Earnings Call Transcript - IQV Q2 2023

Operator, Operator

Ladies and gentlemen, thank you for being here. I would like to welcome everyone to the IQVIA Second Quarter 2023 Earnings Conference Call. All lines have been muted to eliminate background noise. Following the speakers’ remarks, we will have a question-and-answer session. This call is being recorded. I will now hand the call over to Mr. Nick Childs, Senior Vice President, Investor Relations and Treasury. Mr. Childs, please proceed.

Nick Childs, Senior Vice President, Investor Relations and Treasury

Good morning, everyone. Thank you for joining our second quarter 2023 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 Perrone, 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 in the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss 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, Chairman and Chief Executive Officer

Thank you, Nick, and good morning, everyone. Thank you for joining us today to discuss our second quarter results. IQVIA delivered another quarter of strong operational results with 9% organic revenue growth, excluding the impact of foreign exchange and COVID-related work. The demand environment for the industry continues to be healthy, which supports our confidence in the long-term outlook for our businesses. Emerging biotech funding continued its healthy trend. According to BioWorld, second quarter EBP funding was $17.1 billion, up 33% versus the prior year and up 10% sequentially versus Q1. Clinical trial starts were up over 10% sequentially compared to Q1 2023. FDA approvals continued their strong momentum, which is a positive indicator for our commercial businesses going forward. There were 26 approvals in the first half of the year, and that's up 30% versus the average of the prior five years. M&A activity in the biopharma sector remains strong with over $90 billion spent in the first half. 2023 is on pace to be one of the largest years in the last decade in both the value of transactions and number of deals, and that is with a high interest rate environment. Our Q2 demand metrics showed continued healthy growth. Net new bookings were just under $2.7 billion, which was our second largest quarter ever and represented a quarterly book-to-bill of 1.28. By the way, before I move on, I know that some of you inquired last quarter about our services book-to-bill, and I think some of you are concerned about what that may have implied about our performance. So just to remove any concern, our services book-to-bill this quarter was, Nick, 1.34? Correct. 1.34. And our trailing 12-month book-to-bill is 1.34 overall. And again, for those who asked, it's the same on a services basis. Once again, going forward, if there is any meaningful deviation between our total book-to-bill ratio and the services book-to-bill, then we will let you know. Otherwise, you can assume they are roughly the same. Now as a result of these bookings, our backlog reached $28.4 billion, growing 11% versus prior year on both reported and constant currency basis. Another metric we track is our quarterly RFP flow. And this past quarter, it was the largest ever. It was up 8% year-over-year and 6% sequentially. For the longer-term fundamentals of the industry are certainly very positive. Now in the short term, our clients have continued to be cautious with their spending due to the uncertain macroeconomic conditions and that's reflected primarily, I would say, only in some subsegments of our commercial business segments, that is TAS and CSMS. In the second quarter, these businesses were stable with the TAS segment growing in the second quarter at a rate consistent with the first quarter as we had anticipated in our guidance. Of course, last time we spoke, we expected client spending in these commercial businesses to show signs of acceleration by now. But unfortunately, they have continued to delay decisions. Our pipeline is still there. However, decisions keep being moved to the right. And as a result, we now expect these commercial businesses to perform for the balance of the year similarly to what we saw in the first half. For the TAS segment, that represents approximately 6% growth organically, excluding the impact of FX and the COVID step-down. And that 6% growth organically for the year is actually very strong in the current environment. With that, let's review the second quarter results. Revenue for the second quarter grew 5.3% on a reported basis and 5.5% at constant currency compared to last year. And again, excluding COVID-related work from both periods, we grew the top line 9% at constant currency on an organic basis. Second quarter adjusted EBITDA increased 8%, driven by the revenue growth and ongoing cost management discipline. Second quarter adjusted diluted EPS of $2.43, as expected, faced the headwind of the step-up in interest expense and the UK corporate tax rate change. Excluding the impact of these non-operational items, our adjusted