Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IQVIA Holdings Inc (IQV, Financial) reported third-quarter revenue above the high end of their guidance range, with a 6.5% growth excluding foreign exchange and COVID-related work.
- The company achieved a 14% growth in adjusted diluted EPS, demonstrating strong financial performance.
- IQVIA Holdings Inc (IQV) successfully renewed all large pharma strategic partnerships and expanded the scope in over half a dozen partnerships.
- The company's backlog reached a new record of $31.1 billion, representing an 8% growth compared to the prior year.
- IQVIA Holdings Inc (IQV) launched the IQVIA AI assistant, a new generative AI tool designed to provide life science customers with quick and powerful insights.
Negative Points
- The clinical market environment remains choppy, with aggressive competitive pricing and tougher negotiations.
- IQVIA Holdings Inc (IQV) faced a substantial cancellation due to drug futility, impacting quarterly net new business by approximately $350 million.
- Two mega studies were delayed due to client-related logistics issues, affecting short-term guidance.
- The company is experiencing pricing pressure across the board, particularly in the Functional Service Provider (FSP) segment.
- IQVIA Holdings Inc (IQV) updated its full-year guidance due to the delay in two fast-burning mega trials, impacting revenue expectations.
Q & A Highlights
Q: Any thoughts on preliminary 2025? Given the current industry challenges, do you think you could still grow in the high single-digit range?
A: Ari Bousbib, CEO: We typically don't provide guidance for the following year during the third-quarter earnings release. However, we plan to give some indication at our investor meeting on December 10. For 2024, we expect mid-single-digit growth, and my expectation is similar for 2025. We anticipate TAS to continue its growth trajectory, and RDS to grow around 5% plus, despite short-term cancellations.
Q: Can you provide more detail on the trial delays? Are these logistical issues related to financials, and how confident are you that the projects will ramp up in the second half of 2025?
A: Ari Bousbib, CEO: The delays are due to client-related logistical issues, not financials or drug issues. We are confident these trials will resume in 2025. The environment is challenging with large pharma reprioritizing programs, but these specific delays are unrelated to that trend.
Q: Could you explain the timing of cancellations and delays? How do they impact 2025 projects?
A: Ari Bousbib, CEO: Cancellations due to reprioritization are ongoing, but I expect this to peak by the end of the year. Drug futility cancellations take longer to process. Delays in mega trials will push some 2024 work into 2025, but 2025 work will also shift to 2026, so it's not incremental to 2025.
Q: Regarding M&A, you mentioned $228 million in the quarter. Can you update us on the financial profile and growth expectations for TAS?
A: Ari Bousbib, CEO: Most acquisition contributions are in TAS, which saw strong organic growth this quarter. Acquisitions are a key part of our growth strategy, aiming for at least 2 points of incremental growth. This year, acquisitions contributed about 1.5 points to our growth.
Q: How are you managing cost structure amid cancellations and pricing pressures to maintain margins?
A: Ari Bousbib, CEO: We face cost headwinds due to trial delays, as resources were already allocated. We will redeploy some resources, but there will be extra costs affecting margins in the next few quarters. Despite this, we achieved record margins this quarter and will continue to manage costs effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
