Ladies and gentlemen, thank you for standing by. Welcome to the Quintiles IMS Second Quarter 2017 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. As a reminder, this conference is being recorded, Thursday, August 3, 2017. I would now like to turn the conference over to Andrew Markwick, Vice President, Investor Relations. Please go ahead.

Thank you, Alex. Good morning, everyone. Thank you for joining our second quarter 2017 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; and Michael McDonnell, Executive Vice President and Chief Financial Officer. Today, we'll be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will be available following the call on the Events & Presentations section of our Quintiles IMS Investor Relations website at ir.quintilesims.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call could 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 filed on February 16, 2017 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 also like to point out that as with other global businesses, we have been impacted by year-over-year foreign exchange fluctuations. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Thank you, Andrew, and good morning, everyone. Thank you for joining our second quarter 2017 earnings call. Q2 was another solid quarter for the Quintiles IMS team. Strong operational discipline and execution of our integration plans are driving results. Let's review the quarter. Consistent with the last couple of quarters, we're making comparisons more meaningful by discussing results on a combined company basis, as if the merger took place January 1, 2016. Second quarter revenue was at the high end of our guidance range of $1.97 billion. This revenue included $871 million for Commercial Solutions, $896 million for R&D Solutions, and $204 million for Integrated Engagement Services. Adjusted EBITDA for the company was also close to the high end of our guidance range at $486 million. As a result, our adjusted EBITDA margins expanded 100 basis points for the quarter. Let me provide some color behind the numbers. Let's start with our technology solutions business. Our tech business continues to gain traction in the market. Let me illustrate with a few examples. During the quarter, we signed two significant deals with top 10 pharma clients for our social media technology platform for over $12 million. As a reminder, our social media technology mines and analyzes over 400,000 social media outlets to track patient sentiment. It specifically flags adverse events to help clients rapidly identify and remediate issues when they arise, and satisfy regulatory reporting requirements. We do this through proprietary ontology in 52 languages; proprietary algorithms; 24/7, 365 days of the year in a state-of-the-art global monitoring center. We also had significant wins with our Master Data Management or MDM platform amounting to about $20 million with top 20 pharma clients. The clients will deploy our MDM Solution globally, benefiting from Quintiles IMS' global implementation services, which are unmatched by…

Thank you, Ari, and good morning, everyone. Q2 was another solid quarter for Quintiles IMS. Let's review the details. As in previous quarters, I would like to call your attention to the more meaningful combined company comparisons in the center of the page. Second quarter revenue was $1.97 billion which was the high end of the guidance range we provided last quarter. You will recall the deferred revenue adjusted we highlighted on the last couple of calls. This quarter, it negatively impacted revenue by $2 million. When adjusting for this, and on a combined company basis, second quarter revenue grew 1.2% at constant currency and 0.1% reported. On a combined company basis, Commercial Solutions' revenue of $871 million grew just under 2% at constant currency and 0.6% reported. The Commercial Solutions growth rate was again impacted by a decline in the legacy Quintiles' Encore business and headwinds from the legacy Quintiles' Advisory Consulting business. Excluding Encore, growth in Commercial Solutions was about 2.5% at constant currency. We sold the Encore business after the close of the second quarter and recorded an impairment charge in Q2 to reflect the sales price. This business is not part of our strategic vision. And as a result of the sale, we will have some tax benefits. R&D Solutions' service revenue of $896 million grew 1.7% at constant currency and 0.4% at actual FX rates. Growth was impacted by a decline in our early clinical development business due to the closing of a facility in Europe during 2016 as well as weaker bookings and higher cancellations in the third quarter of 2016. When adjusting for the early clinical development business, R&D growth at constant currency was about 3%. Integrated Engagement Services revenue of $204 million declined 2.1% at constant currency and 3.7% at actual FX…

Thank you. Our first question comes from the line of Tim Evans with the company Wells Fargo. Please proceed with your question.

