Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Fourth 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. Thank you. I would now 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 fourth quarter and full year 2020 earnings call. With me 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; and Nick Childs, Senior Vice President, Financial Planning and Analysis. Today, we will be referencing a presentation that e -- that will be visible during this call for those of you on our webcast. This presentation will also be available on the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. Now, you may have noticed that when we issued our press release this morning, we inadvertently missed the quarterly P&L due to an administrative issue. We apologize for this error. This P&L will be made available in our slide presentation and that will be posted to our website momentarily. 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. Thanks for joining our fourth quarter and full year 2020 earnings call. We will review how we close 2020 and discuss 2021 financial guidance. I’m pleased to report we finished the year with a very strong quarter. We delivered double-digit growth in all key financial metrics and once again reported results above our financial targets. This is although more remarkable since last year’s fourth quarter was so strong. As you know, through all these difficulties here and as we navigated through the pandemic, we try to be as transparent as possible and provide visibility to our expected financial performance. In such highly unusual circumstances, the default reaction would normally be to withdraw guidance and watch from the sidelines, but as you know, we tried our best to share with you what we saw. We did the same at the end of the third quarter when we decided to provide our 2021 outlook as soon as we had some visibility, which was a full quarter earlier than usual. Today, this outlook has become clearer and we’ve decided to update and raise that guidance. Let’s start by reviewing our fourth quarter results. Revenue for the fourth quarter came in at $3,298 million which was $108 million above the high end of our guidance range. A little over 70% of these beats came from strong organic performance, less than 30% from favorable foreign exchange. Revenue growth was 13.9% on a reported basis and 12.2% at constant currency. Fourth quarter adjusted EBITDA of $735 million grew 14.5%, reflecting our revenue growth and productivity measures. The $25 million beat above the high end of our guidance range was entirely due to the stronger organic revenue performance. Fourth quarter adjusted diluted EPS of $2.11 grew 21.3%. The beat here…

Thanks, Ari, and good morning, everyone. As Ari mentioned, this was a strong quarter to close the year. Let’s start by reviewing revenue. Fourth quarter revenue of $3,298 million grew 13.9% on a reported basis and 12.2% at constant currency. Revenue for the full year was $11,359 million, which was up 2.4% reported and 2.3% at constant currency. Technology & Analytics Solutions revenue for the fourth quarter of $1,425 million increased 17.4% reported and 15.1% at constant currency. The sequential bump in growth this quarter versus the 9.2% growth in the third quarter was due to the COVID-related work that Ari mentioned. Full year Technology & Analytics Solutions revenue was $4,858 million, up 8.3% reported and 8.1% at constant currency. R&D Solutions fourth quarter revenue of $1,684 million was up 14.5% at actual FX rates and 13.2% at constant currency. Pass-throughs were a tailwind of 220 basis points to fourth quarter R&DS revenue growth, due entirely to COVID work. But you should note that R&DS delivered double-digit organic growth on both the services and 606 basis, again strong performance, especially considering the tough comparison to the fourth quarter of 2019, when organic service revenue also grew at a double-digit rate. For the full year R&D Solutions revenue was $5,760 million, essentially flat on both the reported and constant currency basis. Excluding the impact of pass-throughs R&D Solutions full year reported revenue grew 2.2%. CSMS revenue of $189 million was down 10% reported and 11.9% on a constant currency basis in the fourth quarter. For the full year CSMS revenue of $741 million was down 9% at actual FX rates and 9.2% at constant currency. Demand for field reps continues to be soft in the current environment. As a result, business development activity is slowed. But the businesses performed modestly better…

[Operator Instructions] Your first question comes from Robert Jones with Goldman Sachs. Your line is open.

Great. Good morning. Thanks for taking my questions. I guess maybe just on TAS, it seems like record constant currency growth in the quarter from the segment, despite the advanced management business, I’m assuming, not really coming fully back. And if I heard you correctly, Ari, it sounded like a good portion of the acceleration was driven by real world evidence for the government. I’m just curious how sustainable some of that work might be into 2021 kind of what’s assumed in this healthy guidance of 9% to 12% in TAS? And then just any thoughts on the other pieces of TAS outside of real world evidence and the guidance would be helpful?

