IQVIA Q4 2021 Earnings Call Transcript

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Provided by Quartr
February 15, 2022

Key Takeaways

  • Q4 revenue surged 10.2% reported (11.6% at constant currency) and adjusted EPS reached $2.55, marking a 20.9% gain and beating guidance.
  • Full-year net new bookings exceeded $10 billion and R&D contracted backlog hit a record $24.8 billion, with a book-to-bill ratio of 1.34 (ex-pass-through).
  • 2022 revenue guidance of $15.7 billion was reaffirmed while full-year adjusted EBITDA and EPS targets were raised, implying double-digit profit growth.
  • The new “20 by 25” strategy aims for at least $20 billion of revenue by 2025, backed by strong uptake of clinical, commercial and technology platforms across 3,000+ clients.
  • Ongoing productivity actions, a favorable mix tailwind as COVID work tapers and disciplined pricing will drive margin expansion, supporting up to $2.5 billion in remaining share repurchases.
AI Generated. May Contain Errors.
Earnings Conference Call
IQVIA Q4 2021
00:00 / 00:00

There are 10 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA 4th Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. As a reminder, this call is being recorded.

Operator

Thank you. I would now like to turn the call over to Nick Childs, Senior Vice President, Investor Relations and Corporate Communications. Mr. Childs, you may begin your conference.

Speaker 1

Thank you, and good morning, everyone. Thank you for joining our Q4 2021 earnings call. With me today are Ari Goosby, Chairman and Chief Executive Officer Ram Bruman, Executive Vice President and Chief Financial Officer Eric Sherbert, Executive Vice President and General Counsel Mike Fedock, Senior Vice President, Financial Planning and Analysis and Brian Stangel, Associate Director, Investor Relations. Today, we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com.

Speaker 1

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 will 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 ks 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

Speaker 2

to turn the call over to our Chairman and CEO, Ari Housby. Thank you, Nick, and good morning, everyone. Thank you for joining today for our 4th quarter results. It was great to see many of you in person at our Analyst and Investor Conference in November. And as you will recall, we shared our that we would meet or exceed our 3 year Vision 2022 targets.

Speaker 2

We also laid out our plans to make In the next 3 phase 3 year phase of our journey to 2025. The team highlighted the power of connected intelligence, which brings together IQVIA's differentiated capabilities and drives our leadership position in the clinical and commercial markets. This underpins our new 20 by 25 strategy, which alludes to our plans to achieve At least $20,000,000,000 of revenue by 2025. We're excited about this next phase of growth for IQVIA and we are busy refining our And you will hear more about it as the year progresses. 2 weeks ago, IQVIA was named to Fortune's list of the world's most admired companies for the 5th consecutive year.

Speaker 2

Importantly, we earned a 1st place ranking within the healthcare, pharmacy and other services category for the first time. We ranked number 1 in the categories of innovation, capital deployment, global competitiveness, Quality of product and services and long term investment value. I want to thank Our nearly 80,000 employees worldwide for this recognition is a tribute Their innovation and drive. Turning now to our results. We ended 2021 on a high note.

Speaker 2

Despite COVID-nineteen's continued impact on many parts of the world, we delivered robust top and bottom line growth in the quarter, which as you know was against a much tougher year over year comparison than earlier in the year. These results reinforce our confidence that we will achieve our 2022 guidance. And of course, It sets us up well to meet our ambitious 20 by 25 targets. Let's review the 4th quarter. Revenue for the Q4 grew 10.2% on a reported basis and 11.6% at constant currency.

Speaker 2

The 60 $2,000,000 beat above the midpoint of our guidance range was driven by stronger operational performance across all three segments, As well as higher pass throughs, partially offset by FX headwinds. Compared to prior year And excluding COVID related work, our core businesses, meaning R and Ds and TAS, Grew mid teens at constant currency on an organic basis. Ron will provide a lot more detail in his remarks, including additional COVID adjusted numbers for each segment. 4th quarter adjusted EBITDA grew 12.7%, reflecting our revenue growth as well as ongoing productivity initiatives. The $27,000,000 beat above the midpoint of our guidance range was entirely due to our operational performance.

Speaker 2

4th quarter adjusted diluted EPS Of $2.55 grew 20.9%. That was $0.13 Above the midpoint of our guidance with the majority of the beat coming from the adjusted EBITDA drop through. Let me now provide an update on the business. On the commercial side of the business, it was a Strong year for new molecules and launches as the industry continued its recovery from the COVID-nineteen pandemic disruption. This year, 50 new molecules were approved by the FDA and 72 new commercial launches took place.

