Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Second Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder this call is being recorded. Thank you. I would like to now turn the call over to Andrew Markwick, Senior Vice President, Investor Relations and Treasury. Mr. Markwick, please begin your conference.

Thank you. Good morning, everyone. Thank you for joining our second quarter 2020 earnings call. With me on the call today are Ari Bousbib, Chairman and Chief Executive Officer; Michael McDonnell, Executive Vice President and Chief Financial Officer; Ron Bruehlman, who will be Mike's successor, as of August 1; Eric Sherbet, Executive Vice President and General Counsel; Nick Childs, Senior Vice President, Financial Planning and Analysis; and Jen Halchak, Senior 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, on 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 could differ materially from those stated or implied by forward-looking statements, due to risks and uncertainties associated with the company's business, including COVID-19 impacts, 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 as 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, Andrew, and good morning everyone. Thank you for joining our second quarter 2020 earnings call. Before we get to the results, I'm sure you all saw the announcement last night, and so this will be Mike's last IQVIA earnings call, and so I wanted to take the opportunity to thank him for his service and wish him well in his new role at Biogen. I also want to thank Ron and welcome him back, he really never left, but I want to thank him for agreeing to serve as our Interim Chief Financial Officer until we decide on a permanent successor. Many of you already know Ron, and I'm sure you are delighted to welcome him back to the CFO chair. Now to our results; revenue, adjusted EBITDA and earnings all came in above our guidance ranges. Today, we are also updating our guidance for the year and raising our full year revenue, adjusted EBITDA and earnings ranges. Before we review the numbers, I'd like to give you a quick operational update. During the second quarter, we saw gradual improvement in the accessibility of clinical research sites in the R&D solutions business, pretty much in line with what we told you three months ago. Global site access improved to approximately 20% in April, to 40% at the end of June. Average site accessibility for the second quarter was about 30%, again in line with the assumption that we made, when we set our second quarter guidance. The progress of global site reopenings is continuing into the third quarter, and today, it's at 53%. I should point out that the progress has been slowing somewhat in the past couple of weeks, as a result of several localized COVID-19 flare-ups in geographies around the world, and especially, in parts of…

Thank you, Ari, and good morning everyone. Turning first to revenue; second quarter revenue was $2.521 billion compared to $2.740 billion in the second quarter of 2019. First half revenue was $5.275 billion compared to $5.424 billion in the first half of 2019. Second quarter revenue in Technology & Analytics Solutions was $1.109 billion compared to $1.102 billion in the second quarter of 2019. First half Tech & Analytics Solutions revenue was $2.226 billion compared with $2.177 billion for the first half of 2019. R&D Solutions second quarter revenue was $1.235 compared with $1.435 billion in the second quarter of 2019. First half revenue in R&D Solutions was $2.676 billion compared with $2.851 billion in the first half of 2019. Second quarter contract Sales & Medical Solutions revenue was $177 million compared with $203 million in the second quarter of 2019. First half contract Sales & Medical Solutions revenue was $373 million compared to $396 million in the first half of 2019. Turning now to profit, adjusted EBITDA was $483 million for the second quarter, and $1.045 billion for the first half. Second quarter GAAP net loss was $23 million, resulting in a $0.12 loss per diluted share. For the first half, we had GAAP net income of $59 million or $0.30 of earnings per diluted share. Adjusted net income was $229 million for the second quarter or $1.18 per share. Adjusted net income for the first half was $523 million or $2.68 per share. Let's now turn to R&D Solutions backlog; closing backlog grew 13.5% to $20.5 billion at June 30, 2020. New business wins remain strong and to-date we have experienced no material COVID-19 related cancellations. Let's now review the balance sheet; at June 30, cash and cash equivalents totaled $1.1 billion and debt was $12.1 billion, resulting…

[Operator Instructions] Your first question comes from the line of George Hill from Deutsche Bank. Your line is now open.

You covered a lot. I guess, the first question I would ask is, have you seen any change in the competitive environment as it relates to COVID-19? And I know you haven't any cancellations and the win rate’s been strong. But I guess just talk about how the selection process is going and whether you guys think you're taking share.

