Earnings Call Transcript - IQV Q4 2024

Operator, Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Fourth Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, you may now begin your conference.

Kerri Joseph, Senior Vice President, Investor Relations and Treasury

Thank you, operator. Good morning, everyone. Thank you for joining our fourth quarter 2024 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Mike Fedock, Senior Vice President, Financial Planning and Analysis; and Gustavo 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 on the Events and Presentations section of our IQVIA Investor Relations website. Before we begin, I'd like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Ari Bousbib, Chairman and Chief Executive Officer

Thank you, Kerri, and good morning everyone. Thank you for joining us today to discuss our fourth quarter and full year 2024 results. It was great to see many of you in-person at our December Investor Day at Innovation Park headquarters. I hope this helps you appreciate the depth and breadth of our offerings as we showcased product demos and toured some of our industry-leading laboratories. In fact, many of you commented to me afterward that they left with a deeper understanding of the breadth and depth of our capabilities and how our strategy to improve patient outcomes is being executed. As we closed 2024, we delivered solid full-year results with revenue growth of 5.5% at constant currency, excluding the COVID revenue step down; adjusted diluted earnings per share growing over 9%; and free cash flow of $2.1 billion, which represents growth of 41% versus last year, as well as 104% of adjusted net income. I'm very proud of the results the IQVIA team was able to deliver in an industry that faced significant challenges in 2024. We saw the consequences of the Inflation Reduction Act, which led to delayed customer decision-making, reduced discretionary spending, and portfolio reprioritizations. Additionally, we had a challenging macro environment that persisted with geopolitical unrest, continued high interest rates, inflation, foreign currency headwinds, and questions about the impact of political elections in the U.S. and around the world, all of which created a tremendous amount of noise and incremental uncertainty. In fact, very few companies in our broader industry sector achieved positive growth, and IQVIA really stood out as an outperformer. More specifically, in the fourth quarter, you saw that we had strong operational results. Revenue came in above the high end of our guidance range, representing about 4.5% growth excluding the impact of foreign exchange and COVID-related work. We delivered just under 10% growth in adjusted diluted earnings per share and achieved a record quarter of free cash flow. On the clinical side, net new bookings for the quarter were over $2.5 billion, and this all highlights the great work done by our R&DS team in securing new business contracts. This helped mitigate the outsized level of cancellations that did materialize in the quarter, just as we had anticipated. Now, despite the tough macro environment, the R&DS business had some significant achievements in 2024. We successfully renewed all of our large pharma strategic partnerships this past year, even as many clients reevaluated and consolidated their alliances. In addition, we established new relationships, displaced incumbents, and expanded the scope of work in several partnerships, positively positioning our business for future growth. IQVIA has partnerships with 22 of the top 25 pharma companies. We made significant advancements in our global health business, helping the World Health Organization control polio virus outbreaks in Africa and collaborating with the Coalition for Epidemic Preparedness Innovations in Rwanda to respond swiftly to a Marburg virus disease outbreak. Finally, we were selected by a large biotech client to expedite a vaccine trial for Mpox in Sub-Saharan Africa, addressing a critical outbreak and unmet medical needs. This all shows that whenever there is a crisis, IQVIA is a company public health officials turn to. Now, moving to TAS. The growth trajectory materialized just as we said it would: low single-digit growth in the first half and gradually ramping up each quarter. In fact, growth exceeded our expectations in the second half. Obviously, this was helped by easier comparisons versus the second half of 2023, but we also had stronger organic demand than expected across all sub-segments, with real world actually returning to double-digit growth. We finished the year with constant currency growth of 5.7% and about 6.5% excluding the COVID step down, which was at the high end of our guidance. We expect to sustain these favorable trends into 2025. Reflecting on 2024, we're proud of what we achieved in TAS. A couple of business highlights: we introduced 60 innovations this past year, including 39 AI-enabled applications. For example, we introduced IQVIA AI Assistant, our first-ever generative AI interface that allows customers to interact with a growing number of our products and get answers to their questions almost instantly. Our digital business, which until now was largely in the U.S., has begun expanding into Europe, where we've doubled the number of websites, publishers, and partners that are now integrated into our digital network. Now, looking at 2025, we are reaffirming the guidance we provided to you at the December Investor Day. On the TAS side, things have continued to recover as we anticipated. On the R&DS side, we still have some volatility, so we might see another quarter or two of fluctuating demand and elevated cancellations, but