Speaker 2

IQVIA supported nearly 80% of launches by top 20 pharma And approximately 60% of all launches. This highlights our scale globally And across all customer segments in applying advanced technology and analytics capabilities to enhance launch planning, engagement And measurement. Overall, we've seen significant momentum and continued demand for our technology solutions. There are now over 3,000 clients who have adopted 1 or more of our technology platforms, including human data Science Cloud, Orchestrated Analytics, E360, Omni Channel Navigator, Engage And of course, Orchestrated Customer Engagement or OCE. In fact, the footprint of our OCE platform itself continue to grow, with over 350 clients having adopted 1 or more modules on the platform since launch.

Speaker 2

Early in 2021, we launched IQVIA Next Best Action, which is an AI driven omni channel customer engagement decision engine. 2 top 20 pharma clients have successfully rolled out this intelligence engine to orchestrate customer engagements in over 30 countries and across more than 40 brands each, 2 other top 20 pharma are currently in the implementation phase. Another highlight in our TAS business has been the success of D and D Marketing Solutions, a leading provider of data and digital marketing solutions that help brands deliver personalized digital content to healthcare professionals. In the quarter, We entered into an enterprise agreement with the top 10 pharma clients to utilize DMD's advanced analytic capabilities To power omni channel engagement across all 8 of their brand franchises. To date, 18 of the top 20 Have adopted at least one of DMD's solutions.

Speaker 2

We're very excited for the future growth of this business Within IQVIA, real world evidence and other highlights of the year. IQVIA continues to play a leading role In the use of secondary data to answer key questions for life science customers. In the Q4, we won 2 large post authorization safety studies In an autoimmune area with the top 10 pharma, these studies use existing healthcare data to observe patients over a period of 10 years to better understand long term effects of the treatment. We were also recently awarded a disease registry for an upcoming novel gene therapy. Here, we will recruit a broad population of patients with a specific disease to understand how they are currently managing clinical practice.

Speaker 2

This information is vital to our life science sponsors to inform the design of subsequent clinical trials so they can target patient groups with the highest unmet need. Moving to clinical technology, we saw increased adoption of our orchestrated clinical trial, OCT platform. We support trial planning, site management, patient engagement, trial management and clinical data analytics. During the year, we added 90 new OCT clients, bringing the total to over 350 clients who have adopted 1 or more modules within our clinical technology suite since launch, including all of the top 10 and 18 of the top 20. Within OCT's digital patient suite, this year we secured 3 preferred provider partnerships with top site operations across our entire clinical trial portfolios.

Speaker 2

This technology facilitates patient randomization to ensure protocol adherence and streamlined site supply chain management to reduce drug wastage And to drive significant cost reductions. Our solution was awarded a tough ranking by industry leaders in a recent ISR Our report for randomization and trial supply management capabilities. We also saw increased demand For our industry leading decentralized clinical trial offering, approximately 1 third of our active full service clinical trials Incorporate 1 or more of our VCT technology or services capabilities and we expect these to continue to grow As the need for these capabilities in complex studies becomes more evident. For example, we are looking for treatment of multiple system atrophy, We are deploying our full suite of capabilities, including eCOA, We consent and home visits to significantly reduce the travel burden on these patients We have significant mobility challenges. Finally, our overall R and D's business continues to build on its strong momentum with over $2,400,000,000 of net new business, including pass throughs, and it set a record for quarterly Excluding pass throughs and 124 including pass throughs, For the calendar year, we delivered over $10,000,000,000 Of total net new bookings for the first time ever, an increase of 14.6% compared to 2020.

Speaker 2

This led To an LTM contracted net book to bill ratio of 1.35, excluding pass throughs And 1.34, including pastures. Our contracted backlog in R and D was 10.2% year over year to a record $24,800,000,000 as of December 31, 2021. And now I will turn it over to Ron for more details on our financial performance.

Speaker 3

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. 4th quarter revenue of $3,636,000,000 grew 10.2% on a reported And 11.6 percent at constant currency. You'll recall that last year's Q4 was a much tougher comparison than earlier quarters As we picked up incremental demand from mega vaccine studies in RNDS and government related COVID work within TAS. Also, the core business began to rebound from the effects of COVID-nineteen.

Speaker 3

In this year's 4th quarter, COVID related revenues were approximately $325,000,000 down about 25% versus the Q4 of 2020. And our base business that is exclinic growth at constant currency was mid teens. Technology and Analytics Solutions revenue for the 4th quarter was 1 $1,496,000,000 up 5% reported and 6.6% at constant currency. Year over year, TAS experienced just over 400 basis points of headwind due to a step down in COVID related work. Excluding all COVID related work, organic R and D Solutions 4th quarter revenue of 1,944,000,000 And 16.3% at constant currency.

