Good morning, everybody. Luke Sergott, the Life Science Tools Diagnostics Analyst here at Barclays. Today, I have Ron Bruehlman from IQVIA, CFO. I think we can just probably get right into it. Okay, great. If that's okay with you. Off the top here, let's go, you know, instead of ticking off the macro headwinds, let's tick off the topics of today. SVB exposure. Yeah ... and just walk us through that. I figured that would probably be the first question. A week ago, I would've had no idea. Look, overall, what I would say is, it's not a big concern for us, at least so far as what we can see right now. You know, as far as our own relationship with SVB, we have no loans whatsoever with them. We had a small amount of cash on deposit with our subsidiaries that we acquired back, you know, last year or so that we were able to move out this week. No exposure there. No big concern. Of course, the bigger question is, how about our customers? How many customers do we have that bank there? We went back and took a look, and just under 150 customers had some sort of relationship with SVB. It sounds like a lot, we have 10,000 customers. Actually, not so much. Then we looked at what our exposure was for these customers. We're actually at a net cash positive position, which is to say we've received more in advances than we, you know, we're waiting for from them. That's good. Just the size of these customers because, okay, 150, are they big, are they small? In total they represent about, well, actually less than 2% of total IQVIA revenues. We haven't seen any issues with them, frankly, everybody, you know, having access to cash and so forth. So far, no big issues. Of course, we all have to be a little bit, you know, careful about projecting what's gonna happen with the overall economy. You know, you see the markets being roiled today in the banking sector in particular and so forth. Are there credit marketing implications ongoing and so forth? Who knows? That's kind of above anybody's, and certainly my ability to predict at this point. With SVB in particular and Signature Bank, no issue at all with them. All right. That's great. Can you talk about with that type of background in mind, can you talk about the industry dynamics that you're seeing right now? We ended the year really strong for you guys. There's been some fear on the bookings environment, especially on the biotech side. There's nothing new there. Talk about as you're seeing RFP volumes and see how that ultimately factors into your guide for the year. Yeah. Well, look, just looking at the overall industry demand picture, it's very consistent Q1 so far with what we saw in Q4, and I would break that into two parts. One would be our Tech and Analytics Solutions business, Commercial business. You'll recall that in the fourth quarter, we mentioned that there was some, I guess, cautiousness on the part of customers, there, particularly on discretionary sort of projects, you know, analytics and consulting work and, you know, some late data purchases and things of that nature. We didn't see the normal budget flush where normally we would have seen it. We anticipated that some of that cautiousness would carry over into Q1, and baked that into our guidance. In fact, that's what's happened. Hasn't been a dramatic slowdown, but continued cautiousness on the part of customers, which I would attribute to, you know, the ongoing concern about what's going to happen in the economy. That's on the, you know, kind of the sales and marketing side, the commercial side of our pharma customers. If you go to the R&DS side, the clinical trial side, you see absolutely no change at all there. The, you know, the RFP flow remains very strong. Bookings, good. The, you know, this is large pharma down through EBP. Even in the EBP sector, we've seen a very, very good, you know, continued RFP flow. What I would say is no change there. Demand environment remains quite solid, and, you know, we're always monitoring that for any change. you know, last year in particular, when we had all the concern about Emerging Biopharma, you know, we were asking more and more questions of our operations. Are you seeing anything? Are you seeing anything? so far, no, we haven't. It's been very solid. On that task, if you could dig in a little bit more, from the pause or the cautious funding environment, I think you described it. Can you talk about are there any particular functions that are being paused or, customer class or across the three different businesses in there? I don't think it's a customer class issue so much as it is, you know, pharma looking at their spend, you know, for instance, their marketing spend, or their spend on consulting work. You know, sometimes looking at a few customers in the margin about how much data they need and so forth, and just trying to trim their budgets a little bit going into this year to respond to what they see as a potential downturn in the economy. Taking a little bit longer to make decisions. Ultimately, I mean, we're not talking about dramatic changes here, but it's on the margin. This is following a period kind of in 2021 into 2022, through much of 2022 that was quite strong. It's in comparison, I would say. Okay. Still growing. Yeah. The OCE, you know, for those wins, you're still seeing elevated. You know, RFP and that's still. Yeah, the OCE is more kind of, those come up as they come up, which is to say, which companies make the decision to switch vendors or take a new look at their Customer Relationship Management business. Those haven't been as, I would say, sensitive to the economic concerns. It's more, you know, pipeline of things that are gonna be coming up for consideration from the customers, we continue to see that. We continue to win, you know, more than our fair share of those that do come up. Okay. On the R&DS side, you guys haven't seen any of the pressure from any of the biotech funding. Can you talk about the breadth of your portfolio, or why do you think that some have started to see it? Right. Why hasn't it hit you guys? 