Thank you, George. Good morning. Again, when we refer to no material cancellations related to COVID-19, we are speaking about cancellations of trials that were already in the backlog and not for COVID, for other things. And it just points to the resilience of our customers and their long-term view. They haven't changed their priorities, and they are still focused on the diseases that they were focused on before the crisis emerged. With respect to COVID-19 itself, we've won a wide variety of the trials, ranging from small lab work or - all the way to wide vaccine trials. A number of those are - I mean, are well publicized. There are a few large ones. Some of them are nominal fees related to product reviews for small biopharma companies. There are multimillion-dollar vaccine trials. There are currently two vaccine trials that are funded by the U.S. government. So operational work speed, which we have won, one of which we mentioned - I mentioned in my introductory remarks, which is the one with AstraZeneca. So in terms of competitive wins, I think the crisis has shown that our unique capabilities are highly, highly differentiated. All I can say is, we've become a lot closer to the customer base during this crisis, with many of them we had weekly forum. We've got extraordinary feedback from our customers in terms of the criticality of the information we were providing them in realtime for their own decision-making process. And we've continued to win at a very high pace. I believe that we've continued to gain market share. And certainly, we gained a significant amount of the overall COVID-19 work out there. And I want to point out that this COVID-19-related work is - we are contributing as well to the resolution of the crisis. And so in many cases, because these are government-sponsored, we are discounting those. So they are important, and they are going to continue to play a role in the foreseeable future here. And they were a part of our bookings in the quarter. I believe they represent somewhere in the teens of our service bookings in the quarter, sort of mid-teens or so. And so it's not a negligible piece of our dollar bookings but - it wasn't a 'make it or break it' kind of set of activities.

And maybe if I could ask, Mike, a quick follow-up. And Mike, you're going to be missed there at IQVIA. Remote monitoring has played a huge part of the process as we've gone through the COVID crisis. I guess can you talk a little bit about the financial implications of moving to the remote environment versus the on-site environment?

You're asking about the remote environment versus - yes. I mean, look, we - as I said in my remarks, the remote monitoring, obviously, is where everyone went. And in order - because we could simply not access the site, I think that, as I said in my remarks, on-site visits have replaced - are now overcome the number of remote visits. The peak of those remote visits were sometime in the May, June time frame. And now we have started accelerating in a steep fashion the number of actual visits. We're still not to our normal pace, but it has dramatically increased. As I said, 53% of the sites are now accessible, and we are able to visit those sites. Bear in mind, while remote is helpful and then we are using it mostly to meet obligations to patients and clients and to ensure their safety, et cetera but again, it's important to know that in-person site visits are still required in order to meet the source data verification criteria, the - each trial budget, of course, will have to be revised accordingly. So we see this as more of an opportunity as well as we go back to site. Thank you, George.

Your next question comes from the line of Tycho Peterson from JPMorgan. Your line is now open.

Thanks. I appreciate all the color. I guess, Ari, on the reopening of site, I’m just curious about how much risk you see in the flare-up of cases, now heading into 3Q in the back half of the year and other implications to R&DS and CSMS for your business and other steps you can take in anticipation of some of this to try to mitigate the impact.

CSMS? Did you mention CSMS or - what's the question?

The question was about the flare-up of COVID cases and the risk heading into 3Q in the back half of the year and the steps you can take to mitigate some of that in advance and then just any - where you would see more impact.

Was that Tycho who's asked? Was that George still?

No. It's Tycho.

Tycho, sorry. We're having trouble hearing on our end.

The question is about the flare-up in COVID cases and risks for 3Q in the back half of the year and other steps you can take to mitigate some of the impact these cases are going back up in a number of regions.

Yes. I mean, look, there's flare-ups out there, Texas, Florida, California, South Carolina, around the world. I mean Europe and certainly Asia is pretty much back up to not quite 100%, but not that far. The main issue here is, in some parts of the United States - but, again, we don't disclose exactly which sites are where, but you should know that it's not going to be that material, these flare-ups in the U.S. to our - we have over 100,000 sites globally. And we've become very adept at transitioning to remote monitoring. So, I think - yes, I mean, we now have been able during the second quarter, to adapt, and we have a number of workarounds using our remote capabilities. And so, we feel that these assumptions that we made for the third quarter, I think, are, in a way, better educated than the ones that we made three months ago, when we were just learning to adapt to the crisis. I should point out that these assumptions that we made in April 2020, many folks out there thought that we were getting ahead of ourselves and we’re maybe too optimistic about those assumptions. And the fact is, the progression of site accessibility as a metric was exactly as we predicted. And we base that on the course of the disease in China and other geographies that were more - that had been ahead of the rest of the world in terms of the disease. And we base that also on our own internal data and modeling that we are using to project our business. So, once again, while people thought we were overly optimistic, it turned out we were exactly on target with respect to site accessibility and, in fact, not so optimistic. So, I think, I'm not suggesting that, because we were right three months ago, we are right now for the next three months. But, I think, we - if anything, I believe, we are a little bit more educated now, and our models are even more precise than they were three months ago.

