Business Wire | Oct 20, 2020 07:04AM EDT

IQVIA Reports Third-Quarter 2020 Results, Raises Full-Year 2020 Guidance and Provides 2021 Outlook

Oct. 20, 2020

DANBURY, Conn. & RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Oct. 20, 2020--IQVIA Holdings Inc. ("IQVIA") (NYSE:IQV), a leading global provider of advanced analytics, technology solutions, and clinical research services to the life sciences industry, today reported financial results for the quarter ended September 30, 2020.

Third-Quarter 2020 Operating ResultsRevenue for the third quarter of $2,786 million increased 0.6 percent on a reported basis and was lower by 0.1 percent at constant currency, compared to the third quarter of 2019. Technology & Analytics Solutions (TAS) revenue of $1,207 million grew 10.2 percent reported and 9.2 percent on a constant currency basis. Research & Development Solutions (R&DS) revenue of $1,400 million was lower by 4.5 percent on a reported basis and by 5.1 percent at constant currency. Excluding the impact of pass throughs, R&DS revenue grew 2.6 percent year-over-year on a reported basis. Contract Sales & Medical Solutions (CSMS) revenue of $179 million was lower by 13.9 percent on a reported basis and by 14.4 percent at constant currency.

R&DS contracted backlog, including reimbursed expenses, grew 18.5 percent year-over-year to $21.7 billion at September 30, 2020. The company expects approximately $5.8 billion of this backlog to convert to revenue in the next twelve months, up from $5.4 billion at June 30, 2020. The third quarter contracted net book-to-bill ratio was 1.71x including reimbursed expenses and 1.42x excluding reimbursed expenses. For the last twelve months ended September 30, 2020, the contracted net book-to-bill ratio was 1.55x including reimbursed expenses and 1.45x excluding reimbursed expenses.

Third-quarter 2020 Adjusted EBITDA was $604 million, up 1.9 percent compared to the third quarter of 2019. GAAP net income was $101 million, and GAAP diluted earnings per share was $0.52. Adjusted Net Income was $318 million and Adjusted Diluted Earnings per Share was $1.63, up 1.9 percent compared to the third quarter of 2019.

"The IQVIA team continues to execute well in the current environment, once again delivering results above our financial targets, with revenue and profit metrics turning positive in the third quarter," said Ari Bousbib, chairman and CEO of IQVIA. "TAS has already returned to pre-COVID growth rates and R&DS is expected to reach double-digit growth in the fourth quarter. Demand remains robust, as evidenced by another record quarter of bookings in R&DS, setting the stage for an excellent 2021."

Year-to-Date 2020 Operating ResultsRevenue of $8,061 million for the first nine months of 2020 was lower by 1.6 percent reported and by 1.2 percent at constant currency, compared to the first nine months of 2019. TAS revenue of $3,433 million grew 4.9 percent reported and 5.6 percent at constant currency. R&DS revenue of $4,076 million was lower by 5.6 percent reported and by 5.4 percent at constant currency. CSMS revenue of $552 million was lower by 8.6 percent reported and by 8.3 percent at constant currency.

Adjusted EBITDA for the first nine months of 2020 was $1,649 million. GAAP net income was $160 million and GAAP diluted earnings per share was $0.82. Adjusted Net Income was $841 million and Adjusted Diluted Earnings per Share was $4.32.

Financial PositionAs of September 30, 2020, cash and cash equivalents were $1,464 million and debt was $12,339 million, resulting in net debt of $10,875 million. At the end of the third quarter of 2020, IQVIA's Net Leverage Ratio was 4.7x trailing twelve month Adjusted EBITDA.

Share RepurchaseWhen the COVID-19 outbreak became a pandemic in March, the company temporarily suspended share repurchase activity. Based on the company's performance during the pandemic, continued robust demand for its offerings, solid liquidity, and strong free cash flow performance, IQVIA is today lifting the temporary suspension of its share repurchase program. As of September 30, 2020, the company had approximately $1.0 billion of share repurchase authorization remaining.

