Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA First Quarter 2022 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 Nick Childs, Senior Vice President, Investor Relations and Corporate Communications. Mr. Childs, please begin your conference.

Thank you. Good morning everyone. Thank you for joining our first quarter 2022 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 Bryan Stengel, Associate 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 and 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 will 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.

Thank you, Nick and good morning everyone. Thank you for joining today to discuss our first quarter results. IQVIA has very strong financial results in the quarter and that is despite the broader macro environment. On this note, regarding first the tragic situation in the Ukraine, our thoughts and concerns from the beginning has been around the safety and well being of our employees, the patients we support and all those affected by the ongoing events. We've been actively supporting our employees and their families on the ground with evacuation support, relocation services and financial assistance. For example, we accelerated bonus payments and actually we continue to pay our employees there, regardless of their ability to perform any work. In addition, IQVIA capabilities are being utilized to help support the resulting refugee crisis. For example, Ukrainian refugees are entering surrounding countries with medicines and prescriptions and medical professionals in those countries are seeking to identify and convert product information on these prescriptions into their local equivalent. To help, we've established a free online service for medical professionals to search a product name, active ingredients, and strength, and the tool generates a list of matching products in whichever the local country around the Ukraine is. Also, we've been working very closely with our customers, suppliers and clinical sites across the region to ensure continuity of our in-flight clinical trials and ensure of course that our clients are able to continue to support the effective delivery of medicines to vulnerable patients in the region who depend on these medicines. In Ukraine we are providing support to ensure that trial patients who have begun receiving treatment remain on their treatment protocols. We have established direct to patient shipments of investigational medical products and patient call centers in order to ensure patient care can…

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. First quarter revenue of $3,568 million grew 4.7% on a reported basis and 6.8% at constant currency. In the quarter COVID related revenues were approximately $375 million to down about 35% versus the first quarter of 2021. In our base business, that is excluding all COVID related work from both this year and last, organic growth at constant currency was about 13%. Technology and Analytic Solutions revenue for the first quarter was $1,439 million, which was up 6.8% reported and 9.8% at constant currency. Excluding all COVID related work, organic growth at constant currency in Tech and Analytic Solutions was just over 10%. R&D Solutions first quarter revenue of $1,934 million was up 3.5% at actual FX rates and 4.7% at constant currency. Again, excluding all COVID related work, organic growth at constant currency in R&DS was approximately 17% which was consistent with our expectations. Contract Sales and Medical Solutions or CSMS first quarter revenue of $195 million grew 1% reported and 5.7% at constant currency. Excluding all COVID related work, organic growth at constant currency in CSMS was mid single digits. And let's move down the P&L now. Adjusted EBITDA was $812 million for the first quarter, which represented growth of 9.1% on a reported basis. First quarter GAAP net income was $325 million, that was up 53.3% year-over-year and GAAP diluted earnings per share with $1.68 up 54.1% year-over-year. Adjusted net income was $477 million for the quarter, up 12.2% year-over-year and adjusted diluted earnings per share grew 13.3% to $2.47. Now as already reviewed R&D Solutions delivered yet another outstanding quarter of net new business. Our backlog at March 31 stood at a record $25.3 billion, an increase of 9.1% year-over-year. Next 12 months revenue from…

[Operator Instructions] Your first question comes from the line of Eric Coldwell from Baird. Your line is open, please ask a question.

Thanks very much. Good morning. Two quick ones, both on geography. First, with Russia-Ukraine, I'm sorry if I missed it, but could you tell us the impact in Q1 and then how the $40 million to $50 million of annual impact is phased through the year? I guess, I would assume the majority of that or a significant portion is in 2Q, but we'd love to get your sense on how you faced that $40 million to $50 million projected impact? And then secondarily, early in the pandemic IQVIA was the first and perhaps most vocal company to talk about the impact of China in Asia-Pac when COVID first broke out. Obviously, a lot of conversation these days on the rolling lockdowns in China, I'd love to get an update on what you're seeing from the impact in that market and how you're operating across that region, given the governmental actions ongoing today? Thanks very much.