we think the bulk of the portfolio reprioritizations at large pharma has been completed. We feel good about the R&DS demand environment because leading indicators continue to be favorable. For example, our Q4 RFP flow was up mid-single digits, little higher actually in the EBP segment. Our qualified pipeline is also up with positive growth across all segments. EBP funding, as you noted, was strong through 2024. Full-year biotech funding was over $100 billion, which is 44% higher than it had been in 2023. Now, we did have much higher cancellations in 2024 than ever before; in fact, nearly 50% higher than the average of the previous three years. But our gross new bookings before cancellations for 2024 were even stronger and up mid-single digits at constant currency versus 2023, which led to an end-of-year backlog of $31.1 billion, which, again at constant currency, was 5.5% higher than a year ago. Now, turning to the results for the quarter: Revenue for the fourth quarter grew 2.3% on a reported basis and 3% at constant currency. Compared to last year and excluding COVID-related work from both periods, we grew the top line about 4.5% on a constant currency basis, which included in the quarter about 2 points of contribution from acquisitions, mostly on the TAS side. Fourth quarter adjusted EBITDA increased 3.1% driven by revenue growth and ongoing cost management discipline, which resulted in 20 basis points of margin expansion. Fourth quarter adjusted diluted EPS of $3.12 increased 9.9% year-over-year. Let me now give you some color on business activity. IQVIA's success is achieved by continuing to raise the bar in innovation every year and investing in highly differentiated capabilities. You saw the recent announcement of our collaboration with NVIDIA to transform healthcare and life sciences through advanced AI solutions. AI has the potential to transform our industry, for example, by addressing lengthy and complex processes in clinical trials or on the commercial side by helping expedite diagnosis and improve treatment adherence by patients. Our collaboration with NVIDIA will help accelerate the introduction of AI agents within our workflows, with AI agents essentially becoming digital companions to researchers, healthcare professionals, and patients. Let me give you some more examples of what was achieved in the quarter, and let me start with TAS. The business is rapidly evolving as we see increasing demand for integrated solutions that combine information, analytics, and services. This is enabling us to win much larger, longer-term deals with our clients because of our unique ability to deliver these combined offerings. IQVIA was awarded a strategic partnership to deliver omnichannel marketing solutions to promote a top-ten pharma client's established portfolio, utilizing analytics, information technology, and commercial outsourcing capabilities. Another EBP client asked IQVIA to support them in launching a new cell therapy for a severe pediatric condition by providing the full, comprehensive, commercial infrastructure that includes field sales, medical and commercial communications, compliance, and OCE. Moving now to real-world, IQVIA is using advanced AI to support a top-ten pharma client to demonstrate efficacy for gastric cancer treatment and gain approval in new markets. Let me move now to RDS. I noted the success of our RDS team and want to highlight some notable wins that represent our capabilities across segments, therapeutic areas, and operational dynamics. Let me start with large pharma: the top five pharma clients selected IQVIA to conduct a complex, full-service Phase 3 study addressing asthma and COPD patients. We won another full-service global Phase 3 breast cancer study for a top thirty pharma. Another top-ten pharma client awarded IQVIA a large FSP contract, notable because we displaced two large, long-time incumbent CROs. In MedTech, IQVIA was awarded a study to evaluate a novel medical device specifically targeting a cardiovascular condition. In Biotech, a few notable awards include a critical Phase 3 oncology study based on our strong data-driven approach and ability to manage global complex trials efficiently, and another global full-service study for a biotech client for progressive pulmonary fibrosis disease. Lots of success in the marketplace with large pharma, MedTech, and EBP. Now, before passing the call over to Ron for a more detailed review of our financial results, I'd like to take a minute to acknowledge and congratulate our employees around the world for their extraordinary work this past year. It was challenging, but we delivered. We also received amazing recognitions throughout the year. Frost & Sullivan awarded IQVIA the 2024 Global Customer Value Leadership Award for excellence in AI quality and regulatory solutions in healthcare. IQVIA’s SmartSolve Enterprise QMS was recognized for Best Use of AI in Healthcare by the MedTech Breakthrough Awards. My Green Lab awarded IQVIA Laboratories the 2024 Race to Zero Leadership Award for certifying 100% of our laboratory. We received recognition as a leader in Forbes World's Best Healthcare and Life Sciences Management, and for the eighth year in a row, IQVIA was named one of the World's Most Admired Companies in Fortune's annual survey, and importantly, for the fourth year in a row, IQVIA was named the number one most admired company in our category of healthcare, pharmacy, and other services. In addition, IQVIA earned the number one ranking in the categories of Innovation, Global Competitiveness, People Management, and use of Corporate Assets. Now Ron will give you more details on our financial performance.