diluted EPS growth would have been 14%. A few highlights of business activity. IQVIA has been awarded a significant contract with a top 10 pharma to implement our full commercial data and analytics solution suite. This suite of offerings will benefit our clients by utilizing insights powered by AI, such as personalized engagements with HCPs; leveraging our multichannel capabilities, including digital; precise geographical sales targeting; and better cost efficiency by reducing the number of resources that are manually generating insights. This initiative positions IQVIA as a strategic partner with this large top 10 pharma client for AI-powered data and analytics solutions. Another top 10 pharma extended and broadened an analytics project to track the sales performance of their top-selling immunotherapy oncology drug in Europe. The project allows commercial teams to continuously track brand performance, factoring AI-generated insights and improve, as a result, execution across seven cancer indications in over 25 countries. In another win, IQVIA was awarded a significant contract from another top 10 pharma client to deploy our OCE Optimizer application globally. This is an AI-powered multichannel sales management application that optimizes HCP engagement in real-time. IQVIA was selected over two other competitor solutions because of the seamless integration that OCE offers with the client's current ecosystem, the superior AI capability and our successful history with these clients in previous global system implementations. Also, in the quarter, IQVIA was selected by multiple clients to deliver regulatory-mandated plus post-approval safety studies in Europe. In each case, IQVIA was selected over preferred providers due to our deep expertise in sourcing data from the local health systems in Europe and our ability to bring multiple databases together in a harmonized manner for research. We were awarded a five-year pregnancy exposure study from an EBP customer to collect and analyze health information from women who take prescription medicines or vaccines during pregnancy and compare results with women who have not taken them. We won this award because of our rich experience in post-approval safety studies in pregnancy and deep experience in epidemiology. In the quarter, IQVIA has been recognized by the Artificial Intelligence Breakthrough Awards with the prestigious Best AI-Based Solution for Healthcare award. IQVIA was recognized for its AI software, including natural language processing and proprietary large language models technology, which analyzes complex and unstructured patient data to provide unique insights into patient care and disease states. This technology is helping clinicians identify and screen at-risk patients, enabling targeted intervention to patients in need. IQVIA continues to differentiate in the application of AI analytics with two of the top 10 pharma companies designating their use of IQVIA AI as their innovation of the year. In addition, both Databricks and Snowflake separately named IQVIA their 2023 Health and Life Sciences Partner of the Year. These awards recognize AI and tech partners for their exceptional accomplishments and joint collaboration. There's a lot going on at IQVIA with generative AI, and we will likely be discussing this at the appropriate time at a future investor meeting. Let me now move to R&D Solutions segment, which had another strong quarter, including several key wins. Our expertise in oncology continues to be a differentiator for us. In the quarter, a midsized pharma company awarded IQVIA two large Phase III trials for gastric and prostate cancer, which are expected to last about six years. The client selected IQVIA due to our therapeutic expertise and infrastructure to run global complex oncology studies as well as our global data assets. Also this quarter, a large FSP client renewed their partnership with IQVIA as a preferred provider this time without soliciting competing bids. This client was a historical lockout account for the historical Quintiles legacy company. We won here due to our FSP expertise, scale and delivery capabilities. In our lab business, the top 10 pharma awarded us a large study in the quarter for a novel drug that improves the quality of life of patients suffering from a serious autoimmune disease that impacts one out of 50 people worldwide. This study is our clients' top R&D program, and it has positioned IQVIA as the largest laboratory service provider for this client. Lastly, I'm proud to share that Sheetal Telang, Vice President of Therapeutic Strategy at IQVIA, has been honored with the 2023 Rising Star Award by the Healthcare Business Women's Association. Sheetal earned the award for strong and innovative leadership of critical industry initiatives, including by increasing diversity and inclusion levels among patients enrolled in clinical trials. I will now turn it over to Ron for more details on our financial performance.