Full-Year 2020 GuidanceFor the full year of 2020, the company is raising its guidance ranges as follows:

($ in millions, except per share data) Updated Prior^(1)

Revenue $11,100 - $11,000 - $11,250 $11,100

Adjusted EBITDA $2,335 - $2,295 - $2,360 $2,345

Adjusted Diluted EPS $6.25 - $6.35 $6.10 - $6.30

(1) Provided on Q2 2020 earnings call on July22, 2020

Fourth-Quarter 2020 GuidanceFor the fourth quarter of 2020, the company is providing guidance as follows:

($ in millions, except per share data) Guidance Growth vs. Prior Year

Revenue $3,040 - $3,190 5.0% - 10.2%

Adjusted EBITDA $685 - $710 6.7% - 10.6%

Adjusted Diluted EPS $1.93 - $2.03 10.9% - 16.7%

Guidance for the fourth quarter and full year of 2020 assumes that business conditions will continue to improve and that localized flare ups of COVID-19 will not have a material impact to fourth quarter results.

Full-Year 2021 OutlookFor the full year of 2021, the company expects revenue of between $12,300 million and $12,600 million, Adjusted EBITDA of between $2,725 million and $2,800 million, and Adjusted Diluted Earnings per Share of between $7.65 and $7.95. The company will provide more detailed full-year 2021 guidance on its fourth quarter earnings results call in mid-February 2021.

The company has developed this outlook based on the general assumption of continued recovery and return to normal business conditions in 2021. The company further assumes that there will not be another global wave of COVID-19 infection that would lead to public health policy decisions that could cause widespread business and healthcare disruptions, hampering the progress of sites reopening, patients returning to trials or other face-to-face interactions that are important to our business.

All financial guidance assumes foreign currency exchange rates at September 30, 2020 remain in effect for the periods forecasted.

Webcast & Conference Call DetailsIQVIA will host a conference call at 9:00 a.m. Eastern Time today to discuss its third quarter 2020 results and full-year 2020 and 2021 guidance. To listen to the event and view the presentation slides via webcast, join from the IQVIA Investor Relations website at http://ir.iqvia.com. To participate in the conference call, interested parties must register in advance by clicking on this link. Following registration, participants will receive a confirmation email containing details on how to join the conference call, including the dial-in and a unique passcode and registrant ID. At the time of the live event, registered participants connect to the call using the information provided in the confirmation email and will be placed directly into the call.

About IQVIAIQVIA (NYSE:IQV) is a leading global provider of advanced analytics, technology solutions and clinical research services to the life sciences industry. Formed through the merger of IMS Health and Quintiles, IQVIA applies human data science - leveraging the analytic rigor and clarity of data science to the ever-expanding scope of human science - to enable companies to reimagine and develop new approaches to clinical development and commercialization, speed innovation and accelerate improvements in healthcare outcomes. Powered by the IQVIA CORE(tm), IQVIA delivers unique and actionable insights at the intersection of large-scale analytics, transformative technology and extensive domain expertise, as well as execution capabilities. With approximately 68,000 employees, IQVIA conducts operations in more than 100 countries.

IQVIA is a global leader in protecting individual patient privacy. The company uses a wide variety of privacy-enhancing technologies and safeguards to protect individual privacy while generating and analyzing information on a scale that helps healthcare stakeholders identify disease patterns and correlate with the precise treatment path and therapy needed for better outcomes. IQVIA's insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures. To learn more, visit www.iqvia.com.