Ron Bruehlman, Executive Vice President and Chief Financial Officer

Thanks, Ari, and good morning everyone. Let's start with revenue. Fourth quarter revenue of $3,958 million grew 2.3% on a reported basis and 3% constant currency. In the quarter, COVID-related revenues were approximately $10 million, which is down about $50 million versus the fourth quarter of 2023. Excluding all COVID-related work both from this year and from last, constant currency growth was about 4.5%. The Technology & Analytics Solutions revenue for the fourth quarter was $1,658 million, which was up 8.3% reported and 9.5% constant currency. R&D Solutions fourth quarter revenue of $2,123 million was down 1.3% reported and 1% constant currency, but excluding all COVID-related work, R&DS revenue grew over 1% at constant currency. Finally, Contract Sales & Medical Solutions’ fourth quarter revenue of $177 million declined 4.8% reported and 3.2% constant currency. Now for the full year, revenue was $15,405 million, which is up 2.8% reported and 3.4% at constant currencies. COVID-related revenue totaled approximately $110 million for the year. Excluding all COVID-related work from this year and last, constant currency growth in revenue was 5.5% for the year. Full-year Technology & Analytics Solutions revenue was $6,160 million, which was up 5.1% reported, 5.7% at constant currency, and 6.5% excluding all COVID-related work at constant currency. Full-year revenue in R&D Solutions was $8,527 million, up 1.6% on a reported basis, and 2% at constant currency. Excluding all COVID-related work, growth in constant currency in R&DS was over 5%. Our full-year CSMS revenue was $718 million, down 1.2% reported but up 1.4% at constant currency. As Ari mentioned in his opening remarks, the 2024 growth trajectory in TAS played out as we anticipated with improvements every quarter. We experienced a softening growth rate throughout 2023 due to cautious customer discretionary spending, and we predicted that 2024 would be a turnaround year based on our forward-looking indicators in recent history. In fact, that's what happened in 2024: TAS growth picked up significantly, finishing the second half with high single-digit growth driven by strong mid-single-digit organic growth. As you know, TAS is a short cycle part of our business, and we’ve seen, 2023 gave us early insight into customer spending behavior during the downturn. By the same token, we expect that the 2024 turnaround in TAS serves as a good leading indicator of the industry's recovery for 2025. Let's move down the P&L. Adjusted EBITDA in the quarter was $996 million, representing growth of 3.1% year-over-year. Full-year adjusted EBITDA was $3,684 million, that's up 3.2% year-over-year. Fourth quarter GAAP net income was $437 million, and GAAP diluted earnings per share was $2.42. For the full year, GAAP net income was $1,373 million, or $7.49 of earnings per diluted share. Adjusted net income was $564 million for the fourth quarter, and adjusted diluted earnings per share was $3.12. That for the full year brought adjusted net income to $2,042 million, and adjusted diluted earnings per share to $11.13. R&DS backlog at December 31 was $31.1 billion, an increase of 4.4% year-over-year and 5.5% at constant currency. To anticipate the question that I think we'll get about why the backlog was flat sequentially versus Q3, recall that the dollar strengthened considerably during the fourth quarter, and we have to retranslate the backlog at the end of each quarter for reporting to you, which knocked about $0.5 billion off the backlog that retranslation alone. As of December 31, cash and cash equivalents totaled $1.702 billion and gross debt was $13.983 billion, resulting in net debt of $12.281 billion. Our net leverage ratio ended the year at 3.33 times trailing 12-month adjusted EBITDA. The fourth quarter cash flow from operations was $885 million, and CapEx was $164 million, resulting in free cash flow of $721 million for the quarter, a record quarterly free cash flow. For the full year, free cash flow was $2,114 million, as Ari said, up 41% year-over-year. In the quarter, we repurchased $1,150 million of our shares, bringing our full year share repurchase to $1,350 million. Just yesterday, actually, the IQVIA Board of Directors replenished the share repurchase authorization by $2 billion, increasing the total remaining authorization to approximately $3 billion. Now let's turn to guidance. For the full year, we're reaffirming our 2025 outlook, which is for revenue growth at constant currency ex-COVID of 4% to 7%, adjusted EBITDA margin expansion of up to 20 basis points, and adjusted diluted earnings per share growth of 5% to 9%. This translates into total revenue between $15,725 million and $16,125 million, which includes just over a $100 million step down in COVID-related work, which is entirely in R&DS and of which 75% will be in the first half and 25% in the second half. We expect 100 basis points to 150 basis points of contribution from M&A activity and an FX headwind should rates continue of approximately 150 basis points versus 2024. Our adjusted EBITDA guidance is $3,765 million to $3,885 million, and our adjusted diluted EPS guidance is $11.70 to $12.10. This includes about $675 million of net interest expense, approximately $575 million of operational D&A, an effective income tax rate of about 18.5%, and an average diluted share count of approximately 178 million shares. The guidance also assumes $2 billion of cash deployment split between acquisitions and share repurchase, and finally, the guidance assumes that foreign currency rates as of February 5 continue for the balance of the year. Now at the segment level, guidance is also unchanged for TAS, R&DS, and CSMS. We expect TAS revenue to grow 5% to 7% at constant currency, translating into $6.3 billion to $6.5 billion. A note, we'll have easier comps in the first half than the second half. R&DS revenue is expected to grow 4% to 6% at constant currency ex-COVID, translating into $8.7 billion to $8.9 billion of revenue. This guidance includes over $100 million of step down in COVID-related revenue that represents about 100 basis points of headwind to the R&DS growth rate. We anticipate that R&DS growth rates will be lower in the first half and improve sequentially thereafter. Finally, CSMS revenue is expected to be approximately $700 million, flattish year-over-year. For the first quarter, we expect revenue to be between $3,740 million and $3,790 million. Note that Q1 has the largest impact in the year for both foreign exchange and COVID revenue step down for a total of approximately 300 basis points of headwind. Adjusted EBITDA is expected to be between $870 million and $890 million in the quarter, and adjusted diluted EPS is expected to be between $2.60 and $2.70. As mentioned, our guidance assumes that foreign currency rates of February 5 continue for the balance of the year. So, let's summarize. We delivered an excellent fourth quarter, which closed out a strong year. For the full year, revenue grew 5.5% at constant currency, excluding COVID-related work. Adjusted EBITDA margin continued to expand, and adjusted diluted EPS was up 9.1%. Free cash flow was a record in the quarter at $721 million, bringing the full year to over $2.1 billion, up 41%. We repurchased $1,150 million of our shares in the quarter, bringing full-year share repurchase to $1,350 million. Our Board of Directors increased our share repurchase authorization by $2 billion, bringing remaining authorization to approximately $3 billion. During the year, we introduced 60 innovations, including 39 AI-enabled applications, and the momentum continues to build with our recently announced collaboration with NVIDIA. IQVIA was named in Fortune's list of World's Most Admired Companies for the eighth consecutive year and earned first place ranking in our industry group for the fourth consecutive year. Lastly, we reaffirmed our full year 2025 revenue growth guidance at constant currency of 4% to 7%, adjusted EBITDA margin expansion of up to 20 basis points, and adjusted diluted earnings per share growth of 5% to 9%. That concludes our formal remarks. Let me hand it back over to the operator to open up the call for Q&A.

