- Revenue $2,594 million, up 6.3
percent at constant currency and 5.2 percent reported
- Adjusted EBITDA $561 million, up 8.4
percent at constant currency and 9.4 percent reported
- GAAP Diluted Earnings per Share
$0.29
- Adjusted Diluted Earnings per Share
$1.42, up 19.3 percent
- $792 million of share repurchase
completed year-to-date; $133 million during the third
quarter
- Record quarter of R&D Solutions
contracted services Net New Business, resulting in a book-to-bill
ratio of 1.69x
- Reaffirming mid-point of full-year
2018 revenue guidance inclusive of foreign currency headwind;
raising mid-point of full-year 2018 Adjusted EBITDA and Adjusted
Diluted EPS guidance
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 September 30, 2018. On
January 1, 2018, IQVIA adopted ASC 606 “Revenue from Contracts with
Customers” as required by the Financial Accounting Standards Board.
Under this new standard, IQVIA recognizes revenue in the Research
& Development Solutions segment on a percentage of completion
basis. Additionally, ASC 606 requires that service revenue and
reimbursed expense revenue be consistently presented as one line on
the income statement. Unless stated otherwise, all financial
information that follows has been provided under ASC 606.
Third-Quarter 2018 Operating Results
Revenue for the third quarter of $2,594 million increased 6.3
percent at constant currency and 5.2 percent reported, compared to
the third quarter of 2017. Technology & Analytics Solutions
(TAS) revenue of $1,014 million grew 15.0 percent at constant
currency and 12.9 percent reported, including the benefit of
acquisitions. Research & Development Solutions (R&DS)
revenue of $1,382 million grew 3.5 percent at constant currency and
3.1 percent reported, with growth in R&DS substantially all
organic. Contract Sales & Medical Solutions (CSMS) revenue of
$198 million declined 11.9 percent at constant currency and 12.8
percent reported.
Third-quarter 2018 Adjusted EBITDA of $561 million increased 8.4
percent at constant currency and 9.4 percent reported. GAAP net
income was $60 million and GAAP diluted earnings per share was
$0.29. Adjusted Net Income of $294 million grew 13.1 percent, and
Adjusted Diluted Earnings per Share of $1.42 grew 19.3 percent.
“We delivered another quarter of strong financial performance,
with solid core growth in our R&DS and TAS segments,” said Ari
Bousbib, chairman and CEO of IQVIA. “In R&DS, we had a record
quarter of contracted services net new business, which positions us
well to deliver on our merger synergy targets exiting 2019. Our
technology business continues its strong momentum, driven by deals
such as the recent milestone agreement with Roche to deploy and use
IQVIA commercial technologies globally, and by the launch of our
clinical technologies suite, which we are developing on
Salesforce.”
Year-to-Date 2018 Operating Results
Revenue of $7,724 million for the first nine months of 2018
increased 6.4 percent at constant currency and 7.6 percent
reported, compared to the first nine months of 2017. TAS revenue of
$3,010 million grew 12.5 percent at constant currency and 13.8
percent reported. R&DS revenue of $4,097 million grew 5.8
percent at constant currency and 6.8 percent reported. CSMS revenue
of $617 million declined 13.3 percent at constant currency and 11.7
percent reported.
R&DS contracted backlog including reimbursed expenses was
$16.4 billion at September 30, 2018. The company expects
approximately $4.6 billion of this backlog to convert to revenue in
the next twelve months. For comparability during 2018, the company
is reporting R&DS net new business on a contracted basis
excluding reimbursed expenses. Under this approach, R&DS
contracted net new business of $5.37 billion for the twelve months
ended September 30, 2018, grew 22.9 percent compared to the twelve
months ended September 30, 2017. R&DS contracted net new
business for the quarter ending September 30, 2018 was $1.7
billion, representing a contracted book-to-bill ratio (excluding
reimbursed expenses) of 1.69 for the third quarter 2018.