'Cause you guys deal with so many different customers. Yeah, we do. I would say we're a little bit different than some of our peers that tend to participate more in the early part of the market, and where they have seen some issues. We tend to, you know, work customers a little bit later, you know, phase II, phase III. We have a higher percentage of customers that are post-revenue customers than some others. I think our total pre-revenue Emerging Biopharma is about 10% of our RFP flow and our backlog. Not insignificant, but not, you know, hugely significant. We also tend to be fairly choosy about what customers we will take. You know, we wanna make sure that they have the funding in place and we structure the contract such that we get paid more upfront than we might with a larger customer. All of those things together I think makes us a little bit less vulnerable than some of the others who participate earlier in the market with smaller customers, more pre-commercial, where you might ride a big wave up like in 2021 and then have it come back down with funding. I'd make a comment about funding too. I mean, the impression has been, boy, funding has really been hurt. If you look on a year-over-year basis, yeah, 2022 was weaker than 2021 or 2020, but those were both record years. If you compare overall funding, we look at a source called BioWorld that aggregates across public, private funding, follow-ons and so forth. You see that 2022 was, I think, $61 billion of funding for Emerging Biopharma, which is consistent with or higher than, slightly higher than the pre-pandemic level. You saw a big ramp-up in 2021 that inevitably wasn't gonna continue, and now we're back to kind of more normal levels. What we've seen so far, very early in 2023 of course, but what we've seen so far in 2023 looks fine on that front. We're not overly concerned about the funding issue. I think there was a lot of, you know, some comments made by competitors that got people concerned, and then just the raw year-over-year compares looked ugly and told a little different story than you would get if you took a longer-term context on the issue. Gotcha. Are you seeing from the RFPs coming in, is there a shift more towards FSP or any type of dynamic change in the type of project you guys are winning? Yeah. We've seen, I think, in the last, call it 3 years- 5 years, a shift a little bit more towards FSP work from full service work. You know, the reality is most of our large pharma customers do a combination of both. In fact, we do some hybrid trials where within a given trial, part of it will be FSP and, you know, certain elements of it, certain elements will be full service. We've seen a lot of that. There are few of our customers that are really exclusively FSP. We've seen some more, you know, shift towards more FSP work. At the same time, the faster-growing part of the market, which is Emerging Biopharma, tends to be more a full service sort of customer because they don't have the case of employees and the global breadth, so forth, to run clinical trials on their own. Yeah, on the margin, a shift towards FSP, but there's a lot going on underneath the surface when you look at individual parts of the business. Does that change as you get to the maturity of a particular therapeutic indication building? As I'm thinking about is if you have gene therapy, there's so much, and cell therapy, there's so much difference, so many differences with how those trials would be run that I would imagine that the FSP capabilities would be built before you start landing those big strategics. Yeah. That's the case. What you find is in cell and gene therapy in some areas like that, it tends to be more oriented towards full service work, even among the large sponsors who like FSP work a lot. Yeah. And then in the more mature therapeutic areas, maybe a shift more towards FSP work. You know, another thing about the FSP work is that pharma will do kinda use you for a base level, some certain customers, base level of clinical trial work, and then they'll use the full services as kind of a capacity buffer for the ups and downs and so forth. There are a lot of different elements to this. How's the pricing work? How's the environment been? I'm sure it's probably stable, but when you have more FSP, the common, you know, thinking is that that's coming in at a lower margin. Yeah, it is. FSP work typically comes at a lower margin than full service work. There's no question about that. That's. You know, if on the margin you're going towards more FSP work, that is a, you know, a mixed drag on the margin. If we can dig in here for the guidance for the year a little bit. Talk about the dynamics here between you've got that big full year. Give us a sense of the pacing and the, kind of between the top line and the margin expansion. Yeah. Yeah, sure. Well, look, when you look at the full year, there's some important things to take into consideration. The, the most, I guess the biggest of them is what's happening with COVID-related work. We signaled overall guidance, overall revenue growth on a reported basis of just over 5% to slightly under 7% revenue growth, which looks, you know, light compared to, you know, some prior years. You have to take into account there that our COVID-related projects are coming down about $600 million in total revenue year-over-year. In our guidance, to be fair, we have some things going the other way. One would be we've assumed 100 basis points of M&A contribution during the course of the year. At least when we put out our guidance, there was a very slight tailwind for the year due to FX. Now that changes every day, and it's probably gone against us a little bit since we did our guidance. What we like to look at is kind of an underlying revenue growth rate, which is organic, constant currency, taking COVID out of both years. If you do that, we're looking at, a very solid, overall growth for the year for IQVIA that, you know, it's very much in line with what we've been doing all along through this period. As you're thinking about the dynamics between the two segments in the first quarter, you know, the TAS business is probably gonna be softer than the R&DS. Is that, is that safe to assume? through the year, I would say, look, here's the guidance we've given. We've given growth of we've assumed this underlying constant currency ex-COVID growth of 9%-11% for the company as a whole. TAS under, you know, the very segments underneath that, TAS 7%-9%, R&DS about 10%, CSMS, you know, kinda flat to up low single digit or so. Yeah, in that sense, R&DS growing a little bit faster than TAS, although TAS still very solid underlying growth. You know, that's based on the strong bookings activity we've had in R&DS going back. Yeah. That's then just a couple of years, yeah, continues to improve throughout the year. I mean, what kind of step up are you assuming here in the back half? Well, yeah. I mean, yeah. I think one of the things that, when you're looking at the