And then Ari, one follow-up. You talked about a return to normal growth next year. 15% growth off 630 would be 725 and essentially where consensus is. Is that the right way to be thinking about it for next year?

I said that we are going to give guidance for 2021, much earlier than before than usual. That is not at the beginning of the year more this year for next year, and that is because, as you correctly point out, we have visibility. We have more visibility than usual because we know of the work that should have been done this year that's still in our books that we need to progress plus the work that we want this year, so we have more visibility. I'm not going to give you any numbers. I'll let you speculate, but hopefully in a not too distant future I mean, I don't know if we'll be able to do this in the third quarter, but maybe we should have that as a goal, okay? We're getting there in terms of our 2021 plans. Thank you.

Your next question comes from the line of Robert Jones from Goldman Sachs. Your line is now open.

Thanks for the question. And yes Mike, definitely enjoyed working with you. Good luck in the next endeavor, and now look forward to engaging. I guess maybe Ari, just on that last line of questions, but maybe to put some numbers around it. The second half revenue guidance looks like it implies about 2% year-over-year growth in total revenue over the back half of 2019? But you updated the NTM revenue, expect it to convert at a backlog is, I think up 10% versus the last update with 2Q. Is that - does that dynamic get at what you just commented on that you have just better visibility into the backlog and what could come out of the backlog in the first half of 2021?

Yes, I mean - Andrew, do you want to take?

Yes sure. Yes, I mean yes, the next 12 months revenue from backlog increased considerably quarter-over-quarter. It was $4.9 billion at the end of Q1 and now sits at $5.4 billion, a large sequential move. And I think that's the ultimate forward-looking indicator for future revenue growth in the trajectory of the business. So we're very pleased with that. I think obviously, we still want to dig into our plans when we started with that process, as Ari said earlier. And we're looking forward to providing 2021 guidance, but I think...

Yes but Bob, I think you're thinking about it the right way. Part of this is the fact that this - as you know, we won I believe, a disproportionate piece of the market over the past year or so. And those market share gains have translated into a big proportion of our backlog that's new wins that are - haven't started. And so a big piece, which is why you saw the revenue conversion being slower than usual even without the COVID-19 crisis. That's because site start-up activity is typically a little slower. Patient enrollment is a little slower. The vast majority of our book of business is not in the sweet spot, so to speak, where the trial is ongoing. And so the COVID-19 crisis has added to this issue because when you think about the impact of the crisis on trials for patients that were already enrolled. And for trials that are in that phase, where you are really - in the sweet spot and executing the trial and patients with insights. Then we worked around that with - you can work around with remote monitoring. And now we're returning patients to sites, et cetera. But sites that had not started yet, site start-up activity is - was much more difficult, simply because people were just not at work, and we weren't able to get the site up and running. So that has been delayed, and it's kind of slowed down a bit. Similarly, patient enrollment was more difficult and is more difficult. We are now enrolling, as I said in my introductory remarks, patients back into trial. But we still are only at 25% of normal baseline number of patients recruited per week. So it's going up, and we're catching up. And I think that's part of why you see more revenue pushed back into the next 12 months. That's kind of the pent-up, if you will, revenue that should have been executed - that's now going to be executed. And that's in addition, of course, to the change orders for the work that needs to be done. I mentioned before, we need to do on-site data verification. So despite the remote visits, a piece of the work - still needs to be done on site. So that's additional. And then finally, we continue to book at a very high pace, as shown by our high book-to-bill ratios. As all of that adds up to what we believe is the expected next 12 months revenue from backlog.

