Earnings Call Transcript
IQVIA HOLDINGS INC. (IQV)
Earnings Call Transcript - IQV Q2 2024
Operator, Operator
Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Second 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 call is being recorded. Thank you. I would now like to turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.
Kerri Joseph, Senior Vice President, Investor Relations and Treasury
Thank you, operator. Good morning, everyone. Thank you for joining our second quarter 2024 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; 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 & Presentations section of our IQVIA Investor Relations website. 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.
Ari Bousbib, Chairman and CEO
Thank you, Kerri, and good morning, everyone. Thanks for joining us today to discuss our second quarter results. IQVIA delivered another quarter of strong operational results with 5% revenue growth, excluding the impact of foreign exchange and COVID-related work, and 8.6% growth in adjusted diluted earnings per share. The fundamentals of the industry remain healthy, which supports our confidence in the outlook for our business. On the commercial side, things are starting to gradually improve, and while customers continue to exercise budgetary caution, we see faster decisions and more focus on carrying out mission-critical projects such as those associated with launching new drugs. As you recall, new FDA approvals for 2023 were 55, which was the second-largest year since 2017. In fact, year-to-date approvals are at 21, which is in line with the average for the last five years. In the quarter, TAS came in a little better than our expectations, consistent with the improving leading indicators that we cited earlier this year. Both Consulting and Analytics and real world revenue improved sequentially in the second quarter. We said TAS revenue growth for 2024 was going to be the mirror image of 2023. In fact, TAS revenue growth was about 3% in the first quarter and it was 4% in the second quarter, excluding COVID and foreign exchange. At constant currency and based on looking at forward-looking indicators, we remain confident in our full-year forecast for TAS. This implies 6% to 7% growth for the balance of the year, resulting in full-year mid-single-digit growth, again consistent with the target we established for TAS at the beginning of the year. On the clinical side, while we continue to see the trend we have observed over the past year with large pharma reprioritizing their portfolios of programs and reallocating money to the most attractive ones in response largely to the IRA, demand from our large pharma clients in R&DS remains solid. We are also encouraged by the continued acceleration of EBP funding. In fact, BioWorld reports emerging biotech funding for the second quarter was $22.9 billion, which is up 32% versus the prior year. For the first half, biotech funding is about $70 billion, essentially equal to the entire year of 2023. Obviously, it does take time for funding to translate into RFP flows, but certainly, it bodes well for mid-to-long term prospects in our EBP segment. In the quarter, R&DS recorded good net new bookings of approximately $2.7 billion, representing a book-to-bill of 127. Backlog reached a new record of $30.6 billion, which is growth of 7.7% versus prior year. In fact, that's actually 8.1% when you remove the impact of foreign exchange. And of course, all of our usual forward-looking indicators RFP flows, overall pipeline, and qualified pipeline are up. Turning now to the results for the quarter. Revenue for the second quarter grew 2.3% on a reported basis and 3.5% at constant currency. Compared to last year and excluding COVID-related work from both periods, we grew the top line 5% at constant currency, including approximately 1.5% from acquisitions. Second quarter adjusted EBITDA increased 2.7%, driven by revenue growth and ongoing cost management discipline. Second quarter adjusted diluted EPS of $2.64 increased 8.66% year-over-year. Now I'd like to spend a bit of time on highlighting some of our business activities. Starting with us, IQVIA contracted with the Top 20 client to expand the implementation of our commercial technology ecosystem. IQVIA's AI/ML offerings, including analytics and OCE, integrate seamlessly into the clients' technology infrastructure and allow our client to manage their data more effectively and to optimize their customer engagement. In the quarter, IQVIA won a multi-year contract with the top five clients to increase the effectiveness of the digital communication strategy. Here, our innovative solution enables targeted audience selection and custom content delivery. In our first quarter call, we shared a preview of a large deal awarded in April for our current OCE offering. This is a multi-year global implementation for a major division of a top five pharma client with 1,000 users, and it's displacing the incumbent. As you know, IQVIA has a rich history of developing AI for healthcare. For the last 10 years, we've invested heavily in artificial intelligence and machine learning algorithms that support our clients from clinical development through commercialization. Our AI offerings are specifically engineered to meet the demanding standards of precision, speed, privacy, and trust that are required in healthcare, whether it's in-patient support services or analytics or pharmacovigilance. Our proprietary AI software solutions have become market-leading. Let me share a few examples of AI wins and awards in TAS this last call. We launched a GenAI solution, which collects