ICON Public Limited Company (ICLR) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the ICON Plc Q1, 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be question-and-answer session. [Operator Instructions] I must advise you that the conference is being recorded today on Thursday, the 23rd of April 2020.I would now like to turn the conference over to your speaker today, Jonathan Curtain. Please go ahead, sir.

Thanks, Tim. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended March, December 31, 2020. Also on the call today, we have our CEO, Dr. Steven Cutler; and our CFO, Mr. Brendan Brennan. I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call.Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the Company's business and listeners are cautioned that forward-looking statements are not guarantees of future performance.Forward looking statements are only as of the date that they are made and do not undertake any obligations update publicly any forward looking statements, either the results of new information, future events or otherwise. More information about the risks and uncertainties related to these four different statements may be found in SEC reports filed by the Company. This presentation includes selected non-GAAP financial measures.For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed, Condensed Consolidated Statements of Operations U.S. GAAP Unaudited. While non-GAAP financial measures are not superior to, or a substitute for, the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.We'll be limiting the call today to one hour and would therefore ask participants to keep their questions to one each, with an opportunity to ask one related follow-up question.I would now like to hand over the call to our CFO, Mr. Brendan Brennan.

Thank you, Jonathan. In February on ICON quarter fourth 2019 earnings call, we outlined our expectations for the COVID-19 impact to our quarter one 2020 revenue would be in the range of $4 million to $7 million. The majority of which was associated with our Chinese operations. Following that call, we have seen a very rapid escalation into a global pandemic.Accordingly, whilst we are pleased with the operational and financial momentum we brought into 2020, the significant disruption and uncertainty caused by COVID-19 means that we have taken decision to withdraw our full year 2020 financial guidance. My following comments will focus on our quarter one performance and these will then outline further details in relation to our current and future operational challenges as well as the various measures we are putting in place to mitigate these risks.In quarter one, we achieved gross business wins of $1.27 billion and reported a $160 million worth of cancellations. Consequently, net awards in quarter one were $867 million, resulting in a net book to bill up 1.21. With the addition of these new awards, our backlog grew to $8.7 billion. This represented a year-on-year increase of 10.4%. Revenue in quarter one was $715.1 million. This represented year-on-year growth of 6% or 6.5% on a constant currency basis. And on a conference on organic places, revenue growth was 5%.Our top customer represented 11.4% of revenue for the quarter compared with 14.8% in quarter one 2019. Our top five customers represented 39.9% of quarter one revenue compared to 39.9% last year. Our top 10 represented 52.2% compared to 53.1% last year while our top 25 representative 69.6% compared to 71.6% last year.Gross margin for the quarter was 29.3% compared to 29.9% in our quarter four and 29.5 in the comparable quarter last year. Our SG&A was 12.2% of revenue in quarter one, which compared to 11.9% last quarter and 12.1% in the comparable periods last year. Operating income for the quarter was $106.3 million, a margin of 14.9%. This compares to 15.9% last quarter, 15.1% in the comparable quarter last year. The net interest expense was $1.4 million for the quarter and the effective tax rate was 12% for the quarter.Net income attributable to the group for the quarter was $91.7 million, a margin of 12.8% equating to diluted earnings per share of $1.70. This compares to earnings per share of a $1.83 in quarter four and $1.63 in the comparable quarter last year, an increase of 4.3%. On a comparative basis, days sales outstanding were 55 days at March 31, 2020. This compares with 54 days at the end of December '19 and 59 days at the end of March '19.Cash generation from operating activities in the quarter was strong at $142.8 million. Capital expenditure was $11.3 million in quarter one, in addition a $175 million worth of stock was repurchased in quarter one at an average price of $141.68. This equated to over 1,235,000 shares, which is an excess of our stated goal of repurchasing 1 million shares over the course of the full year.We do not have any immediate plans to repurchase any further shares. At March 31, 2020, the Company had gross cash balances of $484 million and debt of $350 million even a net cash funds of $144.4 million. This compares to net cash of $220 million at December 31, 2019 and net cash of $128.6 million at March 31, 2017. In addition to the significant cash flow, we currently have undrawn revolving credit facility of $150 million available to use. Our robust cash generation and strong access to liquidity put us in a very resilient position as we worked through the challenges that 2020 brings.And with all of that said, I'd now like to hand the call over to you Steve.