No, that all makes a ton of sense. And I guess maybe just a quick follow-up Ari, on TAS. Maybe just - I know you touched on some of the elements there in the prepared remarks, but clearly better performance than many expected. What are clients specifically utilizing within the segment I know there's a lot of components there. Is it the analytics for virtual meetings? Is it more safety studies? Just trying to get a better sense of what was driving the performance in TAS?

Yes, I mean look, the usual thing, data technology, Real-World as well. I mean, why don't I turn to Ron, you want to add here?

Yes look, the strongest part of the TAS segment has been and remains Real-World. We've also seen continued implementations in the tech sector that's gone well. Analytics solutions actually has been strong, although there have been some delayed client decisions as a result of COVID. So I would say, across the board, but there is particular strength that we see is in Real-World.

And again, the weakness in TAS, as we said before, is the part of the business where we help clients organize face-to-face meetings with physicians, healthcare professionals around the world, the conference business that requires in-person, and that has essentially dried out. It's beginning interestingly, to show signs of revival. People are scheduling conferences in the next few quarters. So that's going to come back. But, certainly, it's been largely brought to a hold and that has created a hole in our revenue, which is why TAS hasn't performed as greatly as, but everything else I think, has done very good.

Yes everything, yes [TAS] and data remains very solid.

Very stable, yes.

Your next question comes from the line of Patrick Donnelly from Citi. Your line is now open.

Maybe just a follow-up on the TAS question there certainly, appreciate Real-World doing well. Can you just give us a bit more color on OCE? I know you kind of noted 35 new clients so far in 2020. Can you just discuss how that's trending relative to your expectations? And then again, maybe some of the feedback you're getting from customers that are either converting over to you or kind of competitive wins, what you're hearing about the offering there?

So again, the team has really performed very well. We've crossed the 100-customer mark, and now we're at 115 wins. We continue to see a lot of success. Generally, with a handful of exceptions, we're not seeing any slowdowns in implementation actually in many cases accelerations of implementations. We went live for several deployments, including by the way, in the midst of the crisis. I remember seeing - I think I saw an e-mail somewhat from one of our large, large, large clients, congratulating the team for an amazing job they did on deploying in Spain in the middle of the - peak - the COVID crisis over there. So, things have tended to go very well on our deployment. Generally, the demand for remote detailing continues to rise. We've got a module within OCE - called OCE Remote Detailing, which is the most secure compliance platform in the space. We also launched last quarter our compliance solution in the commercial space, HCP engagement management, which already has four wins. And a strong pipeline has been building. So I think it's all going very well according to expectations. And frankly for OCE, we haven't seen any - a few - again a handful of slowdowns in terms of some areas where we couldn't redeploy. But on the other hand, we've seen acceleration. So it's essentially going as well as we could have expected.

And then maybe just one on the margin side, you guys did a pretty good job insulating the bottom line from some of the revenue headwinds, are pretty quick to do some cost controls. I know you talked about planning for 2021 already. I guess how should we think about some of the costs that have come out? Are those going to come back in terms of your planning? Are you feeling good enough, to your point there, Ari, I think you talked a few times about the visibility? Now that you're more comfortable there, are you kind of easing on some of the cost controls? Maybe just help us think about kind of the margin cadence and the go-forward, the cost control measures that you have in place? Thank you.

Okay, yes. I mean do you want to - Ron, you want to...

Yes sure. Look obviously there is some margin pressure in the first half due to the drop in revenue and how quickly we could get costs out more so and early on and later on. We should see margin expansion in the second half of the year as the business comes back. We've taken a lot of cost out. I don't think all of it's going to come back. Certainly, we're going to continue to try to keep pressure on keeping T&E costs down. And I think naturally, they will in this COVID crisis. And we're always looking to take out - to improve efficiency wherever we can. One of the things that we've looked at very carefully other than T&E, which obviously has fallen off, is renegotiating vendor contracts, reducing third-party spend. And we're reassessing our office space needs, which I think a lot of companies are doing right now. So I think that the cost trends will be positive going forward as will margin progression.