structured and unstructured survey inputs from over 30,000 HCPs across 36 countries in multiple languages and in minutes delivers analytics and insights to our clients on how their interactions and messages about their brand resonated. This work would normally take a week at least for human analysts using existing tools. A Top 10 client awarded IQVIA a contract to implement our centralized GenAI reporting and analytics solution across their entire U.S. sales force, consolidating different legacy tools. IQVIA's comprehensive GenAI solution enables users to ask questions and get contextual responses in the form of charts, graphs, and KPIs. This AI solution also proactively alerts the user of key trends, anomalies, and the changes that would be required. In another example, a U.S. Medtech client selected IQVIA to implement IQVIA's AI solution to onboard and train patients to utilize their medical device for diabetes. IQVIA's AI solution incorporates real-time sentiment analysis, provides automated transcription, and smart engagement recommendations. It empowers patients to take more control of their treatment, which promotes better adherence to treatment protocols. Lastly, for AI in TAS, IQVIA won the award of Best Use of Artificial Intelligence in Healthcare out of 4,500 nominations in the 8th Annual MedTech Breakthrough Awards. IQVIA's leading AI solution here is called SmartSolve Enterprise Quality Management System, eQMS, which simplifies quality compliance and connects regulatory and quality processes for life sciences customers. Moving to real world, IQVIA won an effectiveness study with a mid-sized pharma client focusing on patients who have not responded well to their previous migraine treatments. We were selected due to our strong therapeutic expertise combined with our direct-to-patient approach to accelerate recruitment and reduce site burden. A U.S. EBP client awarded IQVIA a real-world post-approval safety and efficacy study in Japan for their coronary intravascular therapy. The aim of the project is to demonstrate the safety and effectiveness of their device, which could potentially increase the client’s market share in Japan, as well as help the client register the device in other regions. Within the quarter, a Top 15 pharma client awarded IQVIA a significant contract to study the effectiveness of a therapy for schizophrenia. The study will use data tokenization to link multiple data sources and then apply AI to provide a comprehensive view of patients pre and post-therapy in real-world settings to physicians, patients, and caretakers. Finally, you may have seen that IQVIA was recognized by a respected independent third-party research organization as a leader in medical affairs and life sciences regulatory operations. IQVIA's global end-to-end solutions enable medical affairs customers to manage and curate the richness of data coming into the organization, transforming evidence into insights that can enable actionable initiatives. Let me now move to R&DS. Let's start with the trending therapeutic area, obesity treatment. A Top 15 pharma client selected IQVIA Labs to conduct globally harmonized high-volume testing to ensure accelerated enrollment. It's expected this will result in a significant reduction of study timelines for this therapeutic area, where speed-to-market is key. Our strength in the vaccine development area led to another major role to conduct a Phase III trial for a new influenza vaccine that will enroll approximately 50,000 volunteers. Turning to oncology, which represents, once again, our largest therapeutic area in R&DS bookings this quarter. I'll offer a few examples. A Top 20 client selected IQVIA to conduct a large Phase III oncology study focusing on small cell lung cancer, a disease with a high need for effective treatments. We won this study due to our strong therapeutic expertise, data, and analytics capabilities, as well as our proven delivery approach, which includes dedicated delivery unit project staffing that is exclusively focused on the client's study. By the way, for some time now, we've been deploying this unique delivery approach for large customers who have an especially complex study portfolio across multiple therapeutic areas. A biotech client selected IQVIA to support a large-scale global complex Phase III program to test and validate their innovative cell and gene therapy vaccine for colorectal cancer. Lastly, in oncology, a Top 25 pharma client awarded IQVIA a contract to develop an optimum clinical strategy and to execute a bladder cancer study in the U.S. They were awarded this engagement based on IQVIA's AI-enabled site selection and feasibility solutions that will help the clients meet aggressive timelines. We discussed AI initiatives in TAS and, in fact, AI enablement is also pervasive in R&DS. A couple of other such examples; a U.S. biotech client awarded IQVIA for full-service clinical trials, which are supported by IQVIA's AI-enabled data and analytics, increasing the likelihood of success for each trial, reducing the risk of protocol amendments, as well as the need to add countries and sites after the trial starts. In another example, we were awarded a Pharmacovigilance Project by a large biotech client to manage all case processing work worldwide using our AI capabilities. The IQVIA AI-enabled solution is designed to dramatically improve productivity, reduce cost, and enhance data quality and accuracy. We will continue to share more exciting AI initiatives across the businesses, hopefully, at future investor forums. I'll now turn it over to Ron for more details on our financial performance.
