Iqvia Holdings Inc. (IQV) Q3 2025 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA 3rd Quarter 2025 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. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerry Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Thank you, Operator.

Good morning, everyone.

Thank you for joining our third quarter of the 2025 earnings call. With me today are Ari Boosby, Chairman and Chief Executive Officer. Ron Bruleman, Executive Vice President and Chief Financial Officer, Eric Scherber, Executive Vice President and General Counsel, Mike Fedok, Senior Vice President of Matters and 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 who view on our webcast. This presentation will also be available following this call in the events and presentation 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. Our results could differ materially from those stated or implied in 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. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release. I would now like to turn the call over to our chairman.

Thank you, Kerry, and good morning, everyone. Thank you for joining us today to discuss our third quarter results. We delivered another strong quarter rather than when profits were towards the high end of our guidance, reflecting solid operational performance. Free cash flow was particularly impressive this quarter. It was actually the highest quarterly free cash flow ever, even when you consider the large advances we got during the COVID era for vaccine trials. this strong free cash flow of course reflects a good and disciplined working capital management by the team but also an improved overall industry backdrop on the clinical side net bookings in the quarter totaled exactly two two billion and six hundred million dollars which resulted in a net book-to-view ratio of 1.15, also reflecting the improving trends in customer demand that we started seeing in the second quarter, as well as, of course, solid execution from our sales teams. In fact, our third quarter net bookings were 5% higher sequentially, 13% higher than a year ago, and 21% higher than the trough that we experienced in Q1 this year. Key demand metrics were also strong in the quarter. The EBP funding momentum is building this year, with each quarter delivering steady sequential growth, reaching $18 billion in Q3, according to BioWorld. our qualified pipeline was up six percent year over year driven by large pharma and ebp segments you will recall that in the second quarter we had high single digit sequential rfp flow growth and low teams growth year over year this quarter we saw again high single digit rfp flow growth sequentially, and 20% growth year-over-year with growth across all segments. Importantly, client decision-making timelines have been improving sequentially. Finally, our backlog reached a new record of $32.4 billion at the end of the quarter, showing growth of 4.1% compared to the prior year. On the commercial side, TAS continued to perform well in the third quarter and delivered strong results despite tougher year-over-year comparisons. In fact, if you look historically at sequential revenue growth, Q3 is generally flat to down versus Q2, and we were slightly up this quarter. This was driven by ongoing momentum from drug launches and the strength of our Broadway to Renful portfolio. I do want to mention the good growth we had this quarter in CSMS, about a third of which was from an acquisition. We decided to increase our capabilities in this segment as we are seeing a developing trend of large pharma clients increasingly looking to outsource commercial operations for established brands in specific markets. These tend to be large multi-year engagements, typically spanning across therapies and geographies. And IQVIA is uniquely positioned to capitalize on this trend by combining our information and analytics and domain knowledge with a local sales force footprint. Let me turn to the result of the quarter. Again, strong revenue and profit results. Revenue for the third quarter came in at the high end of our guidance range, representing year-over-year growth of 5.2% on a reported basis, and just under 4% at constant currency. Third quarter adjusted EBITDA was up 1.1%. Third quarter adjusted diluted EPS of $3 increased 5.6% year-over-year. Let me just now, as I usually do, share a few highlights of business activity. Let me start with Taz. New drug launches continue to be a key area of strength for IQVIA. A few examples. A biotech client awarded us a multi-year integrated partnership to support faster product launches. This win includes a full suite of information assets and analytics capabilities. A top 10 pharma client awarded IQVL program to support the launch of a novel oncology therapy. Top 20 pharma clients awarded IQVL contract to support the launch of a dual-indication metabolic therapy utilizing AI capabilities to integrate advanced patient insights into product utilization and patient response. The top 10 pharma clients selected IQVIA to provide large support for a new autoimmune disorder therapy. The engagement includes advanced AI-enabled patient-level solutions that enable performance tracking and analytics near real-time and integrate specialty pharmacy data and payer insights. A good example of the commercial outsourcing trend I mentioned earlier was a very large award from the top five pharma clients to manage end-to-end commercialization and promotion of an established brand portfolio in a very large overseas market we're progressing as planned to deploy highly specialized industry ai agents so far we have approximately 90 agents in development covering 25 use cases across commercial, real-world, and our MDS. We are now seeing growing demand to help our clients accelerate AI adoption. We are increasingly helping our clients build data infrastructures that are robust and AI-ready by leveraging IQVS healthcare-grade AI ecosystem, combining advanced information management, integrated platforms, security, safety and privacy along with domain expertise let me share a few examples of key wins in the whole the top 20 pharma clients selected IQVIA to deliver a next generation information management solution that streamlines hundreds of sales data feeds into an AI enabled centralized simplified global warehouse another top 10 pharma clients awarded IQVIA a contract to deploy a next-generation AI-enabled SaaS platform to optimize global compliance reporting. A biotech client chose IQVIA to deploy a new global master data management program to enhance AI-enabled omnichannel marketing and analytics operations. Our real-world business continues to perform well. Here are some examples. Top 10 pharma clients selected IQVIA to lead a post-market commitment study evaluating treatment outcomes in African American patients with lung cancer. A biotech client selected IQVIA to lead a prospective real-world study supporting a regulatory commitment to a rare oncology disease. Biotech client selected IQVIA to deliver a retrospective real-world study supporting post-marketing commitments for their newly approved drugs to fulfill regulatory requirements. Turning to R&D solutions, the positive momentum that we saw in Q2 continued to build through Q3. A few stand-up wins with our biotech customers first. In oncology, a first-time sponsor selected IQVIA to lead a phase one trial for a novel leukemia treatment. Another biotech client selected IQVIA to lead a complex phase one and phase two trial in hematologic oncology targeting multiple cohorts across two indications. We were also selected as the exclusive CRO partner for the biotech's entire cardiovascular program and of course this recognized our leadership in cell and gene therapy and cardiovascular research as well as our ability to execute globally. Large Pharma was also strong in the quarter. We were, for example, selected to lead a Phase II study in stroke therapy, demonstrating our deep neuroscience expertise and global trial capabilities. Another top 10 Large Pharma clients selected IQVIA to manage a global Phase III MASH program, leveraging AI-enabled pathology tools and a robust site network to accelerate execution. We were also selected to lead a phase 3 ovarian cancer study, highlighting our deep therapeutic expertise and the strength of the integrated delivery model we built in partnership with these clients. Now, before I turn into Ron for details on our financial performance in the quarter, I want to say a word about the CFO transition we've announced some time ago. So, as you know, my C-Doc will step into the CFO role on February 28, 2026, succeeding Ron Brumman, who will retire after a remarkable tenure. Ron, and that's the good news, Ron will stay on as a senior advisor to continue to help us on specific projects and to help ensure a smooth transition. Ron has been a highly valued leader of this company for many years. In fact, Ron and I have been working together for over a quarter century. Ron has been instrumental in shaping IQVS financial strategy, driving this transformation into a leading global organization. He was here from managing the IMS Health IPO in 2014, through the Queen Towers merger in 2016, and of course he returns in 2020 to help us navigate the pandemic. his steady leadership and strategic long-term vision have been essential in building a high performance global finance organization and in helping IQVIA remain resilient during unprecedented times over the past few years. Mike brings deep industry experience and he has held key financial industry goals across IQVIA including as CFO of our R&D solutions business and prior to that as CFO of our IQVIA laboratory business. He's worked closely with me and the senior team for years now and is very well positioned to lead our finance function into IQVIA's next phase of growth.

