Ladies and gentlemen, thank you for standing by. And welcome to the IQVIA First Quarter 2018 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. As a reminder, this conference is being recorded, Wednesday, May 02, 2018. I would now like to turn the conference over to Andrew Markwick, Vice President, Investor Relations. Please go ahead.

Thank you, Tina. Good morning, everyone. Thank you for joining our first quarter 2018 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Michael McDonnell, Executive Vice President and Chief Financial Officer; and Nick Childs, Senior Vice President, Financial Planning and Analysis. Nick is new to this call, and he joined the company a couple of months ago to lead our financial planning and analysis function. 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 the call on 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, including the impact of the changes to the revenue recognition accounting standards which is 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 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 first quarter 2018 earnings call. We finished 2017 with strong momentum, and I am pleased to report we continued this momentum in the first quarter of 2018. Once again, we delivered strong financial results with revenue and profit numbers above our guidance ranges. Let's review the quarter. As we enter our second full year following the merger, we're now able to see our financial performance compared to the same base as last year. I would also like to acknowledge the extraordinary work of our finance organization they have been able to ASC 606 numbers to a high degree of precision for both 2017 and 2018. I am pleased that we were already able to bridge the change in accounting standard first out of the gate in last quarter's earnings release and we are able to provide full transparency into growth under the new standards today and going forward. The team delivered very good results once again. First quarter revenue of 2,563,000,000 borrowers grew 8.6% and was higher than our guidance range. The revenue bid was driven by three roughly equal components. First, organic operational upside which we are flowing through to our increased full year revenue guidance. I will note that this organic upside was the entire driver of the adjusted EBITDA bid as well. Second, the phasing of pass-through in our R&D Solutions segment which came in at about $390 million for the quarter and a little higher than we had anticipated which is entirely due to timing. And third, an FX data win versus our guidance range which we are also flowing through to our increased full year revenue guidance. You should note that while FX have revenue in the first quarter, it had no material…

Thank you, Ari, and good morning everyone. As Ari mentioned, we had a strong start to 2018. Let’s review the financials which I remind you are now on an ASC 606 basis for all periods presented which includes 2017. First quarter revenue of $2,563,000,000 grew 8.6% reported and 5.2% at constant currency. Commercial Solutions revenue up 985 million grew 14.1% reported and 9.3% at constant currency. R&D solutions revenue of $1,365,000,000 grew 8.1% at actual FX rates and 5.8% at constant currency. Integrated Engagement Services revenue up 213 million declined 9% at actual FX rates and 12.8% at constant currency. And now turning to profit, first quarter adjusted EBITDA of 547 million grew 8.5% reported and 7.4% at constant currency. Adjusted EBITDA margins decreased 10 basis points on a reported basis but expanded 40 basis points at constant currency. As Ari mentioned we, had solid margin expansion in the core business driven by revenue conversion and cost takeout which was partially offset by the many investments we continue to make in the business. GAAP net income was $69 million and GAAP diluted earnings per share was $0.32. Adjusted net income of 285 million grew 8%, growth was primarily driven by stronger adjusted EBITDA below the line benefited from a lower tax provision due primarily to the Tax Cuts and Jobs Act. These benefits were partially offset by higher depreciation and amortization and interest expense from higher debt levels. Adjusted diluted earnings per share of $1.34 grew 19.6%. Year-over-year growth was driven by higher adjusted net income which I just discussed, as well as the lower share count year-over-year. On this basis, our LTM contracted net new business at March 31, 2018 was 4.72 billion representing year over growth of over 15%. If you focus on the quarterly bookings contracted net…

[Operator Instructions] Our first question comes from Sandy Draper, SunTrust. Please go ahead.

One, first just start out with a quick housekeeping and I apologize if you have answered because I jumped on the call a tiny bit late. Did you give an adjusted backlog to exclude the pass-through revenue or you’re just going to go forward always including the pass-through revenue.

Yes, we did not give that Sandy, it's Mike speaking. We tracked obviously 605 and 606 throughout the year, last year, and we fully have implemented 606 at this point and that’s the basis upon which we are going to report backlog. We did give a 12/31/17 backlog under 606 for comparative purposes.

And I think in addition to that, I mean that’s important thing here is 606 backlog or whether its 606 revenue. We have given you next 12 months backlog from that metric as well, which you will see on the edge of the slides in the presentation, which is now expected to be $4.6 billion. So I think that should help you in terms of your modeling the rest of the year.

