Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Third Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder this call is being recorded. At this time, I would like to 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 third quarter 2020 earnings call. With me on the call today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; 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 Web site 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, 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 a 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 third quarter 2020 earnings call. The third quarter marked a nice sequential improvement in our financial performance, with results coming in above the high-end of our expectations. You will recall that based on early signs of recovery at the end of the second quarter, we raised our guidance for the year. Based on stronger than expected performance in the third quarter, we are again raising our full-year guidance ranges for revenue, adjusted EBITDA, and adjusted diluted EPS. We're expecting a continuation of these recovery trends in the fourth quarter. This of course sets us up well for next year. As we promised back in April at the onset of this pandemic, we will talk to you today about our outlook for 2021. Based on what we currently see, we think the most significant COVID impact to our business are behind us, and our outlook for 2021 indicates strong performance next year, and a return to our growth trajectory. Ron will discuss 2020 and 2021 guidance in more detail later. Before we review the quarter, a quick operational update, we continue to experience a gradual improvement in the accessibility of clinical resource sites in the R&D Solutions business even with the localized flare-ups we've seen around the world. We are seeing a return to on-site monitoring visits, and similar to last quarter, on-site visits exceeded the number of remote visits. In instances where sites remain physically inaccessible for clinical monitoring, remote monitoring and virtual solutions are proving to be effective workarounds. The pace of startup activity picked up significantly during the first quarter, and we are pretty much back to baseline levels for site initiation visits. Of course, special recruitment trends have started to follow as well. Moving to…

Thank you, Ari, and good morning everyone. Let's turn first to revenue. Third quarter revenue of $2,786 million grew 0.6% reported, and was flat at constant currency. Revenue for the first nine months of the year was $8,061 million, which was down 1.6% reported, and 1.2% at constant currency. Technology & Analytics Solutions revenue of $1,207 million grew 10.2% reported, and 9.2% in constant currency. Year-to-date, Tech & Analytics Solutions revenue was $3,433 million, up 4.9% reported, and 5.6% at constant currency. In R&D Solutions, third quarter revenue of $1,400 million was down 4.5% at actual FX rate, and 5.1% at constant currency. Excluding the impact of pass throughs, R&D Solution third quarter revenue grew 2.6%. Year-to-date revenue of $4,076 million was down 5.6% at actual FX rate, and 5.4% at constant currency. Contract Sales and Medical Solutions revenue of $179 million was down 13.9% year-over-year reported, and 14.4 % on a constant currency basis in the third quarter. Year-to-date, revenue was $552 million, down 8.6% at actual FX rate, and 8.3% at constant currency. Now moving down to P&L, adjusted EBITDA was $604 million for the third quarter, which represented growth of 1.9%, year-to-date adjusted EBITDA was $1,649 million. Third quarter GAAP net income was $101 million, and GAAP diluted earnings per share was $0.52. Year-to-date GAAP net income was $160 million, and GAAP diluted earnings per share $0.82. Adjusted income was $318 million for the quarter and $841 million year-to-date. Our adjusted diluted earnings per share grew 1.9% in the third quarter at $1.63. Year-to-date adjusted diluted earnings per share was $4.32. Now turning to the R&D Solutions backlog, as Ari mentioned, R&DS new business activity remains quite strong. Consequent on the robust booking activity that Ari talked about, our backlog grew 18.5% year-over-year with close at $21.7,…

[Operator Instructions] And the first question comes from Eric Coldwell with Baird.

Thanks very much, and good morning. I was curious if you could share with us the percent of your bookings this quarter that came from COVID-related trials? You did give us the metric last quarter, as did I think virtually all of your peers.

I think looking at the contracted services bookings, in the quarter it was about 20%.

And, Ari, I assume higher on a pass through basis given the nature of those large vaccine studies?