Yeah. Thank you. Look, TAS, in general, has been more insulated from the impacts of COVID during 2020 than R&D or CSMS, right? So, all data, analytics, consulting, real world business were pretty much unaffected, and as you know noted, the only pockets there that we had -- where we had issues were the events management business, which essentially came to a halt. Now, in the fourth quarter the underlying TAS business return to normal growth rate. It had already returned to normal growth rates in the third quarter, I think, we posted 9.2% a constant currency growth in the third quarter. The sequential increase in that growth rate in the fourth quarter, which is about, let’s call it, 600 basis points was entirely due, as you know noted, to the incremental work from COVID-related activities. So we expect this incremental contribution to continue about the same pace into the first quarter. Now, similar to R&DS, the COVID work in TAS has been faster execution and the guidance that we give you for 2021 does include the COVID work that we have visibility to, but I can tell you, there is no COVID work in the second half of 2021 that’s built into our guidance. It’s still early in the year, so this could change, right? It’s not going to stop abruptly. But right now, the bulk of what we see in terms of COVID work in TAS for 2021 is in the first quarter, similar as in the fourth quarter and a little bit of sales in the second quarter and that’s it. What is that COVID work, by the way? It’s mainly related to projects for governments, essentially using our people and analytics to support authorities in the management of the crisis. The real work -- real world work for the FDA that I described in my introductory remarks. We also performing large scale diagnostic testing and monitoring of COVID patience for other governments, Europe and Asia, around the world. And we’re assuming that’s going to go away certainly by the middle of the year in our guidance. But again, that’s -- that could be -- that could prove to be and I have an expectation -- again, it’s not built in the guidance, but an expectation that we will continue to have similar type of work as we’ve developed capabilities and really a new set of offerings which we intend to go-to-market going forward.

No. That’s helpful, Ari. And if I could just ask one on the R&DS side, similar question. I know that the COVID work in the past or implications has been kind of a moving target, but just similar thoughts would be appreciated on how you’re thinking about COVID versus non-COVID-related work in the R&DS guidance for 2021.

Yes. So, again, just as in TAS, COVID work did contribute significantly to R&DS growth. Obviously, I mean, look, mid double-digit growth in TAS is not the new normal. We’ve said TAS growth accelerated, but it accelerated to the high single-digit growth that we always anticipated pre-pandemic. If you go back to the guidance we gave, the long-term guidance we gave in June of 2019. We did expect TAS to reach high single-digit 8%, 9% and eventually 10%. But that’s the underlying TAS growth business. Now, with R&DS, it also, of course, would be misleading to look at the R&DS business, and say, that’s the normal mid double-digit growth. Obviously, it’s hard to -- it’s harder to determine what would have been without the COVID work, because without the COVID work, there would have been other business that had essentially been pushed to the right, right, in our MDS, as you can understand. But by the way, even absence the large COVID trials that we’ve been a privilege to work on, we would have had very strong underlying R&DS services growth in the fourth quarter as well. Now, we expect COVID work to be with us through 2021 and maybe also into 2022, because there’s a need for vaccines for multiple manufacturers to meet global demand. There are new vaccines that are being developed for variants of the virus. There are alternative vaccines that are needed in case of adverse safety events or quality issues or manufacturing delays. There are novel treatment programs that are targeted at specific populations and conditions. And of course, there are post-approval commitments to regulators, all of which do require continued R&D work. Now, look, we have a large backlog to execute, 22.6 billion at the end of 2020. We are, look, we have got the ability to execute on this existing backlog and that ability will continue to improve. Site startup and patient recruitment continues to improve. The next 12 month revenue from backlog has increase. So, all of this provides the basis for our 2021 R&DS revenue guide guidance. The pipeline of opportunities is very strong. If we exclude COVID opportunities, our pipeline is showing good growth. For example, the oncology pipeline is in the mid double-digit growth. The CNS pipeline is up low-double digits to at least 12%, 13%. Cardiovascular and diabetes pipe is growing strong double digits, very, very strong double digits. So we know if your question is suggesting that what happens post-COVID? We’re not falling off a cliff. We have -- the vast majority of the backlog is not COVID, obviously. If you look at our bookings in 2020, every quarter except for the first quarter, obviously, COVID-related work represented between 15% and 20% of our services bookings. And for the year, I think, it was exactly 15%, 1-5. So we continue to book very, very solid good business across all therapy areas and we expect our strong growth in R&DS to continue even post-COVID. Thank you.

Great. Thanks, Ari.

If we can move to next question in the queue please, Operator?

Yeah. Your next question comes from Tycho Peterson with JPMorgan. Your line is open.

Hey. Thanks. Ari, start a follow up on the first question, but I think previously you talked about real world evidence actually picking up as the pandemic lingers, just given that, you need to understand why people have more severe symptoms, a lot of vaccines were rushed to market. So I’m just curious as to why you think that piece will drop off after the first quarter given there seems to be a growing need and most of your peers are talking about it being a pretty strong year for real world evidence?

Yeah.