Speaker 3

Excluding all COVID related work, organic growth at constant currency and R and Ds was approximately 25%. Contract Sales and Medical Solutions or CSMS, 4th quarter revenue of $196,000,000 grew 3.7% reported and 7.4% at constant currency. Excluding all COVID related work, organic growth at constant currency in CSMS was low single digits. For the full year, revenue was $13,874,000,000 in currency. COVID Related revenues in 2021 were approximately $1,800,000,000 with just under 80% of that attributable to R and D About 20% due to TAS and the remainder in CSMS.

Speaker 3

The incremental COVID related revenues in 2021 versus 2020 accounted for approximately half of our growth in 2020. In the near technology and analytics solutions Revenue was $5,500,000,000 up 13.9% reported Excluding COVID related work, organic growth at constant currency in TAS was high single digit. Full year revenue in R and D Solutions was $7,556,000,000 growing at 31 point 4% at constant currency. Excluding COVID related work, R and D has organic growth at constant currency For both total revenue and services revenue, it was low double digit. Full year CSMS revenue was $784,000,000 representing 5 point 8% growth on a reported basis and 5.7% at constant currency and excluding COVID related work, organic growth at constant currency in CSMS was low single digits.

Speaker 3

Now we'll move down to P and L. Adjusted EBITDA was $828,000,000 for the 4th quarter, which was 12.7% growth on a reported basis. Full year adjusted EBITDA was $3,022,000,000 up 26.8 percent year over year on a reported basis. 4th quarter GAAP net income was $318,000,000 and GAAP diluted earnings per share was $1.63 Full year GAAP net income was earnings per diluted share. Adjusted net income was $496,000,000 for the 4th quarter, up 20.7 percent year over year and adjusted diluted earnings per share grew $0.05 For the full Adjusted net income was $1,760,000,000 or $9.03 Standing quarter of net new business.

Speaker 3

R and D backlog now stands at a record $24,800,000,000 Full year 2021 net new bookings, including pass throughs, rose to over 10 Okay. Let's move to the balance sheet now. Our cash flow from operations was $692,000,000 and CapEx With $184,000,000 to a record $2,666,000,000 and gross debt was $12,125,000,000 resulting in net debt of $10,750,000,000 Our net leverage ratio at December 31 was 3.7 Now it's worth highlighting that our improved free cash flow over the last 2 years allowed us to deploy approximately $4,500,000,000 Capital to internal investments, acquisitions and share repurchase, while at the same time We have a high of 4.8 times in Q2 2020, which You'll recall with the height of the pandemic to nearly 3.5 times leverage ratio target of 3.5 times to 4 times a full year early. In the quarter, we repurchased $174,000,000 of our shares, which resulted in full year share repurchase of $395,000,000 and we ended the year with 195,000,000 fully diluted shares And $523,000,000 of share repurchase authorization remaining under Our existing program. Now last week, our Board of Directors approved our share repurchase authorization, which increases our remaining authorization to just over $2,500,000,000 Now let's turn to the guidance.

Speaker 3

As you saw, we're reaffirming the full year 2022 revenue guidance that we issued at our Analyst and Investor Conference in November We are now officially guided in November. Now additionally, we're raising our full year 2022 Profit guidance versus what we provided you in November. So to summarize the overall guidance for the full year, we expect $15,700,000,000 which represents year over year growth of 7.1% to 9.2% at constant currency and 6% to 8.1 on a reported basis compared to 2021. Now we now expect adjusted EBITDA to be between 3 $30,000,000 $3,405,000,000 representing year over year growth of 10.2% to 12.7%. And we also now expect adjusted diluted EPS to be between $9.95 $10.25 which represents year over year growth of 10.2% to 13.5%.

Speaker 3

Now our full year 2022 guidance As soon as it's December 31, 2021, foreign currency exchange rate, we expect to see a headwind of 110 Now at our Analyst and Investor Conference in November, we told you to anticipate that Our COVID related revenue will step down by approximately $1,000,000,000 in 2022, but we'll more than compensate for that We're pleased with the strong growth in our base business. And let me give you some additional detail around this that I think will be helpful. Excluding COVID related revenue, the FX headwind and the contribution of acquisitions, Our total company revenue guidance implies organic growth at constant currency in the low to mid teens. At the segment level, we 7%. Excluding COVID related work, we expect organic revenue growth at constant currency in TAS Research and Development Solutions revenue growth It's expected to be between 8% 10%.

