Conference Transcript - IQV 2026-06-03

Dave Windling, Analyst — Jeffries Healthcare Equity Research

Thank you. Good morning, everybody. I'm Dave Windling with Jeffrey's Healthcare Equity Research. Welcome to our 2026 Global Healthcare Conference. We appreciate your joining, whether here in person or virtually. Really appreciate the interest and attendance in the conference. Also, very much appreciate IQVIA's participation this year and Ari Boosby, the company's CEO, joining me here for our fireside chat. IQVIA, as you know, is the leading player in call it the broader pharma services and technology space, but particularly in the contract research organization space that I've covered for some time. So thank you very much, Ari. I thought I'd remind folks that we are coming up on the 10-year anniversary of the forming of IQVIA. IMS and quintiles respectively had long histories before that but in terms of putting the companies together october 1 i think of this year would be 10 years so um so congrats on on the progress um you had the the industry has been through uh you know some somewhat of a downturn a challenging time for the last few years but seems to be pulling out of it and your recent quarters show strength that would add to that perspective, I think, the improvements. So let's start with your views of the first quarter and your takeaways from what you saw, you know, first quarter or year to date and how that sets you up for the rest of the year. But starting with the first quarter, what are your views?

Ari Bousbib, CEO

First of all, thanks for reminding us about this upcoming 10th year anniversary. When we put together two companies 10 years ago, I remember, I think, that the pro forma EPS was $3.90 and our guidance for this year at the midpoint is $12.85. So more than triple, which is not bad.

Dave Windling, Analyst — Jeffries Healthcare Equity Research

can't do that math in my head okay all right so the first quarter you saw was

Ari Bousbib, CEO

pretty strong in fact we came in both on the top line and the bottom line ahead of the high end of our expectation and I think it's good to look at both of our segments yes you said that clinical trials yes it's an area of strength it's about 55% of our revenues but we've got a very strong commercial solutions business as well and both outperformed our expectations on the clinical trial side the first quarter was about 6% revenue growth when you strip out FX which was a tailwind for all of our businesses this past quarter and the benefit of acquisitions our organic growth was three points now that we know what the other the ones who report peers have done it's at least a five point differential in growth rates and I guess the only one who's has positive growth and interestingly our clinical trial business should call RDS organic growth was three points which was three times what it was a year ago so definitely improved results on the commercial side growth in the quarter was double digits again benefit of FX tailwind and acquisitions brings you your organic growth in the quarter to meet single digits which was double what it was a Year ago in the first quarter. So again strong revenue EPS beat free cash flow was 100% of net income again ahead of our expectations We did we did really well in terms of results

Dave Windling, Analyst — Jeffries Healthcare Equity Research

Excellent. So as you mentioned, I appreciate your highlighting that I didn't emphasize it enough But yeah, so a little over half the business R&D. So close to half a little under half commercial. Let's start with the bigger of the two, if you don't mind. In the RNDS and clinical trials market, how would you characterize demand and how that is evolving? I think improving,

Ari Bousbib, CEO

but I'll let you tell us. You're correct, Dave. Look, let's split the market in two broad segments. There's large pharma, and then there's everything else. There's EBP and midsize. On the large pharma side, our clients are coming out of a period of a lot of disruption, a lot of noise. The environment is not back to what it was before that noise, that is 2023 or so, but it's improving gradually. I remind you what the noise was. There was the IRA in 23. Then there was the MFN and the tariffs and the FDA disruptions and so on and so forth. And all of that created turmoil. Large pharma delayed decision making, re-evaluated their portfolios, a lot of disruption. that's largely behind all of the programs of reprioritizations and pipeline cleansing and so on a lot are completely behind us and the environment is in fact improving you looked at our bookings in the quarters they improved double digits year over year very strong across the board Our leading indicators are also up mid to high single digits, whether it's RFP flow or qualified growth in the qualified pipeline of opportunities. So the environment is generally very stabilizing and is improving, and you can see that in the growth of our bookings. On the non-large pharma side, the single most meaningful leading indicator of demand is funding. And you saw that EVP funding improved significantly. I think last year it was double the prior year. The first quarter continued to be very, very strong. April is actually very very strong again you can't make a trend from a quarter or a month but certainly the direction it's based I think April funding was triple what it was last year's April so we certainly see a lot more confidence in secondary markets to fund follow-on research for EBPs as well as venture capital funding um all of that bodes well for the industry now if you step back and you look at demand long-term demand for clinical trials um large farmers r d spend will grow two to three percent okay long term um and that's not changing i don't think uh yeah there's a lot of noise people talking about synthetic cohorts and looking for reasons but on the flip side you've get the the advent of AI which is 95% of AI applications at large pharma today and in the foreseeable future are at the discovery stage which has is going to have the consequence of increasing the number of molecules bear in mind many large farmers are looking at a five-year horizon with the not insignificant number of Eloise and so they have an interest in replenishing their pipelines AI helps identify more molecules that are more likely to succeed in trial the bottleneck in drug development is clinical trials it's not the discovery so you're going to identify more molecules in fact anecdotally I tell you a couple of weeks ago we were with some of our clients and they've asked us how fast can we ramp up capacity if we dramatically increased the number of molecules we want to take to trial so demand environment stabilizing improving gradually and many signs that it will continue to grow and two to three percent i think is a conservative estimate for large pharma um ebp is eight to nine percent and it's long been the um uh major driver of um faster growth in in the business in fact 2025 65 percent of new trial starts were from ebp so again all around strong signals that demand is returning, both for large pharma and for EBP.