Operator, Operator

Thank you. Our first question comes from Shlomo Rosenbaum from Stifel. Please go ahead. Your line is open.

Shlomo Rosenbaum, Analyst

Hi, thank you very much. Ari, I wanted to just ask you to dig back in a little bit more on how the operating environment progressed through the quarter and relative to what you were expecting in Q4? We had some discussions about reassessing vendor relationships kind of ending or the expectation it would end in the fourth quarter and some of that reprioritizing work ending. We're still talking about some potential volatility for the next one to two quarters. Is that kind of the way you were expecting it coming into the fourth quarter? Or is there any change into that? As part of that, maybe you could talk about if there’s any change in your expectation in those divided contracts that you discussed last quarter? Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Okay, thank you, Shlomo. Well, we spoke not that long ago in December in a rally, and we shared our sentiment with respect to the operating environment. Not much has changed versus what we told you then. It was a difficult operating environment for all the reasons we mentioned then, and I reiterated in my introductory remarks the macro environment consequences of the Inflation Reduction Act, unexpected large cancellations due to futility reasons, and two large fast-burning trials we had just started that were delayed. Nothing has changed here. We think the bulk of the cancellations and reprioritizations has occurred. We said this previously. However, we anticipate some volatility. After one month into the quarter, you can't accurately predict what will happen. Overall, we think 70% to 75% of the reprioritizations are complete, but I can't tell you the specifics about what we might book or what cancellations may arise. As for the two delayed trials, they are still ongoing and the clients remain invested in those, so we're managing the associated costs through the year, but overall, we feel confident about their execution.