And the next question, and I know you guys probably have answered this a lot and been tried of, but it will be helpful just to get the updated view. There is certainly some level of concern out there just across the industry about pharma M&A. Can you just walk us through again sort of how you view the near term impact and any exposure to consolidation, and then on both sides of the business and how expose you would be and then what you think about longer term impact of form a consolidation? Thanks.

Look this is not the new phenomena. It has been happening for decades in industry so both legacy businesses have a lot of experience dealing with these phases of consolidation. First you should know that we are very well diversified provider of services to the pharma industry. There is probably no one out there that provide as much stuff to pharma as we do. We've got offerings in multiple countries around the world, and there is no one really that does not buy anything from us. Customer concentration as a result over that is very low. I think our last client is less than 10% of revenue, actually the highest is maybe half of that. On the commercial side, it depends on the nature of the combination. The area of our business that would be theatrically most affected by merger is the data business because obviously we are the largest supplier of that offering and so it's very likely that when two companies merge, they were both using our data. And again, here the impact on the data side will depend on the nature of the combination. Through the degree that needs our complementary therapies and complementary pipelines, then the effect is de minimis because there is no overlap. To the degree that they are exactly overlapping usually those mergers don't take place. They are regulatory opposition to those and so historically we’ve modeled this in the past and $2 of spend doesn’t become $1 of spend. And I am talking about the data side here. Over several years potentially the impact goes from $2 to $1.8 that’s only on the information side. The rest of the business is virtually not affected. Again on the R&D Solutions it's a backlog driven business, there is good visibility into future revenues, we sometimes actually those mergers may be an opportunity to serve more depending on who is the surviving preferred supplier and bear in mind the legacy Quintiles acquisitions was locked out of many large accounts. So it has happened in the past that an acquisition actually has enabled us through penetrate decline that we have locked out from before. So again overall we feel good about older merges that have taken place, that have been talked about and do not expect any noticeable impact on our guidance.

And just final one and I will jump back in the queue. Lower level of share rate purchases in the quarter obviously than we seen in the past, that just some normal timing and maybe that the lower cash flow, or was there any change in profit that you thought about share repurchase? Thanks.

No, there is no change, absolutely no root. If you go back to the entire past year, this is consistent with what we have done. We have done a $100 million plus or minus of open market purchases quarter in and quarter out. The difference is when there was a secondary offering by our sponsors, then we generally took the opportunity to participate in this secondary offering and buy $200 to $153,000 million worth of stock in that secondary. But that hasn’t happened in the past quarter our existing PE shareholders do not - do a secondary in the quarter and so we didn't have that opportunity. So there is a open market purchases I think we bought $86 million, I guess last quarter we bought $130 million, quarter before 170 something, the quarter before 78, I am talking about open market purchases and bear in mind we couldn't buy anything before the earnings release, which was February 14, 2018, and then we precluded from buying for at least some quarterly to the week after the earnings release. So the open window is relatively short because obviously long before the end of the quarter we also - out of the market. So, a small window and consistent with the past. We will continue to repurchase if our sponsors choose to go second in the future, we will look to participate and there is no change whatsoever in our intent to repurchase there, we still have $1.6 billion of share authorization and we intend to use it whether in the next 12 or 16 or 18 months or so couple of years certainly we will use that authorization.

Our next question comes from Erin Wright, Credit Suisse. Please go ahead.

I am curious kind of where we stand in terms of the cost saving plan, are you ahead of plan on that front and just a broader integration process. So does it continue to be on track or you need some meaningful accomplishment, I guess stage, but what are the next steps in integration and cost savings progress. I guess where it stands now? Thanks.

I think we said that we expected to be on the run rate of $200 million of cost stack out executed by the end of 2019. That is end of year three after the closure of the merger. The way synergies happened as you know it's kind of - its an accelerating ramp, so it's usually the 20% or so is in the first year and then another 30% or so the second year, and then the last 50% in the third year and that was our plan. I think we are a little ahead of schedule that is at the end of the first year and of last year therefore, our run rate was more than 20% more in the 30% or so. And I expect by the end of this year we’ll be more than two-thirds done with our cost takeout actions. So, we are a little ahead of schedule and perhaps that is what you see in the - I show the chart that shows 120 bps of margin expansion at content FX from integration savings, as well as the regular operational efficiency work and cost takeout actions. So, we are well on track and again and ahead of schedule.

And it was another nice step up growth bookings associated with Next-Gen offering can you characterize can kind of what you're seeing or where you’re seeing the most traction in terms of customer tights and how that’s generally resonating that would be great? Thanks.