Cautionary Statements Regarding Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, our fourth quarter 2020 and full-year 2020 and 2021 guidance. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "expect," "assume," "anticipate," "intend," "plan," "forecast," "believe," "seek," "see," "will," "would," "target," similar expressions, and variations or negatives of these words. Actual results may differ materially from our expectations due to a number of factors, including, but not limited to, the following: business disruptions caused by natural disasters, pandemics such as the COVID-19 (coronavirus) outbreak and the public health policy responses to the outbreak, international conflicts or other disruptions outside of our control; our ability to accurately model or forecast the impact of the spread and/or containment of COVID-19, among other sources of business interruption, on our operations and financial results; most of our contracts may be terminated on short notice, and we may lose or experience delays with large client contracts or be unable to enter into new contracts; the market for our services may not grow as we expect; we may be unable to successfully develop and market new services or enter new markets; imposition of restrictions on our use of data by data suppliers or their refusal to license data to us; any failure by us to comply with contractual, regulatory or ethical requirements under our contracts, including current or changes to data protection and privacy laws; breaches or misuse of our or our outsourcing partners' security or communications systems; failure to meet our productivity or business transformation objectives; failure to successfully invest in growth opportunities; our ability to protect our intellectual property rights and our susceptibility to claims by others that we are infringing on their intellectual property rights; the expiration or inability to acquire third party licenses for technology or intellectual property; any failure by us to accurately and timely price and formulate cost estimates for contracts, or to document change orders; hardware and software failures, delays in the operation of our computer and communications systems or the failure to implement system enhancements; the rate at which our backlog converts to revenue; our ability to acquire, develop and implement technology necessary for our business; consolidation in the industries in which our clients operate; risks related to client or therapeutic concentration; government regulators or our customers may limit the scope of prescription or withdraw products from the market, and government regulators may impose new regulatory requirements or may adopt new regulations affecting the biopharmaceutical industry; the risks associated with operating on a global basis, including currency or exchange rate fluctuations and legal compliance, including anti-corruption laws; risks related to changes in accounting standards; general economic conditions in the markets in which we operate, including financial market conditions and risks related to sales to government entities; the impact of changes in tax laws and regulations; our ability to successfully integrate, and achieve expected benefits from, our acquired businesses; and risks and uncertainty associated with providing guidance and forecasts earlier than is our customary practice. For a further discussion of the risks relating to the combined company's business, see the "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC, as such factors may be amended or updated from time to time in our subsequent periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We assume no obligation to update any such forward-looking statement after the date of this release, whether as a result of new information, future developments or otherwise.

Note on Non-GAAP Financial MeasuresNon-GAAP results, such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are presented only as a supplement to the company's financial statements based on GAAP. Non-GAAP financial information is provided to enhance understanding of the company's financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP, and non-GAAP measures should not be considered in isolation from, or as a substitute analysis for, the company's results of operations as determined in accordance with GAAP. Definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measures are provided within the schedules attached to this release. The company uses non-GAAP measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a more meaningful indicator of the underlying operating performance of the business. For example, the Company excludes all the amortization of intangible assets associated with acquired customer relationships and backlog, databases, non-compete agreements and trademarks, trade names and other from non-GAAP expense and income measures as such amounts can be significantly impacted by the timing and size of acquisitions. Although we exclude amortization of acquired intangible assets from our non-GAAP expenses, we believe that it is important for investors to understand that revenue generated from such intangibles is included within revenue in determining net income attributable to IQVIA Holdings Inc. As a result, internal management reports feature non-GAAP measures which are also used to prepare strategic plans and annual budgets and review management compensation. The company also believes that investors may find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures are not a substitute for GAAP disclosures.

Our full-year 2020 and 2021 guidance measures (other than revenue) are provided on a non-GAAP basis because the company is unable to reasonably predict certain items contained in the GAAP measures. Such items include, but are not limited to, acquisition and integration related expenses, restructuring and related charges, stock-based compensation and other items not reflective of the company's ongoing operations.

Non-GAAP measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to the company, many of which present non-GAAP measures when reporting their results. Non-GAAP measures have limitations as an analytical tool. They are not presentations made in accordance with GAAP, are not measures of financial condition or liquidity and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. Non-GAAP measures are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider such performance measures in isolation from, or as a substitute analysis for, the company's results of operations as determined in accordance with GAAP.

IQVIAFIN



Table 1

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(preliminary and unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

(in millions, except per share 2020 2019 2020 2019data)

Revenues $ 2,786 $ 2,769 $ 8,061 $ 8,193

Costs of revenue, exclusive of 1,800 1,852 5,328 5,399 depreciation and amortization

Selling, general and 460 395 1,298 1,250 administrative expenses

Depreciation and amortization 319 299 943 888

Restructuring costs 20 19 50 45

Income from operations 187 204 442 611

Interest income (1) (3) (4) (7)

Interest expense 100 114 314 338

Loss on extinguishment of debt - 24 12 24

Other income, net (14) - (59) -

Income before income taxes andequity in earnings of 102 69 179 256 unconsolidated affiliates

Income tax (benefit) expense (3) (1) 9 48

Income before equity inearnings of unconsolidated 105 70 170 208 affiliates

Equity in earnings (loss) of 3 (1) 8 (1) unconsolidated affiliates

Net income 108 69 178 207

Net income attributable to (7) (12) (18) (32) non-controlling interests

Net income attributable to $ 101 $ 57 $ 160 $ 175 IQVIA Holdings Inc.