Ron Bruehlman, Executive Vice President and Chief Financial Officer

Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Second quarter revenue of $3.728 billion grew 5.3% on a reported basis and 5.5% at constant currency. In the quarter, COVID-rebated revenues were approximately $120 million, which is down about $140 million versus the second quarter of 2022. Excluding all COVID-rebated work from both this year and last, organic growth at constant currency was 9%. Technology & Analytics Solutions revenue was $1.456 billion. That was up 3.4% on both a reported and constant currency basis. Excluding all COVID-related work, organic growth at constant currency in TAS was 6%. R&D Solutions revenue of $2.096 billion was up 7.5% reported and 7.6% at constant currency. Excluding all COVID-related work, organic growth at constant currency in R&DS was 12%. Lastly, Contract Sales and Medical Solutions, or CSMS, revenue of $176 million declined 3.8% reported and was flat at constant currency. Total company first half revenue was $7.380 billion, which was up 3.8% on a reported basis and 5.1% at constant currency. Excluding all COVID-related work, organic growth at constant currency for the first half was 10%. Technology & Analytics Solutions revenue for the first half was $2.900 billion. That's up 1.9% reported and 3.2% at constant currency. And excluding all COVID-related work, organic growth at constant currency in TAS was 6% for the first half. R&D Solutions first half revenue of $4.122 billion was up 6.1% at actual FX rates and 7.1% at constant currency. Excluding all COVID-related work, organic growth at constant currency in R&DS was 14% in the first half. Contract Sales and Medical Solutions, or CSMS, first half revenue of $358 million declined 5.3% reported and 0.5% in constant currency. Let's move down the P&L now. Adjusted EBITDA was $864 million for the second quarter, which represented growth of 8% while first half adjusted EBITDA was $1.715 billion, which was up 6.4% year-over-year. Second quarter GAAP net income was $297 million, and GAAP diluted earnings per share was $1.59. For the first half, we had GAAP net income of $586 million or $3.12 of earnings per diluted share. Adjusted net income was $454 million for the second quarter, and adjusted diluted earnings per share was $2.43. For the first half, adjusted net income was $916 million or $4.88 per share. Now, excluding the year-over-year impact of the step-up in interest rates and the increase in the UK corporate tax rate, adjusted diluted earnings per share grew 14% in the second quarter and 11% for the first half. As already reviewed, R&D Solutions delivered another quarter of excellent bookings. Backlog at June 30 stood at a record $28.4 billion, which is up 11% year-over-year and up approximately 40% in the last three years. Reviewing the balance sheet. As of June 30, cash and cash equivalents totaled $1.382 billion, and gross debt was $13.777 billion, which resulted in net debt of $12.395 billion. Our net leverage ratio ended the quarter at 3.59 times trailing 12-month adjusted EBITDA. Second quarter cash flow from operations was $402 million and capital expenditures were $160 million, resulting in free cash flow of $242 million. As we previously announced, in May, we issued $1.250 billion of senior secured and unsecured notes. The proceeds from these notes were used to pay down our revolving credit facility. We also took advantage during the quarter of our stock price multiples falling to 2017 levels and deployed $490 million to repurchase 2.5 million shares at an average price of $194 per share. In the first half, share repurchases totaled $619 million. Now we ended the quarter with $736 million of share repurchase authorization remaining under the program. But our Board of Directors just authorized a $2 billion increase to our share repurchase plan, which brings the authorization to $2.736 billion as of today. Let's turn to the guidance. We're updating our guidance to address the impact of the continued client cautiousness we've been experiencing in the commercial business. We now anticipate this cautiousness persisting for the balance of the year. And reflecting the reduced expectations for both TAS and CSMS, we currently expect revenue to be between $15.050 billion and $15.175 billion, which represents year-over-year growth of 4.4% to 5.3%. Total company organic growth at constant currency, excluding COVID-related work, is now expected to be between 8% and 9% for the year. This revenue guidance continues to assume about 100 basis points of contribution from acquisitions and a step down in COVID-related revenue of approximately $600 million versus 2022. By segment, we now expect TAS to grow approximately 6%, consistent with what we saw in the first half. Our expectations for the R&DS segment are unchanged and consistent with our previous guidance. And finally, we now expect CSMS revenue to decline approximately 3%. And all of these growth rates are organic at constant currency, excluding COVID-related work. Now, to reflect these changes in revenue, we're also updating our guidance for full year adjusted EBITDA to $3.600 billion to $3.635 billion, which represents year-over-year growth of 7.6% to 8.6%. And lastly, we're updating our guidance for adjusted diluted EPS to $10.20 to $10.45, representing year-over-year growth of 0.4% to 2.9%. This adjusted diluted earnings per share guidance includes the year-over-year impact of the step-up in interest rates and the increase in the UK corporate tax rate. And together, these non-operational items reduced the year-over-year growth rate by approximately 12 percentage points. So excluding these items, adjusted diluted earnings per share is expected to grow 12% to 15%. Now let's move to our third quarter guidance. In Q3, we expect revenue to be between $3.760 billion and $3.810 billion or growth of 3.9% to 5.3% on a constant currency basis and 5.6% to 7% on a reported basis. Adjusted EBITDA is expected to be between $880 million and $895 million, up 8.1% to 10%. And adjusted diluted EPS is expected to be between $2.39 and $2.49, declining 3.6% to growing 0.4% year-over-year. Excluding the step-up in interest expense and the increase in the UK tax rate, this translates into third quarter adjusted diluted EPS growth of between 11% and 15%. Now, I should note that all of this guidance assumes that foreign currency rates as of July 31 continue for the balance of the year. So, let me summarize. We delivered another strong quarter of financial performance, including organic revenue growth of 9%, excluding the impact of foreign exchange and COVID-related work. Our quarterly net new bookings were the second highest ever at just under $2.7 billion, and our industry-leading backlog reached a new record of $28.4 billion, up 11% year-over-year. Underlying demand in the industry and our business remains healthy with our RFP flow reaching a new record high in the quarter, up 6% sequentially versus Q1 2023. We took advantage of the stock price multiples falling to 2017 levels during the quarter and bought back almost $0.5 billion worth of shares at an average of $194 per share. On top of this, our Board of Directors authorized a $2 billion increase to our share repurchase authorization. And finally, while client cautiousness and their discretionary spending are slightly reduced, our short-term outlook on the commercial side of the business, that is TAS and CSMS, the fundamentals of both the clinical and commercial markets continue to be healthy and support our confidence in the longer-term outlook for our company. And with that, let me hand it back over to the operator to open the phones for Q&A.

