Ladies and gentlemen, thank you for joining us. I would like to welcome everyone to the IQVIA Third Quarter 2024 Earnings Conference Call. As a reminder, this call is being recorded. I will now turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, you may begin your conference.

Thank you, operator. Good morning, everyone. Thank you for joining our third quarter 2024 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; Mike Fedock, Senior Vice President, Financial Planning and Analysis; and Gustavo Peroni, Senior 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 on the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. Before we begin, I'd 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 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 to turn the call over to our Chairman and CEO, Ari Bousbib.

Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our third quarter results. IQVIA delivered another quarter of strong operational results. Revenue came in above the high end of our guidance range, representing about 6.5% growth, excluding the impact of foreign exchange and COVID-related work. And we also delivered 14% growth in adjusted diluted EPS. As we expected, the environment for our short-cycle businesses continues to improve as our clients are launching new drugs and executing on critical commercial programs. In fact, as revenue growth accelerated in Q3 to over 8% year-over-year, with growth in all subsegments. This reaffirms the second half growth trajectory that we had anticipated for TAS since the beginning of the year. And we now expect TAS growth for the year at the high end of our mid-single-digit range. On the clinical side, the near-term market environment continues to be choppy as we've been discussing in prior earnings calls. None of this is new, but as you know, we've been facing aggressive competitive pricing and tougher negotiations. Additionally, the trend that started over 1.5 years ago with large pharma re-prioritizing their program portfolios as a result of the IRA has been continuing, and this has been leading to a higher-than-normal level of cancellations, and we expect this to be the case again in the fourth quarter. On the EBP side, funding levels this year have improved. But as you know, it does take time for this funding to translate into actual RFP flows and even more time to translate into awards. Our bookings in the quarter included a substantial cancellation due to drug futility that impacted our quarterly net new business by approximately $350 million for that one trial. The reported net book-to-bill was 1.06x, but excluding the specific cancellation, the book-to-bill would be 1.22x. Lastly, in late September, two clients notified us of their need to delay two mega studies that were already in the start-up phase due to client-related logistics issues. This affects our short-term guidance, and Ron will share more about that later. While we navigate through these short-term challenges, it's important to remember that our CRO business is a long-cycle business. The demand metrics give us confidence in the strength and resilience of our business. I'd like to share some details of what we are seeing. Firstly, as you may know, many large pharma companies have been running processes this year to reevaluate and consolidate their strategic partnerships. To date, we have successfully renewed every single large pharma strategic partnership. In fact, we've added new relationships, displaced incumbents and expanded the scope in over half a dozen of our strategic partnerships with large pharma clients. There are two aspects to this successful performance by the RBS team. One is that our existing large pharma customers have reaffirmed their trust in IQVIA. And two, it opens up opportunities for us to gain greater share of wallet in future programs because these clients have consolidated their strategic partnerships. In the EBP world, biotech funding reached about $16 billion in the quarter according to BioWorld, and that means that year-to-date, biotech funding was over $80 billion, which represents more than 50% growth in funding year-over-year. Now again, as I remarked earlier, it does take time, and it could take one year to one and a half years before that funding translates into actual awards. Three, our backlog reached a new record of $31.1 billion at the end of the quarter, and that represents growth of 8% compared to the prior year. Four, our trailing 12-month book-to-bill remains healthy at 1.22x. Fifth observation, our next 12 months revenue from backlog is up 5.5% year-over-year. Our quarterly RFP flow continued the same trend we saw in the first half, increasing mid-single digits year-over-year. And finally, our qualified pipeline in the quarter is up across all customer segments, and it grew low double-digits overall compared to the prior year. And that is good. Now just to be balanced, I should point out that in stronger market environments, that qualified pipeline has sometimes been up in high double-digits. Now let's turn to the results for the quarter. Revenue for the quarter grew 4.3% on a reported basis and 4.2% at constant currency. Compared to last year, and excluding COVID-related work from both periods, we grew the top line about 6.5% at constant currency of which just under 5% is organic growth. Third quarter adjusted EBITDA increased 5.7% and was driven by revenue growth and ongoing