Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA First Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Andrew Markwick, Senior Vice President, Investor Relations and Treasury. Mr. Markwick, please begin your conference.

Thank you, Casey. Good morning, everyone. Thank you for joining our First Quarter 2021 Earnings Call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Nick Childs, Senior Vice President, Financial Planning and Analysis, and newcomer for this call, Bryan Stengel, Associate Director, Investor Relations and Bryan has succeeded in overseeing HealthTech. 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 on the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. 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 could 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-K and subsequent SEC filings. In addition, we will discuss 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 to turn the call over to our Chairman and CEO, Ari Bousbib.

Good morning everyone and thank you, Andrew. Welcome and thank you for joining us today. This morning we reported first quarter results with strong double-digit growth in all key financial metrics and as a result of this performance and an improved outlook for the rest of the year, we have once again raised our guidance. The 2021 guidance that we provided to you last quarter was already within reach of our original pre-COVID plans for 2021. Our revised guidance today significantly exceeds those original plans. In many ways, 2020 was a reset year for our company and also for the industry. We've been saying for a long time that the traditional timelines for the development of new drugs are too long. The speed at which COVID vaccines were developed in 2020 has obviously raised the bar in terms of what expectations should be. The crisis accelerated the adoption of new technologies and we believe it will force a lasting change in how innovative medicines are developed and commercialized. All of this has made IQVIA even more relevant to our clients and has highlighted the power of our differentiated offerings. The deep client engagements that we had during the pandemic demonstrated how uniquely positioned we are to bring new insights and expertise that can improve drug development and commercial fine lines. What is also becoming clear is that there is a lot of pent-up demand due to one, the many trials that were slowed down or temporarily pushed to the right and two, the trials that did not get started as they were crowded out by the COVID resolution efforts on which everyone was focused. This pent-up demand across therapy areas, combined with record levels of biotech funding provides a very strong backdrop for our industry. As a result of these favorable conditions, we've started the process of revisiting our Vision 2022 goals. We plan to update you later this year on our Vision 2022 progress and lay the groundwork for the next phase of our journey. We may do this at an Investor Conference later this year, especially if we are able to hold one in-person, so stay tuned for more information. For now, let's review the quarter. Revenue for the first quarter grew 24% on a reported basis and 21% at constant currency was $209 million above the high end of our guidance range. About half of these beats came from strong operational performance and half was from higher pass-throughs. First quarter adjusted EBITDA grew 32% reflecting our revenue growth and productivity measures. The $69 million beat above the high end of our guidance range was entirely due to the stronger organic revenue performance. First quarter adjusted diluted EPS of $2.18 grew 45%. The beat here entirely reflects the adjusted EBITDA drop-through. A little bit more color on the business. Our commercial technology presence continues to grow as we launch new offerings in the market. During the quarter, a top 10 pharma client deployed our next best action solution in 14 countries. This tool is a SaaS-based technology platform that optimizes our client salesforce effectiveness. It increases the success of their marketing activities by providing automated sales call recommendations for the field based on advanced artificial intelligence and machine learning algorithms. Our base OCE and CRM win rate remained strong. We added another 10 new clients this quarter and now have 150 clients deploying about 70,000 users. Our eCOA technology platform or electronic clinical outcomes assessment tool, which is used by our Real World as well as R&DS teams is also experiencing strong demand. This cloud-based platform utilizes a user-friendly interface to collect clinical data directly from patients. We launched this solution during 2019 and the team is seeing strong user acceptance. To date, we've been awarded over 125 studies with over 300,000 patients enrolled and over 4 million surveys completed. Moving now to R&DS. We continue to build on our strong bookings momentum in our R&DS business. In the first quarter, we achieved a contracted net book-to-bill ratio of 1.41 including pass-throughs and 1.41 excluding pass-throughs. At March 31, our LTM contracted book-to-bill ratio was 1.52 including pass-throughs and 1.45 excluding pass-throughs. These numbers are all the more impressive given our strong revenue growth. Our contracted backlog in R&DS including pass-throughs grew 18.3% year-over-year to $23.2 billion at March 31, 2021. As a result, our next 12 months' revenue from backlog increased by over $600 million sequentially to $6.5 billion that's up 31.1% year-over-year. The R&DS team is building on the success we experienced in 2020 with our hybrid virtual trial offering or decentralized trials. In the first quarter, we won decentralized trials in new therapeutic areas including cardiovascular and metabolic disorders. We are working with 5 of the top 10 pharma clients and to date, we've recruited almost 170,000 patients using our advanced decentralized trial solution. Finally, you saw that on April 1, we completed the acquisition of the remaining interest in Q Squared Solutions from QUEST Diagnostics. As you know, Q Squared is an industry-leading laboratory service provider for clinical trials with global capabilities across safety, bioanalytical, vaccine, genomics and bioanalytical testing along with best-in-class technology in bio specimen and consent lifecycle management. These transactions streamline strategic decision-making for us and gives us the flexibility to build greater bioanalytical, genomic and bio market capability, as we see increased attractive growth opportunities in this expanding market. With that I will turn it over to Ron for more details on our financial performance.

