DANBURY, Conn. & RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--IQVIA Holdings Inc. (“IQVIA”) (NYSE:IQV), a leading global provider of advanced analytics, technology solutions, and contract research services to the life sciences industry, today reported financial results for the quarter ended March 31, 2019.
First-Quarter 2019 Operating Results
Revenue for the first
quarter of $2,684 million increased 7.2 percent at constant currency and
4.7 percent on a reported basis, compared to the first quarter of 2018.
Technology & Analytics Solutions (TAS) revenue of $1,075 million grew
12.9 percent at constant currency and 9.1 percent reported. Research &
Development Solutions (R&DS) revenue of $1,416 million grew 5.3 percent
at constant currency and 3.7 percent reported. This included a
year-over-year decline in pass throughs, resulting in over 300 basis
points of headwind to R&DS constant currency revenue growth. Contract
Sales & Medical Solutions (CSMS) revenue of $193 million declined 7.0
percent at constant currency and 9.4 percent reported.
R&DS contracted backlog grew 16.0 percent year-over-year to $17.58 billion at March 31, 2019. At the end of the quarter, the company became aware of a client’s decision to end a significant trial. The project wind down is being assessed and contractual arrangements are still in process. However, termination of this clinical trial was announced publicly by the client and, accordingly, the company is making an estimated adjustment to backlog of $390 million, comprised of $160 million related to services and $230 million related to pass throughs. The unusually high proportion of pass throughs is unique to this therapy area and is not representative of the profile of IQVIA’s overall backlog. This adjustment results in a backlog of $17.19 billion, of which approximately $4.9 billion is expected to convert to revenue in the next twelve months. R&DS contracted net book-to-bill, excluding pass throughs and including the above adjustment, is 1.51x for the twelve months ending March 31, 2019.
First-quarter 2019 Adjusted EBITDA was $587 million. GAAP net income was $58 million, and GAAP diluted earnings per share was $0.29. Adjusted Net Income was $309 million, and Adjusted Diluted Earnings per Share was $1.53, up 14.2 percent compared to the first quarter of 2018.
“We began the year with another quarter of strong financial and operational performance,” said Ari Bousbib, chairman and CEO of IQVIA. “We are particularly pleased with the sustained acceleration of our top-line growth and the continued market penetration of our analytics and technology-enabled offerings across our TAS and R&DS businesses. The team is executing superbly for our clients and we are starting to realize the benefits of our continued investments in innovation.”
Financial Position
As of March 31, 2019, cash and cash
equivalents were $936 million and debt was $11,287 million, resulting in
net debt of $10,351 million. At the end of the first quarter of 2019,
IQVIA’s Net Leverage Ratio was 4.6 times trailing twelve month Adjusted
EBITDA.
Share Repurchase
During the first quarter of 2019, the
company repurchased $141 million of its common stock from certain of its
remaining private equity sponsors. IQVIA had approximately $2.1 billion
of share repurchase authorization remaining as of March 31, 2019.
Full-Year 2019 Guidance
Full-year 2019 guidance remains
unchanged, and the company is reaffirming its guidance range for revenue
of $10,900 million to $11,125 million, Adjusted EBITDA of $2,375 million
to $2,425 million and Adjusted Diluted Earnings per Share of $6.20 to
$6.40.
Second-Quarter 2019 Guidance
IQVIA expects second-quarter
2019 revenue of between $2,660 million and $2,710 million, Adjusted
EBITDA between $565 million and $580 million and Adjusted Diluted
Earnings per Share between $1.46 and $1.51.
This financial guidance assumes foreign currency exchange rates at March 31, 2019 remain in effect for the remainder of the year.
Webcast & Conference Call Details
IQVIA will host a
conference call at 9:00 a.m. Eastern Time today to discuss its
first-quarter 2019 financial results and second-quarter 2019 guidance.
To participate, please dial 1-800-909-4261 in the United States and
Canada or +1-212-231-2926 outside the United States approximately 15
minutes before the scheduled start of the call. The conference call and
a presentation will be accessible live via webcast on the Investors
section of the IQVIA website at http://ir.iqvia.com.