Yes, I mean again, you can see we have a large cost base. And so as for me, the situation becomes worse, there are many levers that we can use to mitigate impact to profit. And again, I want to emphasize, we have not taken any virtually, no action with respect to employment. There are very, very small pockets, really affecting a few hundred employees, where there were furloughs or there were a few restructurings, but nothing out of the ordinary course. Nothing dramatic and we do not plan to do so. And the reason for that is, again, we are a people-based business. We're a services company, and we want to protect our employees. We know they're going through difficult times. And then secondly, we do expect a V-shaped recovery and a very strong - well here I go I'm talking about 2021. I didn't want to, but we expect a strong 2021, and we are going to need our very talented employees. So we didn't take any base compensation or restructuring actions as a result of the crisis.

Your next question comes from the line of Eric Coldwell from Baird. Your line is now open.

Thanks, good morning Mike, good luck with your future endeavors. A couple of quick questions here, but first off, I heard in the Q&A, a mention of particular strength in Real-World evidence. Last quarter, I believe you highlighted that RWE could be a tale of two cities, prospective and retrospective work, with the prospective work looking more like trials? There could be some headwind. What changed there, if anything or what were the dynamics between the old IMS RWE and the old Quintiles' RWE business mix?

Well that's a very, it’s very - okay I don't want to flatter you too much. It's a very thoughtful question. And you're right, to - your understanding why yes, we are doing well in Real-World. And that is that the ability to use patient-level data, which I'll remind you, is really an unparalleled asset at our company. We have now - we did over 800 million patient lives - unique patient lives, which have been extremely useful. The unique E360 technology capabilities enable us to conduct a lot of retrospective studies. And that part of the business has been extremely strong. The second factor is that, while access to sites has also been restricted, but it is less restricted than a clinical trial site. To a degree, there are many Real-World studies where the sites are actually doctor offices, as opposed to hospitals and those have tended to have - while restricted still and many of them were shut down, as you know, but access - physical access was better than we would have thought. And the experience has proven that the site accessibility for Real-World is somewhat better than for clinical trial sites. So as a result Real-World has done, again, better than we would have expected. Bear in mind also, when we report site accessibility metrics, we only report for clinical trials. And as you know, our competitors, our CRO peers report those numbers in aggregate.

Yes, helpful thank you. IQV is one of two companies in the space that reports authorizations on a contracted basis. I think there was some speculation that you could have strong awards, but maybe contracts would be pushed out given the global uncertainty and clients putting out fires. Clearly, that was not a big headwind, but I am curious, what is the normal lag from award to contract at IQV? My hunch would be maybe a couple of months, but I'd love to hear your thoughts. And then how has that changed in - this COVID environment? We know the COVID specific trials are being contracted extremely quickly, but have you seen other changes in the duration between award and contract time?

Well, your general assumption is correct okay. You're kind of two months' lag time. We're trying to reduce that. But that kind of 60-day period is a good assumption. The lag between booking and revenue could be up to 12 months, okay. So the lag between award and contracting could be up to 60 days, 30 to 60 days, let's say. And the lag between booking and revenue could be up to 12 months, six months to 12 months, depending on the client, the study dynamics. And of course, the COVID situation has pushed that lag between booking and revenue further simply because we were unable to get sites started. But we are going - we are getting back into it as we speak. And certainly in Asia, we are already back up to normal, and we expect that to happen with a three to six-month lag in the rest of the world, Europe and then U.S. So yes, I mean, it has created some delays in execution. On the other hand, as you suggested COVID-19 trials are much faster burn, but it has partially begun to offset that.

Eric, one thing.

Yes.

Both awards and contracted bookings were very strong in the quarter. So either way you look at it…

Yes, Ron makes a good point. I mean I don't want to - you remember the old way of reporting book-to-bills, which was basically on awards. And if we had done that this quarter, did I say - it would be having - materially higher than the 1.64, materially higher on awards - I mean awards basis.

Very helpful, last one, just a clarification. There were some phone issues in one of your earlier responses. Did I hear you say that COVID work in total across therapies and vaccines accounted for mid-teens of your contracted awards?

Yes, in services yes, yes.

Yes, okay. Great, thanks guys.

Okay. Operator, I think we're up to the top of the hour now. So I think we've run out of time for the call. Thank you, everyone, for taking the time to join us today, and we look forward to speaking with you again on our third quarter 2020 earnings call. Jen and I we are available to take any questions that you may have for the rest of the day.

And Mike and Ron.

Yes. Mike and Ron will join us as well.

Okay, thank you, everyone.

This concludes today's conference call. You may now disconnect.