Yes, I mean the -- it's very hard, the timing of pass throughs and the volume of pass throughs is different. Look, we have a lot of COVID awards since the start of the pandemic, many of them small from protocol reviews. I mean I think we had like close to 200 different awards around the world, so gives you a sense. Some of them very tiny, some protocol reviews, we have lab work. They range from -- you had normal fees to, of course, we are on several of the large vaccine trials, not necessarily doing the entire work but we, for example, have been awarded work I think on four of the five trials that are part of Operation Warp Speed that are in phase three. So sometimes we've got in -- and in a couple of cases we've got the full service work, and, of course, there we've got big pass through numbers. In other cases we'll get the lab work, the pharmacovigilance work. So we are very involved, and some of that work does not include pass through, some of that it does include pass throughs. A lot of trials where we have full clinical work do have big pass through numbers which have not been yet into -- in our revenue numbers given that, as you probably know, we are in our full service vaccine work is in at a later stage than to have some of our competitors who have already seen that revenue -- that very strong revenue flow through in prior quarter or will seek in this quarter, in Q3, mostly from pass through revenue.

That's very helpful, and if I could get you to just follow on to that, a number of investors are focused on how the COVID work plays out over the next several quarters. When do you expect a peak in bookings and/or revenue from COVID-related trials at which point we would obviously need the quarter to be back fully to offset any year-over-year comparisons that might be developing?

Yes, well look, I mean in developing -- I'm sorry, you're talking about 2021 obviously.

Yes, and [multiple speakers] -- yes.

Yes, so I mean, look, Eric, we have spent a lot of time, as mentioned back in April, we wanted to try to give you a sense for how 2021 would shape up, and we've spent a lot of time, bottom up, reviewing what would happen. As you know, we affect everything or piece of work across our business segments with probabilities and an assessment of what revenue would be derived in subsequent periods. So the same applies to the COVID trials. Most of the revenue on the large full-service COVID trial is pass through, okay, so there's no impact to profit, and that's just the fact. When you are a full service work on a vaccine trial you have to remember there are cases I've seen, I don't know if that's the case with us, but it's where the past revenue is a ratio of 10 to one, in other words $10 or pass through versus $1 of service revenue, whereas in normal traditional trials we would see one pass through dollar to each two or three dollars of service revenue, and once again, pass throughs is totally irrelevant to our profits, it has no impact whatsoever. So, it makes it very difficult to predict. So that's one element of the COVID trial. The second one is, of course, we've taken into account the possibility that vaccine trials get cancelled. There could be a vaccine that gets approved, or two, or three, and the others ones feel that it's not economically worthwhile for the sponsor to continue to vaccine trial. In fact historically, well before COVID, we know from experience that vaccine work carries an unusually high risk of cancellation versus traditional other drug developments. So with all of that in mind, so we know all of that, we've…

Ari, thank you very much for the detailed answers, I appreciate it.

Next question comes from John Kreger with William Blair.

Hi, thanks very much. Ari, just to kind of continue on that, I think you mentioned to Eric that about 20% of your bookings were COVID-related. For the other 80%, are you able to start those studies up and enroll in a fairly reasonable basis or would you say that's still broadly impaired?

Thank you. Well, okay, as I said in my introductory remarks, with respect to site initiation visits which -- and site startup activity, that's the area of our business that has seen the strongest improvement. In fact, the site initiation visits are back to baseline levels, and recruitment of positions obviously starting to follow. So I think actually very good moves on that front. The accessibility to sites for trials that are in flight hasn't quite recovered. We are currently at about, I want to say the -- I look at my team about 70%, right. We are currently for global, if you look globally at our sites we are back to about 70% normal accessibility. That's a bit below what we would have expected, but interestingly it's critical site, because a site is not a site is not a site. There are sites that are very tiny, and the relative incremental value of opening that sites doesn't mean as much. So we are focused on the ones that are most significant. So that's for in-flight trials, and we're returning gradually to normal activity there. For new trails, again site startup activities has resumed, site initiation as essentially the visits are where they should be normally pre-COVID levels, normally patient recruitment lives, but that has increased significantly throughout the quarter, patient recruitment was fundamentally disrupted, okay, because essentially everything was put on a hold, and we're gradually going back, we have good momentum, and we don't think we will recover to baseline level and sometime in 2021, but again all of that is factored into our guidance.

