IQVIA HOLDINGS INC. Q4 FY2024 earnings call

2024 Year-End Results

• Delivered solid full year results with revenue growth of 5.5% at constant currency excluding COVID revenue step down, adjusted diluted earnings per share growing over 9% and free cash flow of $2.1 billion (41% growth vs last year).

Fourth Quarter Operational Results

• Revenue grew 2.3% reported and 3% at constant currency; above high end of guidance range excluding foreign exchange and COVID-related work impact. Adjusted EBITDA increased 3.1% driven by revenue growth and cost management, with 20 bps margin expansion. Adjusted diluted EPS of $3.12 increased 9.9% year-over-year.

R&DS Business Achievements

• Successfully renewed all large pharma strategic partnerships, established new relationships, displaced incumbents and expanded work scope. Had significant advancements in global health business, e.g., helped WHO control polio, collaborated with CEPI on Marburg virus, and supported Mpox vaccine trial.

TAS Business Growth and Innovation

• Growth trajectory materialized as expected with low single digit growth in first half and ramping up in second half. Finished year with constant currency growth of 5.7% and ~6.5% excluding COVID step down. Introduced 60 innovations including 39 AI-enabled applications, like IQVIA AI Assistant and Patient Relationship Manager; digital business expanded into Europe.

Partnerships and Collaborations

• Collaborated with NVIDIA to transform healthcare and life sciences through advanced agentic AI solutions. Secured large deals in TAS, e.g., omnichannel marketing solutions for top ten pharma, launch of ovarian cancer treatment, support for cell therapy launch, and data management simplification for large pharma; in R&DS, won studies for asthma/COPD, breast cancer, oncology, etc.

For the fourth quarter, Technology & Analytics Solutions (TAS) revenue was $1,658 million, up 8.3% reported and 9.5% at constant currency. R&D Solutions (R&DS) revenue was $2,123 million, down 1.3% reported and 1% at constant currency, but excluding all COVID-related work, R&DS revenue grew over 1% at constant currency. Contract Sales & Medical Solutions (CSMS) revenue was $177 million, down 4.8% reported and 3.2% at constant currency. For the full year, TAS revenue was $6,160 million, up 5.1% reported, 5.7% at constant currency and 6.5% excluding all COVID-related work at constant currency. R&DS revenue was $8,527 million, up 1.6% reported, 2% at constant currency, and over 5% growth excluding all COVID-related work at constant currency. CSMS revenue was $718 million, down 1.2% reported but up 1.4% at constant currency.

2025 Full-Year Guidance

• Reaffirms 2025 outlook: revenue growth at constant currency ex-COVID of 4%-7%, adjusted EBITDA margin expansion of up to 20 basis points, adjusted diluted earnings per share growth of 5%-9%. Total revenue between $15,725 million and $16,125 million, including over $100 million step down in COVID-related work (75% in first half, 25% in second half). Contribution from M&A activity 100-150 basis points, FX headwind ~150 basis points. Adjusted EBITDA guidance $3,765 million-$3,885 million, adjusted diluted EPS guidance $11.70-$12.10. Assumes $2 billion cash deployment between acquisitions and share repurchase, and foreign currency rates as of February 5 continue for the balance of the year.

Segment-Specific Guidance

• TAS revenue to grow 5%-7% at constant currency, translating to $6.3 billion-$6.5 billion. Easier comps in first half than second half.
• R&DS revenue expected to grow 4%-6% at constant currency ex-COVID, translating to $8.7 billion-$8.9 billion, including over $100 million step down in COVID-related revenue (100 basis points headwind to growth rate), lower growth in first half and improving sequentially.
• CSMS revenue expected to be approximately $700 million, flattish year-over-year.

First Quarter Guidance

• Expect revenue between $3,740 million and $3,790 million. Adjusted EBITDA between $870 million and $890 million. Adjusted diluted EPS between $2.60 and $2.70, assuming foreign currency rates of February 5 continue for the balance of the year.

• Macro environment challenges: consequences of IRA (delayed customer decision making, reduced discretionary spend, portfolio reprioritizations), geopolitical unrest, high interest rates, inflation, foreign currency headwinds, political elections leading to incremental uncertainty.
• Higher cancellations in 2024: nearly 50% higher than average of previous three years, but gross new bookings before cancellations for 2024 were strong and up mid single digits at constant currency vs 2023, ending year backlog at $31.1 billion (5.5% higher at constant currency than a year ago).
• Pricing pressure: tough competition with ~4,000 CROs, making it difficult to maintain pricing levels.

Q: Shlomo Rosenbaum asked about how the operating environment progressed through the quarter and potential volatility for the next one to two quarters, and changes in expectations for divided contracts.

A: Ari Bousbib said not much has changed from December's assessment, operating environment was difficult for reasons mentioned, bulk of cancellations and reprioritizations has occurred but some volatility may remain in next quarter or two, and nothing has changed regarding the two delayed trials.

Q: Elizabeth Anderson inquired about the biotech environment, RFP flow, and drivers of real world evidence acceleration.

A: Ari Bousbib stated biotech funding was strong in 2024 (over $100 billion), RFP flow was up mid single digit across portfolio with EVP higher, and real world evidence acceleration is due to it being must-do activities for clients when drugs are approved, which were delayed but eventually had to be done.

Q: Ann Hynes asked about cancellations in Q4 and pricing on renewals.

A: Ari Bousbib said historically average quarterly cancellations is ~$0.5 billion, Q4 cancellations were way above expected, not a billion but very high; on renewals, pricing is tough due to competition with many CROs but IQVIA won renewals and expanded work scope with large pharma.

Q: David Windley asked about cost levers to eke up margin and business mix shift.

A: Ari Bousbib said they use levers like optimizing average labor rate across geographies, exploring economies of scope, leveraging IT infrastructure, and accelerating AI tool deployment; higher FSP mix is in bookings and will take time to impact P&L.

Q: Charles Rhyee asked about TAS segment trends and outlook for different parts.

A: Ari Bousbib said info is low single-digit growth, analytics and consulting had impact from cautionary spending but recovered, real world and tech were high growth, driven by drugs needing approval and related activities.

Q: Jack Meehan asked about Q4 gross margins and policy implications for pharma/biotech.

A: Ron Bruehlman said gross margins are reported numbers, need to consider adjusted numbers, and stranded costs from delayed trials and mix impact from business growth; Ari Bousbib said no NIH exposure, new administration likely more business friendly with potential pharma/biotech reforms positive for IQVIA.

Q: Michael Ryskin asked about pharma reprioritization and conversations with pharma companies.

A: Ari Bousbib said based on client conversations, ~2/3 to 3/4 of reprioritization is done but there may still be some volatility, and one quarter is a window in this long cycle business.