Speaker 3

Excluding COVID related work, we expect organic revenue growth Constant currency in R and Ds to be in the upper teens. And finally, contract sales and Medical Solutions revenue was anticipated to be down, But excluding COVID related work, we expect organic revenue growth at constant currency in CSX. Let's move to the Q1 now. As you all know, the Q1 of last year marked The continued rebound in our base business after the 2020 pandemic related decline. In addition, Q1 and Q2 of last year represented our peak COVID related revenues.

Speaker 3

And as a result of this, the first half For the Q1, revenue is expected to be between 3,515,000,000,000 5.15 growth of 4.8% to 6.6% on a constant currency basis and 3.1% to 4.9% on a reported basis. Excluding the impact of the Q4, organic revenue growth at Constant currency to be in the mid teens. $800,000,000 $815,000,000 up 7.5% to 9.5%. And finally, adjusted diluted EPS is Expected to be between $2.40 $2.46 growing 10.1% to 12.8%. So to summarize, our Q4 results on both the top and bottom line against what was 2020, our U.

Speaker 3

S. Recorded its largest ever quarter of service bookings and for the The first time had over $10,000,000,000 of total net new bookings in a year. Our contracted backlog improved to a record of nearly 25 We closed 2021 with net leverage of 3.6x

Speaker 2

Our Board approved

Speaker 3

a $2,000,000,000 increase to our share repurchase authorization. And finally, We're reaffirming the full year 2022 guidance that we provided in November for revenue and we're raising our adjusted EBITDA and adjusted diluted EPS guidance. And with that, let me turn it back over To the operator for questions and answers.

Operator

Your first question is from Jack Meehan with Nephron Research.

Speaker 4

Thank you and good morning.

Speaker 5

I wanted to talk a

Speaker 4

little bit more about COVID and appreciate all the color you gave, Ron, during the prepared remarks on this.

Speaker 2

So at the end of the quarter, we're seeing

Speaker 4

this year Can you talk about the balance of the COVID work and just how you feel about the duration of COVID? Kind of over the next few years, do you think there's some aspect that might prove stickier In TAS, or some ongoing work in R and Ds? Just any color there would be great.

Speaker 3

Yes. Look, continue to burn off over the next 2 years. I think it will be a gradual decline during the course of 2022, but it's going to continue on into 2023. Yes. It's hard to foresee, Jack, how much additional COVID work there might be.

Speaker 3

We've all been surprised by the ups and downs of And we're right now, we're basing our expectations on what we currently We have in the backlog and we'll see where it goes from there and see what other work might come along.

Speaker 2

Yes. Judge, I mean, this is Exactly right. And I all we can do is look at the situation today. If anything, if we've learned anything about this pandemic, we Can't predict the evolution. So we do have in our RFP pipeline, especially on the R and D side, We're going to have a number of proposals to assist in new therapies to address COVID.

Speaker 2

There are Even launch top 10 pharmas that we are talking to about potential therapeutics. So I do anticipate there will be some residual amount of COVID work ongoing, But unless things change dramatically based on the picture today, it's just going to gradually taper down. That's what we have here through 'twenty three really and maybe at the end of 'twenty four, unless something happens, which no one here hopes for. But That's what we have. It's all largely based on burning off the world, both commercial and clinical.

Speaker 4

Great. And then Just as a follow-up, would be great to get your latest thinking on labor and maybe wage inflation. What is Has your view changed at all related to when you initially gave guidance around, just wage inflation and the impact that might have on the forecast for 2022?

Speaker 2

Yes. I mean, look, that's a good question. That's the single most important Operational challenge we have is people management. I mean, look, it's wonderful to be the leader In this space and to have such a $25,000,000,000 backlog To execute and strong commercial demand as well. And the result of that is we need all our people.

Speaker 2

Even though technology is gradually taking over more and more of the work that we deliver, but we still need a lot of people. And at 80,000 people, we know we To recruit many 1000 more this coming year, we have attrition, which is an issue Really for everybody, the great resignation is affecting us post pandemic. We are we've become and that's the price of our success. I would say, we have become an academy company. A lot of people Recruit talent from IQVIA.

Speaker 2

But look, we are adjusting to this. We're creating all kinds of flexible work arrangements, compensation arrangements, loyalty building programs, training programs, Back to work, the future of work, which is an initiative that we have to redefine roles and what's So we've been very innovative in terms of our workspace, really working on a lot of multiple fronts. With respect to the numbers and how it affects our numbers, obviously, it's challenging when you have to raise compensation costs and generally, However, I would point to you that our margins, our adjusted EBITDA margins We are expecting to grow more than ever before. We are getting the leverage on the massive restructuring and cost Improvement initiatives that we launched immediately post merger, but we're now getting the benefit of that leverage And that's offsetting more than offsetting the wage inflation headwinds. Again, I point to the growth of our profit numbers Relative to the growth of our revenue numbers and you see that we significantly materially raise or grow our profit higher Then materially higher than our revenue growth, which implies significant margin growth.