Thank you. Good morning, Eric and thanks for your questions. On the first one, Ukraine, well Ukraine actually is like we're not even 1% or above 1% of our revenue a little less. So call it $130 million, $140 million, let's say. And, obviously, it's a significant displacement and the world that cannot be done primarily in R&DS. I might point out some of that may come back, some of the trial obviously needs to continue and will be delayed. It just takes time and because of the disruption, or you want to answer specifically, the question on the how much per quarter? We said it's -- we sized it at $40 million to $50 million, right? So it's less than a proportion of impact in Q1, obviously, because the conflict didn't start until late February. So we had a few million dollars of impact in Q1, not a huge impact. You're right, Eric, that it's probably that $40 million to 50 million is probably front end loaded in the year, because we should recapture a little bit as we get late in the year and we start shifting work. But that always takes longer than you think it's going to take. So, you know, we're not assuming a huge recovery of work in 2022, but ultimately, as we find new patients and move the clinical trial activity outside of Russia and Ukraine, we should recover a lot of that you know in probably back end of the year or early next. Now with respect to China, just to situate the conversation, China is about 2.5% of our global revenues and that's about half and half on U.S. and commercial. Now to take the commercial side first, we saw virtually no impact, even at the worst of the COVID crisis…

Thank you very much.

Your next question comes from the line of Shlomo Rosenbaum from Stifel. Your line is open, please ask your question.

Hi, thank you very much for taking my questions. A quick question, just is the years revenue and profitability pacing the way that you expected as you entered the year? I mean obviously a little bit of change with Russia and stuff like that, just the second quarter guidance is a little bit lower than what the Street expected. Obviously the street does not have the insight into the pacing that you guys have at that level of detail and it could be that we just didn’t get the same kind of COVID headwind roll off year-over-year and I just want to kind of start with that question and then I have one followup.

Well, Shlomo thank you for your question, good morning. Look, I think Ron mentioned in his introductory remarks that last year's first half included the highest, the peak revenues from COVID. The second quarter will be the toughest compared year-over-year with COVID in. Right? The biggest step down, year-over-year of COVID revenue will be in the second quarter. That's one factor. Secondly, on a reported basis, if you look at, again, assuming FX rates remain where they are for the balance of the year, the worst comparisons year-over-year in terms of FX impact, are in the second quarter, okay? But the underlying businesses when you take these out, COVID and FX, you guys help me out with the numbers, yes second quarter is consistent with the rest of…

Yes, very consistent. And that's why we're giving you ex-COVID constant currency organic, because that cleans out a lot of the items that cause the volatility that you're seeing. And really across the quarters of 2022, when you look at it on that basis, very consistent growth rate.

So again, I mean, in TAS I can tell you the, what's built in our forecast and reflected in our guidance is due to constant currency organic growth, excluding COVID related work will be high single digits, so very consistent again with the first quarter. R&DS due to constant currency organic growth, excluding COVID will be upper teens. And CSMS will be low single digits, excluding COVID related work at again constant currency organic growth. So you're right on a reported basis the number with the actual COVID work included it looks a little choppy sequentially. But the reality is the underlying business is pretty consistent and pretty strong.

Okay, great.

Yes and the other thing I would say Shlomo is that, that's pretty much in line with our guidance that we gave. I mean the, the linearity and how it's progressing over the quarter is exactly what we were expecting.

Okay, perfect. Then this is another one for you Ari, just you have a really good history of being aggressive on share repurchases when the stock dips, and the stock is pulled back a lot. I mean, you know, at the Analysts Day you communicated being, and just, you know, actually more recently of having a lower leverage target in for a longer period of time. But would you consider taking up the leverage to take advantage of the stock price, given the fact that it seems like our trends in the business really haven't changed despite the changes in the stock price?

