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IQVIA Reports Second-Quarter 2020 Results and Raises Full-Year 2020 Guidance

Second quarter revenue $2,521 million and Adjusted EBITDA $483 million

GAAP Diluted Earnings per Share $(0.12); Adjusted Diluted Earnings per Share $1.18

R&D Solutions quarterly net book-to-bill ratio 1.64x including pass throughs and 1.60x excluding pass throughs; contracted backlog including pass throughs grew 13.5 percent year-over-year to $20.5 billion

R&D Solutions NTM revenue from backlog increases 9.5 percent during the quarter to $5.4 billion, including pass throughs

Full-year 2020 guidance raised for revenue, Adjusted EBITDA and Adjusted Diluted Earnings per Share

DANBURY, CT & RESEARCH TRIANGLE PARK, NC (STL.News) IQVIA Holdings Inc. (“IQVIA”) (NYSE:IQV), a leading global provider of advanced analytics, technology solutions, and contract research services to the life sciences industry, today reported financial results for the quarter ended June 30, 2020.

Second-Quarter 2020 Operating Results

Revenue for the second quarter was $2,521 million compared to $2,740 million in the second quarter of 2019, down 7.1 percent at constant currency and 8.0 percent on a reported basis.  Technology & Analytics Solutions (TAS) revenue was $1,109 million compared to $1,102 million in the second quarter of 2019, representing growth of 2.0 percent at constant currency and 0.6 percent reported.  R&D Solutions (R&DS) revenue was $1,235 million compared to $1,435 million in the second quarter of 2019, down 13.3 percent at constant currency and 13.9 percent reported.  Excluding the impact of pass throughs, R&DS revenue was lower by 10.8 percent year-over-year on a reported basis.  Contract Sales & Medical Solutions (CSMS) revenue was $177 million compared to $203 million in the second quarter of 2019, lower by 12.3 percent at constant currency and 12.8 percent on a reported basis.

R&DS contracted backlog, including reimbursed expenses, grew 13.5 percent year-over-year to $20.5 billion at June 30, 2020.  The company expects approximately $5.4 billion of this backlog to convert to revenue in the next twelve months, up from $4.9 billion at March 31, 2020.  The contracted book-to-bill ratio including reimbursed expenses was 1.64x for the second quarter of 2020.  Excluding reimbursed expenses, the second-quarter contracted book-to-bill ratio was 1.60x.  For the last twelve months ended June 30, 2020, the contracted book-to-bill ratio was 1.43x including reimbursed expenses and 1.42x excluding reimbursed expenses.

Second-quarter 2020 Adjusted EBITDA was $483 million. GAAP net income was $(23) million, and GAAP diluted earnings per share was $(0.12). Adjusted Net Income was $229 million and Adjusted Diluted Earnings per Share was $1.18.

“Against the background of the ongoing COVID-19 situation, we delivered second quarter results that exceeded our expectations,” said Ari Bousbib, chairman and CEO of IQVIA.  “As we had assumed, the R&DS business saw a gradual increase in the accessibility of clinical research sites, exiting the quarter at 40 percent accessibility and currently at 53 percent, resulting in an improvement in the number of weekly onsite visits from the start of the quarter.  Deliveries in our TAS segment continued with little disruption, and demand for our technology and analytics offerings remains resilient. I am proud of how the IQVIA team is executing in this environment – supporting our improved outlook for the year.”

First-Half 2020 Operating Results

Revenue for the first six months of 2020 was $5,275 million compared to $5,424 million during the first six months of 2019, down 1.8 percent on a constant currency basis and 2.7 percent on a reported basis.  TAS revenue was $2,226 million compared to $2,177 million in the first half of 2019, representing growth of 3.7 percent at constant currency and 2.3 percent reported. R&DS revenue was $2,676 million compared to $2,851 million in the first half of 2019, down 5.5 percent at constant currency and 6.1 percent reported.  CSMS revenue was $373 million compared to $396 million in the first half of 2019, lower by 5.1 percent at constant currency and 5.8 percent reported.

Adjusted EBITDA for the first six months of 2020 was $1,045 million. GAAP net income was $59 million and GAAP diluted earnings per share was $0.30. Adjusted Net Income was $523 million for the first six months of 2020 and Adjusted Diluted Earnings per Share was $2.68.

Financial Position

The company continues to maintain strong liquidity. As of June 30, 2020, cash and cash equivalents were $1.1 billion and the company’s $1.5 billion revolving credit facility was undrawn.  During the second quarter, the company refinanced its 3.5 percent senior notes due 2024, extending the maturity to 2028.  At the end of the second quarter of 2020, IQVIA’s Net Leverage Ratio was 4.8x trailing twelve months Adjusted EBITDA.

Share Repurchase

When the COVID-19 outbreak became a pandemic in March, the company temporarily suspended share repurchase activity.  The company did not repurchase any shares during the second quarter of 2020. As of June 30, 2020, the company had approximately $1.0 billion of share repurchase authorization remaining.

2020 Guidance

The future course of COVID-19 is inherently uncertain. Several factors related to the COVID-19 outbreak are outside the company’s control and could impact the company’s future operating results, including the pandemic’s severity and duration, its impact on healthcare systems and economies around the world, and the nature and effectiveness of governmental responses to the outbreak.  However, the company has used its best efforts to estimate the impact of COVID-19 on its business and the resulting impact on financial performance for the balance of the year.  On April 28, 2020, the company outlined its assumptions regarding the global progression of the virus, the percentage of clinical research sites accessible to us throughout 2020, and our ability to interact with clients to support business development activities.  These assumptions supported the company’s 2020 guidance provided at that time.  During the second quarter, it became apparent that the global spread of the virus would become wider and more prolonged than we had assumed.  However, the percentage of sites accessible to us tracked in line with our assumptions, and business development activities progressed better than our original assumptions.

Based on the company’s better than expected performance in the second quarter, the company’s ability to execute in this environment, incremental COVID-19 trial work, an evaluation of current business conditions and outlook for the balance of the year, the company is now forecasting better performance in its TAS segment and better execution against its R&DS backlog than previously anticipated.  Together these factors are expected to contribute to improved financial performance in 2020 versus the company’s expectations on April 28, 2020.  As a result, the company is raising its full-year guidance ranges as follows:

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