Earnings per share attributable to common stockholders:

Basic $ 0.53 $ 0.29 $ 0.84 $ 0.89

Diluted $ 0.52 $ 0.29 $ 0.82 $ 0.87

Weighted average common shares outstanding:

Basic 191.3 194.5 191.3 195.9

Diluted 194.9 199.0 194.9 200.5

Table 2

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(preliminary and unaudited)

(in millions, except per share data) September December 30, 2020 31, 2019

ASSETS

Current assets:

Cash and cash equivalents $ 1,464 $ 837

Trade accounts receivable and unbilled services, net 2,414 2,582

Prepaid expenses 165 138

Income taxes receivable 78 56

Investments in debt, equity and other securities 79 62

Other current assets and receivables 445 451

Total current assets 4,645 4,126

Property and equipment, net 452 458

Operating lease right-of-use assets 490 496

Investments in debt, equity and other securities 78 65

Investments in unconsolidated affiliates 85 87

Goodwill 12,363 12,159

Other identifiable intangibles, net 5,222 5,514

Deferred income taxes 125 119

Deposits and other assets 377 227

Total assets $ 23,837 $ 23,251

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued expenses $ 2,461 $ 2,512

Unearned income 1,188 1,014

Income taxes payable 101 108

Current portion of long-term debt 144 100

Other current liabilities 245 211

Total current liabilities 4,139 3,945

Long-term debt 12,195 11,545

Deferred income taxes 429 646

Operating lease liabilities 387 396

Other liabilities 580 456

Total liabilities 17,730 16,988

Commitments and contingencies

Stockholders' equity:

Common stock and additional paid-in capital, 400.0shares authorized at September 30, 2020 and December31, 2019, $0.01 par value, 254.5 shares issued and 11,070 11,049 191.7 shares outstanding at September 30, 2020; 253.0shares issued and 192.3 shares outstanding atDecember 31, 2019

Retained earnings 1,158 998

Treasury stock, at cost, 62.8 and 60.7 shares atSeptember 30, 2020 and December 31, 2019, (6,065) (5,733) respectively

Accumulated other comprehensive loss (317) (311)

Equity attributable to IQVIA Holdings Inc.'s 5,846 6,003 stockholders

Non-controlling interests 261 260

Total stockholders' equity 6,107 6,263

Total liabilities and stockholders' equity $ 23,837 $ 23,251

Table 3

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(preliminary and unaudited)

Nine Months Ended September 30,

(in millions) 2020 2019

Operating activities:

Net income $ 178 $ 207

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 943 888

Amortization of debt issuance costs and discount 13 10

Stock-based compensation 69 87

(Earnings) loss from unconsolidated affiliates (8) 1

Gain on investments, net (17) -

Benefit from deferred income taxes (160) (154)

Changes in operating assets and liabilities:

Change in accounts receivable, unbilled services and 328 (167) unearned income

Change in other operating assets and liabilities (137) (38)

Net cash provided by operating activities 1,209 834

Investing activities:

Acquisition of property, equipment and software (440) (445)

Acquisition of businesses, net of cash acquired (118) (461)

Purchases of marketable securities, net (8) (2)

Investments in unconsolidated affiliates, net of 8 3 payments received

Investments in equity securities (2) (10)

Other - 5

Net cash used in investing activities (560) (910)

Financing activities:

Proceeds from issuance of debt 1,591 1,900

Payment of debt issuance costs (33) (47)

Repayment of debt and principal payments on capital (792) (875) lease obligations

Proceeds from revolving credit facility 1,250 1,710

Repayment of revolving credit facility (1,610) (1,930)

(Payments) proceeds related to employee stock option (43) 15 plans

Repurchase of common stock (346) (679)

Distributions to non-controlling interest, net (16) (6)

Contingent consideration and deferred purchase price (20) (21) payments

Net cash (used in) provided by financing activities (19) 67

Effect of foreign currency exchange rate changes on (3) (19) cash

Increase (decrease) in cash and cash equivalents 627 (28)

Cash and cash equivalents at beginning of period 837 891

Cash and cash equivalents at end of period $ 1,464 $ 863

Table 4

IQVIA HOLDINGS INC. AND SUBSIDIARIES

NET INCOME TO ADJUSTED EBITDA RECONCILIATION

(preliminary and unaudited)

Three Months Nine Months Ended Ended

September 30, September 30,

(in millions) 2020 2019 2020 2019

Net Income Attributable to IQVIA $ 101 $ 57 $ 160 $ 175 Holdings Inc.