Ron Bruehlman, Executive Vice President and Chief Financial Officer
Hey. Thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Second quarter revenue of $3,814 million, grew 2.3% on a reported basis and 3.5% at constant currency. In the quarter, COVID-related revenues were approximately $45 million, which is down about $70 million versus the second quarter of 2023. Excluding all COVID-related work from both this year and last, constant currency growth was 5%. Technology & Analytics Solutions revenue was $1,495 million, which was up 2.7% reported and 3.8% at constant currency. If we exclude COVID work from both years, it was exactly 4% growth. As you may recall, Q1 2023 was the last quarter with meaningful COVID activity in TAS. R&D Solutions revenue of $2,147 million was up 2.4% reported and 3.3% at constant currency. Excluding all COVID-related work, growth at constant currency in R&DS was 6%. Lastly, Contract Sales & Medical Solutions revenue of $172 million declined 2.3% reported, but grew 2.8% at constant currency. For the first half, total company revenues were $7,551 million, up 2.3% reported and 3.2% at constant currency. Excluding all COVID-related work, growth at constant currency was 5.5%. Technology & Analytics Solutions revenue for the first half was $2,948 million, up 1.7% reported and 2.4% in constant currency, and excluding all COVID-related work growth at constant currency in TAS in the first half was 3.5%. R&D Solutions' first half revenue of $4,242 million was up 2.9% at actual FX rates and 3.6% at constant currency. Excluding all COVID-related work, growth at constant currency in R&DS was 7% for the half. Lastly, CSMS first half revenue of $361 million increased 0.8% reported and 5% at constant currency. Let's move down to P&L now. Our adjusted EBITDA was $887 million for the second quarter, representing growth of 2.7%, while first half adjusted EBITDA was $1,749 million, up 2% year-over-year. Second quarter GAAP net income was $363 million, and GAAP diluted earnings per share was $1.97. For the first half, we had GAAP net income of $651 million or $3.53 of earnings per diluted share. Adjusted net income was $487 million for the second quarter, and adjusted diluted earnings per share were $2.64. For the first half, adjusted net income was $955 million or $5.18 per share. Now, as Ari reviewed, R&D Solutions bookings were again strong in the quarter. Our backlog at June 30 was $30.6 billion, up 7.7% at actual currency and 8.1% at constant currency. Next 12 months revenue from backlog increased to $7.8 billion, growing 6.9% year-over-year. So let's turn now to the balance sheet. As of June 30th, cash and cash equivalents totaled $1,545 million, and gross debt was $13,258 million, which results in net debt of $11,713 million. Our net leverage ratio ending the quarter was 3.25 times trailing 12-month adjusted EBITDA. Second quarter cash flow from operations was $588 million, and capital expenditures were $143 million, resulting in free cash flow of $445 million. Okay. Turning to guidance. With the first half of the year now behind us and better forward visibility, we're refining our financial guidance for the balance of the year. For the year, we now expect revenue to be between $15,425 million and $15,525 million. Adjusted EBITDA should be between $3,705 million and $3,765 million and adjusted diluted earnings per share between $11.10 and $11.30. There is no material change to our previous assumptions about COVID-related step down, acquisition impacts, and foreign exchange impacts. By segment, at constant currency excluding COVID, our full-year guidance remains the same and is unchanged versus what we gave you back in February, which is to say TAS will grow this year around 5% and R&DS in the 7% range. Moving now to third quarter guidance, we expect revenue to be between $3,830 million and $3,880 million. Adjusted EBITDA is expected to be between $925 million and $950 million, and adjusted diluted EPS should be between $2.76 and $2.86. Now all our guidance assumes that foreign exchange rates as of July 18 continue for the balance of the year. So to summarize, we delivered another solid quarter of financial performance. R&DS had bookings of $2.7 billion with a strong book-to-bill of 1.27. TAS performed well against our expectations. Adjusted diluted earnings per share increased 8.6% year-over-year. We're now leaving behind the interest expense headwinds and are moving back towards resuming double-digit EPS growth. Free cash flow for the quarter and for the first half were strong, driven by strong collections performance, and we remain confident that both TAS and R&DS will achieve the full-year targets for revenue growth we provided at the beginning of the year. And with that, let me hand it back to the operator to open the session for Q&A.