Speaker 2

Ron? Yes. And also

Speaker 3

I would say, Jack, that we do have the ability in a lot of instances to raise prices, to adjust prices. We have Some provisions for improvement in our MSA agreements. We also have some short cycle businesses. So wherever we have the ability to Adjust prices, we are doing so and there as well. Great.

Speaker 2

Your

Speaker 6

Thank you. Probably the number one topic here Funding environment and any potential knock on impacts to the group. Your competitor who also reported at Same time this morning and is very exposed to pre commercial biotech said their RFP volumes were down 10% in the 4th quarter. Commercial Biotech as a percent of R and D backlog or bookings? And 2, Talk about what you're seeing in real time in terms of business demand, bookings, other related activity in that Pre commercial biotech space, that would be very helpful.

Speaker 6

Thank you.

Speaker 2

Yes. Thanks, Eric. Well, as you can imagine, we track these Numbers pretty tightly and there are as you know many definitions of what biotech funding and so on. We are not seeing in the actual RFP pipeline Any changes versus what has been, as you know, a very strong demand environment For the EVP segment in general. In terms of percent of our bookings, what do we give here?

Speaker 2

We don't have the backlog, We have the bookings. Let me see. I got a few numbers here for you. I think, look, In terms of the actual bookings, large pharma still represents The majority, right, a little bit over half. Is that correct?

Speaker 2

That's correct. And then we Maybe the mid size is perhaps about somewhere around 10% -ish of our bookings and the rest. So again, I'd say 35% plus is EBP. And that has been the again, it fluctuates as you can imagine these things these numbers go up and down. Now if you compare where we are here in terms of the pipe of the RFP flow, Okay.

Speaker 2

It still continues to grow double digit in volume. I mean, it's really, really high, more than double digits. One moment if we give you the numbers, but the pipeline is very, very strong. I mean, as actually it's about our pipeline is about equal to our backlog As we speak right now, okay. And again, as I said before, COVID is basically a percentage of the A pipeline here.

Speaker 2

A lot of it is oncology, which is up more than 20%, CNS more than 33% up. Agree, across Terapeka, we're seeing very good EBIT growth in the pipeline. I'm talking Okay, not the books. I'm taking the pipeline. To your question, what do we see going forward, okay, which would be normally Like an indicator of the funding.

Speaker 2

And we see that EDP In the pipeline actually represents a majority of our pipeline right now. So Again, we don't see any significant changes. Look, I wouldn't yes, it's true. For example, January was lower The month of January was lower than the EDP funding, but I wouldn't extrapolate from 1 month And all from 1 quarter for that matter, as you know, generally the levels of EDP funding are very, very high. I mean, we are we must be in the top 3 years ever in terms of funding.

Speaker 2

So okay, maybe that this year will be a little lower than last year. Again, these were record years. We're talking about Orders of magnitude greater in terms of multiples of the funding if you just go back 3, 4, 5, 6 years. So Yes. I mean, a step down in a form that will concern as we continue to see very, very good Both bookings and even higher revenue, I'll

Speaker 6

just do one follow-up. The Could you remind everyone what your definition of the business, Pharma, what your technical definition is, what it takes for We

Speaker 2

look at how much they spend In terms of the clinical development of R and D spend, okay? Some of that

Speaker 7

I'm sorry? Go ahead.

Speaker 6

I was just going to say some of that client base would actually be companies that have The commercial pipeline.

Speaker 3

Yes, that's correct. That encompasses what you might call small pharma as well that has commercialized Product, in addition,

Speaker 2

if a company spends less than a couple of 100,000,000, I don't know exactly the number and how We segmented. We have, as you know, tons of analytics and segmentation definitions, but broadly speaking, A company that spends less than a couple of $100,000,000 in a given year in its R and D budget for us as an EVP, okay? That's just One definition, we've got others also triangulate as you can imagine, but that's one definition that I happen to like. All

Speaker 6

right. Last one, if you had to guess and maybe you're not willing to do so, but if you had to guess, just off the cuff, not holding your feet to the fire, Would 10% of your backlog be pre commercial biotech, 20%?

Speaker 2

I don't know if I can give you these numbers, but you know what, why don't we do this? Why don't we give us on follow-up questions, we'll try to give you a little bit more clarity or range On what's in the backlog? We will try to do that. I'll ask the finance team here to I'll try to prevail and use my executive privilege to prepare all these guys. But I don't know at this point, you put me on the spot here.