Thank you, Brandon, and good morning to all of you. As we entered 2020, the key industry drivers of a positive outsourcing landscape, growth in R&D budgets and a continued strong biotech environment remained in place. In quarter one, we booked strong levels of growth and net awards of $1.027 billion and $867 million, representing book-to-bill of 1.44 and 1.21 respectively.Consequently, we grew our backlog year-over-year by 10.4% to $8.7 billion with revenues expanding to 715.1 million or 6.5% on a constant currency basis. We achieved the gross margin of 29.3% and we continued our strong SG&A performance with SG&A at 12.2% of revenue. This delivered earnings per share growth year-over-year of 4.3% to $1.70.In addition, in the April, we were very pleased to announce the continuation of our long-term relationship with our top customer with the signing of the new multi-year services agreement. However, while the impact of COVID-19 was relatively modest in quarter one this year, it is our expectation that we would experience a more severe downturn in our business in quarters two and three and possibly beyond, and it is clear that 2020 is going to be a difficult year for the CRO industry as we face the extraordinary challenges brought about by the sudden onset of the coronavirus pandemic.Our core Phase II, III business is the service line most impacted. New trials are being put on hold, patient enrollment has slowed and approximately two thirds of our sites are either restricted or stopped access altogether for our CRA, resulting in significantly fewer monitoring visits. Furthermore, although a smaller part of our business in our central laboratories, sample volumes received into our facilities have been reduced by approximately 40% due to the drop-off in site activity levels.The consequences of these challenges will curtail our ability to execute in the quarters ahead. However, despite the obvious issues, we are proactively reviewing and implementing alternative trial monitoring approaches with customers on a study-by-study basis, including remote and risk-based management, and we are seeing significant demand for our at-home services delivered through our recently acquired Symphony Clinical Research Group.The active push to develop a treatment for COVID-19 is also resulting in a large number of RFPs and some significant success with projects that we anticipate will start quickly. In addition, since mid-March, we are seeing conditions gradually improving in China with over 70% of our sites now reopened and monitoring activities recommencing. Our hope is that other regions will follow soon in quick order as they stabilize and recover.Furthermore, I want to point out that the impact to our business is not uniform and indeed in certain areas such as our functional solutions business, we remained positive in our outlook for 2020 and are expecting year over year revenue growth. Whilst access to third-party sites is currently significantly reduced, we are realizing the benefits of previous investments and acquisitions which are in part helping to offset this impact.Through our site network model, we are able to provide a proven method to engage physicians and patients into clinical research programs. Our embedded staffs also have direct access to the site’s patient database, which helps evaluate the patient population during the study feasibility phase, increasing enrollment and making clinical trial participation a much more efficient process for the physician. As country restrictions ease and enrollment restart, this network will play a crucial part in accelerating the recruitment process for new and ongoing trials.Our acquisition is Symphony Clinical Research has also positioned ICON as the leading global provider of at-home and alternative site visits with over 300 clinical trials completed across five continents. Since the outbreak of the COVID-19 pandemic, we have experienced tremendous interest in the service with serious inquiries with over 60 sponsors. We've been ramping up the scale of this delivery method with staff being transferred from other areas of our clinical research services in order to enable delivery of trials using this approach across more studies.Furthermore, while all CROs and sponsors including ICON will be placing emphasis on remote and risk-based monitoring, ICON is also differentiated by its iconic platform and FIRECREST technology. Iconic helped analyze operational, clinical and real world data, enhancing the design and delivery of our projects as well as strengthening our engagement with investigators and customers. And FIRECREST enables remote management of aspects of clinical trials such as investigator and staff training on protocol and patient education through portal and video delivery. FIRECREST is used by all of the top 20 global pharma companies with almost 0.5 million registered users.Nevertheless, as we are not immune to the impact of COVID-19, we are taking immediate and proactive cost reduction measures to protect jobs maintain our business performance and ensure that we are ready to move quickly when business conditions improve later in the year. To address the challenges brought on by the pandemic, we have developed a comprehensive cost optimization strategy. It includes an immediate freeze on hiring in certain business units. The removal of contract staff with permanent employees can assume responsibilities and a reduction of our non-labor variable spend in discretionary areas such as travel and facilities.As a people business, the majority of our costs are employee related, which also means that a major part of our cost optimization strategy is the implementation of a temporary salary reduction for all employees. Since the middle of April, the board and senior leadership have taken a 30% reduction in fees and salary respectively; and our Chairman, Ciaran Murray and I have taken a 40% reduction.The reminder of the Company, we are adopting a progressive approach, with the vast majority of employees taking a single digit salary reduction. While these measures are designed to protect jobs, I realized that these actions are difficult and I would like to thank all of our staff for their flexibility and understanding. Taking these costs containments plans into account and in conjunction with our current revenue forecast, our quarter two outlook is for revenue to be in the range of $575 million to $625 million and earnings per share to be in the range of $0.90 to $1.30.Our balance sheet remains resilient and industry leading. At the end of quarter one, we had a gross cash balance of $484 million, $350 million of debt and thus, a net positive cash balance of a $134 million. In closing, I want to make it clear that we see the significant disruption caused by this pandemic as relatively short-term, and as we move beyond 2020, we expect global conditions to improve and the core fundamentals that have driven growth in the CRO space to reemerge.In the medium-to-long term, we see increased opportunities to deploy capital more cost effectively and build our global franchise. However, for the time being, we are well-priced to weather the challenges of the pandemic and position ourselves for the growth opportunities that lie ahead.Before moving to Q&A, I'd like to thank the entire ICON team for all their hard work and commitment during this challenging time. Your safety and wellbeing are the Company's priority. At ICON, our mission is to help our customers to accelerate the development of innovative medicines and devices that save lives and improve the quality of life.Over the years, we have helped to bring many such treatments, vaccines and medical devices to market, positively impacting the lives of millions of patients. This ethos will remain during the current crisis as we work on a number of important COVID-19 trials on behalf of customers as well as much needed treatments for other illnesses and diseases.Thank you everyone and we're now ready for questions.

[Operator Instructions] Your first question today comes from the line of Erin Wright. Please go ahead.

And this guidance that you just gave for the second quarter, did it assume any sort of improvement throughout the quarter? Or are you just extrapolating what you’re currently seeing? I'm just curious how you're thinking about things progressing throughout the second quarter?

Well, first of all, Erin, I wouldn't call it guidance. We specifically call it our outflow. So, it’s what we can foresee at the moment given we're really not only -- we haven't even had one full calendar month of a significant impact. March was a sort of a month where the second half of it was much more significant than in the first half. And so, I would call it more of an outlook and what we've seen going forward.In terms of improvement during the quarter, we haven't modeled any of that at the moment. We're seeing a challenging quarter. We see it, relative -- we believe, we're kind of at the bottom of the challenges or at the max of the challenges. During the quarter, we don't see a particular phased approach during the quarter. At the moment, we're literally just starting to come through April and starting to get some initial indications. So, it's very early days, but we believe that the quarter will be relatively flat and will be relatively stable in terms of bring the bottom of the curve.

And then, are you seeing any sort of abnormal cancellations? Or are you viewing this more of a timing delay? Or do you think of this as also being a bolus or acceleration in the back half of the year, if the environment normalizes?

A couple of points there, one is, no, we're not seeing any significant cancellations. You saw our cancellation rate in Q1 was on par, and certainly as we've gone April, we've not seen any further cancellations above the normal sort of run of the mill approach there. We do see this being relatively short-term issue and we do see us moving forward as we get into quarter three and particularly quarter four and into next year that will come through.That of course assumes some sort of therapeutic will be developed very quickly and possibly a vaccine will be available within the next 12 months or so. So, there are some assumptions with that, but we do see that this is going to be a relatively a short-term issue that we need to deal with that, we need to work through. But I think the longer-term we're going to be in a very good position.

Thank you. Your next question comes from the line of Jack Meehan. Please go ahead.

I wanted to drill in a little bit more on the commentary related that what you're seeing in terms of sites open versus closed? So it's been roughly two thirds of your sites have been impacted at some point. How is that, if you went from March, beginning in March to beginning April to where you are today, how is that trended at any given point? And just to confirm what Erin was doing after, you're assuming it stays where it is through the end of the second quarter, that's what your outlook assumes?

Yes, Jack. In terms of -- I mean, this came upon us incredibly quickly. So really, we talk about two-thirds of the sites being impacted. When I say impacted, that's a number of things, CRAs are not able to get access to, recruitment on hold or pause, the inability into due to do sites do visits -- get on sites and do visits. So, there is a variety of different things that come into that sort of two thirds of site. And really, it -- I don't want to say happened overnight, but certainly within sort of I'd say 3 to 4 weeks that happened.And to be honest, we're not seeing at least in the last couple of weeks, any further challenges there, any further diminution of our ability to access sites. So about thirds of them will remain open to us, and we've been doing remote monitoring visits on many of the sites that we can't actually go to physically. But that number came down very quickly and it hasn't at this stage anyway further diminished, and so we are hopeful. And quite frankly, we expect that, that's going to be around the number.And from here, it should start to improve. And I just start becomes that will as, and I think it will be in a fairly staged and fragmented manner besides start to open up as a country is open up and as the states that they're in open up. Some will happen near relatively quickly. It will be much slower, and we'll have priorities on either doing COVID trials or doing other things. So, it's not just whether the states open up where this country is open up, it's the priorities within the sites on what those clinical trials are.We are highly involved in the oncology trials, and we believe oncology trials are likely to be a priority as they reengage and as the sites reengage. So that's, to some extent, advantage. But the bottom is, we believe we’re -- we hit the bottom pretty quickly, and it's a slow uptick from here over the next 6 to 9 months.