Operator, Operator
Thank you. Your first question comes from the line of Shlomo Rosenbaum of Stifel. Your line is open.
Shlomo Rosenbaum, Analyst
Hi. Thank you very much for taking my questions. It looks like a very solid quarter and we're seeing the TAS improving, which is definitely heartening. A question I have, Ari and Ron, is that the guidance has been raised for revenue and EPS at the midpoint, but if you look at the EBITDA guidance, it was lowered slightly. Could you discuss what's happening and the nature of the revenue coming through for the year? Also, could you provide some insights regarding the pacing as we move into the fourth quarter, including the ramp you expect? Thank you.
Ari Bousbib, Chairman and CEO
Thanks, Shlomo. I wouldn't place too much importance on the adjustments in the guidance. We assess all of our business unit forecasts and compile them, which simply results in whatever outcome we see. The foreign exchange rates are slightly more favorable than in our last report, contributing slightly to higher overall revenue. However, I wouldn't read too much into it. EBITDA results depend on the mix of business we have. When we have more of certain offerings, it affects our margins accordingly. We are still achieving margin growth, and I understand your concern, but we don’t focus heavily on these small adjustments, which could also change next quarter. It's simply a matter of the mix of business. We're still achieving about 30 basis points margin expansion at the midpoint and 50 at the high end, which is strong considering the market challenges we've faced in the first half of the year. Regarding EPS, it's primarily due to better control of capital expenditures, which positively affects depreciation and amortization. This is the main factor driving the higher EPS. Again, these are minor adjustments, and I wouldn't draw any significant conclusions from them.
Operator, Operator
Thank you. Your next question comes from the line of David Windley of Jefferies. Your line is open.
David Windley, Analyst
Hi. Thanks for taking my question. Good morning. Ari, you've talked in some of your recent public commentary about price pressure or price expectations from customers in your opening remarks. You mentioned budget sensitivity, I think in the context of TAS. Could you just kind of bring us up to current on your assessment of the market environment in terms of customers' willingness to pay your asking price?
Ari Bousbib, Chairman and CEO
That's a great question. I've addressed this previously, and my view remains unchanged. It's accurate to say that we haven't suddenly entered a different bullish environment. Larger pharmaceutical clients have announced substantial cost-cutting measures, often accompanied by a review of their procurement practices and vendors, and we are a key vendor for them. Therefore, none of this is surprising. The budget constraints and cautiousness I spoke about earlier are still in place, and we cannot freely adjust our prices. Clients still need to undertake certain projects, many of which were delayed, but we are seeing improvement in that regard. The timeline for decision-making has started to improve and has shown more significant advancements, though it hasn’t returned to pre-cautious levels. This improvement is why we feel more confident about our forecast. Large pharmaceutical clients are being more disciplined in their spending, making negotiations tougher. This is evident in both our commercial and R&DS areas. Additionally, in the R&DS sector, the industry has somewhat divided into a few large players and many smaller ones, some of whom are desperate for business and behaving less disciplined in their bidding processes. Clients definitely take advantage of this. Thus, pricing remains challenging for various reasons on both the commercial and R&DS sides. In response, we are continuing to enhance our productivity and cost containment programs, alongside deploying AI within our operations. However, these initiatives do take time, and there is a delay before we see the full benefits. That's the current situation regarding pricing. Thank you, David.