My first inclination will be to do that, but very frankly, we're not going to do that. We can buy, you know, thankfully, there is a third factory you are articulating, which is our cash flow generation. And as you've seen, it's been pretty strong. And that allows us more flexibility and affords us the ability to do both, that is to maintain a lower leverage ratio and aggressively pursue share repurchases. You saw we bought for over $400 million in the first quarter. You know, frankly, there are time windows where we cannot buy. We reported earnings I think in February 15, and [Technical Difficulty] we be in the markets as we leverage a lot any level of time. So again, the answer to your question is, yes we will do aggressive share repurchases, but no we will not increase the leverage ratio.

Okay, thank you.

Your next question comes from the line of Jack Meehan from Nephron Research. Your line is open, please ask your question.

Thank you, and good morning. You know, one of the big debates for this year in the industry has also been labor. How did your wage and turnover trends compare to versus prior periods? Can you just comment on how you're managing through that?

Yes, well look, it's interesting. We've, we're obviously experiencing the same trend that we've talked about before, which is given the strength of the industry backdrop, there's obviously competition for talent. And we are really, really actively recruiting and hiring to meet the incremental demand. We also saw like the rest of the industry attrition pick up towards the end. I think it has stabilized I would say over the past few weeks. We track these very carefully and look at it on a weekly basis. And it seems to have kind of plateaued and maybe even start to come down a little bit. Look we have employees and we recruit thousands of employees a year. So we do the talent acquisition capabilities to be able to meet this increased demand. And we have -- we actually it is fascinating back to the Ukraine situation, we are actually looking now at repositioning individuals from these countries, Russia, and also Ukraine, in different geographies, and utilize them in other places. So we are really literally our global footprint allows us a little bit more initiative. We are seeing some margin pressure from labor cost increases, but as we have the flexibility, again, because our global footprint to do some arbitrage and moving things around the world, to optimize our cost structure, we of course, have our ongoing, that's part of our DNA, you know, we are continuing. That's what we do day in day out productivity initiatives and cost optimization actions. Look, we've also increased rate cards on existing RFPs and we are looking for ways to pass along some of those cost increases into pricing where we can. So the combination of all of that, obviously, this is easier to do, the pricing level is easier on short cycle businesses…

Thanks.

Your next question comes from the line of John Sourbeer from UBS. Your line is open, please ask your question.

Hi, thanks for taking my questions. I was wondering if you could just talk a little bit on the real world evidence business growth in the quarter and is this still going to be a double digit growth this year you going to -- may be some of the COVID work going away throughout the year?

Okay. Well look, real world evidence, we saw strong growth. You saw that in TAS in general, organic constant currency revenue growth, excluding COVID was just over 10% in aggregate. And the high growth segments, as you pointed out, are real world evidence and of course, as you all know, Commercial Tech which continued to be strong drivers of growth. And I gave several examples, specific client examples of how in the commercial world and technology space, and real world evidence we are utilizing our unique capabilities. So, real world evidence is doing disclose the numbers here or not?

I mean, [indiscernible] there continues to high teen, growth driver excluding any COVID impacts. So the numbers we've been giving for real world have excluded that from the beginning. So that business has been consistently in the high to upper teens growth rates and we see that continue.

Yes, exactly John. We see that continuing. To your last question, with respect to that COVID step down in revenue, which we've been talking about for a while now, we've always said during the height of the pandemic, that and this is true for real world, is true for commercial and certainly is extremely true for the R&DS business. COVID work essentially crowded out the rest of the business, because our clients understandably refocused their dollars on COVID, whether it's vaccines, or therapeutics, or what have you. But on the commercial side, government works to track and monitor COVID patients, et cetera and they turned to us. As you know, we had a very strong share of that market appropriately. And the concerns that some of you had expressed at that time is, well when that goes away then what happens? Well, we told you that that time that when that would go away, the base business would come back, because we knew that there were a lot of projects that have been essentially put on hold and that there was a lot of pent up demand that needed to be addressed and that's exactly what is happening. Exactly what is happening. Now that's true with real world evidence, it's true on the commercial side and it is true certainly in R&DS. Thank you.