(Benefit from) provision for income (3) (1) 9 48 taxes

Depreciation and amortization 319 299 943 888

Interest expense, net 99 111 310 331

(Income) loss in unconsolidated (3) 1 (8) 1 affiliates

Income from non-controlling interests 7 12 18 32

Deferred revenue purchasing accounting - 3 1 8 adjustments

Stock-based compensation 33 27 69 87

Other (income) expense, net (3) 5 (35) 23

Loss on extinguishment of debt - 24 12 24

Restructuring and related charges 25 19 65 45

Acquisition and integration related 29 36 105 96 charges

Adjusted EBITDA $ 604 $ 593 $ 1,649 $ 1,758



Table 5

IQVIA HOLDINGS INC. AND SUBSIDIARIES

NET INCOME TO ADJUSTED NET INCOME RECONCILIATION

(preliminary and unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions, except per share 2020 2019 2020 2019data)

Net Income Attributable to IQVIA $ 101 $ 57 $ 160 $ 175 Holdings Inc.

(Benefit from) provision for (3) (1) 9 48 income taxes

Purchase accounting amortization 226 226 691 676 ^(1)

(Income) loss in unconsolidated (3) 1 (8) 1 affiliates

Income from non-controlling 7 12 18 32 interests

Deferred revenue purchasing - 3 1 8 accounting adjustments

Stock-based compensation 33 27 69 87

Other (income) expense, net (3) 5 (35) 23

Loss on extinguishment of debt - 24 12 24

Royalty hedge gain - - - 6

Restructuring and related charges 25 19 65 45

Acquisition and integration 29 36 105 96 related charges

Adjusted Pre Tax Income $ 412 $ 409 $ 1,087 $ 1,221

Adjusted tax expense (84) (77) (223) (250)

Income from non-controlling (7) (12) (18) (32) interests

Minority interest effect in (3) (2) (5) (6) non-GAAP adjustments ^(2)

Adjusted Net Income $ 318 $ 318 $ 841 $ 933



Adjusted earnings per shareattributable to common stockholders:

Basic $ 1.66 $ 1.63 $ 4.40 $ 4.76

Diluted $ 1.63 $ 1.60 $ 4.32 $ 4.65

Weighted average common shares outstanding:

Basic 191.3 194.5 191.3 195.9

Diluted 194.9 199.0 194.9 200.5

(1)

Reflects all the amortization of acquired intangible assets.

(2)

Reflects the portion of Q2 Solutions' after-tax non-GAAP adjustments attributable to the minority interest partner.

^ ^Reflects all the amortization of acquired intangible assets.(1)

^ ^Reflects the portion of Q2 Solutions' after-tax non-GAAP adjustments(2) attributable to the minority interest partner.

Table 6

IQVIA HOLDINGS INC. AND SUBSIDIARIES

CALCULATION OF GROSS AND NET LEVERAGE RATIOS

AS OF SEPTEMBER 30, 2020

(preliminary and unaudited)

(in millions)

Gross Debt, net of Original Issue Discount, as of September 30, 2020

$

12,339

Net Debt as of September 30, 2020

$

10,875

Adjusted EBITDA for the twelve months ended September 30, 2020

$

2,291

Gross Leverage Ratio (Gross Debt/LTM Adjusted EBITDA)

5.4x

Net Leverage Ratio (Net Debt/LTM Adjusted EBITDA)

4.7x

View source version on businesswire.com: https://www.businesswire.com/news/home/20201020005345/en/

CONTACT: Andrew Markwick, IQVIA Investor Relations (andrew.markwick@iqvia.com) +1.973.257.7144 Tor Constantino, IQVIA Media Relations (tor.constantino@iqvia.com) +1.484.567.6732