cost management discipline, and that resulted in 30 basis points of margin expansion. Third quarter adjusted diluted EPS of $2 and $0.84 increased 14.1% year-over-year. I'd like to share a few highlights as is our practice of business activity. Let me start with RMBS, where we continue to differentiate with our therapeutic expertise, clinical technology and public health offerings. IQVIA won a top 10 pharma partnership as a new preferred provider for Central Lab as well as secured extensions for several existing FSP engagements in clinical monitoring, data management and clinical technology. We were awarded a strategic partnership to provide VCT solutions for metabolic and cardiovascular programs at top 15 pharma clients. We're the only company that can offer the VCT services and technology without having to partner with third parties. Within oncology, which is, as you know, a key therapeutic area for our industry, we were selected by several leading sponsors in the quarter, including a U.S. biotech client to manage a large global Phase III study for renal cell carcinoma for patients who have progressed after first-line immunotherapy combinations. A large pharma customer to conduct an early phase trial in prostate cancer, leveraging our expertise in dose escalation and both expansion study designs, a biotech client to run a global Phase III study for a biosimilar targeting multiple myeloma. This project aims to bring the first biosimilar for multiple myeloma to market, a biotech client leader in cell and gene therapies to conduct a groundbreaking Phase III trial for reoccurring cancer in the lymphatic system. Across these awards, we differentiate with our ability to run global studies with dedicated teams as well as our AI-enabled site selection solutions. Within clinical technology, in fact, we continue to expand our recently launched one home for sites offering. A biotech client selected IQVIA to increase clinical trial capacity by streamlining access to multiple vendor sites via our single sign-on platform. In the quarter, a large biotech client selected IQVIA to expedite the setup of a trial to deliver vaccines for Mpox in Sub-Saharan Africa addressing a critical outbreak in the region and significant unmet medical needs. Finally, IQVIA in partnership with the coalition for epidemic preparedness and innovations, the Rwandan government, and several institutes responded to an outbreak of the Marburg virus, a hemorrhagic fever with greater than 50% futility in Rwanda at the end of September. Our organizations collaborated to mobilize and dose the first patient with an investigational vaccination within nine days of the outbreak. Moving to TAS. As you saw from our results, the business is recovering even better than we had forecasted. One area we continue to make great strides in is in building differentiating AI capabilities across our offerings. You will have seen we recently launched the IQVIA AI assistant, which is a new generative AI tool designed to provide life science customers with quick and powerful insights through a user-friendly conversational interface. This allows users to ask complex business questions and receive comprehensive and reliable answers in real time. IQVIA AI assistant is built on IQVIA's trademark health care-grade AI which enables extensive privacy safeguards and provides expert validation of accurate, reliable output as is demanded by the health care industry. IQVIA was awarded a multiyear contract by a large pharma client to deliver our next best action offering for sales reps across nine countries. This AI-enabled solution optimizes sales rep engagement activities and enhances their interactions with HCPs. IQVIA secured a multiyear contract with a North American biotech client to improve workflow efficiency through an integrated fully connected intelligent solution that includes OCE, orchestrated analytics, and one key offerings. The top 10 clients chose IQVIA to improve HCP engagement for a new schizophrenia treatment. And in this case, we displaced the incumbent by offering a solution that will enable daily alerts based on new real-time inputs versus the incumbent's weekly frequency. The top 5 pharma clients awarded IQVIA a multiyear contract to provide co-pay support for oncology and women's health franchises. This deal enhances patient access to medications and drives better health outcomes. A couple of examples in the real world segment, the top 5 pharma clients selected IQVIA to support the launch of the new GLP-1 assets targeting weight loss based on European payer reimbursement models. The top 5 pharma clients engaged IQVIA to provide an evidence-based approach for a client's medical affairs team to optimize funding decisions and prelaunch activities in the North American market. A top 20 large pharma client awarded IQVIA a contract to support engagement with HCPs and KOLs based on detailed share of voice analysis of scientific and clinical experts in nine countries across all core therapeutic areas for the client. Finally, and before I turn it over to Ron for more details on our financial performance, I'd like to invite you to our IQVIA Investor Day, which has been scheduled for December 10th on the campus of our headquarters in Durham, North Carolina. Our Investor Relations team will be available to provide additional logistical details. Event information is already available on our investor portal.