Operator, Operator

We'll go first this morning to David Windley at Jefferies.

David Windley, Analyst

Hi, good morning. Thank you for taking my question. Ari, you mentioned a significant increase in trial start activity, which is certainly encouraging. The bookings you highlighted are also quite strong. I have two questions: first, does this reflect pharma and biotech companies resuming business after evaluating their pipelines? Second, have there been any improvements in the operational environment, such as site staffing and labor turnover, that could enhance throughput on the operational side? Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Thank you, Dave. The environment has remained stable over the past one and a half to two years. While there have been discussions regarding EBP funding and concerns regarding the impact of the IRA, large pharmaceutical companies are assessing the longer-term effects of the IRA and are reviewing their portfolios of ongoing and upcoming studies, which has led some to reprioritize certain projects. However, our business has remained solid, consistently growing each quarter, with our bookings setting new records. We haven't noticed any disruptions in the market for R&D Solutions recently, and this quarter reflected that trend. Regarding your second question about staffing and site start-ups, attrition rates have returned to pre-pandemic levels of approximately 10% to 12%. We are actively recruiting and hiring to support our significant organic growth and meet increased demand. Competition for talent remains, but we currently employ around 87,000 people and are adding thousands each year. As for site staffing issues, we have seen challenges but to a lesser extent than we experienced six or nine months ago, and these issues have been significantly reduced. While we are not quite at full staffing levels across all sites due to occasional sporadic issues, the situation has improved markedly. Thank you, David.

David Windley, Analyst

Thank you.

Operator, Operator

Thank you. We'll go next now to Ann Hynes at Mizuho.

Ann Hynes, Analyst

Hi. Good morning. I just want to dig into TAS a little bit more. Within TAS, I know there are several sub-segments. Can you just give us growth rates or declines within the sub-segments like consulting technology and real-world evidence? And also, I think most of the pressure is coming from the consultant segment. Can you tell us just what the margin drop-through is that? So if consultant is maybe like 25% of revenue, I think it is, what's the negative margin drop-through? That'd be great. Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

I don’t believe we have disclosed the margins by sub-segment, but they are quite strong overall. The consulting and analytics segments both generate good margins, with much of our analytics work being performed out of offshore centers in Bangalore and Manila, where we achieve solid margins through standardized workflows and refined processes over the years. When we refer to consulting, it’s important to clarify that this isn’t akin to McKinsey-type consulting. Our consulting services focus on operational aspects, such as pricing market access studies, launch studies, and sales force optimization studies that clients use to support new drug launches, geographic market reprioritization, and restructuring of their sales organizations. These projects are essential for clients; however, the current economic environment and higher interest rates have led to a pause in decision-making. While the pipeline remains intact, spending has slowed down and projects are not being executed. Consequently, we are observing lower prospects as decision-making appears to have been delayed. We were initially optimistic that decision-making would pick up within the last couple of months, aiming for growth rates around 8% or higher for the TAS segment this year. Unfortunately, we haven’t seen that acceleration materialize in the second quarter. Therefore, based on current observations, it seems reasonable to expect continued organic growth of approximately 6% at constant currency for the segment during the remainder of the year, excluding the impacts of COVID. Thank you.