Thanks Ari, and good morning everyone. As Ari mentioned, this is a very strong quarter. I would start first by giving you some more detail on revenue. First quarter revenue of $3.409 billion grew 23.8% on a reported basis and 21.4% at constant currency. Technology & Analytics Solutions revenue for the first quarter was $1.348 billion, which was up 20.7% reported and 17.1% at constant currency. R&D Solutions, first quarter revenue of $1.868 billion improved 29.6% at actual FX rate and 28.1% at constant currency. Pass-through revenues were a tailwind of 770 basis points to the R&DS revenue growth rate in the quarter. CSMS revenue of $193 million were down 1.5% reported and 4.1% on a constant currency basis. Moving down the P&L, adjusted EBITDA was $744 million for the quarter, representing growth of 32.4%. Margins expanded on 140 basis points despite significant headwinds from higher pass-through revenue and lower margin COVID work. GAAP net income was $212 million and GAAP diluted earnings per share were $1.9. Adjusted net income was $425 million for the first quarter and adjusted diluted earnings per share grew 45.3% to $2.18. R&D Solutions delivered another exceptional quarter of net new business, backlog was up 18.3% year-over-year at $23.2 billion at March 31. Next 12 months' revenue was already mentioned from backlog grew significantly and currently stands at $6.5 billion, up 31.1% year-over-year and of course this metric now includes the first quarter of 2022, which is a further indication that we see the momentum of the business continuing beyond this year. Now, let us review the balance sheet. At March 31, cash-and-cash equivalents totaled $2.3 billion and debt was $12.2 billion resulting in net debt of $9.9 billion. Our net leverage ratio at March 31 improved to 3.9 times trailing 12-month adjusted EBITDA marking the first time since just following the merger that this ratio was below 4 times and this is particularly noteworthy; you may recall that in 2019, when we gave you our 3-year guidance, we committed to deleverage to 4 turns or below exiting 2022. We are pleased to have achieved this target entering 2021. First quarter cash flow; free cash flow in particular with very strong cash flow from operations was $867 million, CapEx was $149 million, resulting in free cash flow of $718 million. We repurchased $50 million of our shares in the quarter. Which leaves us with $867 million of share repurchase authorization remaining under the program. Now let's turn to guidance. You'll recall that back on April 1 when we announced the acquisition of QUEST 40% interest in our Q Squared joint venture, we raised our 2021 EPS guidance by $0.12 to reflect the elimination of QUEST minority interest in the joint venture's earnings. We wrapped revenue and adjusted EBITDA guidance unchanged, of course because we already consolidated the financials for the joint venture prior to the transaction. Well, today we're revising our guidance upward again as follows. We are raising our full-year 2021 revenue guidance, both at the