David Windley, Analyst
Yeah. Thank you.
Operator, Operator
Your next question comes from the line of Anne Samuel of JPMorgan. Your line is open.
Anne Samuel, Analyst
Hi. Thanks for taking the question. I was hoping perhaps you could speak a little bit more about the performance of your different business segments within TAS and perhaps where you started to see some of that outperformance. Thank you.
Ari Bousbib, Chairman and CEO
The data business within TAS remains unchanged, but we are noticing improvements in the rest of the business. Overall, we have seen sequential improvements across all segments. Year-over-year, the aggregate performance is up. Excluding COVID impacts and foreign exchange, the data business is performing in low-single digits and generally flat, while the remaining segments have started to grow in the mid to high-single digits. Notably, the real world segment has seen significant growth this past quarter.
Anne Samuel, Analyst
That's great to hear. Thank you.
Operator, Operator
Your next question comes from the line of Elizabeth Anderson of Evercore ISI. Your line is open.
Elizabeth Anderson, Analyst
Hi, guys. Thanks so much for the question this morning. Can you talk about the burn rate maybe in the back half of the year? Is that something you could sort of see based on the mix of business at this point that you think could creep up sequentially? How do you kind of view that as we progress through the back half?
Ari Bousbib, Chairman and CEO
On the clinical side, this area can be quite variable. The reported revenue often fluctuates, and even after removing the impact of COVID and foreign exchange, it can be challenging to accurately predict pass-throughs. Some of the quarterly changes we observe result from weeks of pass-throughs. This quarter reflected that pattern and we anticipate it will continue into the next quarter, with a rebound expected in the fourth quarter. For R&DS, we see growth aligning with our initial projections for the year, adjusted for COVID effects and at constant currency, in the range of over 7%. Regarding our product mix, we hold a significant share of the oncology programs available. This is not unexpected, as key decision factors include therapeutic expertise and patient enrollment capabilities, where our strengths in data analytics and AI play a crucial role. Consequently, our bookings and backlog increasingly consist of more complex oncology studies and rare diseases, which significantly influences our burn rate. This trend is also observed in the broader industry, as competitors exhibit similar declining burn rates. In the first quarter, the backlog burn was 7%, which I believe was the correct figure, while the second quarter saw a slight increase to 7.1%. We expect similar rates for the remainder of the year. We are pleased to report that our bookings for the next 12 months have risen, with projected revenue from backlog at $7.8 billion, up from $7.3 billion last quarter, indicating about a 6.9% increase. This gives us confidence in our project conversion and revenue growth moving forward for the rest of this year and into next year.
Elizabeth Anderson, Analyst
Great. Thanks.
Ari Bousbib, Chairman and CEO
Yeah. Thank you.
Operator, Operator
Your next question comes from the line of Max Smock of William Blair. Your line is open.
Max Smock, Analyst
Hi. Good morning. Thanks for taking my questions. And apologies if I missed this, but within R&DS, did you quantify how much RFP flows in the qualified pipeline were up at the end of the second quarter? And then how are you thinking about the timeline for those to convert to potential uptick in bookings? Could we see an acceleration in book-to-bill above 1.3 times before the end of the year here or given kind of where we are in the year, are we now at a point where you think a more meaningful potential rebound in bookings is more of a 2025 event? Thank you.
Ari Bousbib, Chairman and CEO
Thank you, Max. We're laughing here because I’m curious about when 1.3 became the benchmark. We have reported impressive book-to-bill ratios over 1.3 in the past few years, mainly due to COVID studies and similar factors. However, we are very pleased with 1.27 and 1.2. We are satisfied with these book-to-bill figures; they are quite strong. You're mentioning a rebound in bookings, but we had excellent bookings this quarter. I'm not sure why there's a concern; we're happy with this performance. There hasn't been a rebound; it’s very good. The bookings reported this quarter are actually the third-highest ever, so I'm unclear about the inquiry regarding bookings. Did you also ask about conversion? I apologize if I missed that.
Max Smock, Analyst
Yeah. I'm sorry, you set such a high bar, Ari. But in terms of the first part of the question.