And then, it does seem like the biggest impact is on the monitoring and recruitment, but there is obviously other aspect of clinical trials as well. I was just curious, if you could talk a little bit about any success you're having at maybe reallocating where you're focusing the resourcing of your CRAs, as some of these states are closed. Just what are some of the things you're working on?

Sure, and you're right. The monitoring of our studies is the major impact on this at the moment and that's significant. But, we -- I think one of the benefits we have as a business without different service areas, is the ability to transfer resources across, for instance Symphony Clinical Research Group, people who visit patients in an at home environment. The people within our clinical business who have nursing qualifications and are qualified to do that work are able to potentially transfer and we have been looking and doing that as we've seen, as I said, a lot of inquiries, a lot of interests coming in on that business.The other part of our businesses is our FSP, which hasn't at this stage been impacted any significant way. And we have in fact a requirement for people in that business and they are hence we are able to transfer a number of people from our Phase II, Phase III business in the clinical space, across to our docs FSPs business. So, the ability and the collaboration and the flexibility of resource and the management and deployment is a certainly an advantage bondage that we have, and we're actively looking at how we do that and so that we can minimize the lack of or maximize utilization of our resources right across the business.

Your next question comes from Elizabeth Anderson. Please go ahead.

Hi guys. Good morning. Thanks for the update. I had a question about how sponsors are reacting to sort of more digital solutions. I mean, you mentioned some and I'm sure some of its early conversations. But how are people, are people looking at it more like in terms of forward going trials? Is it sort of things that they can convert? Are there particular areas that you're seeing more interest in? Any details you could provide that would be helpful?

Its early days for that, we’re all sort of just running around, trying to make sure that we get the basic stuff done. I think there's a lot of talk around how the pandemic will impact the clinical trial process in the longer term, and I think we could all see certainly more remote monitoring. The remote monitoring is being going for a while now. There's nothing terribly new about that, that I think it will certainly help to accelerate that within some customers. We certainly see some more interest on the virtual trial, but this is not the time to be setting up virtual trials or hybrid trial. It's more discussion and of all the talk about it, but we need a more stable environment I think in order to actually move that forward.I do think there's no doubt that that's going to happen going forward and we'll see a more digital opportunities and virtual hybrid top trial. It'll accelerate the conversation. I think and I certainly see that happening. However, I've been around this industry long enough to know that things don't happen always as fast as perhaps we'd like to go around. We think they will happen. So at the moment everyone's telling you how things are going to be never going to be an assignment. It's all going to be different. That will inevitably to some extent be true. But as we get through this, I think those conversations will increase. People will be more ready to pilot and to move forward. But I don't see it. I don’t see a dramatic change in the digitalization of clinical trials at this point at least not in the immediate future.

Okay. That's helpful. And then if we think about like the RFPs that you guys have seen in the last few weeks, you know, obviously the funding market for biotech is largely closed, but you know, they've raised a lot of money. Are you seeing any sort of like significant mix shifts? I mean, obviously I'm sure COVID RFPs are way up, but in terms of the rest of your book of business.

I mean I'm talking about quarter one and remember quarter one was moderately normal until the last two to three weeks, I suppose. So, in terms of quarter one, our RFP dollars were up in the high single digit. Numbers, it was a good, I was very pleased with that dollar availability. It was across the spectrum, a large pharma, a smaller pharma. So, we saw, -- so we're seeing plenty of opportunity and that's continued at least in the last few weeks. We haven't seen a significant drop off in opportunities. There was a little bit of a slowdown in decision making towards the end of the quarter with everybody sort of taking a stock of what they were doing, and I think that might well be the case in quarter two as well. But overall opportunities on a year,-on-year basis, were actually following the trends that they have over the last few years.

Thank you. Your next question comes from line of Dave Windley. Please go ahead.

Hi. Good afternoon, gentlemen. Thank you for taking my questions. Hope you're healthy and safe, sounds like you are. I wanted to try to get a little more precision, so Steve in your comments about site impacted, you said two-thirds. When you call a site impacted, is that mean that it's basically totally inaccessible? Or is there a way to think about kind of partial accessibility and an ability to move forward? Just wondering kind of definitionally around that? And then, in terms of your ability to pivot to digital remote risk-based type solutions, are you able to put a percentage on that? Like the number of visits that you've been able to switch to some type of digital remote access that mitigates the overall downside to visit activity?

Yes, thanks, Dave. I hope you're well as well. I know it's a challenging time for everyone, but any trying to stay safe. In terms of sites impacted, there is, every sites is a little different to be honest with you. The way I'm looking at that number is that, we talked about the 65%. The two-thirds are impacted even some way. So, that is certainly not totally inaccessible. That is not the case.What that means is all sites, the CRIs can visit on site or we're not able to do risk-based remote monitoring or they've posed recruitment or they're not starting studies. So, I recognize that there's a whole bunch of different sort of issues and items there, but that was, that's the figure really about two-thirds of sites are impacted in some way rather being COVID. There are very few sites that are totally inaccessible in any way. But there business, they'll have, and I would say a significant impact on our business.In terms of the risk based monitoring. You know, as we look at those sites that can't do the physical onsite visits, it's about a third of those, about a third of sites have an ability to be monitored from a remote basis. Sorry, I misspoke, about two-thirds of those sites can be monitored on a risk-based most, it's about two thirds, but it's about a full that half of those are actually happening. And so, there's an element of, yes, we can do it. But they not, they can't -- we kind of implement it all, at least not in the short term. So, we're working with a number of those sites to actually be able to implement that.So as I said that, about third of them can actually do it and two-thirds of it potentially can do it. And the third we actually implement. So it's again a moving picture and not entirely easy. I mean this is not of the focus of the -- of many sites at the moment so actually implemented the remote monitoring does have challenges. But it is something we're actually working on and trying to get as many visits as possible. And I would say about that half of time we're able to move that forward and certainly been able to implement the risk of remote monitoring in those.