low and the high end of the range resulting in an increase of $625 million at the midpoint of the range. The new revenue guidance is $13.200 billion to $13.500 billion, which represents a year-over-year growth of 16.2% to 18.8%. This increased guidance range reflects the first quarter strength and the continued operational momentum that we see in the business and also absorbed FX headwind versus our previous guidance. Now compared to the prior year, FX is expected to be a tailwind of about 150 basis points to the full-year revenue growth. From a segment perspective, we now expect full year Technology & Analytics Solutions revenue to grow at a low- to mid-teens percentage rate and R&D Solutions to grow in the low- to mid-20s. Our previous expectations that revenue in the CSMS business would be slightly down remains unchanged. We're also raising our full-year profit guidance. As a result of stronger revenue outlook, we've increased our pre-adjusted EBITDA guidance at both the low and high end of the range resulting in an increase of $133 million at the midpoint. Our new full-year guidance is $2.900 billion to $2.955 billion, which represents year-over-year growth of 21.6% to 24.4%. During the EPS, I mentioned the Q Squared transaction on April 1, as a result of that, we raised our adjusted diluted EPS guidance by $0.12 to a new range of $7.89 to $8.20. We are now raising both the low and the high end of that guidance range, resulting in a new adjusted diluted EPS guidance of $8.50 to $8.75 or year-over-year growth of 32.4% to 36.3%. A little bit of detail on the P&L interest expense is expected to be approximately $400 million for the year, operational depreciation and amortization is still expected to be somewhat over $400 million and we're continuing to assume an effective tax rate of approximately 20% for the full year. This guidance assumes that current foreign currency exchange rates remain in effect for the rest of the year. Now let's turn to the second quarter guidance, assuming FX rates remain constant through the end of the quarter, second quarter revenue is expected to be between $3.225 billion to $3.300 billion which represents reported growth of 27.9% to 30.9%. Adjusted EBITDA is expected to be between $690 million and $715 million, which represents reported growth of 42.9% or 48.0% and finally, adjusted diluted EPS is expected to be between $2 and $2.10, up 69.5% to 78%. So to summarize, we delivered very strong first quarter results, once again reporting double-digit growth in all key financial metrics. This included revenue growth of over 20% in both our TAS and R&DS segments. R&DS backlog improved to $23.2 billion, up 18% year-over-year. Next 12-month revenue from that backlog increased to $6.5 billion, up 31% year-over-year. Free cash flow was strong again this quarter, net leverage improved to 3.9 times trailing 12-month adjusted EBITDA and finally, given the strong momentum we see in the business, we are once again raising our full-year guidance for revenue adjusted EBITDA and adjusted diluted EPS.