Dave Windling, Analyst — Jeffries Healthcare Equity Research

Excellent. So I appreciate the bifurcation there on the cohorts. Let's drill, maybe double-click one step in on large pharma. You had talked over, I think, the last couple of years about a pretty heavy period of reprocurement, lots of resetting of pipelines and resetting of, to your point, kind of the supply chain to execute or prosecute the pipelines, to what extent, you know, I think you've talked about FSP, about pricing, you just mentioned AI. How would you describe what was contemplated in those re-procurements? Like how much of the deck was already set or has been set in the last couple years in terms of how they want to execute as opposed to I think the market is thinking about ai being a big disruptor now i'm wondering how much of of that type of thing was already

Ari Bousbib, CEO

contemplated in your discussions look i mean this is the narrative and then there is the reality okay and unfortunately and you know uh current attendees here uh you know accepted most people now look at investing as based on a narrative and on headlines as opposed to the old-fashioned way that is looking at the fundamentals and I know you and a couple of others are an exception but there is a narrative out there that AI is a disruptor it's not a disruptor trials are being conducted exactly the same way we are bidding on trials the same way yes we are executing with you know higher speeds better quality more efficiency because of the AI gentrification process which we at IQ via by the way have been working on for 10 years you know artificial intelligence is not something new for us that was the rationale for the merger you referred to earlier and we've begun the gentrification process two years ago when we started our collaboration with Nvidia we've got today over a hundred patents AI patents 19 of the top 20 large pharma already use at least one or agents IQ via AI agents in their workflows you know we've got almost 200 agents deployed both clinical and commercial representing over 60 use cases so it's not disruptive it's a tailwind for our business on the RDS side it's a driver of speed quality and efficiency to the benefit of our clients and enables us to gain share to have an edge versus competition everyone talks about AI you know some of them mean our people use co-pilot and we mean something entirely different and on the commercial side it's additive to our revenues because our AI agents the ones we sell to our clients enable them to perform the traditional commercial functions of launch strategy sales planning market access pay a reimbursement modeling etc pricing analytics all of that those functions which require IQ via data and other people's data but bear in mind IQVIA data is 70% of the data that pharma uses worldwide then integrates that data with company specific data needs all kinds of master data management tools integration tools a lot of people to perform analytics today we provide already agents we sell agents to our clients to perform those tasks a lot faster so that creates an incremental revenue opportunity on the commercial side and it is one of the elements that drove better than expected performance in the quarter and is expected to help us continue to grow on the commercial side as well

Dave Windling, Analyst — Jeffries Healthcare Equity Research

thanks for that in this pendulum swing I guess I'll call it of engagement model with your clients in clinical in R&DS the the swing to FSP is something that you know does go back and forth over long periods of time it seems to have moved toward FSP kind of wondering if that has do you think that is stabilized as a result of kind of the wave of re-procurements that have already happened is it perhaps even moving back the other way or hybridizing somewhere in the middle yeah look