Ari Bousbib, Chairman and CEO
Yeah. I'm sorry. Yeah. So again, RFP flows, total pipeline and qualified pipeline in this area are up basically all around. The qualified pipeline, I think, it was up across the number of 12%, was up 12%. And the total pipeline is up single digits. RFP grows as well, right, but mid-teens, right?
Ron Bruehlman, Executive Vice President and Chief Financial Officer
Yeah. RFP flows up single-digits.
Ari Bousbib, Chairman and CEO
Yeah.
Max Smock, Analyst
Got it. Thanks for taking the questions.
Ari Bousbib, Chairman and CEO
Thank you. Yeah.
Operator, Operator
Your next question comes from the line of Jailendra Singh of Truist Securities. Your line is open.
Jailendra Singh, Analyst
Thank you for taking my questions. I want to revisit the individual businesses you mentioned in TAS, specifically RWE and Consulting, both of which improved in the second quarter. Last quarter, you noted RWE showed some recovery after a slowdown in Q4, while Consulting experienced a decline. How do you view these individual businesses in relation to TAS expectations for the second half, especially given the ongoing volatility in Consulting? Is RWE back to a mid to high-teens growth rate, or is there still potential for further recovery?
Ari Bousbib, Chairman and CEO
We anticipate overall TAS growth in the second half to be in the 6% to 7% range at constant currency. Businesses are updating their forecasts, which tend to be higher, but we account for contingencies, evaluate the environment, and adjust our expectations accordingly, leading us to the 6% to 7% range overall. If we assume that 30% of the business remains flat, then the remaining 70% must grow in the high single digits to achieve these numbers. We have a strong sense of confidence in this forecast based on the leading indicators we monitor.
Jailendra Singh, Analyst
But your real-world numbers sound optimistic.
Ari Bousbib, Chairman and CEO
Which one? Double-digits?
Jailendra Singh, Analyst
Yeah, well, may not…
Ari Bousbib, Chairman and CEO
No. Not high-teens. No. Maybe could be low-teens, but high-single to low-teens for the real world. Exactly. Thank you.
Operator, Operator
Thank you. Your next question comes from the line of Justin Bowers of DB. Your line is open.
Justin Bowers, Analyst
Thank you, and good morning, everyone. So just in terms of the strength in TAS and the outlook for the rest of the year, how much of that is, in your sense, the underlying market improving versus IQVIA winning its fair share of business with some of the tools that you have? And then, part two of that would be, what are some of the changes that you've made to manage the part of the business this year versus, let's say, last year at this time?
Ari Bousbib, Chairman and CEO
Thank you. First of all, the market is not rebounding. Client cautiousness and budgetary discipline continue, especially with large pharma. This situation hasn't changed. However, we did mention before that within our portfolio of offerings, there are certain mission-critical elements for our clients. Last year at this time, we expected these elements to be prioritized, but they were delayed. We have always stated that at some point, these tasks must be completed. That is currently occurring, and we expect to see this growth in the second half of the year. The overall market hasn't grown; instead, specific segments that are essential for our clients are finally progressing, and they will continue to do so in the latter half of the year. Therefore, you could say that the market is slightly better since clients are willing to spend, but negotiations are tougher. In response to your second question, we are being more responsive to client needs, more accommodating with their terms, and more commercially aggressive to ensure we win the projects available in the market.
Justin Bowers, Analyst
I have a quick follow-up regarding the improving decision-making timelines you mentioned earlier. Are these improvements related to projects that were delayed or do they also encompass new opportunities, or are they part of a broader trend?
Ari Bousbib, Chairman and CEO
Thank you. It's true that the mission-critical tasks are essential and need to be addressed. This is contributing to an overall improvement, but I believe we are also seeing better decision-making and quicker timelines across the board. Thank you.
Operator, Operator
Your next question comes from the line of Tejas Savant of Morgan Stanley. Your line is open.
Tejas Savant, Analyst
Hey guys. Good morning, and thanks for the time here. Ari, just following up on that line of questioning on TAS. I guess could you share a little bit of color around what gives you confidence to this improved decision-making timeline sort of dynamic continues here, particularly given the election cycle that sort of heating up as we speak? And then, on the analytics and consulting piece within TAS, are you starting to see the work related to those new drug approvals you talked about both year-to-date and last year starting to show up in the project backlog or is that still upside to come heading into year-end in '25? Thank you.