Before we open the call up for Q&A, I'd like to make you aware of a couple of leadership changes within the IQVIA finance organization. Andrew Markwick who has led our Investor Relations function for the past 4 years and very capably, I think you'll agree, is moving on to become CFO of the R&DS unit. Nick Childs, who currently runs our Corporate FP&A function will take over as SVP of Investor Relations and Corporate Communications. Nick has been with us for over 3 years and has a very deep knowledge of the company and our financials and he will be succeeded by Mike Fedock who has served as CFO of the R&DS unit for the past 2 years. Finally, those of you on the fixed-income side know that Andrew has also served as our treasurer for the past couple of years and Manny Korakis who is our Corporate Controller will also assume leadership of the treasury function going forward. Now, rest assured, Andrew will stay around for a few days to finish up the quarter and take all your questions and to assure a smooth transition to both Nick and Manny. And with that, let me hand it back over to Casey who will open the call for Q&A.

Great, Thank you. And your first question here comes from the line of Robert Jones from Goldman Sachs. Please go ahead, your line is now open.

Great, good morning. Congrats to everyone and especially, Andrew, hopefully, we will still get to communicate and you will miss having to talk to all of us all the time. I was going to ask already about the long-term guidance, but I think it sounds like, I can anticipate the answer will be wait till later this year. Obviously, the updated revenue guidance today, it looks like it's a CAGR of 9% to 10% off of 19, so it sounds like, if I heard you right, we'll get more on that later. So instead, maybe I'll just go back to a bigger industry question around M&A, Ron, you mentioned getting the leverage below the target that you guys had set out and clearly there is a ton of activity in this space right now. So, I'm curious, as you look at the business and you look at some of the movement around you in the space in what your competitors are doing, do you feel like there are capabilities that you really need to go out and buy to enhance or build out what you're already doing or do you think IQVIA is in a pretty formidable competitive standpoint where it is today?

We recognize that there are many questions, and while I appreciate your long-term inquiry, our need to update our long-term guidance stems from our three-year planning process shared in June 2019. At that time, we set goals for both top-line and productivity measures, aiming to re-engineer our company for greater efficiency. A lot has transpired since then, particularly in 2020, which I described as a reset year. Given this context, we believe it's time to pause and assess our progress. We are likely to surpass our original targets for 2022, and we plan to complete our planning process. Later this year, we aim to hold an investor conference similar to June 2019 to update you on 2022 and possibly discuss new 2025 targets. Regarding M&A activity in the sector, we are not surprised by the current wave of activity, especially since the IMS and Quintiles merger in 2016. As we near its fifth anniversary, we acknowledge significant changes in the industry, which we intended to disrupt with that merger. We believe we have made progress toward our original goals and that our strategy has been sound. Consequently, many firms are seeking to acquire necessary capabilities. Without the means to obtain technology, data, and analytics capabilities, CROs may find themselves having to sell or merge. Concerning our M&A pursuits, we aim to strategically acquire companies that enhance our capabilities, mainly in technology, to drive our growth. We continuously evaluate potential sales among our assets. We have substantial liquidity, with $2.3 billion cash at the quarter’s end and $1.5 billion in untapped revolver capacity, totaling $3.8 billion. We utilized $760 million of that for a minority stake acquisition in our lab business, which we are excited about. After that, we have over $3 billion available for deployment. Our preference is to invest in internal development or strategic acquisitions; if those options do not materialize, we may return cash to shareholders through share repurchase, as we have traditionally done.

Thanks, Robert.

Thanks, Ari.

Your next question comes from the line of Eric Coldwell from Baird. Please go ahead, your line is now open.

Thank you very much. Good morning. There are many topics we could discuss, but I anticipate questions regarding the COVID statistics for the quarter and the year. If you could provide an update on the number of COVID trials awarded so far, any insights on the revenue percentage for Q1 or your outlook for the year concerning COVID vaccines or therapeutics, information about the backlog related to COVID, and any comments on the pipeline for COVID studies, that would be greatly appreciated. Thank you.

Thank you, Eric. Regarding the number of trials, I don't have specific data on that, but the main impacts from COVID are primarily from the large and rapidly advancing COVID vaccine trials. These are what significantly influence our results. We have many smaller COVID-related activities throughout the company, but they don't have the same level of impact. Among the five major Phase 3 vaccine trials funded by Operation Warp Speed, we have worked on four. We've completed the full clinical trial for two of them, are conducting pharmacovigilance work for one, and have lab work for the other. These trials have had the most considerable effects. In the first quarter, excluding these activities, R&DS revenue increased in the mid-teens. Additionally, COVID-related work has indeed contributed to our first quarter growth, as noted in previous calls. We've seen demand from governments globally, including the US FDA and agencies in Europe and Asia, which has also fueled significant growth in the first quarter. If we exclude these activities, cash revenue growth would have been in the high single digits. Therefore, we estimate that COVID efforts have accounted for about half of the total revenue growth. Regarding your question on the R&DS backlog, if I remember correctly, the service backlog in R&DS is in the high single digits.

Yes, that's correct.