Ari Bousbib, CEO

this FSP versus full service debate has been going on forever in fact 10 years ago when we did the merger I was told that's it you know everyone's moving to FSP and the truth is when When demand slows, and for whatever macro reasons, and we talked about some of the disrupting macro forces over the past three years, when demand slows and goes into a trough, typically pharma re-insources some of the activities. Still need us because you want to be able to flex capacity. Why does pharma outsource clinical trials? There's three reasons. One is cost. another one is therapeutic expertise and the third one is capacity the ability to flex capacity on demand so this fsp debate is again not a real debate fsp has relatively been a stable part of our bookings and backlogs it's about it's in the high teens you can even round it up to to 20% I think it's 17 or 18% of our backlog and in recent quarters it's been a lower percentage than that much lower percentage than that in our bookings I don't know if we are representative or not but it might seem to indicate that we're going back to more full service, bear in mind more molecules identified in discovery because of AI as we discussed before and the increasing complexity the complexity of trials, which is undeniable, the difficulty of identifying the target patient populations, the difficulties of identifying the sites, all of that creates the need for expertise that pharma cannot economically maintain in-house. Pharma is looking to go to different therapy areas, adjacent therapy areas say you have a diabetes drug and you all of a sudden discover that diabetes drug is effective for obesity or liver disease or cardiac or or anything else you may not have the obesity therapeutic expertise in-house so to conduct that trial you're gonna have to go outside which is exactly what happened so the need to access site networks that pharma does not have we see our industry in general and we in particular have unmatched spectrum of therapeutic expertise site network relationships our own sites so all of that um you know leads you to the conclusion that outsourcing is a continuing trend will continue to occur today i think it's 47 percent of all around the spend is outsourced and we see a regular increase of that proportion uh year over year so i'm not so concerned about this fsp again, it manifests itself when there's a trough in demand or a constraint in the environment and pharma pulls back. It's just a phenomenon that has happened a number of times. It happens every five, six years. But we go back to full service. And I want to remind you that EBP is a hundred percent um outsourced right under food service yeah aria i think your point about

Dave Windling, Analyst — Jeffries Healthcare Equity Research

complexity is really important so people are focused on ai as a deflator but complexity is an inflator and has been for a very long time and perhaps ai is even necessary for the industry to be able to handle the complexity um before we move to commercial on on the ebp end of things and and your attempts to gain share in there. Earlier in 25, you had a kind of a mantra of see more, win more. I believe in talking to your team that you've maybe been able to put that on cruise, maybe not push that as hard, but I'll let you describe how are you thinking about growing your share in EBP? How are you positioning IQVIA?

Ari Bousbib, CEO

So EBP is an entirely different segment than large pharma in the sense that it requires, shall I say, white glove handling, more hand-holding, limited resources, a small group of people, a molecule, much earlier engagement is necessary to stick with the customer. we typically as a large CRO historically weren't much focused on that I mentioned before that 65% of the clinical starts last year were from EBP if you look at our business it's exactly the flip side 65% of our bookings and business is with large and clearly it's a great opportunity for us you know smaller focused CROs have had a field day because they haven't had us compete with them in that segment as hard as we could and so therefore over the past couple of years we've decided as you said to see more and win more in that segment by engaging earlier you know the the chaos at the FDA benefited us, we hired quite a significant number of former FDA-ers, therapeutic experts, that for that specific purpose, we used them at the regulatory stage to help and support EBPs at a much earlier stage. We used to never do that. we would wait till the the biotech got some some some good data in phase one phase two and ready now to engage into a real serious travel there's a serious trial akin to the to the trials that we conduct for large pharma because at the end of the day the trial that you're going to conduct for an EBP is exactly the same as the charge can conduct for a large pharma but the engagement with an EVP is very different requires earlier engagement more focus on the regulatory side more hand-holding and so we created a specialized unit IQVIA biotech with these regulatory experts that are able to accompany the the EBP earlier in the process and in fact you know if you listen to reports from those other competitors that are specialized in EBP they'll tell you that they've seen more competition on their domain or the historic domain and that's that's us we've been very very aggressive there And we've made we're growing in our EBP bookings are growing strong double digit. I mentioned before the segment is growing eight to nine percent long term and we've seen our growth. They are strong double digits. So we are making strong inroads.