Let me now turn to Ron for more details on our financial performance. Thanks Ari and good morning to everyone. Let's start by reviewing revenue. A third quarter revenue of $4,100,000,000 grew 5.2% on a reported basis and 3.9% of constant currency. Now, excluding COVID-related work from this year and last, revenue grew 4.5% of constant currency, and this included about a point and a half of contribution from acquisitions. Technology and analytics solutions revenue for the third quarter was $1,631,000,000, that was up 5% reported and 3.3% of constant currency. R&D Solutions third quarter revenue was $2,260,000,000, growing 4.5% reported and 3.4% of constant currency. Now excluding the step down in COVID-related revenues, R&Ds revenue, grew 4.5% of constant currency. And lastly, our contract sales and medical solutions business, or CSMS, grew revenue of $209 million. I had revenue of $209 million, and that was up 16.1% reported and 13.9% at constant currency. Year-to-date revenue for the company was $11,946,000,000. That's up 4.4% reported and 3.7% of constant currency. And excluding all COVID-related work, year-to-date growth was approximately 4.5% of constant currency. Tech and Analytics Solutions revenue was $4,805,000,000 year-to-date. That's up 6.7% reported and 5.8% of constant currency. R&D Solutions year-to-date revenue of $6,563,000,000 with up 2.5% of actual FX rates and 1.9% of constant currency. Excluding COVID-related work from both periods, revenue grew approximately 3.5% of constant currency. And lastly, CSMS year-to-date revenue of $578 million was up 6.8% reported and 5.9% of constant currency. Let's move down to P&L now. Adjusted EBITDA for the quarter was $949 billion, representing growth of 1.1%, while year-to-date adjusted EBITDA was $2,742 million. That's up and even two percent year over year. A third quarter gap net income was $331 million and gap diluted earnings per share was $1.93. Year-to-date gap net income was $846 million or $4.86 of diluted earnings per share. Adjusted net income was $515 million for the third quarter adjusted diluted earnings per share was even three dollars. Year-to-date adjusted net income was $1,480,000,000 or $8.50 per share. Now as already noted, we had strong net new bookings this quarter confirming the improved demand environment we started to see in the second quarter. The R&DS backlog September 30th was $32.4 billion, up 4.1% year-over-year. And next 12-month revenue from backlog was $8.1 billion, that up 4.0% year-over-year. Reviewing the balance sheet, as of September 30th, cash-in-cash equivalents totaled $1,814,000,000 dollars in gross debt was 14 billion 957 seven million dollars uh that resulted in net debt of 13 billion 143 million dollars our net leverage ratio ended the quarter of 3.52 times trailing 12-month adjusted EBITDA and third quarter cash flow from operations was 908 million dollars and capital expenditures were 136 million dollars which resulted in record free cash flow for the quarter of 772 million dollars now i'll turn it over to mike fiat who will share details on our