Yeah. Go ahead, Andrew. Yeah. Yeah.

Yeah. I guess, I mean, Tycho, I think, Ari was alluding to earlier. I think he said, look, it’s still early in the year and this could change it. And then we want to get ahead of ourselves and bake anything into our guidance, but we don’t have line of sight into our contracts. It’s obviously a fast moving environment with the COVID work and its fast execution and we saw very good growth in the first quarter and we expect that to repeat in the second quarter of TAS. Ari mentioned in his prepared remarks at the beginning, obviously, we’re doing work with the FDA and we’re looking at how COVID is impacting the population and what kind of treatments and therapies have people been on or drug regimen have people been on, I mean, their symptoms maybe aren’t as severe as other patients. And so we’ve obviously got a seat at the table here. We’re talking to government and I think that means we’re becoming kind of the company of choice with other governments around the world. But I think we just don’t want to get ahead of ourselves here and think of anything else. Ron, if you have?

Yeah. Yeah. I would just add, Tycho, that we’ve included in our guidance, what we have direct visibility to, but this is a very fast moving environment and things pop up all the time. So it could change.

I mean, look, yeah. It’s just like. We’re delighted to have this COVID work, right? I mean, we are super excited, because the broader picture here strategically is that these crises, as bad as it was, for everyone. In terms of our company, we’ve been talking -- it’s almost like this company existed for situations like this. All of a sudden, the sets of capabilities that we’ve spent so much effort and investment developing, proved to be exactly what was needed to help our clients and to help governments, whether it’s on the commercial side, on the real world side or on the R&DS side. And our relationship with clients has been strengthened. This -- our sets of capabilities have been demonstrated and we expect to continue to capture an ever bigger share of spend going forward into the very long-term in the life sciences industry. And we really are very excited by the pipeline of opportunities, again both on the commercial side and on the R&DS side.

Okay. That’s helpful. And then just two quick follow ups, I’m just curious on recovery trends, where you stand in terms of site accessibility. I think it was 70% coming out of 3Q. So where does that stand today? And then, separately, I didn’t hear you mentioned OCT. I’m just curious how we should think about that rollout and any potential synergies with OCE? Thanks.

What was your first -- your first -- what was the question.

First question was on site.

Yeah. First question was on site access and site access actually remained fairly close to the 70% number.

Right.

We’ve just learned ways to work around it. Although, we would expect it to improve gradually.

Yeah. I mean, look, in the first -- when the trough in the -- at the worst moment of the crisis, we were like less than 20% of site access and that really created huge headwinds for our R&DS business, as you know. Second quarter earnings call, we told you that we would -- we had gone up to 53% site access. And at the end of the third quarter, we were at about 70% site access. And the kind of bad news good news here that we have not improved that metric, it remained at 70%. However, we’ve learned to work around that and the reason why it hasn’t gone back to 100%, frankly, is because of all these new flare ups, et cetera. But the good news here is that it’s been all right, because the -- it’s not so much we found with the number of sites, but it’s really other metrics. The main metric we looked at the beginning of the pandemic was site access, because again, without that you’ve got nothing. But we found out that there is a critical mass of site access, which again, we think is about the level where we are now, whereby our remote monitoring capabilities then prevent material disruption to the delivery of our services in general. We’ve got site networks, relationships, we can work around sites that are not yet up and running for clinical research and today we can pivot much faster to remote monitoring versus when this pandemic hit. Now, if you look at startup activity, which is another important metric that we were looking at, which had also come to a halt, is now back to baseline levels pre-pandemic and that’s extremely good news. And there hasn’t been any major change from this due to the increases in COVID cases or the new variants of the virus. So startup activity, people have learned to work with the virus and it’s essentially back to pre-pandemic levels and we don’t see that changing. Patient recruitment, another very important metric. Obviously, here we lag site startup, but essentially those trends are very strong and the patients are returning to sites essentially close to pre-pandemic levels. So, again, we’re very encouraged by that. You have another question on…

Orchestrated clinical trials, the OCT rollout and…

OCT.

… how do you think about that? Yeah.