Hey. Thank you, gentlemen. So just using a cash flow statement as a proxy, you spent over $250 million on acquisitions in the first half of the year which is a pretty sizeable outlay. Can you just talk about these a little bit? What did you do? What segments were they in? How much did they contribute to growth in the first half? And how much revenue are they expected to add for the full year? Thanks.

Good morning, Tim. Thanks for your question. This is Ari. In the quarter, I think we spent $118 million in acquisitions. We continuously look for and have a rich pipeline of small tuck-in capability acquisitions. These are, for the most part, and I want to say exclusively this year, technology acquisitions both in the commercial space and in the clinical space. This quarter, there were a few handful of small acquisitions, all of which closed at the end of the quarter, and had zero impact in the quarter. As we've told you before, we may pay a healthy premium because, again, we're buying the technology capabilities. It's a decision to continue to develop our assets through acquisitions instead of internal product development spend. Initially, these acquisitions have very little revenue contribution, and the acquisition spend can be lumpy quarter-to-quarter, but that's what we've signaled before; it's not rich. And we expect to answer your question in terms of contribution to revenue, that acquisitions will contribute year in, year out of 1 point to 1.5 point to our growth, and this year won't be different.

Okay. Great. And then the CapEx spending...

And by the way, this will be true both for R&D and Commercial, just to be complete. Go ahead.

Okay. So I was just going to say the CapEx in the quarter was up sequentially by a fairly meaningful amount. Is that the run rate we should expect going forward kind of on your quarterly CapEx?

Mike?

So, Tim, it's Mike speaking. Overall, yeah, it did tick up a little bit. I would attribute that more to timing if you compare the first quarter to the second quarter. And I would say that, in general, we continue to see ourselves as a company that is not capital-intensive. The combined company should run at about 4% of revenue in general, and early on it could be a little bit higher in the early years as we integrate the two businesses. Year-to-date, we're about 4.5%. And I think the first quarter, second quarter is strictly timing.

Great. Thank you.

Our next question comes from the line of Jack Meehan with the company Barclays. Please proceed with your question.

Hi. Thanks. Good morning, guys. It looks like you've shown some good momentum in terms of the net new business awards. I was wondering if you could talk a little bit about the recent cancellation activity, how things have gone since the end of the first quarter, and anything notable there.

Well, I mean, every quarter we have cancellations. Bear in mind, we moved to an as-contracted basis, and that's the same for cancellations, right? So it could be that there was a cancellation a quarter or two ago and we took it in this quarter. So we had, as in every quarter, cancellations this quarter as well. In terms of contracted, nothing of significance in terms of, in the quarter, new cancellations. The cancellations we took, and that are reflected in our numbers, are cancellations that were announced in prior periods. Nothing of significance this quarter. You know we have a very dispersed client base, and there is at the moment not any given trial that will materially impact us.

Great. That's helpful commentary. And then just one in terms of progress and in terms of the cost synergies. It looked like you shared some good leverage there in the second quarter with the higher revenue. Just do you have any additional thoughts on the pacing for getting to the $200 million over the next few years, that will be helpful. Thanks.

Yes. I mean, we've said that it's really starting to kick in in 2018, and there is a ramp. Our goal is to get to our a couple of $100 million of cost synergies, merger-related cost synergies at the end of 2019 in terms of a run rate. So, yeah, that's the ramp. I mean, in terms of – I don't know if we gave – it's not linear as you know, right? I mean, we will have some benefit in 2018, and then it will ramp in 2019, and we get to our $200 million run rate at the exiting 2019. Is it going the way we anticipate? In some area it's going faster and in some areas, as always, slower. There are a lot of moving parts. Some of the real estate consolidations in some countries are easy to do, others are more difficult. Some of the IT systems again in HR, it's going well on the financial side. We have some delays, but again nothing that's unusual. All in all, I think we have good visibility and we're tracking on our plans.

Great. Thanks, Ari.

Thank you.

Our next question comes from the line of Eric Coldwell with the company Baird. Please proceed with your question. Eric W. Coldwell - Robert W. Baird & Co., Inc.: Hey. Thanks very much and good morning.