Great, thank you. One quick follow-up, can you give us a sense about where your focus is on sort of new technology development? I think in the past, you've talked about an OCT suite launch by year-end, is that still on the table?

Yes, absolutely. As you know, we've had great success with OCT coming from behind, and we therefore along with our partners Salesforce, we expanded the relationship to clinical tech platform in tools on the health cloud, we have seven technologies available today for digital sides and patient suites. The digital patient suite includes products such as eConsent, eCOA, and also patient portal. We will by the end of the year have the digital trial management suite go live probably before the end of the year, and the products will include CTMS, risk based monitoring, and the mobile CRA platform. So again, the fully orchestrated solution, OCT, that you're referring to, will be available by the end of this year. Again, we are also coming from behind in this area, but we will be claiming our fair share as we're doing in OCT on the commercial side. Thank you.

Sounds good. Thank you.

Next question comes from Bob Jones with Goldman Sachs.

Great, thanks for taking the questions. I guess, Ari, maybe just a follow-up there, you're saying that site activations are getting back to normal and patient recruitment obviously catching up. You saw X pass through growth in RDS I think of around 2.6%, I guess, what needs to happen to see the double-digit RDS growth in 4Q, and more importantly, what has to happen between now and over the course of '21 to kind of get to that guidance range, is there a lot that needs to improve, or is it just kind of a normal course of what you're already seeing that needs to play out in order to get to these 4Q and 2021 RDS targets?

Well, look, we've said that we should be seeing or reaching double-digit RDS growth in Q4, okay, and we do expect mid-teens in 2021. So, what needs to happen is all normal course of business based on the work that we've done that I described earlier in my reply to Eric's question, our guidance is being bottom-up, as we always do project-by-project and we make an assumption of -- look, I mean what needs to happen is things are going to happen, okay? The elections are going to be behind us, there will be more clarity in environment, there will be at least two or three vaccines out there, people have learned to live with this, people are moving on, and all of that will happen sometime in 2021 during the year. Obviously, this assumes when we say "Normal Business Conditions," it means that what we're seeing today, the trends that we're seeing today, the improvements that we are seeing today continue with a bit more stability in 2021 due to all of these factors being unclear, again, election behind, more clarity on the environment, vaccines learning to live with this thing, all of these assumes when we say stable business conditions it means there is no new pandemic, God forbid, or anything like that, and it's a new normal, if you will, and that's what we're assuming; nothing extraordinary, nothing needs to happen, I should point out that we haven't done any acquisitions of significance as you know really for the past two years. I mean we haven't been spent at the rate that we used to. This is all organic for the most part, and so again, we feel very good about this guidance.

That's fair, and I guess maybe just one follow-up, we haven't spent a lot of time on TAS. You described it as resilient, but I think the growth rates the highest we've seen in years. Can you maybe just spend a little bit more time there talking about what's driving the performance in TAS? I know you mentioned real world evidence, but just wanted to get a little bit more clarity behind the record growth you're seeing in that segment?

Look, the performance is the reflection of the sales, I can't say a different way of the resilience of the business, A lot of what we do is mission critical to our clients with or without the pandemic. Certainly the data business hasn't moved. If anything, there was -- if it proves how mission critical it was. We probably had the best visibility, I mean, you guys and a lot of people out there felt we were insane back at the beginning of the pandemic for giving relatively precise guidance for the balance of the year, and now here we are, and it looks like more or less we are on target and that it's not because we're geniuses, it's because we have visibility, we've got businesses that they allow us to have that visibility, and we are global. So, there are different stages of the pandemic in different parts of the world, so we can model this out, we have our internal database, deep analytics, predictive analytics, and modeling capability. .: Ron, do you want to add…

Yes, just one thing I would emphasize, Bob, if there was a surprise versus where we were expecting early in the year, it's our analytics and consulting business has continued to be very strong, and I think Ari highlighted that in his prepared remarks that we were expecting some disruption due to business development activity, face-to-face selling being affected, and in fact that hasn't, our analytics and consulting visits has been quite strong.