Shlomo Rosenbaum, Analyst

Thank you.

Operator, Operator

Our next question comes from Elizabeth Anderson from Evercore ISI. Please go ahead. Your line is open.

Elizabeth Anderson, Analyst

Hi, Ari. Hi, Ron. Thanks so much for the question. I was wondering if you could give a little bit more color on two things. I think you've been given some nice pharma color. I was wondering if you could talk a little bit more about the biotech environment, how that's going, how you're sort of seeing RFP flow? Are you seeing any kind of unlocking of some of the funds that were raised last year but not spent? And then also talk a little bit more about what you think the drivers on the real-world evidence acceleration are? Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Okay, all right. So, look, the biotech funding, which is a sort of a leading indicator of what is going to happen in terms of the booking environment for that segment, has been strong. According to our statistics, it's over $100 billion for 2024, a record number if you exclude the two years of 2020 and 2021. Last year was around $71 billion, a significant increase. However, just because biotech gets funding today doesn't mean that it translates into clinical trial awards immediately. It takes time, often six months to a year. The RFP flow is up mid-single digits across our portfolio, which is very good in the current environment. We've been seeing robust opportunities in this segment, and we are actively pursuing them.

Operator, Operator

Our next question comes from Ann Hynes from Mizuho. Please go ahead. Your line is open.

Ann Hynes, Analyst

Hi, good morning. Just on cancellations, I know going into Q4, you thought it would be around a billion. Did it come in at that level or was it higher? And then I know you said that you successfully renewed all your RFP activity. Can you just talk about pricing on those renewals and how that's playing out from a competitive landscape? Thanks.

Ari Bousbib, Chairman and Chief Executive Officer

Right. First of all, I never said the word a billion. Historically, the average quarterly cancellations are about $0.5 billion. What I suggested was that given the work large pharma is doing, it wouldn't be surprising if there was a significant increase in the fourth quarter, and it turned out to be above even our expectations, not quite a billion, but very high. For the year, cancellations were nearly 50% higher than the average of the previous three years. Despite that, our backlog grew significantly due to our ability to book more business than last year, outpacing the cancellations. The demand side is positive, although cancellations were elevated. As for pricing in the renewals, the current environment reflects tough competition, which exerts pressure on pricing. However, we were able to secure expanded renewals and remain optimistic for the future.

Ann Hynes, Analyst

Great. Thanks.

Operator, Operator

Our next question comes from David Windley from Jefferies. Please go ahead. Your line is open.

David Windley, Analyst

Hi, good morning. Thanks for taking my questions, and good segue from the last. Ari, you've talked a fair amount about the push toward FSP. You've talked about pricing pressures you highlighted generally. But that pricing pressure also in FSP with these partnership re-procurements. And then you've also talked about carrying costs for these mega trials. I was actually surprised at the Investor Day that you could expand margin at all. My question is, what are the cost levers that you're pulling to be able to manage your margin amidst all those pressures? And then just more simply, in the navigation on gross margin versus SG&A and EBITDA, are we seeing some of that business mix shift toward FSP and P&L already like in the fourth quarter? Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Thank you, David. You’re right to highlight the challenges we face head-on. We have always aimed to expand margins. While it's clearly more complex now given competitive pressures, we are committed to this area. We do this by optimizing our average labor rate globally, restructuring and flattening our organization, and leveraging IT infrastructure. In the past year, we've accelerated the deployment of AI tools within our workflows, which will significantly impact operational efficiency moving forward. This discipline will help us navigate the cost pressures that arise.

David Windley, Analyst

Good for you for that. Thank you very much. It was very helpful.

Operator, Operator

Our next question comes from Charles Rhyee from TD Cowen. Please go ahead. Your line is open.