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Third quarter revenue of $3.896 billion grew 4.3% on a reported basis and 4.2% at constant currency. In the quarter, COVID-related revenues were approximately $20 million, down from about $100 million in the third quarter of 2023. Now excluding all COVID-related work from both this year and last, constant currency growth was about 6.5%, of which just under 5% was organic. The majority of the acquisition contribution was in the TAS segment as is typical. Technology & Analytics Solutions revenue was $1.554 billion, up 8.6% reported and 8.2% at constant currency. R&D Solutions revenue of $2.162 billion was up 1.9% recorded and an even 2% at constant currency. Excluding all COVID-related work, growth at constant currency in R&DS was about 6%. Lastly, Contract Sales and Medical Solutions or CSMS revenue of $180 million declined 1.6% reported and 1.1% at constant currency. Year-to-date revenue was $11.447 billion, up 3% on a reported basis and 3.5% at constant currency. Excluding all COVID-related work, growth at constant currency was 6% year-to-date. Technology & Analytics Solutions revenue was $4.502 billion year-to-date, up 3.9% reported and 4.3% constant currency, excluding all COVID-related work, growth at constant currency and TAS was 5%. Now as a reminder, our Q1 2023 was last quarter where TAS revenue had a meaningful contribution from COVID-related work. R&D Solutions year-to-date revenue of $6.404 billion was up 2.6% at actual FX rate and 3% at constant currency. Excluding all COVID-related work, growth at constant currency in R&DS was 7%. Lastly, Contract Sales and Medical Solutions year-to-date revenue of $541 million was flat on a reported basis and up 3% at constant currencies. Let's move down to P&L. Adjusted EBITDA was $939 million for the third quarter, which was growth of 5.7%, while year-to-date adjusted EBITDA was $2.688 billion, up 3.3% year-over-year. Third quarter GAAP net income was $285 million and GAAP diluted earnings per share was $1.55. Year-to-date, GAAP net income was $936 million, which represented $5.08 of diluted earnings per share. Adjusted net income was $523 million for the third quarter. Adjusted diluted earnings per share was $2.84, up 13.2% and 14.1%, respectively, versus prior year. Year-to-date, adjusted net income was $1.478 billion or $8.02 per share. Our backlog at September 30th was $31.1 billion. That's up 8% year-over-year and 6.7% at constant currency. Next 12 months revenue from backlog was $7.8 billion, growing 5.5% year-over-year. Reviewing the balance sheet now. As of September 30th, cash and cash equivalents totaled $1.572 billion and gross debt was $13.512 billion and that resulted in a net debt of $11.940 billion. Our net leverage ratio at the end of the quarter was 3.27x trailing 12-month adjusted EBITDA. Third quarter cash flow from operations was $721 million, and capital expenditures were $150 million, resulting in a very strong free cash flow of $571 million. You saw in the quarter that we repurchased $200 million of our shares. That leaves us with just under $2.2 billion of share repurchase authorization remaining under the current program. Okay. Let's turn to guidance now. Now while our views on industry fundamentals remain positive, we are updating our full year guidance due to the delay in the two separate fast-burning mega trials, which clients communicated to us at the end of the quarter. These delays resulted from client-related logistical issues. Our team is working closely with these customers to ensure timely resumption of the trials in 2025. For the year, we now expect revenue to be between $15.350 billion and $15.400 billion, adjusted EBITDA to be between $3.675 billion and $3.7 billion, and adjusted diluted earnings per share to be between $11.10 and $11.20. There is no material change from our prior guidance to our assumptions around COVID related step-down in foreign exchange. The revenue growth contribution from acquisitions is expected to be about 1.5 points for the year. Now at the segment level, we currently expect TAS to grow approximately 6% for the full year and R&D approximately 5%. Both growth rates are at constant currency, excluding the impact of the COVID revenue step-down. For the fourth quarter, we expect revenue to be between $3.903 billion and $3.953 billion. This includes TAS revenue growth of approximately 8% in R&DS revenue growth of about 1%, both at constant currency and in the case of R&DS, excluding COVID-related impact. Adjusted EBITDA is expected to be between $987 million and $1.12 billion. And adjusted diluted EPS for the quarter is expected to be between $3.08 to $3.18. And this guidance assumes that foreign currency rates as of October 30th continue for the balance of the year. So to summarize, we delivered another quarter of strong operational results. Revenue came in above the high end of our guidance at about 6.5% year-over-year, excluding the impact of foreign exchange and COVID-related work, adjusted EBITDA margin expanded to 24.1%. Adjusted diluted EPS grew by 14% and as interest expense is no longer a headwind. Free cash flow was again strong, going 31% year-over-year, representing 109% cash conversion of adjusted net income. R&DS bookings were affected by the cancellation of one large program due to drug futility. We updated our Q4 guidance to reflect the delayed start of two fast-burning mega trials that are now expected to resume again in 2025. And while we are experiencing some near-term bumpiness in R&DS, forward-looking indicators continue to signal a healthy demand environment, confirming the strength and resilience of this business into 2025 and beyond. And with that, let me hand it back over to the operator to open the Q&A session.