guidance mike thanks ron and good morning everyone let's start with our full year guidance we are confirming our full year 2025 guidance and are narrowing the ranges for revenue adjusted EBITDA and adjusted diluted earnings per share and are maintaining the midpoint of our prior guide. We expect revenue to be between $16,150,000,000 and $16,250,000,000 representing year-over-year growth of 4.8% to 5.5% or 5.2% at the midpoint. This revenue guidance includes approximately 100 million of covid related revenue step down entirely in rds approximately 100 basis points of tailwind from foreign exchange and approximately 150 basis points of contribution from acquisition these assumptions are unchanged from the prior guide we expect adjusted ebitda to be between three billion seven hundred and seventy five million dollars and three billion eight hundred million dollars growing 2.5 to 3.1 percent year over year or 2.8 percent at the midpoint we expect adjusted diluting eps to be between eleven dollars and eighty five cents and eleven dollars and ninety five cents of six point five to seven point four percent versus prior year or We're about 7% at the midpoint. Now turning to the fourth quarter, we're expecting revenue to be between $4,204,000,000 and $4,304,000,000, which represents year-over-year growth of 6.2% to 8.7%. Adjusted EBITDA is expected to be between $1,033,000,000 and $1,058,000,000, representing growth of 3.7 percent to 6.2 percent first prior year and adjusted eps is expected to be between three dollars and thirty five cents and three dollars and forty five cents which represents year over year growth of seven point four percent to ten point six percent and this guidance assumes that foreign currency rates as of october 27th continue for the balance of the year so to summarize in the third quarter we delivered strong top and bottom line results as well as record high free cash flow rnds netbookings were 2.6 billion dollars growing 13 year over year and resulting in a net book to bill ratio of 1.15 times the forward-looking demand metrics in the clinical business continue to trend in the right direction with 20 percent are lead flow growth year-over-year and sequential improvements in client decision-making timelines. TAS performed well and delivered solid results driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio. And we reaffirmed our full year 2025 guidance. With that, let me hand it back to the operator for Q&A.

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We request that you please limit yourself to just one question so that others in the queue may participate as well. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of David Windley from Jeffries. Your line is now open.

Hi, good morning. Thanks for taking my question. Ari, I wanted to ask you about what I think you call your see more win more strategy and how that has played out through the middle of the year or through this year in terms of contributing to the RFP flows improvement that you're highlighting as well as your win rate and how we should think about you know an amount if any you know price competitiveness you're applying in that strategy and how that plays out through the P&L as that business converts to revenue? Thank you.