Charles Rhyee, Analyst

Yes. Thanks for taking the question. Hey, Ari, just wanted to go back maybe to the TAS segment; I think earlier you just mentioned that real-world evidence had something like you said double-digit growth in the quarter. Maybe can you give us a sense for sort of the trends you're seeing between RWE, analytics and consulting, and maybe technology platforms? And give us a sense for within the 2025 outlook, how you see those parts trending separately as we think about the mix going forward?

Ari Bousbib, Chairman and Chief Executive Officer

Yes. Thank you for the question. The TAS business should remain resilient with consistent growth. Info has remained a low single-digit grower, while analytics and consulting saw a dramatic impact due to cautious spending trends we experienced in early 2024. By the end of the core year, analytics and consulting rebounded back towards mid-single-digit growth. The higher growth areas, real world and tech, returned to high single digits, and in Q4 regained double-digit growth. This recovery is expected to continue into 2025, particularly as clients are required to undertake certain projects integral to drug approvals. We are optimistic about maintaining this growth trajectory.

Charles Rhyee, Analyst

Great, thank you. Appreciate it.

Operator, Operator

Our next question comes from Jack Meehan from Nephron Research. Please go ahead. Your line is open.

Jack Meehan, Analyst

Thank you, and good morning. I have a couple of questions for Ron. Just on the income statement, first was the gross margins in the fourth quarter? I was wondering if you could just walk us through the dynamics there. So, they were down a little over 100 bps year-over-year, but you had lower passthroughs. So, was this the trapped cost related to those two trials or just any other color would be great?

Ron Bruehlman, Executive Vice President and Chief Financial Officer

Well, the first thing I would caution is, when you're looking at gross margins, you're looking at reported and not adjusted. So, if you're trying to tie the gross margins and SG&A on our income statement back to our adjusted EBITDA, there's a difference. However, Ari shared key insights already. We have stranded costs associated with those trials that got delayed. Certain of our higher growth businesses, like real-world, tend to be lower margin businesses for us. So there's also a mix that impacts these numbers. But again, whenever you're looking at reported numbers, remember that things like restructuring or other adjustments that get added back can influence the percentage calculations.

Jack Meehan, Analyst

Got it. Okay, that makes sense. And one for Ari just on the policy front. We're a couple weeks into the new administration here. Just any thoughts on implications for pharma, biotech customers? And then second, one question we get is, just any exposure to NIH funding or anything related to that would be great. Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

The short answer to that question is zero. Zero impact, zero NIH, nothing. The longer answer is, I think overall it's going to be a more business-friendly environment. This new administration seems open to adjusting some aspects of the IRA, looking into differences between small and large molecules, and a number of adjustments. We could see some reforms discussed around the PDM side or reimbursement that would be net positive for us. Moreover, the administration appears supportive of life sciences innovation, aiming to uphold U.S.-based research and manufacturing. So all of that is favorable for us.

Michael Ryskin, Analyst

Great. Thanks for taking a question. Ari, I want to go back to something you touched on earlier. You made comments in the prepared remarks concerning pharma reprioritization, sort of working through it. You still expect some volatility going forward, but you think you're mostly through it. You mentioned 70% to 75% of the reprioritization is done. Just wondering how you arrived at that number. Just putting it bluntly, we heard announcements in the last 24 hours, and it seems like there's always a possibility for further changes.

Ari Bousbib, Chairman and Chief Executive Officer

When I said earlier, two-thirds, maybe 70%, 75%, Kerry was concerned I was giving a specific figure. So look, we're basing this on our ongoing client dialogue. We have insight into what they're analyzing and prioritizing. There are still a few large programs awaiting decision, but we believe much of the reprioritization will remain below the threshold for further disruption in our operations. However, I do warn you, predicting bookings or cancellations is extremely challenging in this business, and hence, various factors can cause fluctuations.

Michael Ryskin, Analyst

That's helpful. Thank you.

Ari Bousbib, Chairman and Chief Executive Officer

Okay. Should we have another question or are we done here? We're done. Okay, fine.

Kerri Joseph, Senior Vice President, Investor Relations and Treasury

Thank you, guys. Thanks for taking the time to join us today, and we look forward to speaking with you again on our first quarter of 2025 earnings call. The team will be available the rest of the day to take any follow-up questions you might have. Thank you.

Operator, Operator

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