Your first question comes from the line of Ann with Mizuho.

Any thoughts on preliminary 2025? I know the industry is going through a tough time now. But do you think you could still grow in that kind of high single-digit range given the backdrop?

Thank you, Ann. We typically don't provide guidance for the following year during the third quarter earnings release, but we plan to offer some insights into 2025 at our investor meeting on December 10th. As always, we will give more precise guidance with the full year earnings release. That said, I'm going to break away from what others are suggesting and share my view given the current unstable environment, and I understand you’re curious about '25. For '24, we anticipate that the company will grow around mid-single digits after addressing the short-term challenges we've mentioned. I expect a similar outcome for '25, although we are still finalizing our planning process. Looking at the segments, TAS has rebounded as expected in the second half, which is typical for this short-cycle business. I believe this trend will continue. If TAS achieves approximately 6% growth at constant currency this year, I expect a similar performance for '25. Regarding RDS, which will face short-term cancellations in Q4 and likely early '25, we project a growth rate of around 5% for this year. At this early stage, I anticipate something similar for next year. This is simply a preliminary estimate, and I encourage you to attend our meeting on December 10th for more detailed updates as our planning progresses, along with more comprehensive guidance once we finalize the full year earnings.

Your next question comes from the line of Shlomo with Stifel.

Ari, I know it's one question, but I just want to get a lot more detail, if you can, on the trial delays because I can't talked about two trial issues also, they were talking about financial re-prioritization and stuff like that with some of their clients. You're talking about some kind of logistical issues. Can you give us a little bit more detail? Are these logistics physical logistics? What else could be involved in that? Does it have anything to do with the financials and what kind of confidence do you have that the projects will really ramp into the second half of '25? And if you kind of flush that out as much as possible would appreciate it.

Yes. So look, I mean, what other competitors are experiencing is absolutely coincidental that two trials are out, and we have two trials. I understand why you're asking the question. Just again to step back and look at what's happening. We've got a general environment where, as I stated in my introductory remarks, large pharma has been reprioritizing their programs is nothing new here, and that has led that a direct consequence of the IRA. That has led to an elevated number of cancellations. That affects the industry. That's the market environment. And frankly, even in that environment, we normally should be expected given our scale and performance and momentum, we should be expected to continue to deliver. And that's what we did for the first three quarters of the year. Separately and unfortunately, at the same time, we have had to deal with a very large cancellation that has nothing to do with reprioritization has to do with futility. And that obviously is affecting our short-term impact. Now in a normal environment, we would have been able to absorb that and move on. But because it's such a tough environment, and we're dealing with a general heightened level of cancellations, we've not been able to absorb that. Again, separately and unfortunately, concurrently, to clients, this is totally independent of anyone else of any reprioritization of any financial considerations of anything else, have had for their own reasons, we know what the reasons are. I cannot share them with you. We are subject to very strict NDAs for reasons. It has absolutely nothing to do with the drug, with us, with financials, we just can't tell you what the reasons are. I regret that. But those trials will resume; they happen to be fast burning, and they have tend to be very large. We are confident that they will resume in '25. Now I know it's a lot to absorb. And when you look at the whole picture, that's a lot of different things. I regret it as much as you, but that's the reality we're facing with. The choppy environment will navigate that on a normal circumstances, but we've had to deal with two discrete events unrelated really to the environment.