Thanks, I appreciate the color there and then just maybe one followup. As you are approaching around that 3.5 times levered, any thoughts on M&A and what areas or potential type of businesses would you be looking at if there were do those?

Well, look, we always said we've gave guidance, we have done, and that's been consistent. By the way you can look at our record is between 1 and 2 points of our revenue top line growth over the long-term has been supplementing our organic growth. We make acquisitions within our core businesses when they are strategic and add capabilities or allow us to enter adjacent markets where we think we can add value. We have walked away, we do walk away from I want to say 90 plus percent of the companies we look at in the market. We always felt that valuations were very frothy, and that we did not want to, despite the rate environment so long we did not want to pay for assets more than what they were worth. And unfortunately, for those who did you now find yourself in an environment where valuations have taken a beating and now you've got a lot of private equity owned businesses that are very attractive, we would like to buy. But the entry points for those current owners at the time we did the acquisition was very high. And so, I just don't know how that -- it's going to take time. And because of that I am suggesting that we are going to -- if we were always cautious we are going to continue to be cautious now. Having said that, we will step up to the plate when the acquisition is extremely attractive, extremely accretive to our operations and our financials and we've done that in the quarter actually, we bought significant lab business, which is very attractive. And I believe that's the bulk of our acquisition spending that and correct, yes. And we like very much the lab business, as we discussed before. These are…

Thanks for taking the questions.

Your next question comes from the line of Luke Sergott from Barclays. Your line is open, please ask your question.

Good morning. Thanks for the question here. Just a couple of cleanups. On the COVID step down into 2Q, remind us, I might have missed this one, can you remind us what you guys did in 2Q last year, and by the segments, just so we have an idea how that paces out ?

We have a combination of projects in the TAS segment, you'll recall, we did a lot of government work, which is stepping down as we go through this year. In the R&DS segment, we are working on some mega COVID vaccine studies and safety monitoring work and also therapeutics. But you know, we were involved in hundreds of different COVID related projects. So are you asking what type of work were we doing or revenue numbers?

No, just the revenue. I was just trying to get a sense, I meant the numbers.

The numbers like I told you was, we did about $375 million and now are you talking in Q2 or Q1 now?

Q2 last, I'm just trying to get a sense of the step down what you have the whole billion rolling off right?

And you can infer from the numbers we gave you on the conference call what Q1 was last year, which was, over $550 million and in Q2 it was slightly larger than that last year.

That's helpful. That's exactly what I was looking for. All right. So and there's something here a little more strategic as you think about it. So I mean, when you guys came on after the merger, you started going after the fat tails of biotech, right and going after all the bookings. And so now when you're getting up to record booking levels 1.9 plus, are you guys at capacity of what your business can handle? And I guess it's more of a sense of, I understand it's hard just to add additional bodies given the tight labor market. So give us a sense of the type of work you're now taking on how that's changed. And if we should expect you know, the overall bookings to continue to climb or if this is kind of peak at your capacity right now?

Well first of all I -- capacity we always is people driven in this business, as you know. But I would say if anything, certainly seems to merger. Our ability to take on more work with the same amount of people has increased significantly, because of our decentralized clinical trials capabilities. The increase in technology content, in data analytics, in process improvements that we've done since the merger is very dramatic. So our ability to take on more work with the same amount of people is significantly enhanced. So I don't see, frankly our turning away work, because somehow we don't have the capacity, we just don't do that. Again, with the minor exception of what I described before in my introductory comments, for pre-commercial EBPs, that knock at our door for assistance, and that don't qualify based on our rigorous vetting process. With that minor exception, we are able, willing, eager to take on any and all work. So certainly, I hope we continue assuming the underlying dynamics of the market continue to grow, which is, I think, a very, very valid assumption and a completely conservative expectation. And assuming that we continue to gain market share, which is also I think a conservative expectation. You should expect our bookings to continue to grow over the long-term, no question about it.