Speaker 2

I don't know exactly what I'm going to give you. I will give you something.

Speaker 3

Eric, it's helpful To give you a partial answer to that and say the last 2 years large pharma orders have been bookings have been slightly over 50% Of our bookings. So that gives you at least a start at what you're looking at anyway.

Speaker 7

Yes. All

Speaker 6

right. Well, look, I appreciate it. And I I thought you had a great quarter. So good job. Keep it up and look forward to the rest of the call.

Speaker 6

Thanks so much.

Speaker 2

Thank you, Eric. Usually, you tell this at the beginning of the questions. I was concerned, Thanks for taking it. All right.

Speaker 6

It's all good.

Speaker 2

All right. Next question.

Operator

Your next question is from Tycho Peterson with JPMorgan.

Speaker 5

Hey, thanks. Ari, given that most of the questions we're getting are on RFPs and wage inflation, I want to go back to the wage Discussion in EBITDA margins because it is notable you're guiding for expansion here. You talked about benefits from the original merger integration plan. You talked about Digitization and maybe some price increases, but can you maybe just give us a little bit more color on how you're planning to drive margin expansion in this environment this year? Are you pulling forward any additional

Speaker 2

No, not at all. Not at all. As I said before, Just to make myself clear again, Largely, the main driver of our margin expansion is simply leveraging the benefit of all the cost actions that we took Post merger, okay. You will recall, go back and look at the numbers, we have significant restructuring amounts Every year, which obviously affected our cash flow, and we Are now benefiting and leveraging those overhead optimizations, outsourcing actions, Consolidation of infrastructure, merging of IT systems, etcetera, etcetera. Now in addition to this, Part of the reason you see margin expansion actually probably accelerate in 2022 versus 2021 in a quite significant way.

Speaker 2

I think some of it is what I just said and some of it is a mix benefit. I want to remind everyone that the COVID related work, which was quite significant portion Over the past year or 2, it was at a lower margin than we would otherwise have our base business Okay. Last of it was government work, whether it's on the commercial side, very small margins Or on the R and D side, where we also contributed to the global effort to address the pandemic By pricing our COVID related clinical trials, not at the same level as we would otherwise have For traditional work. And so in terms of mix, as this COVID related work Gradually tapers down and the base business continues to grow as a proportion of the total, Then of course, you've got a benefit on the margin side. I might add further that the amount of pass throughs On COVID related work was unusually high, vaccine trials and came also So the combination of lower margin service margins to start with, plus a higher proportion, an unusually high proportion of Pass throughs, all of that contributed to be to an adverse impact, mix impact on our margins.

Speaker 2

As this work gradually tapers down, then obviously, the mix impact Our margins is going to be more favorable and that's the other reason you see an acceleration of our margin growth.

Speaker 5

Okay. That's helpful. And then a follow-up on APAC. Your long term guidance is 11% to 13% growth through 25%. Obviously, within China, there's A lot of noise, Wuxi Biologics getting placed on the unverified list.

Speaker 5

They're a CDMO, you're a CRO, so very different markets. But can you just talk on your view on China here in the near term? And Does any of this kind of noise potentially benefit you?

Speaker 2

Well, I mean, I don't know if you disclose this, but we've got a Couple $100,000,000 business in China. It's been growing double digits over the last few years. We have a fully owned CRO subsidiary in addition to IQVIA, we have a core IQVIA business and we've got a fully old CRO subsidiary that's called Qumuo, which is designed for local Chinese regulatory requirements and largely caters to the local Market, the local biotechs, whilst IQVIA parent Deals with the work of multinational sponsors for their piece of the clinical trial in China when it exists. It's a unique setup, which in combination with our global CRO platform allows us to capture higher growth opportunities with China. Again, we feel good about our capabilities in this market and about our prospects to continue this growth trend.

Speaker 2

Look, there are local CROs that are emerging, that are formidable competitors that are gaining share. There are hundreds literally of outfits in China. As you know, I want I don't need to belabor the point of the China is a complex There are lots of factors external to our industry that can affect How market dynamics play out, but I'm we're not worried, we're not concerned. We are we continue to invest As required, we have a good market position and it's a small piece of our total business.

Speaker 5

Okay. One last quick one before I hop off on OCE on your retention. You talked about 3 50 clients using over one Your biggest competitor did, I think, talk about winning that growth. Are you able to comment on that dynamic at all?

Speaker 3

Anyone? No, look, we don't comment on Individual customers and dynamics with individual customers. And the Roche win was a very big win and The large majority of that is outside the U. S, I think about 90% or

Speaker 2

Yes. 90% of the work of the project is outside the U. S. So I think the other And its subsidiary was with Genentech, but we were Yes. Yes.