Your next question comes from the line of Anne with JPMorgan.

I was hoping perhaps you could help us understand just maybe the timing of some of these dynamics of the cancellations, how much notice do you get in advance? And when we think about the delays for kind of pushing to the back half of next year, did they impact any other projects for 2025, or does that become incremental to 2025?

On cancellations, it varies. There are two types of cancellations. Over the past year, we've observed that about half are due to reprioritization and the other half relate to normal drug futility based on results. Reprioritization is a process our clients have been navigating for one and a half years, and I believe we are nearing the peak of this situation. It does have an end, which I predict will be by the end of this year. Although my prediction is for one month, I expect elevated cancellations in the fourth quarter. IQVIA does not provide quarterly cancellation numbers, but typically it averages around $0.5 billion, fluctuating by plus or minus $200 million. The cancellation numbers vary each quarter, not being constant. There are quarters with figures around 300, 250, or even as high as 600 or 700. Hence, I wouldn’t be surprised to see quarters where cancellations double due to these reprioritizations. Traditional cancellations not related to reprioritization tend to take time, especially when unfavorable data is involved. Independent panels and discussions with the FDA contribute to the lengthy process. Deciding to cancel requires time, and unwinding the trial can take two to three quarters since we have to account for patients already treated. This complexity sometimes leads to additional bookings to facilitate disengagement. I hope this clarifies your question.

A, you would also, I think, asked about delays and whether the delays had incremental work in 2025. Don't forget, these are multiyear trials. So if '24 work gets pushed into '25, sure, we pick it up there, but '25 work gets pushed into '26. So I wouldn't think of these as being incremental to 2025.

Right, that's correct. However, the sequential growth will be affected due to the comparisons.

Exactly. And we'll give you more information on the sequential growth that we expect as we go forward during our normal guidance process.

Your next question comes from the line of Luke Barclays.

To begin, I want to address a few matters. Regarding the M&A, you achieved $228 million this quarter. Can you provide an update on the financial profile and whether this is included in TAS? Also, how do we anticipate the growth of that business over the next year?

Yes. Thank you. Well, yes, you're correct. As has been typically the case, the majority of our acquisition contribution is in TAS. But I would point out that in the quarter, TAS had a very strong step-up in organic growth. In fact, more than three times sequentially. The company-wide organic growth was just under 5%, excluding acquisitions. So the acquisition contributed to just over 1.5 points to our about 6.5 points of growth at constant currency, excluding COVID. Now if you do the math, you'll see that the organic growth in TAS was also mid-single digits, which, again, is over three times what it was in the prior quarter. So strong in TAS across the board organically. Since you asked about acquisitions, I just want to step back and reiterate what I've said many times before, and that is that acquisitions are an important part of our growth algorithm, always has been the case, and hopefully, will continue to be the case. In fact, we always aimed at at least two points of incremental growth from acquisitions. But if you look at our numbers, you'll see that historically, we've never been able to do two points plus of growth. It's been more between 1 and 1.5 points. And this year, hopefully, 1.5% of contribution from acquisitions. Now bear in mind, we do a very large number of tiny, tiny deals. You have the list here in front of you, Ron?

Just to give a couple of examples this year in a TAS area, we acquired a commercial engagement company, H3O, which has $1 million of annual revenue, and we also acquired a real-world platform B2i that had slightly over $1 million of revenue. So when you look at the total number of acquisitions we make, it appears as a really large figure, but many of them are quite small.

That's typical. If you look at our list of actual acquisitions with all these unique names, you will see they are important. These are smaller deals that we pursue because we believe we excel at acquiring companies with growth potential. Typically, after we integrate these acquisitions within a year or two of ownership, they perform very well. Most of these deals generate very little revenue initially. Sometimes, we have to invest significantly; there are a few recent acquisitions where we paid ten times the revenue. For example, regarding the DMD acquisition a couple of years ago, we entered the digital space and paid nearly ten times revenue for that company. Therefore, the acquisition amounts paid and the revenue contributions are not directly related. For instance, year-to-date, what is the total number of acquisitions up to Q3?