Yes. So that's what it represents. Now, it does have a much longer tail than we would have thought. It is certain it is going to remain with us through 2021 and well into 2022. There are many reasons for that. There are many vaccines for multiple manufacturers that are being developed to meet global demand. We are still responding to RFPs for vaccines around the world in many other countries that want to develop their own vaccines. There are follow-up studies for adapting the vaccines for the mutations of the virus. There are alternative versions of the vaccine that will be needed in case of adverse safety events or in case of quality and manufacturing issues and then there are a bunch of novel treatment programs that are targeted at specific populations, specific conditions and then there is a lot of safety monitoring work that is also in the pipe. So again, the first point that I understand, the context of your question the COVID-related work is not going away anytime soon, and is here for a while, we're very happy that we have our fair share of that market. What I also should say because I know if you didn't ask the question, you're going to ask it soon that the RFP pipeline across the board is very strong, well beyond COVID. In fact, our pipeline of qualified RFPs is approaching $25 billion if I remember correctly.

23.

Okay. It's over $23 billion and it's growing double-digits, both in volume and in value. Again, bear in mind, as I said in my introductory remarks that the work that should have happened in 2020 on all of those other trials that were either about to start or starting all in flight, lots of it was kind of slowed down or pushed to the right. So because of that we've got that pent-up demand that's coming out. And Number 2, lots of projects that normally would have come in will displace, crowded out by the efforts that everyone puts on trying to resolve the COVID situation and so all of that is coming through, and we are confident that both because the COVID work is not going the way in a sharp manner. And number 2, because we've got all of these other activities, there has been bubbling up. We are confident in our guidance for this year and continued strong momentum for the business well beyond COVID.

Thanks, Ari.

Thank you, I appreciate it.

Your next question comes from the line of Shlomo Rosenbaum from Stifel. Please go ahead, your line is now open.

Hi, thank you very much. Ari, if you don't mind, I'm going to try and slip in a few. First, I want to ask you if you could talk a little bit about the Real World evidence trends and update us and how that's going that's been a very strong growing in the past. Number 2, just wanted to ask you for a little bit more detail on how you accelerate the growth in net Q2 business by owning all of it. And then finally, I mean how do you do an encore for a quarter like this. I mean can you talk about the discussion about the business momentum, continuing it's such a strong quarter it's hard to believe that you'll be able to improve the partners and I know I've asked a lot but going to kind of put them out there.

Thank you, Shlomo. We are not indicating that we will consistently achieve the 25% growth shown here, as that is not typical. In response to Eric’s question, I want to clarify the impact that our significant COVID-related vaccine work had on our business. Excluding those factors, our business is experiencing strong momentum. As you may recall, we provided guidance on where we aim to be as a company. By the end of 2022, we anticipated a new normal with high single-digit growth, and we believe we will exceed that, excluding the disruptions and anomalies. Specifically, excluding the rapid vaccine-related work from the first quarter, our R&D business grew in the mid double-digits, while the TAS business grew in the high single digits, also excluding COVID-related work. We feel very comfortable with these results. The remainder of the year should show even higher growth due to the lingering effects of COVID and the pent-up demand that needs addressing, which adds to our momentum. Regarding your question about Real World, we experienced strong double-digit growth in Q1. We previously discussed the care registry for the FDA and our patient monitoring initiatives. We now have over a billion patient lives in our database and continue to enhance our platform for clients by deploying our eCOA platform to collect clinical data directly from patients. We are witnessing significant demand in Real World, particularly as we start to track patient populations, including those who had the virus, those who received vaccinations, and monitoring potential adverse effects. This aligns perfectly with our capabilities in Real World.

Thank you, Shlomo.

Your next question comes from the line of John Kreger from William Blair. Please go ahead, your line is now open.

Thanks very much. Hey Ari, just maybe a follow-up, I think last quarter you talked about your assumption within TAS, you assumed RWE COVID work would really sort of fall off I think in the second quarter. Do you still feel that way or do you think this is going to continue to be strong throughout the year?