Yeah. Yeah. Well, I mentioned that, in my prepared remarks that our virtual trials, technology has been really brought to the front here in the context of COVID. If you step back and think about what OCT is, there’s really four blocks. There is the digital site suite, which you don’t focus on the pin -- on the site portal, payments, ETMF. Then there is a digital patient suite with -- what the patient has to go through with e-consent, eCOA, that’s where the virtual trial essentially is the study hub. Then you have the digital trial management suite with the CTMS, risk-based monitoring and then you have the compliance suite with RIM Smart and Vigilant. So the technologies in our site suite, the patient suite and the compliance suite went live during 2020. And the technologies in our trial management suite will be going live shortly, most likely end of the first quarter, beginning of the second quarter of this year. So, again, all these four suites, the site, the patient and the compliance, they are all went live during 2020 and the trial management suite will be live to be probably March, April timeframe this year. And we are seeing very strong interest on clients. We have seen an increase in RFP activity for OCT platform, not just for individual suites or standalone products, but for the whole platform. We are seeing interest on all customer segments large, mid and AVP [ph] and stay tuned. We’ll report more on that. But the answer to your question is, we are live for most of the products and it will be fully live and operational by the beginning of the second quarter.

Okay. That’s very helpful. Thank you.

Thank you.

Your next question comes from Ricky Goldwasser with Morgan Stanley. Your line is open.

Yeah. Hi. Good morning. So backlog conversion clearly improved even when we back the COVID benefit -- COVID project benefit. So when we think about 2021, when should we expect the backlog conversion to be back to that 7.6% over the pre-COVID level? Should we think about it as sort of second half of 2021 or more kind of like spilled to 2022? And then the second question, when are you talking about patient recruitment and the fact that you’re starting to see patients are coming back to the sites at pre-COVID levels? Are you seeing any impact on how on trial designs, I mean, clearly right now still a relatively low percentage of the population is vaccinated. But as we see more people vaccinated would that impact how you think about trial design and potentially the pace of recruiting new patients to trial.

So, Ricky, the line was pretty bad there. We were struggling to hear you a little bit. I think your second part of the question was around patient recruitment and are we seeing -- expecting I guess pick up in terms of the population getting back and [Technical Difficulty] and people returning besides. I think, from what we are seeing…

So, actually the question is, if we think about it, are -- is individuals are vaccinated. If that sort of change how you guys think about designing trials? If someone has a COVID vaccine, does this mean that they might be compromised and can’t participate in trials?

No.

I don’t think so. No. No.

No. I think it’s all part of the general recovery that we’re seeing and…

Yeah. No.

But the way we are seeing.

It doesn’t change anything to the design of the trials. I mean, it just another element that allows a patient to access offices sites or interact with healthcare professionals. But would be -- would have been the same with a negative test or a -- or somebody with antibodies. I mean, that doesn’t change anything to the design, no. And then the second -- the first...

What was first part of the question, Ricky, I was -- we were really struggling to hear on our side?

So the first one was, if you think about backlog conversion, clearly backlog conversion…

Oh! Oh! Yeah.

… in the quarter even when we excluding COVID. So when do you expect to return to the pre-COVID levels that 7.6%, is -- should we think about it when we model the second half of 2021 or in early 2022 time -- timeline?

Look, like, the backlog conversion is a really tough statistic to model out, because it depends on backlog burn, because it depends on how much we’re adding to the backlog in any quarter. So what we’ve tried to do is provide guidance to tell you how much we think it’s going to burn during the course of the year, the next 12 months revenue and allow you to take it from there. Yes, the COVID work does burn quicker than the other work. There’s no question about that. But we don’t guide to a particular backlog conversion rate, because it’s just too difficult to do, because it depends also on how much you happen to be booking, if you’re booking a lot, like, we have been recently than obviously the backlog goes up and the burn rate goes down. But that’s not a bad thing. So, yes, I would expect you would see a faster burn of the COVID-related work, which we mentioned was about 15% of our service bookings in 2020 and a more normal rate of burn on the rest of the backlog. And I think it still remains to be seen how much additional COVID-related work we’re going to book as we go through 2021. That’s still a question mark.

Thanks. Thanks, Ricky. I think if we can move to the next question in the queue, please.

Your next question comes from Eric Coldwell with Baird. Your line is open.

Thanks very much. I have one technical question and then more strategic one. So, first off, I’m getting a couple of inbound asks on the FX update. I’m just curious if you could maybe clarify, be more clear for us people who missed it. The FX guidance for 2021, is it plus 200 bps tailwind for the full year in total or was the update today that that’s an incremental 200 bps since you first gave 2021 guidance a few months ago?

So when you look at the year-over-year FX impact, when you’re looking at the growth rate, ultimately, if you’re trying to take our reported guidance and get to a constant currency guidance, it’s…

Yeah.

… 100-basis-point tailwind year-over-year. Similar to that in TAS and CSMS and a little bit lower in R&D, maybe about 100 basis points in R&D.

No. He is asking versus the previous guidance…

Versus the previous…

Yeah. That would be the follow on is, what was embedded in the guidance a few months back, so we could just see the delta?

Previous guidance was 150.

Yeah.

Yeah. So...