Got it. Thank you. So many questions to ask, only one more left to do. I'm going to focus on bookings for my second. So appreciate your comments about the environment. Sounds like hitting impact was pretty late in the quarter albeit usually I think the third month of the quarter is a little bit say seasonally if you want to call it more important to closing bookings. So I guess what I'm trying to gage is your gross and net bookings are comparable gross dollars year-over-year a little bit down from last year. So it would seem that if the environment is holding up as you said similar to what it has been the last couple of years from an our fee opportunity standpoint that maybe your close rate was impacted by COVID. Wanted to make sure I understood that and if you're able to put a number on that that be appreciated. But just kind of trying to understand, what maybe what bookings would have looked like had you closed what you thought you were going to close by the end of the quarter if not for COVID?

Yes. That is hard to say what we wouldn't close it's not COVID, certainly COVID had a significant impact, I think right across the business. And I do include bookings in the last couple of weeks of the quarter. And so I think it is fair to say that with the number would have been higher absent COVID. There were decisions that were delayed and not late, because of that. And I'm not going to try to put a number of that, but I do think it was a significant factor put it at that way.And I do think that quarter two that will probably continue in terms of decisions being made by customers. The whole pandemic is causing them all to look hard at what they're doing obviously. And so, I wouldn't be surprised to see some impact there in terms of decision making. And I think what I was trying to say in my commentary that overall, the environment is still pretty positive. The biotech funding might have come down a little bit and then we'll see where that goes. But R&D spending and we can talk about that's a more long-term thing.I think that all of this remains a fairly short term issue. And that's our premise at the moment. The overall environment will remain positive albeit with some volatility and perhaps some short term issues. But yes, I was always encouraged to see that the RFP number albeit for the first quarter is we just see where it is in the second quarter, but overall I think the environment remains solid. The fundamentals remain good, but there is no doubt there is going to be some short term -- very short term challenges as we all know. And they will play out I think in Q2 and Q3.

Thank you. And our next question comes from the line of Dan Leonard. Please go ahead.

Thank you. So thinking about what the rebound looks like post-COVID. Do you anticipate any bottlenecks in the clinical trial system with a lot of molecules that have been delayed, all trying to get trials started and continued at the same time? And how does your site network play into your opportunity there?

I think it's possible, there'll be some challenges as everyone rushes back. Although I think as we look at it become likely that we're going to flick a switch and every site's going to be open from day one and we're all rushing back in. I think this is going to be a staged and phased process that's probably going to happen over at least I think a 6 to 9 month period. You know, possibly stopping in the next few weeks even.So I think as you look at it and knows why, I think it's a manageable process as we got that clearly, we want to make sure that the studies that we have ongoing at the moment brought back and made sure we've collected as much of the data as we possibly can. We made up for any issues that have occurred or we rectified any issues. We clearly try to do that remotely at the moment. We want to stop. We want to get study started and no question about that.They will be an element of catch up as well as be some work that we can do that will catch up. There'll be some work posted that we won't be able to catch up on as well. It's not exclusively, we're just delaying revenue. Some of it probably one happen or at least in the short term. But there certainly a large component of work I think we'll be able to catch up as well. We certainly see a huge amount of activity around the COVID space. I'm actually really encouraged about the speed at which these trials are getting up.I was talking to a customer the other day, who submitted an IND and three weeks later, we think we'll get a first patient. So, this is three weeks off of the submission of an IND, which is unheard of, in my experience anyway. So, we're probably testing a little bit some of the norms of the regulatory process. I'm not suggesting that we're going to get studies up in three weeks on a regular basis in the future.But I do think we're looking hard at what we do as an industry to get study started and that's challenging, some of those accepted sort of timelines and may well be an opportunity. We talk about digital technology and virtual trials. It may well be an opportunity. I think to get things moving a little faster in a more normal setting in the future. So that I think is a, I'd have some optimism around. I think we can handle it the move back into the sides. I don't think that's going to our causes too much pain as we get back to.

Okay. That's helpful. And then, and then just secondly, can you comment on the impact on your M&A pipeline from, from a COVID disruption?

Yes, Thanks Dan. Brandon's here. I think, obviously, the focus of the organization is weathering the storm at the moment. We've done a lot of M&A and we were very thankful for that. Obviously, businesses like Symphony have been a great bonus to us over the last couple of weeks. But certainly, we'll be looking at being a little more of our balance sheet over the next couple of months. We've done some significant buyback in the four quarter. I did mention in my prepared comments that we're also going to be holding on that for a moment. So, I think it would be one where we will be focusing internally and really making sure that our balance sheet remains a very good price over the next couple of months, say, the next couple of quarters and that's where the focus will be.

I guess I would just add, I think Brendan is absolutely right. The focus at the moment is on cash conservation and making sure we get through this medium term. But in the longer term, as I said in my comments, we do think there'll be some opportunities and we’re going to make sure we're in a position to take advantage of those opportunities. Typically, crises provide opportunity, we're very aware of that, and we want to be able to benefit from that, but it's a more longer term opportunity I think.

Thank you. Your next question comes from the line of Stephen Baxter. Please go ahead.

Hey, thanks for all the information this morning. So you touched on this a little bit and obviously you've got the business is quite hard to model over the near term. But when you look at Q2 revenue with the outlook that you guys gave for down somewhere between near 10% to 17% year-over-year and off to your previous trajectory, obviously by more than that. I think what a lot of people are trying to figure out is whether demand and the associated revenue over the next couple quarters is being lost or replaced with lower cost services or kind of simply shifted out to the right. So, I'd love to get your perspective on that at any you can say about the balance between, what feels like is likely to be lost versus a couple of the recoverable at this point would be really helpful? Thank you.

Thanks, Stephen. I might take that one as well as Brendan here. I mean is there any of the effects that we're seeing at the moment is more on the delay side of things. The book of business in the backlog we have, as we said, we haven't seen significant conservations off the back of this. So it really is about the accessibility of our sites, getting our CRAs back to those sites. Then I'm really ramping up on the trials. None of the trials are going away, the activity levels are good for what we see coming through the door, from an RFP perspective, it's pretty solid as well.So we'd be hopeful that, this is a delay because of that issue and as time goes by we'll barn show our backlog and get back on course revenue as we get back into the back end of the year. So, we don't see any kind of devaluation of our business. And we don't see significant shifts away from in terms of proper profile of our business either. As Steve said, our FSP business is doing well during the course of this year, and there are certain parts of our businesses like the in home monitoring and the home nurse business that we'll be doing during the course of this year. So that may shift things a little bit, but overall we don't see any long-term shifts scenario profitability level.

Thanks. And then just really think about, at some point we'll potentially be out of sort of this lockdown situation that we're in and potentially the economy's going to be in what is more of a normal recessionary environment, I guess what are the key metrics that you guys are watching? Demand side there and if there's anything, that's different about your business this time versus the last recession that we had. Any changes even doing there to recession proof your business, it would be great to hear about? Thank you.