Adjusted EBITDA of $1,641 million for the first nine months of
2018 increased 10.0 percent at constant currency and 10.6 percent
reported. GAAP net income was $190 million and GAAP diluted
earnings per share was $0.91. Adjusted Net Income of $849 million
for the first nine months of 2018 grew 12.7 percent, and Adjusted
Diluted Earnings per Share of $4.05 grew 21.3 percent compared to
the first nine months of 2017.
Financial Position
As of September 30, 2018, cash and cash equivalents were $827
million and debt was $10,619 million, resulting in net debt of
$9,792 million. At the end of the third quarter of 2018, IQVIA’s
Gross Leverage Ratio was 4.9 times, and Net Leverage Ratio was 4.5
times, trailing twelve month Adjusted EBITDA.
Share Repurchase
During the third quarter, the company repurchased $133 million
of its stock in the open market, bringing year-to-date repurchases
to $792 million. IQVIA had $889 million of share repurchase
authorization remaining as of September 30, 2018.
Full-Year 2018 Guidance
Guidance ranges for full-year 2018 have been
updated. The revenue guidance range has been reaffirmed at the
mid-point of the range, despite a foreign currency headwind of
approximately $35 million. The Adjusted EBITDA guidance has been
increased by $10 million at the mid-point of the range, and the
Adjusted Diluted Earnings per Share guidance has been increased by
$0.05 at the mid-point of the range. Full-year 2018 guidance
updates are as follows:
($ millions, except per share data)
Guidance
VPY% AFx
Revenue(1)
$10,335 - $10,385
6.5% - 7.0% FX
~$(35)
Revenue(2)
$10,300 - $10,350 6.2% - 6.7% Adjusted
EBITDA $2,195 - $2,225 9.2% - 10.7%
Adjusted Diluted EPS $5.45 - $5.55 19.8% -
22.0%
1.
Assumes foreign currency exchange rates
are consistent with when guidance was provided on Q2 2018 earnings
call
2.
Revenue guidance using current foreign
currency exchange rates
This financial guidance assumes current foreign currency
exchange rates 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 third-quarter 2018 financial results. To
participate, please dial 1-800-901-1807 in the United States and
Canada or +1-212-231-2924 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 55,000
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 2018 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, 2017, 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 2018 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.
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IQVIAFIN
Table 1 IQVIA HOLDINGS INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in
millions, except per share data) (preliminary and unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2018
2017 2018 2017 Revenues $ 2,594 $ 2,466 $
7,724 $ 7,181 Costs of revenue, exclusive of depreciation and
amortization 1,678 1,611 5,004 4,694 Selling, general and
administrative expenses 429 394 1,273 1,153 Depreciation and
amortization 283 256 847 733 Impairment charges — — — 40
Restructuring costs 23 10 66
38 Income from operations 181 195 534 523
Interest income (2 ) (2 ) (5 ) (5 ) Interest expense 105 93 308 249
Loss on extinguishment of debt — 18 2 21 Other expense (income),
net 27 — 5 (3 )
Income before income taxes and equity in
earnings of unconsolidated affiliates
51 86 224 261 Income tax (benefit) expense (14 ) (3 )
29 7
Income before equity in earnings of
unconsolidated affiliates
65 89 195 254 Equity in earnings of unconsolidated affiliates
2 4 13 7
Net income 67 93 208 261 Net income attributable to non-controlling
interests (7 ) (5 ) (18 ) (11 ) Net
income attributable to IQVIA Holdings Inc. $ 60 $ 88
$ 190 $ 250 Earnings per share attributable to common