Yeah. Yeah. So, previous guidance on 100 basis points and this will goes to the 200 basis points tailwind.

Perfect. Thank you very much for that. A little more interesting question, really positive trends here in the cash flow and I know it’s been -- Ron, I know, it’s been a big focus for you. We’ve seen some nice improvement here over the last few quarters. I’m just -- I am hoping you can maybe break this into two pieces. First off, could you give us anything a little more specific or precise on what’s really driving the improvement operationally number one? And number two, perhaps parse out from that if maybe some of the timing on the COVID vaccine work and the higher pass-through tailwind that you did finally get here in the fourth quarter, was that -- how much of a contribution was that versus, let’s say, core underlying fundamental improvement?

Look, it’s good question. The -- as you can see from our cash flow statement, the principal driver, in fact, pretty much the whole driver of our improvement in cash flow -- free cash flow in 2020 was due to improve collections performance. And that’s a combination of collecting quicker, but also billing in a more timely fashion and structuring contracts, so that we built earlier. And part of our collections effort, which we put a lot of focus on was bringing down our overdue receivables. We took our eye off the ball on that a little bit and put a lot of focus on that and we’re able to substantially put a dent in our overdue receivables, which has helped quite a bit. And I think a lot of the processes we put in place, all of them should persist in the 2021. We have to continue to put emphasis on it. But we’ve improved our processes and we expect that to continue. Now you did identify something that’s important, which is that the COVID-related work did bring some benefit in terms of customer advances and being able to bill in advance that helped our 2020 cash flow. I would -- so when you look at our 2020 cash flow, as a percentage of adjusted net income, it was unusually high. We target more in the 80% to 90% free cash flow as a percentage of adjusted net income in a normal year. But cash flow is very lumpy, so it bounces around. We had a very strong year in 2021 amidst as a percentage of net income, excuse me, 2020 as a percentage of net income that probably won’t be quite as strong in 2020. But fundamentally, we’ve improved quite a lot in terms of cash conversion and you should see continued benefit from that going into the future.

That’s very helpful. Thanks, guys.

Thanks. I think we are coming out close to the hour. But if we can take one more question, please.

Absolutely. Your last question comes from Dan Brennan with UBS. Your line is open.

Great. Thank you. Thanks for taking the question. I guess a two-part question. One was on OCE. So, obviously, continued progress there. I’m just wondering when do we begin to see OCE show up in revenue and then you talked about the timetable that was discussed deployed and then you begin to generate traction on that with 140 wins to-date, any color about what’s baked in the 2021 guidance and if not kind of when do we see it?

Yeah. So, again, we continue to see very good traction in the marketplace. Obviously it takes time to deploy. We had 60 client wins in 2020 and I should point out, obviously, despite the difficult environment created by the pandemic, we continue to sell. Total 140 clients win since launch. We keep winning two out of three times against competition. We are deploying large clients which we disclose before. We have a global deployment with Roche. We have global deployment with Novo Nordisk International Operations, AstraZeneca U.S. deployment as well. We have another top 15 pharma deployment for a country in Asia and other top 15 pharma companies that’s globally deploying for the medical teams. So we already have, I mean, is -- I’m not sure if we should disclose this number, but we do have tens of thousands of users already. Now that did move the needle on $12.9 billion revenue company, no, not in 2021, but it is providing very significant growth. And certainly, it is an area where we expect strong margin drop through over time as we complete implementations. As you know, it’s a -- the drop through becomes much more attractive when revenue is license driven and we’re starting to see that, but it will continue to increase as we complete deployments and implementation. Now, we continue to sell. So that also will require implementation. And the strategy overall is the same as for any technology company, which is the land and expand model, and as you know, we resolve the HCP engagement management, I mentioned it. We saw the HCP compliance. We are launching additional modules and continue to expand. So it’s not just OCE, OCE was kind of the centerpiece and then it continues to grow. Ron, anything?

Yeah. Yeah. I just wanted to say, I think, sometimes investors have a tendency to equate our tech business with OCE, because we’ve all talked about it a lot and we have a competitor in that space that talks about it a lot as well. But we have a much broader tech business, as Ari was saying, then just that. I mean, across performance management, compliance, information management, social media, we -- your payer provider and then we have a growing clinical tech segment. So, just want to emphasize that the tech is a lot more than just OCE that for IQVIA.

Yeah. Thank you.

Thanks very much, Dan. So we’re at the top of the hour now. So thanks, everyone, for taking the time to join us today and we look forward to speaking with you again on our first quarter 2021 earnings call and we’ll be available for the rest of the day to take any follow up questions that you might have. Thank you everyone.

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