Yes, we look at our metrics seriously on a very regular basis, right across the operational groups. So, there's all of the normal operational metrics where we're looking at randomization rates, CRA days on site contacts with investigators. Obviously, the metric around the sites availability is going to be one that we'll be watching very closely. And as I said, I think we've seen, the bottom of that, certainly the last week or two we haven't got any worse.So I'm not sure, I want to call it a victory on that just yet, but we're certainly seeing, I'd like to think some hope or at least add experiences and hope that that number is only going to get better going forward. They'll be fewer sites that are impacted. I suppose that those are the sorts of things on a front. Brendan can talk obviously on a financial basis, but from an operational point of view, we measure a multitude of key metrics across our business and those are -- all of those things will be relevant as we swing back into action. Brendan, you want to walk on this – on talking about the financial stuff?

Yes, and I think from the financial side, obviously we've put in a number of costs-containment measures that we're that are going to active to help us focus very much on the balance sheet in the next couple of months, to make sure that our cash collections are solid, to make sure our balance sheet position is very solid. As you Steven, it’s an industry leading balance sheet and we want to maintain and make a good use of that on the back-end of this hopefully the passing of this time there. And we'll be looking at those metrics every day and say every months, and making sure, when we can invest back in the organization that we're ready to do that. So it will be careful management on the day by day basis is to do so.

Thank you. [Operator Instructions] Your next question today comes from the line of Tycho Peterson. Please go ahead.

Hey thanks. Steve, as we think about getting back up and running, can you talk to how much of a differentiated factor you can set ownership is on your part just competitively versus some of your peers? And then, if we think about the checklist that's going to be required to get some of the sites up and running. How are think about things like FDA signoff in terms of changing protocols kind of mid-trial and agreeing on costs splitting costs with sponsors? Can you talk with some of the other things beyond just having patients having the premium to travel that are required to sites up and running?

Sure, Tycho. I'm very -- I do believe our site network is going to be a significant advantage for us, as we get our projects back up and running, as we come through this. These are sites that we have our own folks in integrated sites embedded, and who we have very strong alliances with and who do recruit better and the start up better and faster, who recruit faster and who have ultimately better quality in terms of protocol violators or fewer protocol violators and query.So, I think it's going to be an important advantage for us, particularly early as we get back to it. They're going to be ready to go and very much accessible, as they are at the moment where of course local guidelines allow them to be. So having said that, I don't want to overstate that because there is still relatively small part of our overall patient recruitment services, so it will have an impact I think an important impact on our business. But I don't want to overstate it in terms of materiality of it.In terms of the regulators and the signoff of protocol changes, I've been very encouraged by the interactions we've seen with the FDA, certainly through our ACRO, the CRO association. We've got a lot of engagement from the EMA and the FDA in terms of how we document protocol changes, how we communicate that and what those changes are.So I think the regulators have put out some guidance. And as I think we talked about sponsors moving on and in terms of their attitude towards digitalization of trials. I think we'll see the regulators also seeing that this is going to be an important component of trials going forward and adjusting the guidance and their outlook and their viewpoints to make sure that they're embracing that.Now that's again at the end of the day you've got to do the trial and then they need to vigorous and the day that needs to be. And so we have to have all the things groups all that make sure we catch up with that. We don't want to be in a situation in a year or two where we’re submitting these trials for approval and the request around the data. I don't think we will be because we're very deciduous about.I think all industries are documenting those sorts of changes and making sure that we're very clear on what's being done and why it's being done and what were the circumstances, et cetera, et cetera. So, you know, I think the regulators have been extremely accommodating under the circumstances and also very fast moving out of the circumstances. In terms of our customers and costs and change, again, we're having a number of discussions clearly, on a range of all of our projects around the cost implications of the pandemic what's having.Clearly, we're trying to minimize their cost overruns and try to work proactively with them to help to make sure that we don't blow their budget out. But there are cost implications on the number of cases and we have to reflect that and having good discussions and negotiations around how that's been worked through. That's an ongoing process and of course, every project a little different. Every customer is a little different. But we are engaging with them on that and they certainly understand the challenges we're all on to make that work.

And a follow-up, I appreciate you talking about the number of down around COVID-related work. Can you just maybe help us put some context on how much you think COVID-related vaccine and therapy work could be a tailwind potentially this year? And then how should we think about central lab coming back in the context of the recovery too? Thanks.

I think the COVID work such as we're seeing it, will be a tailwind but I think it'll be relatively modest. The benefit of course is that this is vaccine work and the urgency that I see around getting these studies up and running is quite frankly incredible. And not surprising given the challenges we're facing, but it really is moving far. So I think it will be a tailwind for us. I hesitate again to be too bullish on it because it's still a relatively small component of our work and the trials need to get going.What we've seen is really rapid start up and ability to recruit. Having said that, there are some trials that have recruited very quickly and we've started to see the lab samples come through. So there is no doubt that they are going to help us. And the work there is going to be a positive. How much I find to be hard for us at the moment to forecast the materiality of that or even put a put a number on that. It'll be a suddenly a wind going in the right direction and we can certainly do it all with many of those sort of winds as we can.In terms of central lab, I think I quoted to you that a 40% reduction from run rates in February and samples. I think again that will come back slowly. I don't think we're going to get much lower than that. It may be plus or minus 5%, but I don't think we're going to go too much lower than that. Some of that, as I indicated, some of the COVID work as it ramps will be very, we'll start to ameliorate or attenuate some of that downturn. And we’re engaged in some of those trials.So there's possible sort of attenuation or upside David. I think 40% to 50% is probably the Nadia and we'll slowly move back up. I think it'll probably take most of the years to get back up to a normal run rate. But I do think it'll get better and there will be, I believe some catch up there as well. Samples will have been taken that haven't been sent. There'll be some new samples of course as well. So what all be catch up, but there will be, I think the opportunity to some catch up revenue in the lab space in addition.

Thank you. And your next question today comes from the line of Robert Jones. Please go ahead.

Thanks for the questions. I guess, Steve, clearly you shared your view that you think this or the Company thinks is to be somewhat short-lived recovery over the next six to nine months. I guess maybe just to dig in a little bit more on what informs that view as you sit here today, appreciating, obviously it's a extremely fluid situation. And then just related to that as far as the sites being able to come back online, just given the drop in patient visits that we've seen globally, how are you thinking about clinical trials being prioritized relative to just routine patient visits, which clearly will have a backlog as well?