Yes, I mean, it's going to last longer than we thought, which is why I mentioned earlier that we were not expecting this to continue at that time, and that shaped our guidance for the year. We are updating our guidance and significantly increasing it to reflect not only our first-quarter performance but also our revised expectation that this work will carry on for the rest of the year. It won't be at the same level as in the first or fourth quarters and will gradually decline, but it remains substantial for the remainder of the year and importantly into 2022.

Yes, I still think it’s higher pass-throughs in R&DS and some of the COVID work is inherently a little bit low in margin in some of the other work. So those are the key reasons.

But our operating margins are up.

Yes, our operating margins are up. Our EBITDA margins up 140 basis points in the quarter, so despite that overall very strong performance, obviously at the leverage of the higher volumes and we didn't increase cost accordingly.

Great, thank you.

Your next question comes from the line of Tycho Peterson from JPMorgan. Please go ahead, your line is now open.

Hey, thanks. I want to go back to one of the original questions just on the M&A in the space you've got three competitors now all tied up with mergers. I'm just curious, what are you hearing from customers, how do you think about the opportunity to maybe pick up share in an environment where there is a lot of distraction and churn. Can you maybe just talk to those dynamics?

Okay. What I say here is based on opinions and some educated observations from our interactions with clients and our awareness of the industry. We are already gaining market share without relying on our competitors to underperform. Our market share gains are largely due to our unique capabilities and offerings. We don’t focus too much on what others are doing; instead, we concentrate on our strategy, enhancing our capabilities, and convincing customers to choose us, which has been successful. There has been significant activity in the market with mergers like IMC Research and Inventiv forming Syneos, LabCorp acquiring Chiltern, PRA taking over Symphony Health, and ICON merging with PRA. PPD is selling itself to TMO, and LabCorp is looking into strategic alternatives. However, in the CRO business, synergy between two CROs is rare. If one is strong in early phases and another in later phases, or if there's geographic strength that complements each other, then there may be some value. But generally, they serve the same client base, meaning clients usually stick with one provider, leading to negative synergy in revenue. While there are cost benefits from reducing leadership positions, this business is project-based, requiring different teams for each project. Thus, the scalability and efficiency gained from mergers is quite limited, so I don’t see much value in that. Of course, there could be situations where acquiring a CRO makes sense due to genuine complementarity or customer coverage. Our focus remains on what we do best. Mergers can weaken a company, as we've seen ourselves; even when merging two very different companies with valuable capabilities, the disruption is undeniable. We are aware of these dynamics, and despite the challenges, these situations present opportunities for us. Again, we are not depending on these circumstances; we are gaining share regardless.

Thank you.

Okay. And then one follow-up, speaking of things you are buying on the Q2 Solutions, I just would like a little more color. I mean you mentioned that streamlines decision making, you can build out greater bioanalytical capabilities, but can you just talk a bit more on the rationale for bringing that back in-house and I know you had a question earlier on how you can scale it up, I didn't hear an answer to that as well.

Yes, I mean, look, we owned 60% and was managed jointly we had a joint venture, but mostly I think it has been run largely by outside in terms of the management, it fit into the clinical trial process, the companies who put together originally both were relatively weak in this space. It was turned around, improved, it's a strong business, those capabilities are extremely sought after, the market is becoming more and more attractive. There has been back to the M&A question. There are number of a very attractive highly specialized biologic genomics related labs that came up for sale, and we were unable to proceed decision making, ability to focus, etcetera, and all of that I think will see it going forward. So we as a business that we like it's a growth business, is an attractive business and we want to invest in it and when and if there are acquisitions in this space, we would seriously look at them and be able to move faster. Now also compelling in passing that might say it was a financially no-brainer kinds of transactions for us.

Thanks, Ari.