Good morning. Eric W. Coldwell - Robert W. Baird & Co., Inc.: Hi. Don't take this as a critique at all. But technically, at least compared to those of us on the sell-side, you did push out revenue and EBITDA expectations quarterly throughout the year but you also maintained your revenue and EBITDA guidance for the year. So it does put a lot more attention on the fourth quarter. And with that lead-in, my question is or maybe my ask is help convince me and others that the fourth quarter is, in fact, going to be a strong quarter. And how do you get to your guidance for the full year? What are the inputs in the fourth quarter that really stand out for you both in terms of revenue and EBITDA? And I might have one follow-up. Thanks.

Okay, Eric. I know you have a follow-up for sure. So, look, the guidance we gave is based on our forecast both for every time we did so for the quarter and for the year. Our guidance in revenue and EBITDA has a range, and that range has not changed. As always, there are puts and takes aspects in the business that are doing better than we thought and others that are perhaps weaker than we have anticipated. We also, as you know, got rid of the Encore business earlier this month or last month, and so it won't be in our numbers any longer, so that piece of the revenue is out. Flip side of this, we have a little bit – assuming FX rates remains where they are – we may have a little bit of tailwind from FX which will offset that loss of revenue. And bear in mind, the FX rate is rather a headwind on EBITDA rather than a tailwind, that it may be on revenue simply because we do a lot of work overseas. And at the EPS line, we are hedged largely because we've got also euro-denominated currencies. And the FX movements are very complicated because of the number of countries in which we do business and the large number of currencies that are fluctuating constantly. So with respect to your specific question in terms of the ramp, look, there are some merger-related costs that we've had throughout the first two quarters, and we believe will continue in the third quarter. I've said before, there are redundant costs that we continue to carry that we cannot adjust out of the P&L, of our adjusted EBITDA numbers. Those are going to continue in the third quarter, and a portion of those we're going to…

Yes. Well, again, for those of you less familiar with the IMS, the IMS commercial business traditionally, Q4 traditionally has a seasonality element to it. It's the end of the year and pharma has budgets, marketing and commercial budgets that they look to spend, and the fourth quarter typically has been the strongest. A lot of purchases of what we call ad hoc data packages. Most of that comes at the end of the year. So if you look historically, the IMS legacy business is weaker in the third quarter. The seasonality of Q3 has been the weakest historically, and Q4 the strongest. So that will explain also perhaps the perception of a bigger ramp in the fourth quarter. Eric W. Coldwell - Robert W. Baird & Co., Inc.: Okay. Thank you for all the answers. My quick follow-up, if I'm allowed, is just – I'm sorry if I missed it but I'd love to get an update on your sales and marketing head count and development of your teams in the field. Maybe a qualitative as well as quantitative commentary there would be helpful. Thank you.

Okay. Thank you for the question and thanks for bringing this up. We have said before that we – and I'm assuming you're asking primarily on the R&D side which is where we felt that we were – Commercial is perhaps been not as forceful and aggressive as we could have been historically. Eric W. Coldwell - Robert W. Baird & Co., Inc.: That's correct.

So I think we had around 150 salespeople historically in the R&D business, and it's not easy to ramp-up to where we want to be but we have increased that number materially by probably about 50% at this point. And secondly, we have also trained – as you know, we've said before we've reorganized our go-to-market strategy globally, and we have regionalized the go-to-market approaches in North America, Europe, and Asia, and we have combined our account management across clinical and commercial markets. We have, in the process, trained 1,000 legacy IMS salespeople on R&D, business development, so they are helping us opening doors, create the meetings that otherwise would simply not have been open to the legacy Quintiles organization before. They are able to engage in conversations, learn about RFPs earlier in the process, and involve then the domain experts from the R&D organization at the right time. So, again, in terms of numbers, specifically we continue to ramp-up the sales force recruitment dedicated to R&D. We've increased that sales force that's dedicated and specialized by about 50% to-date. And we have also trained 1,000 IMS salespeople in at least the earlier stages of business development and sales for R&D as well. Thanks for your question.