stockholders: Basic $ 0.30 $ 0.41 $ 0.93 $ 1.13 Diluted $ 0.29 $
0.40 $ 0.91 $ 1.11 Weighted average common shares outstanding:
Basic 202.3 214.3 205.2 220.7 Diluted 206.8 219.0 209.6 225.4
Table 2 IQVIA HOLDINGS
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in
millions, except per share data) (preliminary and unaudited)
September 30, December 31,
2018 2017 ASSETS Current assets: Cash
and cash equivalents $ 827 $ 959 Trade accounts receivable and
unbilled services, net 2,298 2,097 Prepaid expenses 154 146 Income
taxes receivable 66 47 Investments in debt, equity and other
securities 52 46 Other current assets and receivables 299
259 Total current assets 3,696
3,554 Property and equipment, net 417 440 Investments
in debt, equity and other securities 28 8 Investments in
unconsolidated affiliates 106 70 Goodwill 11,794 11,850 Other
identifiable intangibles, net 6,103 6,591 Deferred income taxes 96
109 Deposits and other assets 258 235
Total assets $ 22,498 $ 22,857
LIABILITIES
AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable
and accrued expenses $ 2,162 $ 1,986 Unearned income 984 985 Income
taxes payable 117 72 Current portion of long-term debt 101 103
Other current liabilities 16 10 Total
current liabilities 3,380 3,156 Long-term debt 10,518 10,122
Deferred income taxes 734 895 Other liabilities 406
440 Total liabilities 15,038
14,613 Commitments and contingencies Stockholders’ equity:
Common stock and additional paid-in
capital,
400.0 shares authorized at September 30,
2018 and December 31, 2017,$0.01 par value, 251.2 and 249.5 shares
issued at September 30, 2018 andDecember 31, 2017, respectively
10,876 10,782 Retained earnings 726 538
Treasury stock, at cost, 48.9 and 41.4
shares at September 30, 2018 and December 31, 2017,
respectively
(4,167 ) (3,374 ) Accumulated other comprehensive (loss) income
(220 ) 49 Equity attributable to IQVIA
Holdings Inc.’s stockholders 7,215 7,995 Non-controlling interests
245 249 Total stockholders’ equity
7,460 8,244 Total liabilities and
stockholders’ equity $ 22,498 $ 22,857
Table 3 IQVIA HOLDINGS INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in
millions) (preliminary and unaudited)
Nine Months
Ended September 30, 2018 2017
Operating activities: Net income $ 208 $ 261 Adjustments to
reconcile net income to cash provided by operating activities:
Depreciation and amortization 847 733 Amortization of debt issuance
costs and discount 8 6
Amortization of accumulated other
comprehensive loss on terminated interest rate swaps
— 3 Stock-based compensation 78 82 Impairment of goodwill and
identifiable intangible assets — 40 (Earnings) loss from
unconsolidated affiliates (13 ) 4 Gain on investments, net (3 ) —
Benefit from deferred income taxes (183 ) (137 ) Changes in
operating assets and liabilities: Change in accounts receivable,
unbilled services and unearned income (219 ) (104 ) Change in other
operating assets and liabilities 114 (151 )
Net cash provided by operating activities 837 737
Investing
activities: Acquisition of property, equipment and software
(321 ) (267 ) Acquisition of businesses, net of cash acquired (255
) (525 ) Disposition of business, net of cash disposed — 12
Purchase of marketable securities (3 ) — Investments in
unconsolidated affiliates, net of payments received (24 ) 5
Investments in equity securities (23 ) — Other (6 ) 1
Net cash used in investing activities (632 ) (774 )
Financing activities: Proceeds from issuance of debt 1,631
5,242 Payment of debt issuance costs (23 ) (53 ) Repayment of debt
and principal payments on capital lease obligations (707 ) (2,858 )
Proceeds from revolving credit facility 1,800 1,222 Repayment of