Okay, thanks.

Thank you.

Your next question comes from the line of Patrick Donnelly from Citi. Your line is open, please ask your question.

Hey, guys, thanks for the questions. Ari, I just wanted to circle back on EBP really helpful commentary during the script. I mean, it sounds like even if you did see some softening your business is diversified enough where the impact would be pretty negligible. But to date, you haven't seen anything. And just to clean up, I guess why you wouldn't be seeing it versus some competitors, like one yesterday, who called it out? Then coming down to your vetting process, you're maybe not taking on higher risk trials that others are and you think it comes down to kind of that process internally?

Look, I don't know, I'm not going to speak for other competitors. I obviously people in the industry know, or have knowledge of what their peers focus on in terms of market segments. Look, from the beginning of this merger, we said we were going to be a lot more thorough in terms of what gets into our backlog. If you recall, we switched from "awarded business" to "contracted business", we became a lot more vigorous in terms of the specific booking analytics. I mean, again, I want to, I certainly hope you will never ever hear from us, God forbid it that we are making an adjustment to our bookings, because we are the some kind of some meteorites came from the cosmos and hit our backlog. You haven't heard that from us, quite the opposite. And so, we tell you what the numbers are, and those numbers are thoroughly and vigorously scrubbed. I repeat, we're not going to take it. There are many, we deal with our many clients that call or companies that call or [indiscernible] firms or they are lot of -- these are lot of biotech staff all over the world with high hopes and they'd love to have us help them and support them and they sometimes even want to leverage the fact that they are supported by a few IQVIA in order to raise money. And of course, we just don't do that. That's not our business. You know, that could be -- you know, it is often the case that an EBP at a very early stage with one molecules and high hopes and a nice looking management team, go around raising money and they come in with, at least an assertion that there is a CRO already involved and that has vetted their -- the scientific basis, et cetera. And the more credible the CRO, the better chances they have of raising money. Now we don't do that. It is simple. Others do. So that there are significant differences between how we do business. Someone asked earlier about capacity. And I said this is not going to be a capacity issue for us. But look, it's not that we are desperate for business, we have business, so we're not going to take on anyone. So I think that may be one difference. And as we said market segment focus, you have, Mike do you have any other comment?

Just to build on those comments. You know, in addition to the vetting on both the financial and scientific basis, the nature of work that we typically take in is in the later stage clinical timeframe, whereby there's a lot more I think, you know, historical data versus whether you're down feeling an EBP is mainly in the preclinical or first in inhuman space. So I think that's a that's another benefit to the [indiscernible].

Thank you, and very important.

Yep, now that's really helpful. I appreciate it.

And then your first comment, frankly, was the right one, which is it's a very small part of our overall business, our company.

Right, yes, understood. And then just a quick one Ari on the pricing environment. You know, what you see in there? I know that's a concern and biotech falls off, maybe pricing soften and it sounds like you guys still have nice power there. And on the back of that, any delay in terms of getting reimbursed on some of the shifting trials in Russia, Ukraine, just wondering, as you put in a change order, is there near-term margin pressure that then alleviates as you go through the year and get reimbursed? Just trying to figure that piece out as well? Thank you.

Yes, yes, of course. But again, it's a small, small piece of the overall, and we are absorbing that cost. So we haven't changed our profit outlook and we are not planning to do that for now. There's no reason to do that. We can absorb it. We have enough initiatives. We are large enough, diversified enough that we can handle the Russia, Ukraine situation and disruption on clinical trials normal, so longer that's what, that it is what it is now. Okay?

Thank you, Patrick. Thank you all for joining us today. We look forward to speaking to you again on our next earnings call. Myself and the team will be available for the rest of the day for any follow up questions, so feel free to reach out. I look forward to talking to everyone again soon. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.