Our next question comes from the line of John Kreger with the company William Blair. Please proceed with your question. John C. Kreger - William Blair & Co. LLC: Hi. Thanks very much. Ari, I think in the past you've talked about fully automating E360 by around year end. Could you just give us an update on where that process stands? Thanks.

Yeah. Thank you for the question, John. Look, when we say – what we really wanted to do, there's always an element of customization, right? Every study is unique. What we wanted to do, and we've said this upfront, is to try to "productionize" the process, to accelerate our response time and minimize the degree of customization. Again, there will always be an element of customization. We are well on our way by the end of the year to having "productionized", which means having loaded the data and standardized the data mining and algorithms required to accelerate site identification, optimal site identification for a given protocol design for a dozen main therapies. The issue is how fast can you go across all specific diseases and therapies. So we think that this is going to cover probably 80% to 90% of the RFPs in which we believe Next-Gen will be relevant and useful, which as we said before is at least half of the pipeline. So that's where we are today and this is exactly where we wanted to be. The biggest hurdle is to recruit the type of people that we need. Today, we have 110, I think, the last time I saw, people in what we call the AOCE, Advanced Analytics Center of Excellence (sic) [ACOE, Analytics Center of Excellence], and that's the full-time dedicated team. The ACOE, I'm sorry. I don't remember what it stands for but – Advanced Analytics Center of Excellence (sic) [Analytics Center of Excellence] which we have created, reporting to Cyndi Verst and led by Natalia Balko who some of you have met. We have this team of over 100 people, full-time, working on the operationalization of how we respond to RFPs where we think Next-Gen has relevance. Bear in mind, we are also trying to use Next-Gen in the existing set of trials that we are working on, and it's really the same team. So at this time, the main constraint to even going faster than we have thought is simply the ability to recruit the type of people we want. I mean, we're really hiring data scientists, statisticians, software development people, and it is just not so easy to recruit globally. But we're making good progress. John C. Kreger - William Blair & Co. LLC: Thanks. And then a follow-up. I think you'd suggested that this data would help you have more confidence in RFPs and bidding and, therefore, experimenting with fixed-price awards. It sounds like that first big one is going very well. Are you rolling that strategy out more broadly in awards that you've had in the last three months?

Yes, we are. Again, we will speak some more about this at our November Investor Day. We aim for nothing short of disrupting the way clinical trials are conducted. Historically, this is an industry that's paid for inefficiency, and the biggest problem in healthcare is inefficiency over inefficiency. People are paid for time. And without knocking on any specific profession, the longer it takes – it's like lawyers. The longer it takes, the more time you take and the more money you make, the more costs you have because it's essentially a cost-plus type of business model from an economic standpoint. The more costs you have, the more wastes you have, the more rework you have, the more change orders you have, the more revenue you generate. And so there is kind of an inherent conflict in the industry when no one wants to shoot themselves in the foot, so to speak, and damage their business model. Well we want to change that. We believe that with more visibility, more predictability, more data-enabled and technology-enabled processes, you can actually share risk with clients in a better way with more visibility, an educated risk, and we are willing to do it. And our early forays into this business model change showed that clients are A, much more receptive, and B, see the results in trials that are very complex like the one I discussed before. Again, this is not just a hurdle to overcome because the whole industry is based on a different type of business model. Clients are accustomed to this business differently, and even our own people are accustomed to this business differently. So it's more of a cultural overhaul that we need, and we believe strongly in this vision and we want to move forward. It's too early to show you metrics because we don't have enough of those, and as you know it's a long cycle business. So even if we win a trial today, it's going to take time. Now this particular trial is very large, very complex. It's with a previously locked – essentially locked-out account. And there are many people competing in the same therapy, so an oncology therapy, and so psych identification is even more difficult, and we're beating all timelines historically and we're specifically tracking. Now, one trial is not enough to make it a science, but we feel very confident. And hopefully over time we'll develop enough our database to support the thesis, and I can tell you clients are extremely receptive to our vision. John C. Kreger - William Blair & Co. LLC: Sounds very good. Thank you.

Thank you.