Okay. Well, usually we keep the best for the last, but you start with the big strategy question. So let's start with that. Okay. Well, look, the strength in bookings, momentum, and RFP flow, I think we have to say, and we can see it in the industry in general i think reflects a reduction in the level of uncertainty uh in the market environment and the macro political environment i think there have been a few developments that have sort of helped um tilt decision making at large pharma on certain programs favorably. And the climate overall has improved. That's undeniable in our sector. So that certainly is a big driver of our growth. The specifics of our see more, win more strategy, which we started earlier this year, which as you know now has a lot of imitators has born fruits as well in the sense that we've been looking at markets that we previously hadn't been touching and had left some more marginal players essentially in a quasi-monopoly situation in those segments. And we've decided to go after that. The pricing conversation is a little bit overdone, in my opinion. In a climate where market dynamics were unfavorable, with a lot of uncertainty and less deals to be had, there was more competition on pricing. And all we did in the first part of the year was to align those pricing discounts that that were being offered as opposed to walk away in order to continue to build a book of business um we don't see that uh trend continuing it hasn't been an issue at all uh certainly this fast forward and the opposite we've walked away from deals um and we think that the sector in general um is a lot healthier in terms of market dynamics the level of uncertainty has gone down and pricing has returned to normal levels you have a question a follow-up on tnl implications look we we have a 32 plus billion dollar backlog and only a tiny portion of that was subject to um you know, a few, you know, discounts that we did earlier in the year, those, the revenue associated with those things are going to bleed over our PNN over the next five years. And we do not expect that to have any impact whatsoever on our PNN going forward.

Great. Thanks, Ari. I'll stick to the one question. Thank you.

Thank you. Your next question comes from the line of Justin Bowers from Deutsche Bank. Your line is now open.

Hi, good morning, everyone. So, Ari, it sounds like the business environment is improving, funding's up, consumer confidence improving, and both of the segments, TAS and RDS, are strengthening, at least on a two-year stack basis. Is this a momentum that we should expect to continue over the next three quarters and into 2026? And maybe if you just give us a glimpse of how you're thinking about those two.

Yeah, well, look, you know, I can't tell how to twist the ball here, and I'm not going to give you 2026. This was a clever way of asking me about 2026 guidance. We're not going to do that here. As you know, we usually provide guidance for the year concurrent with the release of our fourth quarter and four-year earnings early in the year. So end of January or early February, will provide that we are in the midst of our planning process and still in October and but look what I can tell you is we are going to deliver this year over five percent in top line revenue growth which frankly given what we've been through and the environment of being um in in the past year and a half two years i think is a very very strong performance and you can see that compared to our larger uh certainly the larger seattle peers uh we are doing very very well So I cannot tell you yet what 26 will be as an extra course, but I mean, look, I would be surprised if revenue growth in 26 is not at least the same or better than the growth that we are seeing this year. So I see that with a certain amount of confidence.

Thank you.

Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Your line is open.

Hi, guys. Good morning. Thanks so much for the question and congrats, Ron, on your retirement. I was wondering if you could talk a little bit, Ari, about some of the differences between what you're seeing on the pharma side versus the biotech side. I think you covered the biotech side nicely in one more answer, but just sort of wanted to peel back the onion a little bit on the pharma side as well.

You mean the large pharma side?

Yes.