Your next question comes from the line of Patrick Donnelly from Citi. Please go ahead, your line is now open.

Hey guys, thanks for taking the question. Ari, maybe just on the OCE business. It's not the biggest piece of revenue yet, but a nice growth opportunity. I think you talked about 10 ads this quarter, can you just talk about how that business is looking in the face of the pandemic, what you're expecting as we go through the rest of the year and just the competitive environment there?

Well, look, we continue to win in the marketplace at about the same pace, I mentioned we had 10 clients win so far in 2021. We have 150 since launch. The large client deployments are going very well, now implementations went well despite the COVID environment last year that will build any slowdowns, in fact some deployments are seeing accelerated timelines, everything is on schedule. I know if you just go to disclose the names of the clients, and now in this business, I'm not sure. The feedback is very positive generally, the field reps are very engaged, way of course the Roche global deployments and the AstraZeneca U.S. deployment, all of that is largely on target, very good positive feedback, you know that we see is rather revolutionary compared to other offerings in the market. It's not just a CRM, it's a platformed on force.com and the Lightning platform. It's a very collaborative tool, utilizes AI and machine learning to integrate various functions within the pharma companies, commercial operations, enables faster integration of data and therefore faster deployments. It links the providers and the suite data for a better view of the doctor and all of that again optimizes our client salesforce effectiveness. And then since then obviously, we are adding modules that are based on the OCE platform, we've got HCP engagement management, we've got OCE optimizer's, we've got the Next Best Action, all of those are enhancing functional capabilities that our clients are buying and that helps grow the business even faster.

Great, thanks Ari.

Your next question comes from the line of Sandy Draper from Truist Securities, please go ahead, your line is now open.

Thanks very much. Just maybe one quick clarification and then a broader one. First one, the comments you made about the growth rates, was that constant currency or is that reported?

Okay Sandy, Yes, the growth rates we've given to the guidance on a reported basis.

Okay. So like the low-teens and mid-20s, that was reported. Okay, great.

The FX impact is slightly positive during the course of the year but engagement a big driver and it remains the same as the year goes on.

Super, that helps. For whoever wants to take it, business is clearly doing well. As Ari mentioned, the target appears to be higher, and one of the major challenges you're likely to face is related to the service business. While some software can scale, how are you handling hiring? Are you considering where to recruit talent? Are there concerns about wage pressure? It's evident you'll need to bring in many people to sustain your growth. We would appreciate your insights on managing hiring, wage inflation, and the addition of a significant workforce in a competitive labor market. Thanks.

It's a great, great question, and you know you are touching on one of the obviously the biggest operational challenges we have and that's a natural challenge when you're growing and you're in service industry and you're right, the software-based business or the data subscription business, they are growing, but not at the pace that the services business is growing and in aggregate in relative terms, we are still going to need to hire people. Now two observations, number one, in early 2020 and 2019 early 2020 in anticipation of continued growth, we already had hired a lot of people. We did not restructure people in 2020. We kept people and even while they weren't working and we paid them, they are here and they are now working and delivering. So we haven't had to hire more people as much as you might think relative to our workforce last year and it's part of the reason why we are having nice margin expansion here. Second observation is we talked before about merger of competitors, obviously this is going to lead to some talent bleed and availability and we are in fact being approached and talent there but, Yes, I mean wage inflation that's true across industries and certainly in our industry as well. So we have to deal with that. You know that we have a program to continue to seek efficiencies, scale whether it's through consolidation of activities, using our offshore centers, automation of processes, etcetera. And we have a lot of programs to create cost efficiencies that again the purpose of which is to continue to be able to deliver margin expansion, even as we've got wage inflation. Ron.

And one more thing Sandy, anticipated wage inflation is fully factored into our guidance.

Yes.

Sorry Sandy go ahead.

No, I just say thanks for taking the question.

Okay. Thanks Sandy, it was a pleasure.

I think we took our time to probably just one more question before we get to the top of the hour.