revolving credit facility (2,169 ) (1,497 ) Proceeds related to
employee stock option plans 18 86 Repurchase of common stock (801 )
(2,252 ) Distributions to non-controlling interests, net (19 ) (3 )
Contingent consideration and deferred
purchase price payments
(24 ) (4 ) Net cash used in financing activities (294
) (117 ) Effect of foreign currency exchange rate changes on cash
(43 ) 59 Decrease in cash and cash equivalents
(132 ) (95 ) Cash and cash equivalents at beginning of period
959 1,198 Cash and cash equivalents at
end of period $ 827 $ 1,103
Table 4 IQVIA HOLDINGS INC. AND
SUBSIDIARIES NET INCOME TO ADJUSTED EBITDA
RECONCILIATION (in millions) (preliminary and unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2018
2017 2018 2017 Net Income $
60 $ 88 $ 190 $
250 Provision for income taxes (14 ) (3 ) 29 7 Depreciation
and amortization 283 256 847 733 Interest expense, net 103 91 303
244 Income in unconsolidated affiliates (2 ) (4 ) (13 ) (7 ) Income
from non-controlling interests 7 5 18 11 Deferred revenue
purchasing accounting adjustments 3 1 6 10 Stock-based compensation
31 29 78 82 Other expense, net 36 5 27 15 Loss on extinguishment of
debt — 18 2 21 Impairment charges — — — 40 Restructuring and
related charges 23 10 66 38 Acquisition related charges 12 9 38 27
Integration related costs 19 8
50 13
Adjusted EBITDA $
561 $ 513 $ 1,641
$ 1,484
Note: Numbers may not add to
total due to rounding.
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
Nine Months Ended September 30, September 30,
2018 2017 2018 2017 Net
Income $ 60 $ 88 $
190 $ 250 Provision for income taxes (14 ) (3
) 29 7 Purchase accounting amortization 216 193 651 553 Income in
unconsolidated affiliates (2 ) (4 ) (13 ) (7 ) Income from
non-controlling interests 7 5 18 11 Deferred revenue purchasing
accounting adjustments 3 1 6 10 Stock-based compensation 31 29 78
82 Other expense, net 36 5 27 15 Loss on extinguishment of debt —
18 2 21 Impairment charges — — — 40 Royalty hedge (gain) loss 3 1
(2 ) 8 Restructuring and related charges 23 10 66 38 Acquisition
related charges 12 9 38 27 Integration related costs 19
8 50 13
Adjusted Pre Tax Income $ 394 $
361 $ 1,140 $ 1,068 Adjusted tax
expense (91 ) (94 ) (266 ) (297 ) Income from non-controlling
interests (7 ) (5 ) (18 ) (11 ) Minority interest effect in
non-GAAP adjustments (1) (2 ) (2 ) (7 )
(7 )
Adjusted Net Income $ 294 $
260 $ 849 $ 753
Adjusted earnings per share attributable to common
shareholders: Basic $ 1.45 $ 1.21 $ 4.14 $ 3.41 Diluted $ 1.42
$ 1.19 $ 4.05 $ 3.34
Weighted-average common shares
outstanding: Basic 202.3 214.3 205.2 220.7 Diluted 206.8 219.0
209.6 225.4 (1) Reflects the portion of Q2 Solutions'
after-tax non-GAAP adjustments attributable to the minority
interest partner. Note: Numbers may not add to total due to
rounding.
Table 6 IQVIA HOLDINGS
INC. AND SUBSIDIARIES CALCULATION OF GROSS AND NET LEVERAGE
RATIOS AS OF SEPTEMBER 30, 2018 (in millions)
(preliminary and unaudited)
Gross Debt, net of Original Issue Discount, as of September
30, 2018
$ 10,619 Net Debt as of September 30, 2018
$ 9,792 Adjusted EBITDA for the twelve
months ended September 30, 2018
$ 2,167 Gross
Leverage Ratio (Gross Debt/LTM Adjusted EBITDA)
4.9x Net
Leverage Ratio (Net Debt/LTM Adjusted EBITDA)
4.5x
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version on businesswire.com: https://www.businesswire.com/news/home/20181022005268/en/
IQVIAInvestor RelationsAndrew Markwick, +1
973-257-7144andrew.markwick@iqvia.comorMedia RelationsTor
Constantino, +1 484-567-6732tor.constantino@iqvia.com
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