Iqvia Holdings Inc. (IQV) May 13, 2026 Conference Transcript

And I'm on the Bank of America Life Science Tools and Diagnostics team, and I'm excited to be hosting IQVIA for our next Barsad chat. I'm joined by Mike Feddeck, Chief Financial Officer. Mike, thanks so much for being here.

Great to be here.

Usual 400 will be a fireside Q&A. If anyone's got a burning question, feel free to raise your hand and we'll throw it in. Mike, maybe just to kick things off, you know, you recently reported 1Q just about a week ago. What were the key takeaways from the quarter? You know, how has that impacted your confidence in the rest of the year? Just sort of, you know, any read-throughs on that? Sure.

Yeah, we were very pleased with our print and the performance in the quarter. You know, starting out a year with revenue and EPS above the high end of our expectations was great. Also being able to show the street the strong organic revenue growth acceleration in both commercial solutions and RDS. I think commercial solutions, organic revenue grew two times versus the prior year and RDS more than three times. And given the AI fears that were out there, it was really good. And we got a lot of good feedback from investors that our theory about the durability and AI being a tailwind for us was actually playing out in the numbers, which was great. And from an RDS standpoint to deliver just about $2.5 billion in net bookings and double-digit growth in the bookings year-on-year and looking at the demand metrics there and the kind of mid to high single-digit range certainly gives us confidence. And on the commercial solutions, the pipeline is very good there. So it was certainly a great way to start out the year.

Good. All right. I mean, you touched on R&DS, the strong bookings. There's obviously a lot of focus on, you know, quarterly book-to-bill. Hopefully, I'm allowed to ask that question without any surprises. But maybe you could just touch on that, you know, that 1.04 number. You know, there's some pass-through dynamics in the quarter. Just help us sort of bridge that. Sure.

Our feelings and our opinions on the quarterly book-to-bill are well-documented, so I won't waste the time we have today repeating that. But, you know, very strong double-digit growth in the net bookings, and the service fee bookings were exceptionally strong, which was great to see. You know, the pass-throughs are such a fickle thing. Honestly, I, and I'm sure I'm not alone in this, wish we didn't have to report pass-throughs as part of our, on a 606 basis, but it really was just an anomaly. There was no change in clients' therapeutic strategies. No, it wasn't sort of AI-related. It really just was the mix of trials that we contracted in the quarter just had low pass-throughs. And I think one analyst in the call did some back of the cocktail knack in math and came up with some assumptions that were pretty well sort of spot on that, you know, if they pass through bookings were within the historical range, like we wouldn't be having like this conversation.

So no, it was it was a good way to start the year. And you know, it's really hard to predict, but what's your expectation on that dynamic the rest of the year? Is this going to be a conversation we're going to be having again and again? Or is this sort of a little bit of a, you know, obviously, you can't predict it.

I think what gives us comfort that it was just a quirky anomaly within the quarter was, you know, going back and looking at the historical trendings. We went back, I think the FP&A team went back over five years to look at that trending. And, you know, I could probably count on less than one hand the amount of times it sort of fell out of the sort of the normal range. So, yeah, I think it was just a one-off idiosyncratic quarter.

Okay. All right. Maybe, I mean, let's just pivot from that to demand environment, customer behavior. You know, we can run through all the various layers of big pharma versus emerging biotech. Sort of what you saw in the quarter, how that played out. It was great.

Obviously, we're encouraged by EBP funding. It continues to be very strong. I think Q1 was almost double what it was last year, and then the IR team showed me yesterday the BioWorld April funding, which was up almost 400% versus April in 2025. So things are strong there. And, you know, we've been asked a lot about, you guys have said, you know, you're being increasingly successful with that customer segment and what's driving it. Is it, are you taking share? Is it that just all boats are rising because of the funding? And, you know, our honest answer is that we think it's more about our deliberate investments we've been making and focusing on that segment more so than funding in EVP. It generally takes for us somewhere between 9 to 12 to 15 months for when EBP gets that funding to make its way through their development plans into RFPs and then obviously into our contracted sort of net new bookings. So we believe we haven't even really begun to see the tailwinds from that funding. So we're very happy with the prospects for EBP. Large pharma is stable. We think the demand environment overall is certainly very constructive. But certainly, there's still some sand in the gears, so to speak, within large pharma, particularly coming off of three to four years of trying to digest and pivot with all the various policy-related actions that have been sort of thrust upon pharma. But overall, the conversations with large pharma are great, and they're proceeding, so we're encouraged.

I mean, on that topic of emerging EBP, emerging biotech, you know, talk about the lag of it flowing through. More broadly, I think, in other parts of our coverage, there's been some fear that, you know, the funding might be there, but the spending isn't. Because some of these customers might still be a little bit more nervous about funding going away, drying up, because it's been so volatile over time. I know it's early, but have you had any discussions on that? Do you feel that, you know, the normal transition from money into money out will happen? Or, you know, are these companies sort of building up cash hoards to weather the next storm?

We haven't seen any of that dynamic or certainly from our salespeople haven't flagged that. I mean, at the end of the day, for us, we deal primarily in phase two and phase three clinical development. So that's where the money tends to flow because it's the sure bet of success versus, you know, preclinical into phase one. So, you know, and the other thing is, is that, you know, the customers. They have to proceed, because in some cases, this is their only baby, so to speak, and then they need to get that baby launched into the world there. So they can't really hold back too much on deploying the funding. So we feel very constructive about the outlook there.

I mean, let's roll that together in terms of R&D's performance. We've had prints from some of your peers, not everybody. I think something that's been discussed in the calls a lot is there's not a lot of visibility given where the top three, five peers sit in terms of what trends they're seeing, but still it seems like IQV is held in fairly well relative to others. What do you think is driving that performance? What separated you the last couple quarters?