Look, you know, large pharma went through a lot of transformation internally in terms of their investment programs. You going back to the IRA, there was this whole phase of reprioritization of programs and reviews of their pipelines, which led to an elevated level of cancellations due to this reprioritization activity. That lasted for a year, year and a half, beginning mid of 2023 and certainly continuing through 2024. um we see that activity as having essentially been completed and we haven't seen uh any further cancellations as a result of that type of activity uh so we think that the pipelines are now uh you know fully sanitized of course they are continuing to be cancellations you know that's kind but they are they are all like more business as usual due to futility or other reasons and nothing unusual um you know large pharma actually you know the rfp flow for our pharma is very strong you know i mentioned that our RFP flow growth year over year is 20 percent and that applies to large pharma and to EBP equally. I mean there's strong strong momentum and again that's helped by the more calming environment and perhaps more certainty around what's coming and it's also held by the fact that these prioritizations have been largely completed and the programs are now on the table are programs that our clients want to uh to engage in and and want to go forward with um our cancellations i always say you know in recent years worth about half a billion dollars uh a quarter plus or minus a couple hundred million dollars so they could range between 300 and 700 million dollars uh you know in a given quarter um so a couple of billion dollars plus you know uh year in year out in 24 we had more than 50 percent higher cancellation than that right over three billion dollars in 24 as because of these reprioritizations from large primary that essentially is behind us and year to date our constellations follow the regular a pattern i think it's actually somewhere between 500 around on average about 550 million dollars a quarter i saw the members uh uh yesterday i think um you know nothing much to uh talk about this quarter i think we were a little bit towards the higher end of that range but again not not because of infrastructure as simply normal force of business. Our also bookings were very strong, very very strong this year and you know and you could see that also in our 2.6 billion dollars of net bookings which were up 13 percent year-over-year up sequentially missing your digits And, you know, the trough we experienced, Q1, you know, probably was the trough. We don't see that, you know, in the details. So, again, large pharma dynamics returning to normal business conditions, trending towards normal business conditions. And biotech funding improving, which, as you know, is the driver of EBP growth. and that, again, is reflected in our bookings and in our RFP flow as well.

Very helpful, thank you.

Your next question comes from the line of Michael Shurney from Leering Partners. Your line is open.

Good morning and thanks for taking the question. Maybe if I can ask a little bit about TAS, nice growth against obviously a tough comp.

As you think about the pathway forward, what do you see as the contributions you're getting from some of your inorganic advancements and where do you see the best opportunities to continue to expand that business above and beyond your own r d talk ai talk anything along that vein that'd be great thanks um thank you michael well you spoke about inorganic i think you know we said the one and a half points of the contribution to the company as a whole as you know as always has been the case the bulk of that is in um Although I think in this past quarter, we did a large acquisition that was in RMDS and SMO. I think that we spent $485 million in total, and most of that is one acquisition called the next oncology which is a um uh an smo uh specialized in oncology very attractive business we acquired this uh you know end of q3 so not much contribution in q3 um and the inorganic contribution to rnds will be a few million dollars i guess uh in the double digits like million dollars of their amounts of revenue to rnds in q4 with respect to ties we didn't do much uh in q3 um and so i guess the acquisitions is contribution for the year well we did we did a csms deal as well right which is it's small obviously but since yes and that's a small segment it was a large piece of it so not much in time in q3 in general we try to buy technology companies companies that can add capabilities to our suite of products analytics companies there's a lot of innovation as you know in the ai space medical affairs yeah medical affairs real world real gold is a very strong real world evidence was uh really uh very very strong in the quarter um and we expect that to continue um into the future so yeah i mean um yeah i mean for the year you know again a point and a half i would say um 50 60 percent of that would be ties and the rest for the year, right, for 25, and then the rest RMDS and then a little bit CSMS.

Your next question comes from the line of Shilomo Rosenbaum, Stifo, your line is open.

Hi, thank you. Ari, before I ask you a question, I just want to also commend Ron. Ron, I've seen you retire before and I'm not fully convinced you're gone right now. Well, it's not. It won't work for a platform. It's not retiring. Yeah, you've dragged him out of retirement in the past, Ari, so I don't know. Ari, I want to ask you to talk a little bit about the subcomponents in TAS and how they're growing in terms of real-world evidence and consulting and analytics and just, you know, some of the trends that you're seeing there. I know consulting often kind of leads the trend in terms of you see that picking up. That means that, you know, the environment is getting better. And maybe you could just talk a little bit about each of the components and what you're seeing and maybe what that says about the market.