Ann Hynes, Analyst

Great. Thanks.

Operator, Operator

Thank you. We'll go next now to Eric Coldwell at Baird.

Eric Coldwell, Analyst

Thank you very much. I had the same question as Ann, and I just wanted to follow up on that. The way we think about TAS is for us broadly defined sub-segments, data, analytics, consulting, real-world evidence, and technology. I'm curious, did any of this cautiousness or sluggishness, did it expand beyond the analytics and consulting side? What are the growth trends in data, real-world evidence, tech any nuances or changes there? And then I have one quick follow-up, if I might. Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Sure, thank you. Let’s begin with data, which is the core of our business. That aspect remains unchanged. Over 90% of our data-related business for the upcoming year is already secured by December, meaning there’s no significant change, and this part of our revenue is recurring. The level of discretion from our clients regarding data is considerably less compared to what we see in analytics and consulting. Regarding our faster-growing areas, such as real-world evidence and technology, the revenue does not directly reflect current sales. Instead, it is tied to technology deals from previous periods. There is a cautious sentiment in the technology sector similar to what we've observed in consulting and analytics, particularly regarding new purchases and transitions. There's ongoing dislocation in technology affecting both clinical and commercial sectors; for example, a major competitor changed their platform, prompting clients to reassess their technological choices. While we have new innovations and competitive pressures from companies like Medidata and Oracle, clients are taking their time to make decisions, although this is not impacting our current revenue. In the real-world evidence sector, some projects entail longer study timelines. We have seen slight caution and delays in late-phase studies, but again, this hasn't significantly affected our yearly revenue. Overall, the TAS segment, which includes consulting and analytics, is down about 5% year-over-year, while the rest of the business remains stable as anticipated.

Eric Coldwell, Analyst

Thank you.

Operator, Operator

Thank you. I know you don't tend to get into details on M&A in the quarter, typically, these are smaller companies, sometimes higher revenue multiples. But I did notice $426 million, I believe, spent on acquisitions this quarter. I was hoping to get some sense of directionally what that might have been.

Ari Bousbib, Chairman and Chief Executive Officer

I believe the acquisition was completed toward the end of the quarter. We acquired a company called Cognitive for nearly $300 million, which operates a clinical site network. As part of our overall strategy, we have been acquiring assets with strong patient enrollment capabilities in specific therapies. Cognitive excels in internal medicine, CNS, and vaccines and serves several large pharmaceutical clients. This company is based in Arizona, and while it represents a significant revenue multiple, we finalized the acquisition toward the end of the quarter. Additionally, we have several smaller acquisitions, but that's the main one. We also made a $36 million investment in a smaller company.

Ron Bruehlman, Executive Vice President and Chief Financial Officer

We had one other site network we've acquired.

Ari Bousbib, Chairman and Chief Executive Officer

Right, right, right. It management organization, yes. That was in psychiatry and smoking cessation. So again, highly specialized site benefit organization we've done a couple this past quarter.

Eric Coldwell, Analyst

So you are starting to follow the path of what PPD and ICON have done in prior years with moving into the opening up the marketplace for actually being a hybrid SMO, but probably still at a very small scale, I would assume.

Ari Bousbib, Chairman and Chief Executive Officer

Yes, we had already started a network ourselves. You're correct that we bought maybe one other one last year. It's not like we are buying dozens of these, but coincidentally, we acquired two in the quarter, which accounts for the majority of the spending you see.

Tejas Savant, Analyst

Hi, guys. Good morning and thanks for the time this morning. Ron, maybe one for you and a quick follow-up on the M&A side for Ari as well, if I may. So Ron, first for you, I mean, margins in the midpoint look to be expanding nicely here into the fourth quarter as implied by your third-quarter guide. Can you just walk us through sort of what drives your confidence in that sort of margin expansion into year-end? And then on the M&A side, Ari, we noticed that the Propel Media acquisition from earlier in the year is being blocked by the FTC at the moment. We had some new merger review guidelines, draft guidelines admittedly, put out a couple of weeks ago as well. Does it concern you that you need to sort of rejig your M&A strategy here in light of some of these recent developments?