Speaker 2

That had its own program, but yes, no Roche has reaffirmed their commitment and is looking to accelerate the rollout actually after the successful implementations we had in several regions. Plus, they've also expressed interest in purchasing other modules. So we're very pleased with our collaboration with this

Operator

Your next question is from John Kreger with William Blair.

Speaker 8

Hi, thanks very much. I wanted to come back to you guys made the comment that you expect your R and D revenue growth this year, I think, to be in the upper teens if you ignore COVID work, which is a very impressive number. Just curious, what do you think that business can do longer term?

Speaker 1

Long term growth. Yes, I think look, I think that The double digit growth was a marker that we have achieved and strive to achieve. If you remember at the beginning of the merger, The growth was very low in the single digits. So we think the continued acceleration will continue and Certainly, you've got double digit sort of mark in the longer term is something that we're looking forward to maintain that acceleration.

Speaker 2

Yes. I mean, look at our investor Conference, we gave you even 25 targets for our company as a whole and we say that the company as a whole We grow 10% to 12% annually, which presumably from a $15,000,000,000 base. So our R and D has to be growing into double digits in order to achieve that. And so that's kind of where we didn't we give guidance also by segment The 25, share those numbers, while the team here is bringing this up. But again, I call your attention I bring your attention What we gave as longer term growth trends just a couple of months ago in November in New York, When we were all together in person and we gave you long term goals And growth trends, and all of which represented a significant acceleration versus what we've had over the 19 to 20 2.

Speaker 1

So double digits at the investor conference.

Speaker 2

Yes, strong double digits, yes. So that's the long term trend Of the business. And again, I point to you that these are large scale businesses.

Speaker 8

Yes, absolutely. Very impressive. And a quick follow-up, Ron, I think this one is probably best for you. In the quarter, can you remind us what the acquisition contribution And did you buy anything notable in the Q4?

Speaker 3

Yes. The acquisition contribution So the growth was relatively minimal. It was a little over 150 basis points. We made a couple of acquisitions in the quarter, the largest of which was a payer analytics Company in Europe, but nothing terribly large. Great.

Speaker 3

Thank you.

Operator

Your next question is from Shlomo Rosenbaum from Stifel.

Speaker 9

Hi, good morning. Thank you. Ari, can you talk a little bit about the breakdown of the upper single digit revenue growth in TAS when you exclude COVID? What's driving the growth there? Is it real world evidence?

Speaker 9

The technology and the information part of the business doesn't grow much at all. So maybe you can just help us with the composition and what are some of the Yes, really big drivers there.

Speaker 2

Yes. Thank you, Shlomo. Well, I and we've done this before. We've told you what it's comprised of. And if you look at TAS, I mean, I like to Look at it in terms of 3 tiers.

Speaker 2

You've got the basic Core information solutions, which is the old IMS business, essentially the data and that's about, I want to say 30% of the business, give or take, and that's a flattish growth rate business, okay? No And that's strategic. That's the way we do it. We just sell the beta with very little price increases. It's a flattish business.

Speaker 2

Then you've got the moderately growing piece of the business, which is let's call it another quarter at this point, A quarter of the business, that's analytics, consulting, various services. And that grows Double digits now. It's been growing strong double digits in past 2, 3 years. It used to grow mid- to high single digit. Now it's growing low to mid double digits for the past few years.

Speaker 2

Yes, low teens, yes. And then you've got the higher growth businesses, and that's the real world and of course the technology businesses, Which will grow good mid teens. And that's about what do you want to say, the balance, was it like 45 Obviously, we used to say it's a 3rd, a 3rd or 3rd. Now obviously, because real world, the fastest growing piece of TAS, Real world and technology are growing at a much faster rate, so they now represent already 45% of the total. And so if you do the math, that should get you to high single digit underlying growth for the segment.

Speaker 9

Okay, great. Thank you. And then maybe this is for Ron. How much is the incremental FX headwinds Impacting EBITDA and EPS guidance for 2022. You talked about absorbing the $70,000,000 of revenue.

Speaker 9

If I were to normalize, how much is that impacting the guidance and just maybe give us a little bit of color on that?

Speaker 3

Well, we offset the entire $70,000,000 in maintaining our revenue guidance. So I mean, another way of looking at it is we raised our constant currency revenue guidance by $70,000,000 I'm not sure I understand your question And beyond that?

Speaker 9

Yes. EBITDA went up about $10,000,000 on each side and EPS $0.05 on each side.