Yes, look EBP is segment is where we see the most traction. Our booking is generally in the segments have increased dramatically. I think we historically - we’re doing okay with the EBP segment but with the Next-Gen capability we’ve accelerated our penetration of the segment I would attribute to most of the growth in our bookings and you seen that we’ve had excellent record booking quarters and an accelerating trend our NNB on the old basis is up 15% year-over-year and we’re very pleased with our traction in the market. I think it's almost or about 70% of our bookings in the quarter were EBP. And obviously Next-Gen is a part of that.

One moment please for our next question and it comes from the line of Robert Jones, Goldman Sachs. Please go ahead.

Just wanted to ask one on the EBITDA margin guidance for 2Q little bit below what we would expected especially in light of the revenue in the quarter and also the better revenue guidance. Is there anything specific worth calling out there or there are some spending items or anticipated expenses that we should be thinking about for 2Q. And then you for the back half of the years or anything else that you would you flag as far as the cadence of the EBITDA margin expectation?

I don’t know what really you mean by lower margin and expectation. I think we showed here for the second quarter margin expansion of how much Andrew we have it can you get me that. We see significant margin expansion because revenue growth we guide through 4.9% to 7% which is pretty strong 5% to 7% and then adjusted EBITDA growing at 9.2% to 13.5%. So that’s like more than the 1.5 times growth on EBITDA versus revenue growth that we had guided to which is like a range of 80 to 120 basis points of margin expansion which is I don’t know I mean you expected more than that, but I think I don’t know may companies in our space that are expanding margin at a 100 basis points. I think perhaps what you're referring to is the absolute dollar number that you guys had out there for second quarter may have been a little bit higher than what - that the range we provided here which is $510 million to $530 million. And the reason for that you had no way to know what was second Q we provided 2017 recast on an ASC 606 basis at the end of last quarter so we didn’t give you the quarters, if you look in this release in the back of the earnings as we have Q2 2017 recast on an ASC 606 basis and you can see there that the growth and you can see the percentage. So maybe what you want to compare is the growth of EBITDA under the new standard versus the growth of EBITDA under the old standard that you had in your model. I think we’re also providing and you’ll get this right after the call. We recast every quarter of 2017 under the new basis that way you’ll have better ways to compare.

You better find that Bob in the appendix of the slide that’s connected on the website.

So, again very strong actually margin expansion even greater than in the first quarter in our guidance.

I was always talking specifically more about the margin sequentially looked like its down 50 bps I’m sure you noticed obviously the EBITDA that you guided to was below where the street was not that on a year-over-year basis wasn’t impressive which is - clearly was maybe a cadence same where but the street was not modeling EBITDA across the next three quarters the way that you’re now guiding to it would seem.

Yes, I think Andrew you want to take…

I think we are seeing that Bob some of revenue be it in the first quarter is future stronger OpEx so that hasn’t got through to the EBITDA line and again the partner stronger you know in the first quarter. So, that where you’re getting a slightly weaker…

But that would be a lower margin in the first quarter, I think Bob is saying that sequentially the margin okay let us look in that, but I think again I don't know whether the second quarter margin typically goes down or you want to take a look at that.

There is a step down sequentially when you look at the quarterly raising for certain thing but we can take it offline Bob.

Our next question comes from John Kreger of William Blair. Please go ahead.

Mike, given all the work you've done on the conversion to 606, what's your current thinking about what the impact of this will be on 2019. So last quarter you laid out that the kind of the earnings headwinds in 2018 but you have any thoughts about how it will impact 2019 kind of upper or down? Thank you.

John it’s really too early to tell on that. We did lay out the earnings impact for 2018 at about 40 million which was similar to 2017, and I would say I’ll go pretty back to our midterm guide where we continue to try to grow our revenue mid single digits we’re committed over the medium term to grow our EBITDA at least 1.5 times to topline and grow our EPS double-digit. So I can give you that kind of color for the medium term but I think in terms of 2019, we’ll get deeper into our planning process several months out and we’ll obviously have more color and guidance to provide at the time.