Ron Bruehlman, Executive Vice President and Chief Financial Officer

I'll address the margin question first, Tejas. We've experienced market expansion throughout the year, which makes it reasonable to expect similar momentum in the latter half of the year. We are implementing various productivity initiatives aimed at reducing costs, which typically yield more benefits as the year progresses. This will certainly help support margins in the latter part of the year. Additionally, we are beginning to see relief from some of the labor cost pressures we have experienced compared to the previous year, allowing us to gain more pricing advantages. It's a mix of several factors that compensate for a slight drag from our business mix. For example, the information business, although profitable, does not grow as quickly as other segments. Despite this, we are very confident in our margin outlook for the second half of the year for these reasons.

Ari Bousbib, Chairman and Chief Executive Officer

Yes. Regarding the acquisition we are pursuing, I believe it will take about a year. We have a strategy to keep growing in the digital space, and that strategy remains unchanged. We are aware of the merger guidelines, but I won’t comment on the ongoing litigation with the FTC. We strongly believe there is no justification for blocking this transaction, although we recognize some new theories being put forward by the current FTC administration. Administrations change, but our M&A strategy will not. We consider ourselves a small player in a vast digital promotional market, which includes major companies like Google. We have the right to compete in this market, serving the needs of the life sciences industry, and our customers appreciate the services we provide. We believe this acquisition will enhance competition within the market and enable others to compete against the dominant players in the digital space. Therefore, we do not understand the FTC's arguments, and I will leave it at that.

Tejas Savant, Analyst

Thanks, guys. Appreciate the color.

Ari Bousbib, Chairman and Chief Executive Officer

You're welcome.

Operator, Operator

We'll go next now to Luke Sergott at Barclays.

Luke Sergott, Analyst

Good morning, everyone. Thank you for the questions. You mentioned that decision-making has been taking longer, particularly in the TAS business. Can you provide some insight into how much longer this process has become? Previously, it took around two to three months to close a deal, but now it seems to be extending to six months. Could you give us a framework for this timeline? Additionally, as you consider potential recovery, I assume there is also some delayed decision-making on the R&D side. When things begin to improve, can we expect the R&D side to bounce back before the TAS side in terms of decision-making?

Ari Bousbib, Chairman and Chief Executive Officer

Thanks for your question, Luke. I'm not exactly sure what you mean by R&D Solutions coming back. It's performing very well. The R&D Solutions segment is not facing any noticeable delays in decision-making. We had another record quarter for bookings, and nothing has changed in that regard. Our RFP flow is also at a record high. I could provide statistics on leading indicators for the R&D Solutions side, such as a qualified pipeline and overall pipeline metrics, all of which are at a record high. We continue our sales activities as usual, and there's no indication of any decision-making delays in the R&D Solutions area. I want to emphasize that. On the other hand, the TAS segment and CSMS primarily impact the consulting and analytics side of the business. The issue is a bit challenging to quantify in terms of time. We've had some items in our pipeline since the end of last year, and as of August 1, the clients for those specific opportunities still haven't decided. Everything is negotiated, and they know they need to conduct the study, but they are considering whether to do it now or possibly wait until next year. Clients are essentially asking themselves if they need to proceed immediately or if they can postpone for a few months. This situation has been in our pipeline for six months, and we haven't removed it because the clients still indicate they want to proceed; they just haven't signed yet. So, yes, in terms of timing, what typically took one or two months is now taking six months or more.

Luke Sergott, Analyst

Okay. I apologize for suggesting that you were experiencing weakness or delays in R&D decision-making. My comment was meant to be more general about the pharmaceutical sector. Regarding the decision-making on the TAS, is that primarily because your customers are concentrating on where to invest their resources for clinical trials, and the TAS offerings are seen as a secondary advantage that you provide?

Ari Bousbib, Chairman and Chief Executive Officer

It's really all over. Every client is feeling the pressure. There's uncertainty about a potential recession, and that may lead us to consider delaying the launch in Portugal or postponing our assessment of the sales force. If we push these decisions to next year, we might also delay our project to evaluate pricing adjustments in light of the IRA implications for this drug in that market and therapy. I can't provide a straightforward answer because of the current environment. I'm certain someone will have a question, probably Shlomo, but our cash flow this past quarter was lackluster. Large pharmaceutical companies holding significant cash reserves are also not paying their bills promptly. Our collection rates are lower than expected, and in this high-interest environment, clients often find excuses for payment delays, such as minor invoice issues. It's just the nature of the current situation, and I don’t have another explanation.

Luke Sergott, Analyst

Got you. That's helpful. Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Thank you, Luke.