Great, thank you. Your next question comes from the line of the Elizabeth Anderson from Evercore ISI. Please go ahead, your line is now open.

Hi guys, thanks so much for the question and squeezing me in. I must say free cash flow was very strong in the first quarter. I just wanted, how you thought that would continue the piece across the year. I mean obviously last year was extraordinary for variety of reasons, including on the free cash flow front, so I just wanted to see sort of how you guys are thinking about the pace as we move through the rest of the year. Thanks.

Hi. Elizabeth and thanks for the question. Look, we did have very strong cash flow. It's not a coincidence, since the start of the pandemic, we've been focusing a lot on that, on collections, not letting accounts receivable slid past due, we've been successful in working down our overdue and negotiating contracts with better billing terms with customers and you're also seeing, although there has been pressure from the industry from clients to extend billing term that's kind of winding down, there is a one-time impact and then you hit steady state. Now having said that, look cash flow is lumpy, so, I'm not going to promise that we're going to have $700 million of free cash flow every quarter. It tends to go up and down, but we have fundamentally shifted our emphasis on improving cash flow, and you've seen that over the past year. Just as a general guidance, help from the guidance, you would expect free cash flow in an average year to be between 80% and 90% of adjusted net income and keep in mind that our adjusted net income is growing quite strong at least. Our cash flow will grow on that basis, but in any given quarter or any given year even it may differ from that. Cash flow is not like earnings, it is not as smooth, it goes up and down, but yes, we have seen improvement and we expect continued strong cash flow going forward, but expect to normal volatility that any company is going to have in cash flow.

Quarter-to-quarter.

I think let's try and squeeze in one more quick one as well, before we end.

Thank you. Your next question comes from Dave Windley from Jefferies. Please go ahead, your line is now open.

Hi, thank you for the opportunity to speak. Ari, I believe the most noteworthy number for the quarter is the $6.5 billion in backlog for the next 12 months, which represents a significant increase, likely the largest since the merger. You mentioned earlier that bookings were very strong, which contributes to this improvement as we move into the next quarter. This progress provides excellent visibility for the upcoming year. I'm curious if you could elaborate on whether this improvement indicates that sites for patient recruitment are reopening, suggesting a higher level of confidence, or if there are enhancements in your tools that have contributed to this outlook.

Thank you for the question. You're absolutely right; there has been a significant improvement in our revenue growth outlook for the R&DS business over the next 12 months, exceeding $600 million. This improvement is due to our strong net new bookings performance and the steadily enhancing clinical trial recovery landscape. It's important to note that our next 12 months metric now includes the first quarter of 2022, which is encouraging. The continued strength we’re experiencing goes well beyond this year. Regarding site accessibility, last year during our Q1 earnings call, only 20% of our sites were accessible. In Q2, that figure rose to 53%, Q3 was around 70%, and Q4 was slightly above 70%. Currently, we're seeing numbers in the 75% to 76% range, indicating an upward trend. Our guidance for 2021 considers many factors regarding the next 12 months of revenue from the backlog, evaluated on a project-by-project basis. This process is precise and provides a clear indication of our business visibility moving forward. Additionally, site startup activity has surpassed pre-pandemic levels, which is a strong signal for future revenue growth. Patient recruitment and visits are also approaching pre-pandemic levels and are trending upward. In summary, these metrics give us strong confidence in the trial pipeline, particularly for non-COVID trials, which are now progressing with sites enrolling patients and conducting visits. Thank you for raising this important question; I hope this provides a clear outlook.

I appreciate your pass time a little bit, but that's very, very helpful. Thank you.

Thank you, Dave.

Thanks for the question, Dave. And thank you everyone for joining us today. We look forward to speaking with you again on our second quarter 2021 earnings call. The team will be available to take any follow-up questions you might have for the rest of the day. Thank you, everyone.

And this concludes today's conference call. You may now disconnect.