I mean look obviously we are asking you the same question as you know we were first in our peer group to make the conversion. We actually run all of last year under the two standards already where most of peer not of all of them are actually doing it this year. And I realize for you guys it’s a real difficult to compare across the industry because our peers are reporting kind of apples and oranges. For 2019 what we said is the mix of projects we drive a lot of the - because of pass-through the amount of pass-through and that’s the biggest issue that that people we have. The more FSP work which is less pass-throughs and then that would normally tend to dampen growth. However, and we said that this year absent the 606 conversion we would have a significantly higher growth on our revenue topline for R&D and for the company as a whole 3.5 to 4 points on R&D and a couple of points on the topline. Nevertheless, we are confident because of the strength of the pipeline that’s building because the strength of our backlog to hold in the midterm - we were confident in holding the midterm guidance that we gave in November and that Mike just reminded us of mid single-digits revenue growth in aggregate. Remember that includes IES, which is almost 150 to 200 basis points of headwind. So we feel good about the growth fight, may be you take advantage of the question here to. I don't know yet about 2019, we’ll confirm that in the year when we provide guidance for 2019, but I would not - I don’t see why it would be different. 2018 revenue guidance that we reminded you of today is 3.6% to 5.6%…

Maybe one quick follow-up. Thank you very much for added clarity on organic growth that you gave earlier on the call. For the commercial solutions’ business I think you indicated it was around 4% organic if you could break that down a little bit. How is the data business doing versus the technology solutions versus some of the services business that you are in there? Thank you.

Again nothing change, if you go back and you look at the historic IMS numbers info was kind of flattish 0%, 1%, 2% depending quarter in and quarter out and on the organic basis and the tech what we call the tech service business, which is our technology business and our services business that grows typically in the high single digits organically, 8% plus or minus 1 depending on the quarter. The older real world business at IMS, which is a database real world business grows solid double-digits and the old Quintiles business a real world business, which is more a keen to clinical trials. It’s a lot of people and it’s a longer type of studies that grew in mid single-digits also. So in aggregate the real world business is kind of double-digit. So if you put it altogether you get to this 4% organic growth on the commercial side.

Our next question comes from the line of Shlomo Rosenbaum of Stifel. Please go ahead

I just want to go over couple points just to make sure I understand them right were the next Gen type of awards 1.6 billion since the merger is that the way to understand it. And then also if you can get into a little bit of about the re-platforming of some of the technology on the salesforce.com platform and where we are with that and how that’s improving your competitive position?

Yes, on the Next Gen yes you are correct. It’s a $1.6 billion of next-Gen awards since the merger. The OCE platform was launched, the replatforming was done for the CRM product as of the end of last year, I think we had the launch event in December I recall with sales force. And we are in the market now and we mentioned some of this most significant wins with PFI we record that team mostly midsize as you know the large pharma segment essentially is in the long-term contract with the competitor, but we have good hopes of winning back some of those over time. And in the meantime, we are the renew cycle is kind of beginning now 18/19 and we hope to win some of those back. But in the meantime, we are winning every single time that we compete on these type of products in the midsize segment.

And then what’s the plan or what needs to happen to turn around the IES business. I mean is it realistic to that or is the goal to get it to may be – flat growth, what’s going to be considered success here and how you’ll get there?

Well look during 2017, we evaluated several strategic options for the business. As you know including the sale process and I have talked very transparently about this. It’s the legacy contract sales organization, which had about somewhere $703 million and $760 million of revenue in 2017 and single-digit EBITDA margins. And after we have gone through the process and so it’s a fairly small industry and it goes in the cycles, we felt that it was not the right time and we decided to integrate this segment at the end of last year with our broader portfolio of offerings. So we are going to continue report it separately, but we are now managing it locally. It’s a very local business and when it was managed as a global entity it probably had too much costs and maybe it was bit far from client. So we are trying to integrate it with our regional and country level sales force and we try to leverage our technology and customer relationships to optimize operations. So hopefully we will report better numbers going forward, but again it’s not a market that has wind in it sales.

Our next question comes from Tycho Peterson of JP Morgan. Please go ahead.

I want to go back to guidance for a sec just so we’re clear. You are raising by less than a beat here presumably that reflects kind of timing on the pull forward and reimburse expenses for R&D solutions. So maybe two questions there can you just give us the sense of how we should model that reimburse expense component of the next couple quarter and is that solely the reason why you are expecting the sequential decline.

Yes. So Tycho, it’s Mike. On the reimburse expenses you should model that in a manner that’s consistent with what we said last quarter we estimated that the pass-throughs and the aggregate for the entire company would be on the order of $1.6 billion that is for R&D, commercial and IES we still think that’s about the right number. We have said that about $175 million of that $1.6 billion would be non-R&D and so if you take that $1.425 billion and divide by the quarter the pass-through did come in a little heavier in the first quarter at $390 for R&D, but we still think that, that’s due to phasing and we are still sticking with that that same estimate, which we what we baked into our thinking on the guidance.