An archived replay of the webcast will be available online at http://ir.iqvia.com
after 1:00 p.m. Eastern Time today.
About IQVIA
IQVIA (NYSE:IQV) is a leading global provider of
advanced analytics, technology solutions and contract 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™, 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 more
than 58,000 employees, IQVIA conducts operations in more than 100
countries.
Cautionary Statements Regarding Forward-Looking Statements
This
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 full-year and
second-quarter 2019 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,” “anticipate,” “intend,” “plan,” “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: 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; 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; hardware and
software failures, delays in the operation of our computer and
communications systems or the failure to implement system enhancements;
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; 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; 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,
including the impact of the changes to the revenue recognition
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; and our ability to successfully integrate, and achieve
expected benefits from, our acquired businesses. 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, 2018, 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 Measures
Non-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. 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 and second-quarter 2019 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
Click here to subscribe to Mobile Alerts for IQVIA.
| Table 1 | ||||||||||
| IQVIA HOLDINGS INC. AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (in millions, except per share data) | ||||||||||
| (preliminary and unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Revenues | $ | 2,684 | $ | 2,563 | ||||||
| Costs of revenue, exclusive of depreciation and amortization | 1,748 | 1,652 | ||||||||
| Selling, general and administrative expenses | 419 | 420 | ||||||||
| Depreciation and amortization | 295 | 282 | ||||||||
| Restructuring costs | 12 | 26 | ||||||||
| Income from operations | 210 | 183 | ||||||||
| Interest income | (2 | ) | (2 | ) | ||||||
| Interest expense | 110 | 96 | ||||||||
| Other (income) expense, net | (7 | ) | 4 | |||||||
|
Income before income taxes and equity in (losses) earnings of unconsolidated affiliates |
109 | 85 | ||||||||
| Income tax expense | 41 | 19 | ||||||||
|
Income before equity in (losses) earnings of unconsolidated affiliates |
68 | 66 | ||||||||
| Equity in (losses) earnings of unconsolidated affiliates | (1 | ) | 7 | |||||||
| Net income | 67 | 73 | ||||||||
| Net income attributable to non-controlling interests | (9 | ) | (4 | ) | ||||||
| Net income attributable to IQVIA Holdings Inc. | $ | 58 | $ | 69 | ||||||
| Earnings per share attributable to common stockholders: | ||||||||||
| Basic | $ | 0.29 | $ | 0.33 | ||||||
| Diluted | $ | 0.29 | $ | 0.32 | ||||||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 197.0 | 207.5 | ||||||||
| Diluted | 201.7 | 212.0 | ||||||||
| Table 2 | ||||||||||||
| IQVIA HOLDINGS INC. AND SUBSIDIARIES | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (in millions, except per share data) | ||||||||||||
| (preliminary and unaudited) | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2019 | 2018 | |||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 936 | $ | 891 | ||||||||
| Trade accounts receivable and unbilled services, net | 2,461 | 2,394 | ||||||||||
| Prepaid expenses | 153 | 151 | ||||||||||
| Income taxes receivable | 65 | 69 | ||||||||||
| Investments in debt, equity and other securities | 55 | 47 | ||||||||||