Thanks for all that. Appreciate it.

Next question comes from Tycho Peterson with JPMorgan.

Hey, thanks. Ari, starting with R&D, does the 4Q guidance assume resumption of any of the trials that have been halted with J&J and AstraZeneca, and then, what gives you the confidence that COVID flare-up won't impact results? I know you talked about site initiation visits back to baseline levels, but I guess what I'm really asking you is have you taken steps to try to kind of mitigate any impact of flare-ups, and then, as we look ahead to 2021 in R&D, can you just give us a sense of how much could contribute to that mid-teens growth you talked about? Thanks.

Yes, I mean you asked me about the impacts of the delays in the vaccine work. Yes, I mean, first of all, interruptions in trials in general are a common occurrence. There are adverse events. In the case of vaccine trials where you have the number, which is arguably one of the reasons why fasteners are so big, because the number of patients enrolling in vaccine trials is huge, we're talking about massive amounts 30,000, 40,000, 50,000, 60,000 people in a trial. You're going to have adverse events, and those adverse events will cause an interruption of the trial, but again, we've factored that in. It's all in our guidance, and we don't expect -- and by the way, as I mentioned before, there are also cancellations in vaccine trials that are more likely. So, look, again we factored that in, we put probabilities on all of our vaccine work, and bear in mind, cancellation is only result in 100% of lost revenue, there is one down and so on, and finally, frankly, since for the full service trial, the one that we talked about, most of the revenue is pass through. So, and this is COVID work. So, it's not likely or maybe even on the service, the small portion of the revenue that's service, it's not like we're making a margin or a margin at all, right, because it's part of our contribution to the effort. So, that's for the vaccine, and what was the other question you had?

Yes, I mean, it was whether you're taking proactive steps to mitigate any impact from COVID flare-ups? You talked about set initiation levels, but what gives you confidence and no impact, and then on the 2021 outlook you talked about COVID being 20% of awards, but how much do you think it contributes to growth that mentions growth next year?

Yes, I don't have to give you the exact contribution to vote, but it's not what's creating the very strong double-digit growth that we expect.

We have solid growth next year in revenue in R&DS even excluding like COVID work. That's the short answer.

Right.

By the way, our growth this year, underlying growth without the COVID work also, not that great growth, but…

In Q4 also…

Yes, in Q4 also, yes, yes, but the flare-ups, I mean look, if it continues in the same proportion and occurrence, and frequency as we see now, that's what's factoring in our guidance, but again, eventually, with the advent of vaccines by the end of the year, or next year, we think all of that will -- and people we learn how to work with this, it's already happening. If you look at, again China is a good -- things are back to normal in China, I'd say entirely, I mean, it's not 100%, it's 95% plus accessible. There are flare-ups by the way in China, but people just work with this. Also again, we have to do some catch-up work, bear in mind, that's also factored into our guidance. We did a lot of remote monitoring this year when we couldn't access the site, and I think people forget that we are not going to move to 100% remote monitoring, okay? There is still a requirement by all regulatory authorities around the world that source document verification has to occur on site. FDA, all the regulatory explicitly require that the source document should not be shared remotely. So again, obviously, what has changed is the number of data points that might be looked at remotely like key safety and efficacy data for example, and so, there's reduced requirements on less critical data, but in general, we still have to do that work that we will not be able to do. So, all of that is, "Pent-up Demand" that needs to be addressed in the coming quarters, catch-up work, if you will.

Okay, and then, Ari, last quick one on CSMS, can that return to, you know call it low single-digit growth next year?