$649 million.

We spent $649 million on acquisitions year-to-date as of the end of the third quarter. Almost half of that amount was for one acquisition, a company called Micra, which is a small specialized CRO in medical devices. This was an RDS acquisition and we completed it in the third quarter, around August. We paid nearly 5 times its revenue for this acquisition. While this represents a significant expenditure, the revenue contribution from this acquisition this year is minimal because we only had about one month of its revenue included in the quarter. Nevertheless, it is a crucial acquisition as part of our strategy. Additionally, I want to highlight that our best deal to date was acquiring the 40% minority share we didn’t previously own from our joint venture with Quest in our central lab, which cost us $760 million and brought in no additional revenue, since we already consolidated that. However, it was still a great deal. I hope this provides some context for our acquisition strategy.

Your next question comes from the line of Justin with Deutsche Bank.

I am looking forward to visiting the lab at the innovation center in December. Ari, regarding the mergers and acquisitions, at the beginning of the year, you mentioned a $2 billion capital deployment. When you consider the mergers and acquisitions alongside the stock buyback, it seems you're still below $1 billion in tracking. If no activity occurs in the fourth quarter, would it be reasonable to expect about $3 billion available for 2025? Additionally, concerning your comments about pricing pressure, you've indicated that it has primarily affected FSP. Are you noticing any effects in FSO as well?

Okay. Well, thank you, Justin. This is a great question. On the capital deployment, as you know, we signaled between $2 billion and $3 billion as a long-term goal annually spread between acquisitions and share repurchase. And as you correctly pointed out, so far this year, we saw the numbers so far, we spent $649 million on acquisitions and just $200 million on share repurchase. And frankly, that's because we were looking at bigger acquisitions that we were unable to do either for pricing or other reasons. Acquisitions, as you know, are binary, you do them, or you don't do them. Now based on what I know today, I don't think that we're going to spend a lot more on acquisitions before the end of the year. Maybe, again, I'm speculating between another $50 million to $100 million at the most. And therefore, you correct to point out, that leaves us with a lot of dry powder. My intention before the earnings release was to massively buy shares in the fourth quarter. And today, my intention is even to more massively buy shares at the end of the quarter. My general counsel specifically said, on his head here, but I am telling you that we are very excited, and we are going to buy a lot of shares. We have $2.2 billion plus share buyback authorization, and the share price is screaming buy, and that's where we're going to spend our capital. Then you had a question on pricing. Pricing is tough across the board, has been commercial and RDS. Obviously, it's not that it's more on FSP than on FSO, it's just that FSP was stronger this year. FSP is perhaps, correct me if I'm wrong, over here, it's about 15% of revenue roughly.

Yes, correct.

Our bookings have been increasing and are approaching 20%, but I believe it will always be between 15% and 20%. The lower margins associated with FSP are a headwind for our overall margins due to the mix of work. As we focus more on FSP, pricing becomes more challenging. This year, many large pharmaceutical companies have put us through a rebid process, inviting numerous CROs to compete. I am pleased to say that we performed well in this process, retaining our existing strategic partnerships and expanding with several partners, especially in Central Lab services. Looking ahead, we are optimistic about R&DS, though pricing remains a significant challenge. The industry has divided into three major CROs and a group of second-tier providers, the latter of whom are struggling and are often willing to lower prices to win business. This creates additional pricing pressure, which clients are eager to take advantage of. Although the situation doesn’t seem to be improving, we are confident in our ability to succeed in the long run.

Your next question comes from the line of David with Jefferies.

I wanted to start with just a clarification. I think based on the book-to-bill that you're reporting this morning, you added about $140 million of new wins bookings above revenue. Your backlog is growing about $500 million. Is the difference there just FX? So that's clarification. And then are you thinking about taking the timing issues, the cancellations, et cetera, the pricing pressure that you just commented on, how should we think about your ability to manage cost structure and continue to kind of hold margin or deliver margin as you have in the past in this environment?