| Other current assets and receivables | 329 | 322 | ||||||||||
| Total current assets | 3,999 | 3,874 | ||||||||||
| Property and equipment, net | 437 | 434 | ||||||||||
| Operating lease right-of-use assets | 517 | — | ||||||||||
| Investments in debt, equity and other securities | 39 | 41 | ||||||||||
| Investments in unconsolidated affiliates | 98 | 101 | ||||||||||
| Goodwill | 11,857 | 11,800 | ||||||||||
| Other identifiable intangibles, net | 5,811 | 5,951 | ||||||||||
| Deferred income taxes | 103 | 109 | ||||||||||
| Deposits and other assets | 248 | 239 | ||||||||||
| Total assets | $ | 23,109 | $ | 22,549 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued expenses | $ | 2,122 | $ | 2,295 | ||||||||
| Unearned income | 971 | 1,007 | ||||||||||
| Income taxes payable | 102 | 100 | ||||||||||
| Current portion of long-term debt | 100 | 100 | ||||||||||
| Other current liabilities | 207 | 32 | ||||||||||
| Total current liabilities | 3,502 | 3,534 | ||||||||||
| Long-term debt | 11,187 | 10,907 | ||||||||||
| Deferred income taxes | 742 | 736 | ||||||||||
| Operating lease liabilities | 401 | — | ||||||||||
| Other liabilities | 412 | 418 | ||||||||||
| Total liabilities | 16,244 | 15,595 | ||||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders’ equity: | ||||||||||||
| Common stock and additional paid-in capital, | ||||||||||||
| 400.0 shares authorized at March 31, 2019 and December 31, 2018, | ||||||||||||
| $0.01 par value, 252.2 and 251.5 shares issued at March 31, 2019 and | ||||||||||||
| December 31, 2018, respectively | 10,927 | 10,901 | ||||||||||
| Retained earnings | 865 | 807 | ||||||||||
| Treasury stock, at cost, 55.0 and 54.0 shares at March 31, 2019 and | ||||||||||||
| December 31, 2018, respectively | (4,915 | ) | (4,770 | ) | ||||||||
| Accumulated other comprehensive loss | (262 | ) | (224 | ) | ||||||||
| Equity attributable to IQVIA Holdings Inc.’s stockholders | 6,615 | 6,714 | ||||||||||
| Non-controlling interests | 250 | 240 | ||||||||||
| Total stockholders’ equity | 6,865 | 6,954 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 23,109 | $ | 22,549 | ||||||||
| Table 3 | |||||||||||
| IQVIA HOLDINGS INC. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (in millions) | |||||||||||
| (preliminary and unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 67 | $ | 73 | |||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 295 | 282 | |||||||||
| Amortization of debt issuance costs and discount | 3 | 3 | |||||||||
| Stock-based compensation | 26 | 21 | |||||||||
| Losses (earnings) from unconsolidated affiliates | 1 | (6 | ) | ||||||||
| Gain on investments, net | (3 | ) | — | ||||||||
| Benefit from deferred income taxes | (12 | ) | (26 | ) | |||||||
| Changes in operating assets and liabilities: | |||||||||||
| Change in accounts receivable, unbilled services and unearned income | (76 | ) | (178 | ) | |||||||
| Change in other operating assets and liabilities | (188 | ) | 13 | ||||||||
| Net cash provided by operating activities | 113 | 182 | |||||||||
| Investing activities: | |||||||||||
| Acquisition of property, equipment and software | (141 | ) | (88 | ) | |||||||
| Acquisition of businesses, net of cash acquired | (175 | ) | (20 | ) | |||||||
| Purchases of marketable securities | (2 | ) | (1 | ) | |||||||
| Investments in unconsolidated affiliates, net of payments received | 2 | 4 | |||||||||
| Other | 1 | (15 | ) | ||||||||
| Net cash used in investing activities | (315 | ) | (120 | ) | |||||||
| Financing activities: | |||||||||||
| Repayment of debt and principal payments on capital lease obligations | (25 | ) | (26 | ) | |||||||
| Proceeds from revolving credit facility | 790 | 405 | |||||||||
| Repayment of revolving credit facility | (385 | ) | (300 | ) | |||||||