I don't know about that, because I'm not going to venture to make prediction on CSMS, I've been wrong in both directions. I have assumed they would go down and they went up, and I assumed they would go up, and they went down. So, look, what's factored into our guidance is kind of flattish five growth, okay, if it's plus 1%, plus 2%, I don't know; flattish growth, flattish for next year.

Okay, thank you.

More detail on the segments when we provide guidance in the ordinary course at the beginning of '21 when we share full-year results and Q4 results, and as we traditionally do, and we'll give more detail on segments there, because I'm sure you can derive based on the comments we made and on the overall guidance that the momentum we see now, three business segments will continue.

Next question comes from Erin Wright with Credit Suisse.

Thanks. In terms of capital deployments here, the share repurchase activity, what's embedded overall on your guidance for 2020-2021, and in terms of the share repurchase activity and have you been active in the fourth quarter to-date, and I guess, on that topic as well, you mentioned it was a largely organic growth that you're pointing to, I just want to clarify, does this guidance assume any acquisition I guess activity consistent with your past practices?

You mean the fourth quarter?

Fourth quarter and 2021.

Yes. So, first of all, congratulations to you, Erin, nice to have you back.

Thank you.

And secondly, look, we have not done any share repurchase since we suspended our program. So, other than the shares that we repurchased in the first quarter when the last primary sponsor shares were sold and we participated into that secondary, and you know about that. That was in the first quarter pre-pandemic. We haven't done anything since then. I wish we had bought all the shares by the way at $85 a share, but we didn't, and so, we're going to start now optimistically after the earnings release, and there will be probably the markets. We don't have lots of time since we have to start before the end of the year anyway, and with respect to acquisitions, no, I mean there's nothing here for the balance of the year that would be materially different than what we've seen this year, that is relatively negligible M&A activity. In 2021, what's the assumption, Ron…

Well, you can expect in 2021 we'll spend some on acquisition share repurchase together, we'll trade-off between the two, and our normal assumption there which is valid in 2021 is about a $1.5 billion between the two during the course of the year.

And that's what we had before pandemic. That is what we had before.

Consistent with past practice.

Okay, great, and then just cost mitigation efforts and further flexibility, I guess if you do continue to see things get a little bit worse in terms of these flare-ups, there are ample levers you can pull here from a cost mitigation standpoint, correct?

Yes. I mean, Erin, you make a very good point, as you know we made a deliberate decision not -- by and large, not to do any restructuring of our workforce. We had maintained employment, and I might add base compensation as well. First of all, the crisis situation dictated that -- you know, that was the right thing to do to focus on our people and take care of our people, and number two, we anticipated the strong V-shaped recovery in Q4 and 2021, and obviously, we wanted to preserve our talents and resources, and so, we've not done anything. Now, obviously, we had any sustained situation that in a systemic way would force us to look at totally different environment for long-term, then we would change that and we do have levers, and the only thing that I can tell you is that we've had strong productivity, despite not reducing our workforce or our base compensation, we've learned like most companies to work remotely. We have very important study going on called the Future of Work internally, and we're trying to determine which roles -- and as you know, we have about 70,000 people. So, there are a lot of different roles in the company, and we are detailing which roles can actually work from home. What we've learnt during this pandemic, what office space do we really need, and if you are going to be behind your workstation all the day not interacting with other people, what's the need for having a physical presence at an office? Again, dependent on the geographies, there are countries where that's just required like in Japan, for example, others not and when we do home assist and so and so forth. So, there will be a lot of questions depending on the roles, and so, there will be changes to our real estate footprint no questions like most companies, but IT investments that we are making, it is to solidified the remote for more capabilities even further et cetera, but again, we've got very significant levers that we have by and large not touched.

Okay, great. Thank you.

Next question comes from Patrick Donnelly with Citigroup.

Thank you for taking the question. Ari, maybe it's on the remote monitoring, virtual trial side, lot of talk about that during the pandemic. I guess do you see general bookings and trials pick back up? Are you seeing any notable shift in activity towards that, or -- I mean how are you guys positioned? Maybe just talk through that.