Yes. What informs our view that this is a relatively short term. I mean a couple of things, Robert. And I think there's no doubt though, this has been -- the world's been a little bit surprised. There's been some governments, et cetera, have been caught out a little bit. Some two, three months ago thought this was going to be a much, much less of an issue than it's been -- It's turned out to be.So I think that's one area. I think we are full warden and clearly there's a possibility that the virus comes back returns in the fall and the Northern hemisphere which would cause it. If it does that, they'll certainly be some further challenges. And however, I don't think we'll quite, it'll be quite the impact that we've had over the last month and a half or so. So I think the preparedness or the understanding of what we need to do, I think it will be much more available than much more in place for the fall. I think that's a positive.I do think from what I've seen around the, not so much the vaccines, which I think might take a little longer, but around the therapeutics. I think we'll have made some progress in the next three to six months in terms of therapeutics that can be deployed, particularly obviously the high risk patients and patients who are at a severe in a much more serious situation. I think that will help us.And so, there -- and then I think, as I said, the whole, the community willingness to address and to move -- into the move probably a bit faster than we've moved as a global community this time, we'll be there, because you got a overlay, potential for the flu to be an issue in the fall as well and we have this and all the rest of it, whether it is a vaccine going to be available, I think that's probably a challenge -- that we challenging for the fall, but there'll be some, I think some experiments to some Phase III trials.Certainly, I'm going out there, which will perhaps help a little bit as well. That's the sort of information that sort of informs my view. And I think, we will be moving forward, we will be getting better. I don't think we're going to be back to normal in quarter four. But I do think, we're going to be certainly on the op and op. And as we get into quarter one of the part of next year, we will return I think to a much more normal trading that's certainly my expectation.In terms of the priority of the clinical trials besides, as honestly, this might actually even help in some ways. The understanding that we need treatments for things like COVID-19 and many other diseases as well, could push sites to be perhaps more involved in clinical trials. As I said, I think the regulators, I've seen a move very quickly to adjust the protocols and they've been very flexible on that.I think the timelines I talked about the three weeks from IND the first patient, that won’t happen on a regular basis. But I think we're challenging some of the norms there, and I think the administrative processes is around clinical trials could be challenged a little bit. And I think that will be a net positive in the more medium to long-term in terms of trials within the sites of the priority of trials. Clinical researchers as a care option is something we've been particularly through our site network for a long time now. I think there are number of organizations to do the same thing.And so we see that it's something that really is perhaps even going to get a tailwind or get a push along from this pandemic. And there is a host of us talk about clinical trials and new drugs and the development process. And I think the public imagination the public understanding of what we do as an organization and as an industry is going to be enhanced by this whole crisis. And it will have some long-term benefits.

Thank you. Your next question today comes from the line of John Kreger. Please go ahead.

Hi, thanks very much. Steve, congrats on the Pfizer renewal, are you able to elaborate at all on any interesting sort of changes of scope or structure of that relationship or should we view it as pretty much kind of steady as she goes versus contract. And do you have any other kind of significant renewals to that we should be thinking about for the remainder of the year?

Hi, John. And no, there is nothing in particular that we changed in terms of the Pfizer. There were scenarios of discussion, but really it was a very collegial and very positive negotiation with Pfizer. So, no major changes to that. And I think about it, no, I don't think there are any significant alliance agreement that are up for discussion or negotiations specifically anyway for the remainder of the year.

Excellent. That's good news. And then one quick follow up. You mentioned, China showing at least some signs of opening up. Are there any lessons you can take away from that as you watch that play out as to what you might see later in the year in Western Europe or the U.S.?

Yes, we're looking at how China is starting to open up, albeit relatively slowly, and some of the other Asian countries as well, and we do take some solace from how that moving forward. And we believe that it can be broadly applied. Obviously, China is relatively small part of our business. So, I hesitate to draw too much from one particular country, but given that it was the epicenter of it that the initiation part of the start of the whole pandemic and in fact it does seem to be moving on now. It gives us again hope that this is relatively short-term issue that we believe we can get through. As I said, by the end of the year, I'm a little bit cared, I want to be little careful about lessons learned from China.John, just get back to your previous question on the alliance. Yes, I think the other areas in the labs where we've been seeing some opportunities and certainly, we've been able to agree a couple of significant opportunity aligns partnership for our lab operations our central lab and our biological lab in the last six months. So, I tend to think about clinical process. It's largest part of our business, but our lab operations have been able to secure a couple of partnerships recently. And that's I think puts us in a good position to really build that business.

Thank you. And your next question today comes from the line of Patrick Donnelly. Please go ahead.

Steve, maybe just along the biotech funding environment, I know you’ve mentioned a couple of times. Obviously, there has been a bit of a pause here given the disruption. New raises have been pretty minimal. When you look out to the other side of this and even maybe the midterm view '21 years like that. Has your opinion changed in terms of what the grocery could be or for the overall market given a little bit of pullback in that funding? Or do you think things come back pretty quickly and we're in a pretty normalized market for next year.

Go on. Yes, sorry, go ahead. I'll let Brendan have a crack at that one, Pat

Yes, I think, we've seen a pretty stable environment from the funding perspective and the growth that we’ve seen there, I've been welcomed but as they came into this year, there's some good science that there as well, which is always the underlying piece in terms of what our biotech’s deserve to get fund or not. And as we go out, I think your question is a good one in terms of the longer term. We still think that there's opportunity there. It's been a really strong part of our marketplace.I suppose the fundamentals of this pandemic that we're seeing don't really change the fundamentals from development. So we do see that there is continued opportunity particularly in the biotech space where there has been a lot of innovation, a lot of creativity. I'm going to expect that the good science and decent forming levels as well as the fact that folks are still looking forward, to some returns on their cash and putting money out there to persist and like they get to take a bit of a pause, as we think about this year as the entire global economy probably will. Then as we think about 2021, we'd be very hopeful that we'll see that both are quite well.

Great. And then, Brendan maybe another quick, one obviously DSO has been a big focus for you guys. I assume this external shop changes things a little bit, but what's your perspective on the focus there as we go through this pandemic?

Yes, they'll still be, we'll be still very focused as an element of our business and we saw decent progress. I mean we didn't say any great diminution to it as we came into the first quarter. And as I see even as we started off Q2 cash corrections remained relatively solved. So we're not seeing any particular issues there yet. That said, we're going to be keeping a closed focused on it as we go to through the months and quarters ahead. But at the moment still looks like we're in a very solid position.

Thank you. And our next question straight comes from the line of Sandy Draper. Please go ahead.

Thank you very much for squeezing me in at the end of the call. I'm glad you guys are doing well over there. All things considered. My question is on the expense side. I mean that's an area you guys have had incredibly outperformed over years and years and done a great job there. Brendan, when you think about your near term cost controls and what you're doing as you start to win, when we start to come back to a more normalized environment. Are there specific areas you think you may be able to take a more of a look and say, hey what we thought we really need to spend here but we realize we can live without this or we can do it differently? Do you think this changes may be longer term, how you think about the cost structure of the business or basically once things come back on, do all those costs that you're pulling out all have to rent back up in line if not faster than the revenue? Thanks.