Yeah. So, look, the growth rate in Q3 is hard to derive big trends because, as you know, Q3 in general is the weakest quarter in the year. but specifically this year we had a tough compare with last year. What was the growth of that Q3 last year? It was like 8.6%, I want to say. I don't know the names there. 8.6% growth last year. So we knew we had a tough compare this quarter. But as I mentioned in my introductory remarks, sequentially we were slightly up, and usually because Q3 is the toughest quarter, given nothing happens for six weeks in Europe, It used to be three weeks, then it's four, and now it's six and it's going to eight where nobody is working. So, you know, I think that the performance this quarter was very strong. It was largely by the real world evidence, which was very, very strong. And everything else was obviously data is usually low single digits. uh and everything else was between low to kind of mid single digits growth again against very uh soft compares uh same for consulting are you seeing a pickup in that consulting recall you will recall that uh i know when you're asking consulting because it's kind of a the most discreet and it's it's positive you know in terms of being indicator um you know when things were trending uh negative territory consulting went down very rapidly uh you know in the 24 you know end of 23 or the first part of 24 time frame uh consulting was down actually negative one of the boards i think it was on negative double digits um but it's positive this quarter And, again, everything outside real-world evidence in aggregate was, you know, you see what we just saw thereabouts.

Thank you.

Thank you. Your next question comes from the line of Eric Caldwell from Beard. Your line is open.

I mean, I'll stick on the task question here just to make sure we're all level set for the fourth quarter. Back in February, you guided to $6.3 to $6.5 billion. That was quite a while ago. A lot of things changed. But if I use that original range and I take out what you've done year to date, that would put the implied fourth quarter revenue guidance about $100 to $300 million below the street on TAS. That's a big range and obviously a lower number than where consensus lies today. So I'm just hoping you can give us a little specificity on what you're thinking for TAS in the fourth quarter so we aren't ahead of our skates.

Yeah, I'm not talking about our targets and then you talked about the street.

Yeah, you guide in February to 6.3 to 6.5 billion, and the year-to-date number through three quarters is 4.8, a little over 4.8, so that leaves less than 1.5 to less than 1.7 to get to the full year, if I've done the math.

Yeah, I'm going to turn to the finance team here asking, I thought I'd have the numbers in front of me. But what you were suggesting that that tiles would be lower than our guidance, I don't see that.

Well, I'm not really suggesting anything. I'm hoping you can you can take that. Yeah, I'm hoping you'll tell us that things have changed since the February numbers, but it is possible that maybe the street's just a little high on the segment. I mean, it looks like you'll cover it with RDS and CSMS, but I just want to make sure we're – You know, Eric, I think you're – we are delivering on guides.

Am I even – Eric, we'll help you with some of the key forward details. But on a full-year basis, there's been no change all year with TAS that the full-year CFX growth rate, so between 5% and 6%. So there's no change there.

We always said 5% to 6% growth year over year, correct? CFX. CFX, correct.

I think you said 5% to 7% constant currency, and I believe it was 5% to 7% on February 6th was the range.

We narrowed our guides in the last call there, so we're still sticking with the 5% to 6%. there's no change from the prior guide and no change where tabs is going to land in the full year okay yeah we don't i don't see any i don't know well there's no change eric yeah we'll help you with that with the q4 but there's been no change yeah perfect thanks just want to make sure we're uh not ahead of our skates i appreciate that very much anything else you have other than this uh tarification i had 42 questions but you told us to stick to one um let me know i i i am going to i'm going to give you a special discount because that wasn't really a question so well look

i i mean you know that was like a commentary i know you were trying to i i appreciate it so um i appreciate it so i'll sneak two in i'll take advantage and uh you know give a give an inch I'll take a mile. Two things just quickly. One, do get some ongoing questions on those couple of mega trials that you mentioned earlier this year. I'm just curious if you can tell us what the status is. I think one was definitely ramping back up here in the back half, and I believe the other was still pushed out till next year if it's happening at all. So maybe just an update on the mega trials. And then secondarily, Ari, in your prepared commentary, you You highlighted some interesting wins, and you mentioned phase one a couple of times, and my historic interpretation of past conversations was that you weren't really a big phase one shot. Maybe you partnered with some others, but I'm curious on what your involvement is these days in actually managing or even having phase one CPU units. Maybe give us a little more color on what you're doing there.

Yeah, it's a very good observation, Eric. We are seeing a lot of demands for phase one work, and we are the network partners. You know, we don't have any significant presence in that segment, but we are expanding. And this is why I chose to highlight a couple of examples. It's also, by the way, part of our C-more-Win-more strategy. And it happens to be that there is more demand. Things are getting sort of, quote unquote, restarted again, and the pipelines are strong. And so we are seeing more demand, and we are ourselves being more present in the segment.