You are talking about remote? Yes, anybody wants to take this?

Yes, on the remote monitoring side -- and stop me Patrick if I am not answer your specific question here, but remote monitoring side, we have largely been able to substitute for the work we would otherwise be doing onsite, but not 100% because there are still the requirement to be onsite to check source documentation at the site under FDA guidelines. Now, remote monitoring we should say is different than virtual trials. Virtual trials include patient tele visits, home health nursing, phlebotomy services, user --patient diaries and things of that nature. So, quite different in that regard, so, I think sometimes these two terms are confused, and people are saying that they are doing virtual trials when in fact what they are doing is remote monitoring.

Right, remote monitoring of that which could be monitored remotely which is not everything, right. Not all components of a trial may be monitored remotely. Virtual trial is a trial that has been designed to be virtual, and that doesn't mean that there won't be onsite monitoring visit either, but it uses different technology than has been designed from the start, whereas remote monitoring is a component of regular trials that just happens to be that some of the data -- some of the activities are monitored remotely.

Okay, that's helpful. I guess just on the TAS business and following up on Bob's question, you guys had lengthy talks about the quality resiliency there. So, it's encouraging to see the high single digit growth this quarter. Outlook certainly seems bullish for 4Q in '21. I guess when we think about '21, continuing this high single digit growth, I guess further one or two key drivers you see there, customer conversations I assume certainly trending positively, but would love just little more granularity on the outlook for next question on that side?

Look, we have developed our guidance on TAS assuming what we see today continues, and there is no reason -- again we see in the worst of the pandemic performed very well. So, certainly when things return to most stable environment, we will continue our high single digit growth trajectory where we are now, and so, there aren't any specific parts of the business. Now remember the data business is zero to low single digit growth and that's kind of very stable. The analytics and services business again was mid to high single digits, and continues so on the high end of that range. The real world business is just on fire to be frank. I mean it was before on fire I mean in a positive way, and firing on all cylinders, and it was already in very strong double digit territory before the pandemic. It continued to be solid double digit territory before the pandemic, and is now expected to continue to grow at that same pace. Technology continues to pick up as the deployments of OCE are well on their way. Going very well I might add, and all of that will start generating the license revenue. We expect not a huge portion of TAS business, but very nice revenue of nice margins. So, all of that will continue, and so, this four segments of our business and when you do that math and you look at the momentum, no, there is no reason to anticipate -- there is no big -- there is no one big good guy that will affect this company's growth rate, and there is no big bad guy that would have said that that's [indiscernible]. Andrew, you have any…

We are approaching the top of the hour. So, I was wondering do we want to squeeze in one more quickly, operator.

The question is from Shlomo Rosenbaum with Stifel.

Hi, thank you very much for squeezing me in at the end. I just want to piggyback out at the last question. Ari if you can talk a little bit about more just on the incumbent patients? One of point of time, you mentioned there were like 50,000 seats to deploy. Just like where you are? How long do you think this is going to take, and is there anything changing in terms of competitively, or is it really the same kind of run rates that you had talked about in prior earnings calls?

Yes, thank you, Shlomo. This OCS continued with exactly the same momentum that is moving about two thirds of time. As I mentioned in my introductory remarks, we have now since the beginning of the year won another 45 new clients, and that's now is total of 125 distinct clients. When we talk about the client, I mean it's one company. There are competitors out there that count five different wins with the same client as five. We count that as one. You mentioned 50,000. I think we are now -- correct me if I am wrong, Andrew, at 63 - 64,000.

Maybe just around 63, yes.

Yes, close to 65,000 users in deployment, and we expect that to continue to grow. That's a nice pipeline. Lots of conversations continue to go. So, the momentum here is unabated. No changes. Thank you, Shlomo. Thank you everyone.

Thanks very much. Thank you everyone, and thanks for taking the time to join us today. We look forward to speaking with you again on our fourth quarter 2020 earnings call, and as always, Jen and I will be available to take any follow-up questions you might have throughout the day.

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