anything — and again, that’s probably the context for your question.

If anything, that kind of induce clients to launch several programs simultaneously. So in this particular case, we’re replacing an incumbent, and I think of them is a rescue study, correct. So that’s the context there.

Charles Rhyee: Thank you.

Operator: We’ll go next to Tejas Savant at Morgan Stanley.

Tejas Savant: Hey guys, good morning. And thanks for the time here. I have a few questions here on R&D solutions. First, just broadly on the pricing environment, are you starting to see more pricing discipline from your peers versus what you saw in the back half of 203? Second, on the cancellation in CNS given the faster burn nature of that work, is there any implication from that for the phasing of R&D revenue through the remainder of 2024? And then last on AI enablement. You highlighted that as a driver of some of your EBP wins in the quarter, which I thought was quite interesting. Could you just share some color on why it’s translating into share gain for you? And what is it you can do with AI that your peers aren’t offering yet? Thank you.

Ari Bousbib: Okay. The three questions totally independent. So first on pricing, look, there’s no change in pricing here. There continues to be pressure from clients and price negotiations are always tough. — we mentioned before that we’re having maybe more pressure than we had before on pricing from large from our clients as they’re working on their savings initiatives, but it’s not that different than history, maybe a little more than usual. But I think nothing with respect to competitors, I can’t speak to what they do. I just have no idea. I don’t want to know. But look, comes to reason that smaller competitors, which have failed largely and have I’ve led to them being acquired are struggling to book business and as a result, could put pressure on pricing.