Ari Bousbib, Chairman and CEO
Thank you. I believe the election doesn't significantly affect the day-to-day decision-making related to drug launches. To address the second part of your question, yes, it's uncommon for a client to choose not to launch an approved drug. Typically, there is a six to nine month delay between approval and the drug's actual launch, during which the related work comes to us, so the impact is minimal. This particular instance was delayed slightly longer than expected, resulting in some projects originally planned for earlier this year now taking place in the second half of the year. Again, there are no surprises here. Thank you.
Operator, Operator
Your next question comes from the line of Dan Leonard of UBS. Your line is open.
Dan Leonard, Analyst
Thank you. So I have a question on the guidance. It seems that the inferred Q4 sales ramp compared to Q3 is a bit greater than typical. Can you talk about the drivers of that and perhaps even elaborate further on your conviction in the recovery in TAS in the back half? Thank you.
Ari Bousbib, Chairman and CEO
Sure. I'll take that question. First, there's been a notable recovery in TAS, which we've discussed extensively in earlier questions. This is a significant factor. Second, the comparison is more favorable as we saw a decline in the fourth quarter last year, which was the weakest quarter of that year. We have consistently mentioned that we expect a reverse trend in 2024 compared to 2023, meaning the first quarter will look like the fourth quarter, the second quarter will resemble the third quarter, and so on. So, we anticipate an increase in the fourth quarter. Additionally, it's important to note that there is a historical seasonality in Q4, which has consistently been stronger over many years. Therefore, the three main reasons are the recovery in TAS gaining momentum, favorable comparisons, and the expected seasonality. Is there anything else anyone would like to add?
Ron Bruehlman, Executive Vice President and Chief Financial Officer
I think I covered that, as simple as that. Yeah.
Ari Bousbib, Chairman and CEO
Yeah.
Operator, Operator
Your next question comes from the line of Charles Rhyee of TD Cowen. Your line is open.
Charles Rhyee, Analyst
Yeah. Thanks, Ari. I want to ask about M&A. I think so far you've spent maybe, was it $220 odd million in terms of acquisitions so far in the first half. Can you talk about sort of what the revenue contribution has been because I think in the guide was about 150 basis points of revenue growth? And just curious, has that been in TAS or in RDS or both? And how much do you still need to maybe do for the back half of the year? Thanks.
Ari Bousbib, Chairman and CEO
Yeah. Thank you so much. Yeah. So look, we said all along that acquisitions would contribute to a better point to our growth this year. We wish we would do more acquisitions, but valuations continue to be high, and we have a big pipeline, but it's not always the case that we are able to close. So far for the year, it's a little bit more than a point, and it's a little bit more entire than in RDS, but that's it. Look, we haven't spent much so far, but we hope to spend more in the second half, and we'll see what happens. Yeah.
Operator, Operator
Your next question comes from the line of Michael Ryskin of Bank of America. Your line is open.
Michael Ryskin, Analyst
Thank you for taking my question. I'm curious if you've addressed this previously, but there have been several notable cancellations of clinical trials in the industry over the past few months. You mentioned one in the first quarter that affected your performance and book-to-bill ratio. I'm interested to know if there has been any improvement in cancellation trends recently. I understand that the more prominent cases attract media attention, but I'm looking to understand the situation behind the scenes with this trend.
Ari Bousbib, Chairman and CEO
Yes, I've mentioned in previous discussions that large pharmaceutical companies are reprioritizing their programs, largely due to the IRA and its potential impacts. This has led to more cancellations than usual over the past few quarters. While we don't disclose specific cancellation figures, our average quarterly cancellations typically range around $0.5 billion. Some quarters may see fewer cancellations, while others may see more. Most of these tend to be programs in the $10 million to $25 million range. Last quarter, we disclosed a significant cancellation because it was well-known and garnered attention, totaling about $4 billion. This is unusual, as terminations can result from either reprioritization or data outcomes. In this specific case, it wasn't a matter of reprioritization; the data simply didn't support continuing the program, which unfortunately happens in our industry.