Yes the 1.6 includes some pass-throughs on the commercial side.

Yes, I said that yes.

And then Ari a question on real world evidence just two parts here, one is the FDA more receptive to kind of incorporating and looking at some of that data. And then on the pharma side are you seeing any evidence of pharma customers looking to use real world evidence to pursue label expansion at this point.

Yes very much so, good questioned a lot of interest in doing single arm studies. I mentioned one again this is where you instead of having a cord of randomized patients that are going to take the drug and go through treatment and that we’re using a placebo for another parallel cord or several ones we don’t do that. We compare to a model and patients taken from out database and the FDA is very willing for label expansions to look to do that. And actually we are midst of a - we just won a very significant study. Obviously the more we do that the more it favors our business because we’ve got the asset here to deploy and so we are very excited about that.

And then one last one, I appreciate the color you guys gave on Next-Gen award. Just curious on fixed price contracts overall where you are in rolling those out and what part of the backlog is fixed price at this point?

Our Next-Gen award is becoming a bigger part of the mix overall it's probably inching towards about 50% of what we are bidding on these days. And a portion of that would be fixed price and we do fixed price and instances where we have good line of sight on recruitment and we feel like we have been comfortably commit to it so it would be a subset of that.

Our next question comes from Jack Meehan of Barclays. Please go ahead.

So want to focus on the new awards and R&D solutions were up 16%, looked very healthy, but could you talk about the pacing of the RFP flow you seem to start the year and any increased activity or interest around the strategic partnerships?

The RFP flow is as healthy as it has been, actually a very significant number of RFPs coming through. We told you I think already last quarter that Q4 RFP was significantly higher than Q4, 2016. I can tell you the RFP flow Q1 2018 was significantly higher than Q1, 2017, so same trend. And then of course as you know we have a strategy we talked about before called see more, win more, so we’re casting wider net. And again very healthy momentum, our NNB on the old basis are up 15% I don’t know if we mentioned this but even in the quarter bookings are up 17.5% year-over-year and that obviously has far please we believe we are gaining market share and we are gaining a bigger share because of Next-Gen but partly also we see a healthy underlying market here. So the market is not growing at 17.5% but I think we see a healthy pipe here, there is no signs that is abating anyway.

Sorry if I missed this earlier, but related to the segment guidance that you provided last quarter, is it safer to say you feel little better about commercial and R&D solutions at this point and maybe a little towards the lower end with IES? Thanks.

Yes.

We’re coming up on the hour operator, so I think we probably got time for one more question.

Our final question comes from Ross Muken of Evercore ISI. Please go ahead sir.

So maybe just on the sort of the technology side in the R&D business. I think you called out maybe some interest in the virtual trial side and we've heard a lot more interest in terms of the concept around the side list trial. Maybe give us a feel for one, where that interest is coming from and how to size or think about how that could play into the market. And then secondarily on the patient recruitment side or some of the other tools you’re employing to drive these kind of Next-Gen wins. Do you feel like you're getting the proof points in terms of that the client base market are more broadly because we are hearing at least from customers a lot more favorable sort of feedback or at least awareness relative to some of the ways you can influence start-up times and total cost of trial et cetera?

Ross I'd love to spend a few hours here telling you about the stuff that we’re doing here in Next-Gen we just have a couple of minutes but we got a lot to say here on your question, imposing question because its speaks to the future of the industry. Just to touch on virtual trials again we're not going to totally eliminate the way we do trials today you still require the full understanding of the disease area, the study protocol, the country level regulations, and how to assemble the right process to deliver on a global scale. So you still need all of those things, right, but we have a very strong uptick in sponsor interest in an innovative way of managing the trials, to which the problem here is in classical trials, you have a lot of sites to manage it’s not unusual to have 100s of site in a clinical trial that you’re managing at the same time. And everyone of these sites has investigators and requires a separate start-up and separate system and CRS on this side and patients. So it is as a concept is a difficult machinery to make work at the same time. The virtual trial the idea is to have one site, one virtual site that then deals with all the local labs and deals with the patients at their location. If you think about it today less than 5% of eligible patients actually participate in clinical research, one of the main reasons is that a distance to a site is significant. The average distance that a patient who is enrolled in a trial struggles to a site is 50 miles, 70% of eligible patients live at least two hours away from a physical site and so largely don’t participate in a…

Yes, thanks very much everyone. Thanks for taking the time to join us today and we look forward to talking with you on our second quarter 2018 earnings call. I will be available for the rest of the day to take up 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 lines. Thank you and have a good day.