Yeah, and phase one in oncology is a little bit different because you're not dealing with healthy volunteers here, so it tends to feed your labor business better than other phase one trials. so there is some distinction there and that's what next oncology was phase one oncology yeah perfect that's that's super helpful thanks yeah and then the two trials yeah no change there uh we don't have anything factored into our uh fourth quarter guidance for revenue burned from either of them so i suppose that's a slight change from what we said it's basically all pushed out of the year.

And it's not contemplated in the guidance. Yeah, bear in mind that, you know, we mentioned these, what is it, like a year ago at this time, because it caused us at the time to change our guidance for RDS. These were fast burning and had already gotten started and they were interrupted uh and so that caused us to change our our guide for rbs in the fourth quarter for the fourth quarter of last year and so we had to mention it we only mention specific trials to the extent we can and we try to be very careful because we are mindful of confidentiality for our clients and so on so we cannot say very much but we do mention it when there is a significant event attached to one trial in this case was true and that caused us to change anything in our in our members but bear in mind we you know at any point in time we're working on a couple of thousand trials and you know and we keep building backlog as you saw and uh and thankfully we have had very positive momentum on our bookings and it's it's continuing so we feel good about that and and um and he continued to stagger uh on our book of business so yeah but which which again enabled us to continue to deliver and we've been better on all the yes even without that the those trials resuming this year thank you eric thank you you one more question yes one more next question operator this should be our last question your

next your last question comes from the line of jeff garra from stevens your line is open yeah good morning thanks for taking the question i want to ask more about ai and maybe try to make it a two-parter first part being if you have any insights how ai is is changing your customers business models and specifically their appetite for outsourcing. And then the second part would be how is IQVIA using AI internally to deliver results for clients that may be a little bit more efficiently and whether you have any visibility into potential gross margin improvements from those internal use cases. Thank you.

Yeah. So thank you, Jeff. You know, we've spoken about this in the past and so far we have about 90 ai agents in development that cover 25 use cases and we continue to progress that by you know by early 27 we plan to develop 500 highly specialized agents and what this do is they essentially eliminate a lot of physical labor from the tasks that we perform for our clients um um so in currently the second part of your question first certainly that will help uh improve our margins longer term now it takes time to de-draw obviously um and it takes time to um to to translate that into market improvements um you know that we've had the great examples on the commercial side you know we have uh you we we use for example uh ai tools to compare patient cohorts to each other um and highlight differences with natural language output which you know leads to improvements in cycle times from several weeks to a couple of weeks um we really have a lot of examples and take a long time to uh to to to recite those but we see significant value in continuing to do more with less through deploying agents within our internal processes for our clients i give a number of examples in my introductory remarks our clients are very interested of course in using ai so early early on before we get involved in discovery um you know there's a lot of um focus from our clients in the discovery space to try to use ai to sort out molecules and try to identify um you know the most like quote-unquote, the most likely to succeed trials to tackle a specific disease. We participate a little bit with some models and some tools that we have, but, you know, later on, you know, look, the issue on the clinical side is that it's highly regulated and you get to go through standard processes that are defined by regulations and you have to use the intermediary spaces between those regulatory interactions to utilize and deploy ai at the It's very helpful. And our clients are using, of course, AI in all the technology tools, some of which are our tools that they use commercially. They use AI, I gave a few examples, to manage their promotion campaigns, marketing campaigns. They use AI to get patient insights in the real world. Real world evidence is a big area for us. And one of the reasons we experience such great growth is we've got very advanced capabilities given our vast information assets in real world patient data, you know, using AI tools and try to evaluate how a drug behaves in the real world using AI you know becomes a great great opportunity so these are the areas now with respect to the margin as you know we've had a lot of we have some margin headwinds certainly this year because of more pass-throughs largely because of the FX tailwind which all of which we call comes without profits and a little bit of the mix you know see for example Q3 CSMS was stronger and CSMS is lower margin so when you have the market headwinds like that certainly we're counting in our usual you know cost reduction programs, offshoring, and so on, but longer term AI, certainly AI enablements will help mitigate those headwinds and help us long-term improve margins. Thank you. And I think the team will be available for follow-up questions as always.

Thank you for taking the time today. Yeah. Mr. Joseph, I turn the phone back over to you. Thank you. Thanks for taking the time to join us today, and we look forward to speaking with you again on the 2025 fourth quarter and four-year earnings fall. The team will be available the rest of the day to take any follow-up questions.

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