Operator, Operator
Your next question comes from the line of Jack Wallace of Guggenheim Securities. Your line is open.
Jack Wallace, Analyst
Hey. Thanks for taking my questions. I just wanted to go back and ask a follow-up to the EBITDA guidance questions from earlier. Ari, you called out that there was some mix-shift impacting margins in the back half of the year, and with the TAS guidance largely reiterated in strong second quarter, I was wondering if you could help us get a better understanding for the mix-shift, which sounds like its intra-segment? Thank you.
Ari Bousbib, Chairman and CEO
I can't provide much more detail than that. It is simply how the situation developed. I understand that this raises two questions. We will need to reassess this range as we build our forecast, and that is where we determined it fell most appropriately. Additionally, we also made some more acquisitions this quarter, which typically have low margins in their first year, and that could have had an effect. However, the difference is not significant in the larger context. So, I'm unable to elaborate further.
Jack Wallace, Analyst
Fair enough. And then on the positive side here, right, in those CE, you won a sizable chunk of a top-five client. Can you just give us a better understanding for the one or handful of reasons that led that client to switch from the long-time incumbent? Thank you.
Ari Bousbib, Chairman and CEO
I believe they preferred our solution. It provided them with greater flexibility to meet their objectives. Unfortunately, I can't share specifics about the program, but they simply liked it more. Thank you.
Operator, Operator
Your next question comes from the line of Patrick Donnelly of Citi. Your line is open.
Patrick Donnelly, Analyst
Hey, guys. Thanks for taking the questions. Ari, you talked a little bit on the capital deployment side about wanting to do more in M&A. Maybe the environment is not too friendly at the moment. But how are you thinking about priorities there? I know you guys have bought back some stock. You seem pretty comfortable with the leverage ratio. So maybe just talk through your priorities, M&A landscape, and then again, I mean, any targets on the leverage side with the debt would be helpful.
Ari Bousbib, Chairman and CEO
I understand you asked about capital deployment and acquisitions. Our cash flow performance this quarter was strong, which helped reduce our leverage. We ended the quarter with a leverage ratio of 3.25 times EBITDA, which is very good considering we were previously in the high 4s. We have been able to deliver naturally as EBITDA grows. Regarding acquisitions, our long-term guidance includes contributions from acquisitions to enhance our top line. So far, we've achieved just over a point. We have a robust pipeline, but it's difficult to predict which acquisition will occur in the second half or in the coming years. It's uncertain. I'm not sure if that addressed your question, but that's my response.
Operator, Operator
Your next question comes from the line of Matt Sykes of Goldman Sachs. Your line is open.
Matt Sykes, Analyst
Hi. Good morning. Thanks for taking my questions. Ari, you mentioned the strong funding trends in the EBP segment at the same time you're still seeing some caution from large pharma. How should we think about the potential revenue mix-shift to VBP versus large pharma, and would there be any implications for FSP versus full-service mix in that? Thank you.
Ari Bousbib, Chairman and CEO
Thank you. It's important to note that there is a timeframe between funding and RFP and then between an RFP and a booking. This business typically has long cycles. Therefore, while we advised against panicking over declines in funding, we reiterated that it won't impact us immediately. Although funding this quarter was robust, which is beneficial for our midterm and long-term outlook, it won't significantly alter our mix. Additionally, we have the largest backlog in the industry, and it won't meaningfully shift the mix of our operations in the coming quarters regarding large pharma, EBP, full-service, and FSP. However, you're right that an increase in EBP and full-service work does help offset the recent trend we've noticed with large pharma leaning more towards FSP, a pattern we've seen historically in this industry. So, with more EBP funding, we can expect more EBP work in the upcoming quarters, and as that backlog turns into revenue, we will see a higher mix of full-service compared to FSP than what we currently have. Thank you.
Kerri Joseph, Senior Vice President, Investor Relations and Treasury
Thank you for taking the time to join us today, and we look forward to speaking with you again in our third-quarter 2024 earnings call. The team will be available for the rest of the day to take any follow-up questions you might have. Thank you. Have a good day.
Operator, Operator
This concludes today's conference call. You may now disconnect.