calendarization, an important thing to consider. There are two really important things to consider here. First is that the biggest part of the year-over-year COVID decline comes in Q1. $600 million for the full year. Over 40% of that decline comes in Q1, so that's the biggest drag in Q1. Secondly, you have the biggest FX impact. FX is even though we were saying in our guidance it was slight tailwind, slight tailwind, it's actually over 200 basis points of drag in Q1. This was all assuming, you know, FX rates mid-February when we released earnings. Those two things are affecting the year-over-year growth rate in Q1 versus the balance of the year. As we go forward, those work their way out of the system and you'll have stronger growth rates just as a consequence of that. We're also assuming that, you know, some of the cautiousness we've seen in the spending on the TAS side from our customers starts to abate as we go through the year and looking out at the pipeline and so forth. We're comfortable that'll happen. Okay. That 100 basis points of M&A that you guys have baked in, you spent $1.3 billion last year. Talk about the types of assets that you're acquiring and why only 100 basis points... Yeah. -of contribution. Yeah, I wanna clear up what I think is a potential misperception here. I was scratching my head about it, and I'd say, "Okay, well, if you do $1.3 billion and you assume you're getting 100 basis points, boy, doesn't that sound like good times for revenue?" No, that's not the case because you have to remember, when you make an acquisition in 2022, you're getting some of that revenue in 2022. The 100 basis points is a year-over-year incremental contribution from acquisitions that we've made. That's really what the, you know, kind of the math is. It's considerably better than the raw numbers you might suggest. you know, as far as what we did in that $1.3 billion, I mean, there were a number of smaller acquisitions that I won't talk about, but the two biggest ones we did were in the digital marketing area in North America, which is Lasso, and that complements very well acquisition we did a year earlier called DMD Marketing. The other was in the lab space, in a company called [audio distortion] that does advanced bioanalytical testing and biomarker testing and complements what we've built out in our lab business in terms of additional capabilities for our customers. Just a few words on the Lasso acquisition because I don't think everyone appreciates what we're doing in the digital marketing space. as all of you know that pharma has been to an extent de-emphasizing the use of sales reps and going towards more multi-channel means of marketing. You know, it's not like it's a dramatic overnight shift, but it's a steady shift towards additional channels for multi-channels for marketing. We've seen this coming, and we didn't have as big a presence as we would have wanted in the digital marketing space to help our pharma customers. We went out and we made an acquisition first of a company called DMD Marketing in the U.S. They have a wonderful model where they have opt-in consent from about 90% of the healthcare professionals around the country to be able to track as they go through medical journals and so forth that are available on our site. We can use this data to see what are the healthcare professionals interested in, and we could very specifically target them, help our pharma customers target them through digital marketing campaigns. You know, Lasso was a nice complement to this because Lasso is a platform that our customers use to actually place the digital ads in different, you know, digital forums, and also to track, you know, their effectiveness, what's happening, what you can see. You have kind of the information and the platform coming together, and it's been a really nice source of growth for us. It's a big growth area for our pharma customers. I think strategically important as they, you know, gradually shift away from, you know, reliance on sales force, you know, to call upon healthcare professionals. How big is that business for you now? We haven't specified the dollar amounts. It's not huge in terms of, overall, you know, we're not yet, in the hundreds of millions of dollars, let's put it that way. There's a lot of growth potential there. It's like a hedge for the natural decline in the CSMS business. Well, yeah, just a little bit. Remember, a lot of what we do in the TAS space relates to, you know, campaigns and direct-to-healthcare professional marketing. We do a lot in terms of helping our customers do call planning of their sales reps, sales force design, deciding which doctors to call on and so forth. It's very complementary to this. It's just a different way that pharma's going to market now than they used to. Probably the industry, healthcare industry is a little bit behind many other industries in this regard. I mean, this is the you know, digital marketing been around for a long time. Yeah. Just to wrap up your last question on the capital deployment. Updates on your priorities for the 2023 and then we'll come back to normal or, you know, how are you guys thinking about that? Yeah. Look, our guidance was, we'd spend about $2 billion in terms of capital deployment this year, roughly $1 billion acquisitions, $1 billion on debt reduction. There's some debt, Euro term loans that expire or that come due in early in 2024 that are a pretty favorable borrowing rate now, but, you know, they don't look great to refinance. We'll likely take those out towards the end of the year. We explicitly didn't put anything in for share repurchase this year. You know, we reserve the right to do some if you have situations where you have market dislocations or whatever, where, you know, you just say, "This is crazy." You know? It's just too good an investment opportunity buying our own stock not to, not to do that. You know, in any event, we see our net leverage ratio declining to 3 or below probably by year-end. It's just kinda naturally coming down. Not so much because we're reducing large amounts of debt, it's just we're growing as an organization, our EBITDA is growing, so our capacity to service debt continues to grow. Gotcha. Gotcha. Still the $600 million of Yeah. Probably a little bit more than that. I mean, if I could give an exact number, I'd say somewhere in the 610-620 range right now. We always do that based on what the outlook is for rates, and that seems to change daily too, right? All right. Thank you. Okay, great. Thank you.