That's a good question, Sandy. We're pretty tight cost monitors on a good day. This is obviously been a very challenging periods and we are thinking about our cost base from that perspective and I've looked at the leverage that we really how we take that down a step. A large chunk of that is around remuneration and salaries. And that is something that I think that builds on back up. That said however, I think this whole environment in this kind of -- this virtual work environment, does give us pause for tall around what is absolutely necessary. So, we'll be looking at our cost base.I think those are, some of it certainly will come back in. There's no question about that. And we'd like to see that come in sooner rather than later. With hopefully it looked over in the general business environment. I have a thing that we'll be looking at all costs lines and actually, asking the question, can we do things more virtually? Do we need as much travel? I think there are questions that we constantly ask ourselves and I suppose this environment is as tested all businesses in the world. I see what are, they can be more flexible and how they operate. So we'll bear in mind as we go through.

Thank you. And our next question comes from the line of Juan Avendano. Please go ahead.

Thank you for fitting me in and I joined the call late, so I apologize if this has been asked. And so I'll try to ask a couple of questions from left field. I guess, can you talk to us about how remote monitoring activities impact a CRO revenue and profitability? In particular, I guess, I'm interested in how alternative site visits could impact past through. Based on some of my research and consultations, it seems like remote monitoring could be a positive mix for CRO, but it was curious if you could confirm that?

Well, I think the potential for us to, if we do remote monitoring effectively and well, is it actually a defilement from a profitability point of view. There's a lot of time spent and then I think it's also a boon for customers potentially too, in that they'll spend less money getting their data reviewed. We'll be able to do, I would say that give us more opportunity to do more work. I think there are set win-win, I'm sorry to use the term. From a profitability point of view, but also from a customer point of view going forward.In terms of pass-through, I don't think that's going to make a huge difference. The pass-through is in terms of monitoring a pretty modest, the major part of the pass-through costs of investigative study. So, tell us why you might have a small impact in Brendan, maybe comment on that, but I don't think that's going to have a huge impact, but I'm optimistic in terms of remote monitoring and how that's going to go forward.However, at the end of the day, I don't think it's going to happen, as I say, this fosters, that's everybody thinks it is. It'll get the conversation going. We'll certainly be doing some more virtual trials and some more remote monitoring, that we were already doing quite a bit of remote monitoring anyway. I think, it'll just move the conversation forward and accelerate the conversation rather than transform the whole industry that's my assessment.

Okay, got it. Then a follow-up I guess is I understand the studies in the startup or activation page could possibly be the most prone to the lays and potential cancellations. And so can you tell us what percentage of your studies are in the startup phase versus accrual and path database lockout?

I can give you sort of high level ballpark. I'm not sure -- We certainly haven't seen any evidence that the studies in start-up are more likely to cancel. We haven't had -- we had two cancellations, which is on par with where we'd normally be. I don't, we haven't seen it up ticking in cancellations that hasn't been, certainly haven't seen anything related to the start-up of studies in terms of cancellations.I would say probably 20%, 25% of that studies are in the start-up, about 50% are in 50% to 60% are in sort of ongoing recruitment and enrollment and data plays. I mean there is probably 20% that are in sort of the final stages of database lock and report writing, et cetera. Very broad high level figures, but I think that's works would be. As I say, we haven't been any evidence that studies early on their lifecycle are more prone to be cancel

Okay. Thank you. And SG&A as a percentage of revenue actually takes up by 10 basis points on a year-over-year basis. This is the first time that I see this happening in many years. Can you talk about how perhaps the COVID-19 dynamic could be impacting your or would impact, if any at all your ability to continue to offshore SG&A leverage?

I mean we’ll continue to look at that one as time goes by I mean I don't think this is a block to any of the cost. Controllable pieces that we done in the past, there is no real issue by one country or another country where we kind of rewards from that perspective, and to be honest as well on John that the dollar amount didn't change from Q4 to Q1 in terms of SG&A. So, yes, in percentage terms, you see a bit of mix, but we'll continue to manage our cost base deciduously.

Thank you. And your next question comes from the line of Dan Brennan. Please go ahead.

Thanks for taking the questions. I guess I was hoping to get a little color on how you think about kind of gradual throughout the year. Maybe Q4 we get back to maybe Q1 some normalcy. But if we think about the 65% that are in impacted in some way as you performed today. If we assuming year like December 31, I mean is that down to 5% 10% it's obviously we don't have a crystal ball, but you're in a better position than we are to kind of have a sense of how these sites may open up.

I missed the first part of the equation. Dan, I think what you’re asking is, all the sites that are impacting at 65% today, what's the sort of the logical sort of bring back or what -- at what rate will it come back to me. Is that right?

Exactly.

Okay. So as I said, I think the 65% is I don't think we're going to go much below that. Maybe it's 70%. But I think that is pretty much of an idea. I think as we go back as we get deeper into the second quarter third fourth, I would like to think that by December 31, that number is going to be much closer, I would just say under 20% in that sort of range. I love to think it zero. But we're not expecting this to completely disappear in the sort of immediate future.We do think there will be some impact, and I do think that those 20% of that that are impacted if it's that number. There will be accessible in terms of remote monitoring. They may have some impact in terms of slower recruitment et cetera et cetera, but I think it will be a vast majority of sites, but still a reasonable proportion that will have some impact.And I think as we get into next year, that number will, I think assuming, the virus doesn't reappear, and we don’t have always further lockdown, and that's a big assumption, but that's what we're saying. As we get into the first quarter, I think that will get to zero.

And then, I actually get kind of lead into my follow-up question. I think you mentioned earlier in the conversation, there will be some ability to catch up on what's been delayed here, but we've had several conversations with some experts. And I think investors are like I mean 2020 volatility is just extreme, but a lot of people are trying think about ‘21, ’22, and how it looks on the normalized basis. And we've heard mixed things about the ability to catch up next year and you could see actually some overage. You can actually see some upside from where you might be pre COVID in 21 versus others have suggested maybe to capacity. The system just can't handle that. So, it's really hard to catch up. So I'm just wondering, as you look ahead further, could you comment a little bit on that? I'm not expecting a number, but as if we think about going beyond 20 and the potential would catch up and see possibly some upside. Is that fair or are there structural issues in the system? Capacity issues and things like that? That just will lead to more of like just a deferral and a push out.

Yes, I would hesitate to say that we would be able to catch up everything that is going to, every sort of reduction that we're going to see in the next couple of quarters. I think there'll be some catch up. I think the system is maybe part of the issue, but I think at the end of, if data isn't collected or samples aren’t taken because patients didn't visit or there's not much to catch up. You're just going to have to miss that, that piece of data that sample. So it certainly won't be anything like a hundred percent.And so I would be very careful about, you know, upside or tailwinds, I think it’s more likely we'll let the catch up will help us get back to a more normal cadence. And then that normal growth curve will kick in and that's the way, I'm thinking about it at the moment. I don't think there's a huge bolus of work out there that we're going to suddenly be able to get down in quarter four or quarter three that'll make up for the challenges we're going to see in Q2 and Q3. I think, that would be overstating it, but I do think there is some work that will -- and that uptick, I think we'll see in quarter four, part of that will be the catch up work that we'll be able to do.