Dave, I think your initial observation about the math is accurate. While I don't have the exact numbers in front of me, what I've heard supports your calculation regarding bookings and backlog. Your question about cost management is insightful, and it's true that we are facing significant cost pressures for several reasons. We have already begun the start-up phase for those two major trials, which required us to mobilize resources, infrastructure, and teams. However, these trials have been interrupted but are expected to resume in 2025, with one trial starting in the second quarter and the other in the latter half of the year. We are not going to dismiss the resources we've built up for these trials, which presents a cost we have to absorb. Of course, we will redeploy some of these resources to other opportunities, such as FSP. Regardless, it’s clear that for the next few quarters, we will encounter additional costs associated with these significant trials, which will impact our margins. Although we haven't completed our planning process and are continually focusing on costs, it's worth noting that we haven’t yet felt the full effects of this situation. So far this year, we have performed well, achieving record operating margins of 24.1% in the fourth quarter, the highest since the company's inception in 2016, reflecting a 30 basis point expansion this quarter. However, we will need to assess the situation over the next two or three quarters, and we'll provide more details on December 10 and during our full-year earnings release. David, you are spot on.

Your next question comes from the line of Elizabeth with Evercore ISI.

Can you update us on the status of the strategic partnership? It's been a strong area for you, but are we just getting started with this brand? Also, regarding numbers, what do you project for the interest expense in 2024 based on your updated guidance?

Thank you, Elizabeth. Yes, we had strong success with our strategic partnerships this year. We've been collaborating with these clients for quite some time and have increased the number of preferred partnerships. This year, as many large pharmaceutical companies announced significant cost reduction initiatives, they reopened their vendor relationships. I believe we have largely navigated through that phase and are now ready to move forward, as most of the major partnerships have been established. That addresses your first question. As for your second question...

Interest expense, talking about this year, Elizabeth round number, $625 million or so, give or take, around that number, which is not terribly different than what we were telling you before.

Got it. And do you want to comment on '25 right now or not on that.

Interest for 2025 will largely depend on the actions of the Fed and the ECB regarding interest rates, but we anticipate it to remain flat next year, and we'll provide updates as needed.

Your next question comes from the line of Michael with Leerink Partners.

I know we don't have formal '25 guidance, so it might be trading a little lightly here. But relative to R&DS and the 5% rough give or take, expectation at this point in time. What are the conditions have to look like relative from a macro basis, cancellation rates, et cetera, to make sure that number is still feasible. Is that predicated on those two mega trials re-ramping with the second half? And what are the most important puts and takes you're focused on that could change versus what the current trend is of general market choppiness?

Yes, I wish I had a crystal ball, but I can only share what we know at this moment. I believe that by the year's end, the program reprioritizations will conclude. This is based on our close discussions with our clients, who are focused on research and innovation. They have been working on this for about a year and a half, starting roughly in the middle of last year. We have a clear understanding of what's been reprioritized and canceled, and we can anticipate what will be canceled by year-end. There could be other trials that face drug futility issues, which is normal, and we expect that. The mid-single-digit expectations we have for R&DS in 2025 are based on the cancellations we know about today. Notably, we had a $350 million program canceled in this last quarter and a $250 million program cancellation in the first quarter. We recognize that these two major programs have experienced delays. Most of the trials we work on are much smaller, and we handle hundreds, with over 2,000 in total. Thus, this is the regular course of things. The larger trials significantly impact our results. For R&DS growth this year, we reported 7% in the first quarter.

8%.

In the first quarter, we saw 8% growth. Then, we recorded 6% growth in both the following quarters, based on a constant currency, excluding COVID impact. We anticipate 1% growth in the fourth quarter. Similar to my comments last year about TAS, 2025 might reflect an opposite trend due to cancellations and their short-term effects, as well as delays. This is the best outlook I can provide for 2025 based on our current knowledge.

There are no further questions at this time. Mr. Joseph. I turn the call back over to you.

Thank you, operator. Thank you all for taking the time to join us today, and we look forward to speaking with you again in our fourth quarter 2024 earnings call. The team will be available the rest of the day to take any follow-up questions you might have. Thank you.

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