Operator, Operator

And we'll go next now to Shlomo Rosenbaum at Stifel.

Shlomo Rosenbaum, Analyst

Hey, Ari. I still get a question, even though you asked that one, right?

Ari Bousbib, Chairman and Chief Executive Officer

Yes, yes.

Shlomo Rosenbaum, Analyst

Thank you. I wanted to discuss a specific metric and then follow up with a broader question. Could you share the growth rate on real-world evidence for the quarter? Also, Ari, could you elaborate on the unique advantages you might have in AI? You've hinted at some developments, but can you explain how your investments in AI over the past few years or the unique data you’ve collected set you apart? Is there something truly unique available in the market right now, or is this more about what's coming up next? Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Thank you. Regarding real-world evidence, it continues to show strong double-digit growth, and that hasn't changed. We are very enthusiastic about the opportunities with AI. This is not a new area for us; we have been actively developing this since 2015 or 2016, and we possess several market-leading proprietary AI software platforms. Our commitment to AI and machine learning resources has been long-standing, and we are exceptionally positioned to leverage AI across various functions such as drug development, discovery, clinical development, safety, market access, medical affairs, and commercialization, which informs our promotional and sales efforts. We also apply AI in natural language processing for translating medical documentation and protocols. Internally, we have utilized AI to improve efficiency across many processes, such as lead to cash. The integration of AI offers us a significant opportunity, and we have seen benefits over the past few years. AI enhances our capability to gain competitive advantages by optimizing site selection based on patient demographics derived from our extensive databases, refining patient recruitment strategies using data analytics, and improving drug development protocols through predictive enrollment models based on defined criteria. You may have heard of our next best application in the OCE suite, which uses historical data to build predictive customer engagement models. Furthermore, we are creating a novel biomarker database with IQVIA's natural language processing tools, which has been instrumental in Alzheimer's studies for early patient identification and recruitment. We have numerous initiatives aimed at expanding patient pathways, including over 150 patent-pending methodologies and algorithms, more than 30 predictive disease models, and over 300 life sciences-specific analytical libraries. As for generative AI, its application is more complex than many realize. There are significant generative AI initiatives emerging, but without proper access to business rules and relevant content, outcomes may be unreliable, often referred to as "hallucinations." Our experience with technology partners indicates that we have the internal capabilities needed to make large language model tools more effective in life sciences, compared to the general public information available. We view this as an exciting development and are actively leveraging it internally. Addressing margins and margin expansion is part of several initiatives contributing to our efforts in this area.

Shlomo Rosenbaum, Analyst

Thank you.

Operator, Operator

We go next now to Jailendra Singh at Truist.

Jailendra Singh, Analyst

Thank you, and thanks for taking my questions. I actually want to ask about data and information offerings business for you guys. One of your competitors recently talked about coming up with competitive solutions in that space for pharma companies. I understand this is a more stable and high-margin, very sticky business for you guys. But just remind us about your positioning there and what makes the barriers to entry high in that business.

Ari Bousbib, Chairman and Chief Executive Officer

You are asking about the data business?

Jailendra Singh, Analyst

Yes, yes.

Ari Bousbib, Chairman and Chief Executive Officer

I don't know what to say here. It's just a completely different situation. The scale, the global presence in over 100 countries, the level of detail, the IT infrastructure required to process, cleanse, connect, and manage all that data globally, and the business operations. Take health care for example; data is chaotic. You can have an abundance of data, but if you don't understand it, connect it, clean it, and know how to use it, it's not really useful. We have data on approximately 1.2 billion patients, and I don't think anyone else has anything close to what we possess.

Ron Bruehlman, Executive Vice President and Chief Financial Officer

We’ve been doing this since the early 1950s, Jailendra. That should indicate something. I mean, technically, nothing prevents someone from recreating what we have in data if they have 70 years and the same expertise we possess.

Jailendra Singh, Analyst

Got it. Thanks a lot.

Nick Childs, Senior Vice President, Investor Relations and Treasury

Okay. Well, thanks, everyone, for joining us today. We look forward to speaking to all of you again on our third-quarter earnings call. The team and I will be available the rest of the day to take any other follow-up questions you may have. Thanks for joining.

Operator, Operator

Thank you again, ladies and gentlemen. We'll conclude the IQVIA Second Quarter 2023 Earnings Conference Call. But thank you all so much for joining us, and wish you all a great day. Goodbye.