Speaker 3

Yes. Look, the stock typically doesn't have a big FX typically doesn't have a big impact on our EBITDA. We had a little bit of negative drag from FX, not like we did with the revenue that we in our numbers and we have more offsets on the EBITDA side than we do on the revenue side. So you don't see as much

Speaker 9

Okay, great. Thank you.

Operator

Your next question is from Patrick Donnelly with Citi.

Speaker 2

Hey, guys. Thanks for

Speaker 7

taking the questions. Maybe just a follow-up on the M and A question earlier. Can you just talk a little bit about the outlook? Cash flow really strong, leverage is pretty reasonable at 3.6 times. Now are you seeing more activity in the pipeline given some of the volatility in So does

Speaker 9

that take a little bit

Speaker 7

longer to play a role in kind of rattling out the potential sellers?

Speaker 2

Well, that's a good question. Look, We always obviously, we're always looking and even if you weren't looking, people call us to see. There are lots of assets that are in the market. We haven't been that active over the past couple of years In terms of numbers of acquisitions, we've done a little bit more in dollars this year, largely driven by our largest ever The year which was simply the consolidation of our lab business, we bought 40% that we didn't own From Q2 I'm sorry, from Quest, that was our Q2 Lab joint venture And we paid, I think, dollars 760,000,000 for that. And we did a couple more larger acquisitions.

Speaker 2

As you know, The multiple valuations in this space in where we operate in the healthcare technology Information space, the multiples are really, very high. And the reason for that is that private equity essentially is trading those assets From one private equity firm to another. And so they keep bumping up the valuations. And We look at these assets, but we are always going to continue to be very reasonable and conservative. If we see Value that we can create, then we will certainly look at these assets, but no major changes versus what you have As do before, we will be opportunistic.

Speaker 2

If there are things assets that we would like to own, we will Make a reasonable bid and we won't get excited by what we're told the market is. Plus I've got Good balancing CFO here with Matt and his team that we have healthy The discussions with the business heads and again, I hope that you could See from our history that our capital deployment has been prudent. We've been willing to have more debt, And we may be willing to have more debt if necessary because we believe our business model is very different. Leverage for us at the peak of the The pandemic was 4.8. And as a company or even if you go back to legacy companies, we believed with leverage ratios that were even 6 times.

Speaker 2

And the reasons for why we were willing to live with those leverage ratios is simply because our business profile, our cash flow generation model, Our business visibility profile, where vast majority of our business is already booked early in the year, Both commercial and clinical, all of that makes us Comfortable that we can live with those, especially in an environment where

Speaker 9

I know there's a lot

Speaker 2

of talk about rising rates. And I want to remind you that The bulk of our debt is at essentially fixed rates largely because of Hedges and the alignment between our euro and debt and euro profits and dollars versus dollar profits. So all of that makes us comfortable. Rates continue to be at historic lows. We will do what's right for the business.

Speaker 2

We will allocate capital to first internal investments, secondly to acquisitions and thirdly To share repurchase and you will see us go back and forth depending on opportunities. But again, we intend to try to continue to reduce debt As is prudent, within the limits of what makes sense from a management standpoint, it doesn't make sense To eliminate our debt at the current rates, I mean, now we view that as negligence on our part. So that's, I guess, the best answer I can give to your question. Thank you very much.

Speaker 7

We done? Yes. Thanks, Ari. If I could

Speaker 2

just squeeze in one follow-up if

Speaker 7

you have a minute. I just want to follow-up on kind of the funding backdrop. Obviously, you've talked a little bit about the R and D strength going out multiple years, double digit growth. I guess when you think about It seems like you were never underwriting the type of record strength you saw last year in order to hit those numbers. If we did see some prolonged softness of Relative to last year's levels, it's still more than sufficient to support that growth outlook, I guess.

Speaker 7

I just wanted to make sure that's kind of the way you're framing it. I

Speaker 2

I cannot overemphasize that we are not seeing that translate into Our sales pipeline, I mean, again, I gave you some numbers earlier and biotech, I'm not giving you The numbers here, because I don't know if I should give them to you or not, but the vast majority, a big majority Of the RFP dollar pipeline and numbers, volume and dollars is actually PVP. So we are not seeing any impact from potential slowdown of the funding into our pipeline, not at all. And the pipeline is at record high levels. So again, it won't affect us 1 bit. And by the way, again, I'm not seeing that happening.

Speaker 2

We talk to EVP all the time.

Speaker 1

Okay. It's encouraging to hear. Thank you.

Speaker 2

Thank you.

Speaker 1

That's going to be our last question. So thank you for taking that. We look forward to speaking again next quarter. Myself and the team will be available for any follow-up questions you might have for the rest of the day. Thanks.

Operator

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

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