Our next question comes from the line of Sandy Draper with the company SunTrust. Please proceed with your question.

Thanks very much and good morning. A question, Ari, in terms of the IMS technology side. Just trying to think about the product roadmap. I remember, I don't know, a year and a half, maybe two years ago, you guys were talking about, after the Cegedim acquisition, the new internet platform, and you had gotten a little traction with some smaller biotechs I think on the CRM side, and were really targeting the potential renewal cycle that was going to be coming up in 2018. As you now have the Salesforce partnership, does that change things? I'm just trying to think about where the product strategy and cycle is in terms of that upcoming replacement cycle and what you really see, the opportunities for you guys over in 2018 and 2019 on the technology side of IMS. Thanks.

Thank you. Sandy, you're correct. When we bought Cegedim – and by the way acquired or developed internally a number of technology platforms – we intended fully to try and regain some of the market share losses of the historical legacy Cegedim organization. Just for a reminder, we're number two in the specifically-defined, narrowly-defined CRM market. Cegedim had been number one historically going back 5 to 10 years, and they were in the market with an on-premise, heavy, now obsolete type of platform, and we had introduced Mobile Intelligence which was a SaaS-based platform. However, over time, as you recall, because we have a wide suite of applications, we saw the need for a new type of offering that would integrate marketing insights with sales data across several platforms and made those interoperable. Now, in so doing, because we had developed applications on a lot of different platforms and we had internally developed platforms and acquired platforms, in order to integrate all of these applications the cost to do so and the speed to market were very high. We decided to replatform everything on horizontal, existing off-the-shelf industry platforms. We considered several options, and we ended up building an alliance with SFDC with which we are extremely pleased in terms of how it's playing out. And that alliance, by the way, extends to the clinical space as well. We believe this will enable us even better to recapture market share specifically in the CRM business with our upcoming OCE SaaS application. Again, when a doctor reads a marketing e-mail from a pharma company, the sales rep that visits these doctors doesn't know today that the doctor read the e-mail because the marketing system and the sales system are not interoperable. But with our platform, we find when the doctor read the e-mail, whether there was a specific reaction. We find the rep that has that doctor in their territory. And if the doctor is in that rep's call log within the next seven days, we can immediately notify that rep. Again, it's a much more targeted precision sales performance that we are looking for. And it's really the next generation of commercial applications, and we believe that this will enable us to recapture market share in the tech space.

I appreciate the response.

Thank you for your questions. Maybe we have time for one more question.

One more question.

Yeah. One more.

Our next question comes from the line of Robert Jones with the company Goldman Sachs. Please proceed with your question. Robert Patrick Jones - Goldman Sachs & Co. LLC: Great. Thanks for sneaking me in. I guess just to go back to the Next-Gen booking. It sounds like an additional $200 million since the last update. So about 20%, I guess, of this quarter's bookings. Can you maybe just dig in a little more, Ari, on where these wins are coming from? Are these existing clients? Are they clients who've already started to leverage Next-Gen or are they brand new kind of greenfield opportunities? Just trying to get a better sense of where you're seeing success with the Next-Gen offering.

Well, actually, a couple of those wins that I remember because I was personally involved total, I want to say, about $35 million or $40 million, and they are with previously locked-out accounts, that is large top 10 pharma clients with whom the legacy Quintiles organization had done zero business over the past 10 years; I think 11 is actually one of them. So the answer is it's coming from all over the place. We don't have – again, in terms of the pace and the ramp, it's been not quite linear; it's actually been accelerating. If you take out the $120 million large deal that we talked about in the previous quarter, it's over $500 million of awards and it's been accelerating as a proportion of the total bookings. And it's really all over. It's EBP wins, it's with locked-out accounts, and it's – from low-size to mid-size type of awards. Robert Patrick Jones - Goldman Sachs & Co. LLC: Great. Thanks so much.

Thank you.

Thank you for taking the time to join us today, everyone, and we look forward to speaking with you again on our third quarter 2017 earnings call. Matt Pfister and I will be available for the rest of the day to take any follow-up questions you might have. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.