Thank you. And our next question today comes from the line of Eric Caldwell. Please go ahead.

Hey, thank you. So first one that was briefly addressed, I think I've got the answer, but I want to be very specific. Pass-through versus service level impacts both for bookings and revenue outlook please?

Pass-through growth, just let me go each, sure I understand your question. You're looking for what.

You’ve got revenue down -- sorry, you've got revenue down 10% to 17% in the second quarter. Is pass-through at the midpoint of that range just like service or more or less?

I think you can perhaps guide given that the most of the impact is in the clinical business where the pass-through happens. Eric, you can model it the same lines and pass-through and direct equally.

Equally, thank you. The second question here, tons of cost actions, cost controls, all the rational reasonable stuff. We never -- I don't think we ever got an actual number on the savings projected would be very helpful if we had that?

No, you didn't get an actual number, Eric. I'm not sure you're going to get an actual number unfortunately.

Come on, it was year on.

No, I am afraid not. We’re looking at it. The reason being, Eric, listen, we're all here. We've given you guidance for Q2. We're very hopeful that we see a better recovery and we're hoping for that in Q3 and Q4, but that number might have to change if we don't see that pace of that recovery. So, it is a little fluid at the moment. And will, obviously, it's baked into the earnings guidance that we've given you for Q2. Beyond that, obviously we'll give you more color when we get to Q3 and Q4.

Maybe I could ask it this way, it looks like based on the guidance given, if we've -- if our quick math is accurate that you're calling for basically a net 40% decremental margin in Q2. Would we be expecting that to improve? The decremental to improve is 3Q, 4Q unfold as volumes come back and maybe some cost actions happening in the second quarter are fully recognized in the third and fourth? And if that decremental target is to improve maybe some color on how much you think it could improve?

I think it's fair to say that our expectation is that it should improve in Q3 and Q4, as we see revenue coming back in. And that's not being said. I think there are cost actions it depending on the speed. If the revenue comes back, they will actually ease up on them a little bit, which will probably keep the margins a little flatter. So, probably the way to look at it, Eric, from your margin perspective is not a massive amount of variance. So, you're probably in a 2% margin range as you go through the next couple of quarters would cost and payments managing that profile is revenue comes back.

That's very helpful. And last question, you have highlighted some businesses that have done performed better and more stable, the in-home nursing, the monitoring, the remote monitoring of course, functional service provider. Are there any other businesses you would call out that have actually seen upside from pandemic response and implications? They can, things like maybe bio stats, but I'm not sure. And then conversely, would it be possible to get you to talk about which businesses have been most impacted on the negative side? Central lab obviously bigger impact there than I was hoping for, maybe thinking Phase I in some other areas that possibly in the short term have been more severely impacted, but I was hoping you could go into a little more granularity on that?

Yes, let me hit the upside. I mean, we've -- we sort of outlined Eric, where we seen them in the symphony that the patient services that's again a relatively small part of our business, but that's seen a lot of activity going forward. We do think the site businesses is paused -- is poised for some opportunity as we get back into restarting study. So I think that's an area where we're confident is going to move along nicely.In terms of other pharmacovigilance, medical monitoring, there's been certainly no diminution, I suppose in those parts of our clinical business, whether there's upside there, I think it's a little too early to tell. We're certainly not seeing a dramatic upside in those, but we've certainly seen plenty of work still counting on there. Bio stats and data management haven't been impacted too much at the moment.But again, I hesitate, there's not too many areas where we're really seeing upside at the moment. Vaccine trials and MERS services, I think you'd probably be, we're seeing some opportunities. But that those vaccine trials will play into a course out clinical group, which has been impacted. And that's we've talked to -- I think we talked enough about that, Phase I, we've certainly seen some impact, again, that's a very small part of our business.So it's not usually material, but that the CPU that we have, we have the one CPU in San Antonio, certainly is been doing a very limited amount of work. And some of our other sites that we do early phase studies, and I've been fairly limited as well. So, I think those are the areas that we've seen sort of most impact on the other -- on the back on the up-sizing.I think the FSP businesses certainly continued to expand based on some significant winds we have the back end of last year. We're actively recruiting. And again, like as I said, the ability of for us as an organization to move and shift and redeploy resources, take significant resource costs out in one area and deploy them in another way we're actually earning solid revenues is, I think a strength of our organization.

Thank you. And our final question today comes from George Hill. Please go ahead.

Thanks guys for taking the question and I'm not going to let our call roll off the hook that easy. I guess one thing that hasn't been touched on is, could you guys talk about, I guess, engagement by clients size? And should be should we think about the sites that are continuing to do business or the sites that you expect to come back first? Would we -- I guess, is there any correlation between client size or client funding type? Or is it more therapeutic area which we where we should see kind of the growth come back first as the business come back first?

George, it's a little early to be calling sort of correlations in there. I hesitate to do that in terms of say, larger clients or smaller clients or midsized firms doing things differently. Certainly, in terms of our larger pharma customers have taken a fairly conservative attitude, I would say, or approach in terms of their trials. Perhaps the buyer takes a little less so in terms of specific instructions around how we should manage their trial. At the end of the day where the sites and the availability of the site is the major determinant in terms of what we can do and what they ultimately are going to do in terms of our trial. So, I don't think it's necessarily the correlation between clients size in everything.In terms of therapeutic areas, as I mentioned in my comments, we have a significant amount of oncology business and I believe that will be less impacted than some of the other more verified less life-threatening type indications. Clearly, the vaccines and the COVID stuff is a high priority. And that's moving forward very fast. But I think oncology will and as life threatening trial as life threatening conditions will come back faster than others and certainly will reignite in terms of recruitment, recall in terms of recruitment faster than the others. That’s the way I look at it and that's to have an impact as most of the industries in oncology. So, I think those will be a priority, but we'll see the rest of them come back in the medium to longer term.

We have no further questions. I'll hand back to the Steven Cutler for closing remarks.

Thanks, Tim. So, thank you everyone for listening in today as the impact of the COVID pandemic continues to evolve. ICON is focused on protecting the safety and wellbeing of our employees and patients and continuing to serve us the important work we undertake on behalf of our customers, and in turn, preserving the strength of our business.I want to take this opportunity again to recognize our entire workforce and to thank them sincerely for the tireless efforts and the ongoing resilience they’re showing during this very challenging period. Thank you everyone.

And we thanks to each of our speakers. That does conclude today's conference. Thank you all for participating. You may all now disconnect.