| Proceeds (payments) related to employee stock option plans | 9 | (11 | ) | ||||||||
| Repurchase of common stock | (145 | ) | (95 | ) | |||||||
| Contingent consideration and deferred purchase price payments | (16 | ) | (14 | ) | |||||||
| Net cash provided by (used in) financing activities | 228 | (41 | ) | ||||||||
| Effect of foreign currency exchange rate changes on cash | 19 | (20 | ) | ||||||||
| Increase in cash and cash equivalents | 45 | 1 | |||||||||
| Cash and cash equivalents at beginning of period | 891 | 959 | |||||||||
| Cash and cash equivalents at end of period | $ | 936 | $ | 960 | |||||||
| Table 4 | |||||||||
| IQVIA HOLDINGS INC. AND SUBSIDIARIES | |||||||||
| NET INCOME TO ADJUSTED EBITDA RECONCILIATION | |||||||||
| (in millions) | |||||||||
| (preliminary and unaudited) | |||||||||
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| Net Income Attributable to IQVIA Holdings Inc. | $ | 58 | $ | 69 | |||||
| Provision for income taxes | 41 | 19 | |||||||
| Depreciation and amortization | 295 | 282 | |||||||
| Interest expense, net | 108 | 94 | |||||||
| Loss (income) in unconsolidated affiliates | 1 | (7 | ) | ||||||
| Income from non-controlling interests | 9 | 4 | |||||||
| Deferred revenue purchase accounting adjustments | 3 | 1 | |||||||
| Stock-based compensation | 26 | 21 | |||||||
| Other expense, net | 6 | 12 | |||||||
| Restructuring and related charges | 12 | 26 | |||||||
| Acquisition related charges | 8 | 12 | |||||||
| Integration related costs | 20 | 14 | |||||||
| Adjusted EBITDA | $ | 587 | $ | 547 | |||||
| Table 5 | ||||||||||
| IQVIA HOLDINGS INC. AND SUBSIDIARIES | ||||||||||
| NET INCOME TO ADJUSTED NET INCOME RECONCILIATION | ||||||||||
| (in millions, except per share data) | ||||||||||
| (preliminary and unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| Net Income Attributable to IQVIA Holdings Inc. | $ | 58 | $ | 69 | ||||||
| Provision for income taxes | 41 | 19 | ||||||||
| Purchase accounting amortization | 225 | 218 | ||||||||
| Loss (income) in unconsolidated affiliates | 1 | (7 | ) | |||||||
| Income from non-controlling interests | 9 | 4 | ||||||||
| Deferred revenue purchase accounting adjustments | 3 | 1 | ||||||||
| Stock-based compensation | 26 | 21 | ||||||||
| Other expense, net | 6 | 12 | ||||||||
| Royalty hedge gain (loss) | 3 | (4 | ) | |||||||
| Restructuring and related charges | 12 | 26 | ||||||||
| Acquisition related charges | 8 | 12 | ||||||||
| Integration related costs | 20 | 14 | ||||||||
| Adjusted Pre Tax Income | $ | 412 | $ | 385 | ||||||
| Adjusted tax expense | (92 | ) | (93 | ) | ||||||
| Income from non-controlling interests | (9 | ) | (4 | ) | ||||||
| Minority interest effect in non-GAAP adjustments (1) | (2 | ) | (3 | ) | ||||||
| Adjusted Net Income | $ | 309 | $ | 285 | ||||||
| Adjusted earnings per share attributable to common stockholders: | ||||||||||
| Basic | $ | 1.57 | $ | 1.37 | ||||||
| Diluted | $ | 1.53 | $ | 1.34 | ||||||
| Weighted-average common shares outstanding: | ||||||||||
| Basic | 197.0 | 207.5 | ||||||||
| Diluted | 201.7 | 212.0 | ||||||||
|
(1) Reflects the portion of Q2 Solutions' after-tax non-GAAP adjustments attributable to the minority interest partner. |
||||||||||
| Table 6 | ||||||
| IQVIA HOLDINGS INC. AND SUBSIDIARIES | ||||||
| CALCULATION OF GROSS AND NET LEVERAGE RATIOS | ||||||
| AS OF MARCH 31, 2019 | ||||||
| (in millions) | ||||||
| (preliminary and unaudited) | ||||||
| Gross Debt, net of Original Issue Discount, as of March 31, 2019 | $ | 11,287 | ||||
| Net Debt as of March 31, 2019 | $ | 10,351 | ||||
| Adjusted EBITDA for the twelve months ended March 31, 2019 | $ | 2,264 | ||||
| Gross Leverage Ratio (Gross Debt/LTM Adjusted EBITDA) | 5.0x | |||||
| Net Leverage Ratio (Net Debt/LTM Adjusted EBITDA) | 4.6x | |||||