Dave Windling, Analyst — Jeffries Healthcare Equity Research

OK, fantastic. So transitioning to commercial, some players in the commercial space away from you have seen some weakness in pharma. Advertising and commercial budgets your business is actually kind of accelerated. I think since since a slower period To what would you attribute that? Yeah, so look

Ari Bousbib, CEO

Overall What's driving Our commercial business is the number of drugs approved And the number of drugs approved has increased I think the second half of 25 saw the FDA approve 31 molecules, I think, which was double, more than double what was approved in the first half. We see the first quarter was very strong, too, and typically takes between six months and a year, year and a half, between the approval and the launch of the drug. this is really the bread and butter of our business so more approvals means more business for us the second big driver of growth and we saw that in the first quarter is what we call patient solutions which includes the parts of real world solutions that stayed with the commercial business patient solutions a big issue with with patients is adherence we've got a lot of engagements on behalf of pharma directly with patients in fact AI plays a role here you know I saw a couple of weeks ago great IQ via AI agents I saw not a real person but almost there that can help predict when a patient is gonna get off a medication and therefore prompts an intervention by another agent to make sure the patient stays on the drug based on you know the massive amount of data we have on patients sticking to to a drug or getting off and what are the signals that can help us anticipate when a patient is going to get off that drug so a lot of good work on patient engagement analytics and consulting again ai makes our clients want more help not less help and you saw that our analytics association business was very strong our pipelines there are at historic levels our growth rates in analytics and consulting are higher I mean the last time we saw that growth rate was I think three and a half years ago and so really strong demand despite what we might have thought would be an area of vulnerability for AI so analytics and consulting very strong commercial engagement services where we which includes the former csms which is where we contract sales reps but not just says reps nurses and an entire spectrum of commercialization services including distribution in some cases large pharma has decided to get out of commercializing themselves usually legacy drugs usually in overseas markets and they've begun outsourcing including to us we want some significant large multi-year engagements for top 10 pharma companies in various parts of the world in South America and Europe in Asia where we take on the responsibility of essentially commercializing a set of drugs in a particular therapy and we see that pipeline of opportunities grow as well so these are the three main drivers of growth on a commercial side digital marketing you see that people are reducing generally their advertising budgets in large pharma it's true all over but the exception is on the digital channels and there as you know we have a very good thriving business and finally AI agents whereas on the clinical side AI agentification again is a tool for increasing speeds improving quality and increasing efficiency on the commercial side it's a incremental revenue stream

Dave Windling, Analyst — Jeffries Healthcare Equity Research

for us yeah with a couple minutes left I want to try to touch on on AI a little more you've you've touched on it through the questions here but um i'm going to start with a little bit of a conceptual question and it drives it who's best place to bring purpose-built ai agents to your customers so you've got the anthropics and open ais and you're partnered with nvidia and they are the technology experts they are bringing some tools to market but But this is an industry that's highly regulated, that's very complex. The management of these projects takes years and a lot of people. And it seems to me that subject matter expertise, which you have tons of, matters a lot. And so kind of help the audience understand why this is not a generalist game.

Ari Bousbib, CEO

Sure. I mean, there are three things you need for, you need many, many things, but let's say three primary ingredients you need for AI identification one is the content and for us that means the data now for most of the you know headline conversations that data is available because of the internet in our industry it's not it's proprietary data I mentioned before 70% of all data used by pharma worldwide is IQVIA data so that's number one ingredient it's not available to expertise as you mentioned not so simple this is not about diagnosing a disease it's not about writing a legal brief it's a lot more complicated than that the typical clinical trial can have over 800 standard operating procedures sops with very very complex workflows and three the regulatory compliance privacy requirements which are very high so we already two years ago put in place what we call healthcare grade ai which includes all the safeguards and all the privacy requirements all the compliance requirements bear in mind every country has different protocols treatment patterns even the names of the drugs are different the the treatment protocols are different the reimbursement models are different and so you say yeah conceptually a generic horizontal AI tool could get to all of that. But it's actually very complex. And the data again, go back to the first degree, is just not available. In fact, we've realized the value of our data has increased exponentially because of AI.

Dave Windling, Analyst — Jeffries Healthcare Equity Research

I appreciate your throwing that in. That would have been my next question if I had time. So very much appreciate that. I think we got most of it in. Ari, thanks for being here and thanks for the audience's attention. Thank you. Enjoy the rest of the conference.