Yeah, well, I'd say even more so the last couple quarters. If you look back over the last couple years, we've outperformed on the CRO side, the large competitors out there. And, you know, I won't say that it's anything, you know, dramatic. I mean, it comes down to solid execution by our operations teams. You know, we always say repeat businesses is the best business. So, you know, we have happy customers. But, you know, the real thing is, is that, you know, AI is not new to us. I mean, if you take a step back, the whole theory of the merger. was taking the IMS data heritage and using that to transform clinical development. So we've been at this in October, it'll be a decade that IQV has been doing this. And, you know, so AI has already been embedded in almost everything that we do on the clinical and the commercial side. And what we're seeing in the marketplace is that this AI phenomenon that has just taken hold. has, has really caused our clients to mentally. Truly embrace using the data in their day-to-day lives. So it's making our conversations with customers a lot more exciting. It's elevating them. And it's almost like there's now more of a meeting of the mind. Whereas, you know, I can give you a, for instance, when, you know, six years or so ago, when I was CFO of the RDS segment, and we were sitting in front of clients demonstrating our AI study optimizer and site selection tools, you know, the clients were like, oh my gosh, like, that's amazing. And it's trained on the best data that exists in the industry. But they said, but pharma is obviously very conservative. And they said, well, we've always done it this way. So we're going to continue to run our trials this way. And now that's totally flipped on its head. So it's an exciting time for us.

So, I mean, since you touched on AI, let's go there. Obviously, a lot of focus for investors, a lot of questions on how it's going to play out. I mean, over the last couple, I think, especially starting in January, that's when the concerns really amped up in our space. What's been your conversations with Pharma? How are they leveraging it? How are they deploying it? Is it internally developed tools? Is it tools provided by companies like IQVIA? Is it tools provided by more of some of the tech and AI leaders? It's sort of, you know, how broadly adopted it has already been.

Um, the conversations with our customers have been great. And like I just alluded to, it really has elevated the conversations with customers and they, you know, everybody's rushing and talking about we're doing AI, you know, it's almost like when you listen to a pharma earnings call, it's, it's, there's almost like a quote of how many AI mentions you have to, you have to work into the transcript there. You know, A, most of pharma's investment dollars are going towards drug discovery, and we think that's a great thing. You know, that it's a very high probability that we're going to see, you know, much more molecules come through development with higher probabilities of success, and certainly our clients are embracing that. And also, you know, it's allowed our clients to sit down with us, and they're really showing us their roadmaps. And then they're asking us questions and say, well, okay, like IQVIA, you guys are the, you know, AI native life science company. Well, what are you guys doing? And then we sort of show them our agentic sort of roadmap. And, you know, the conversations are fantastic because very quickly, pharma goes, well, hang on a second. You know, this isn't our core business. Certainly, we're going to build some point solutions and try to make our people more productive with Claude and, you know, all those off-the-shelf tools, you know. But, you know, why do they want to buy something that we're already building? And so the partnerships with clients about sort of co-developing on both the clinical and the commercial side have been great. And, you know, at the end of the day, there's a big recognition of the data, you know, next to our people, our data is our greatest asset. And if your models are only as good as the data that it's trained upon, you know, it really makes sense to come to IQV. And that's really what's happening.

As you said, you've been somewhat on this journey since the merger, way, way back in the day. I see a lot of this as a continuation of that path and that strategy. Is there a step function change in 2025, 26, 27, or is it going to be a little bit more gradual?

I think step function from a level of engagement and finally getting the industry to embrace data and use it to actually sort of transform and drive productivity and get medicines to the people that need it faster, sure. I think from a financial standpoint, you're going to see a big step function change in our numbers. No, probably not. We have 192 agents across 64 use cases, I believe it is, in flight. We have 19 out of the top 20 pharma companies are already using and buying our agents and their workflows, and I think we have over 100 AI-related patents that have been filed. And, you know, our roadmaps are such that, you know, we should have over 500 agents, you know, in production by the end of 2027. So, you know, I think we're really encouraged by the direction of travel.

To that point, where is this going to show up in the model in the next couple of years? Is it incremental revenue? Is it share margins?

It's going to be all the above. And I think the way to think about it is when you look at our commercial business, it is the shortest burning cycle part of our enterprise. And the majority of our projects in our Argentic AI roadmap on the commercial side of the business are net new offerings. So you will see that manifest itself in continued acceleration over time of our organic growth rates in commercial with accretion in the margin. The RDS side is actually very different. Most of the roadmap there is really inward-facing and agentifying our internal processes. So over time, it'll be more of a margin accretion play, but also it'll enable us to take share as we maintain our first-mover advantage in that part of the business.

Okay. I mean, on the margin side, I think one of the other questions we get is, you know, you just called out that a lot of it isn't that new offerings, but there's a question of, will this be an argument for pharma to use the price lever more? They sort of argue, you know, if there is less FTE, less headcount supporting whatever work is being done, you know, can we address price on that? Have those conversations happened? I mean, is there a concern of that?

Well, certainly there's the large consulting firms never miss an opportunity to run around sort of, you know, pharma procurement and get them all sort of spun up. And that's certainly happening. So as usual, lawyers and consultants are the ones that always make the money no matter what's going on out there. But the conversations with our customers are sure, like we will share in the savings, right? We lean into productivity benefits in the clinical and the commercial side. It's good for our clients. It enables them to expand their pipelines and help the ROI of their products. So it's a good thing. But if you look at the contractual relationships we have, let's just say on the clinical side, because that was the initial knee-jerk fears we were getting from investors to say, oh, if you're more efficient, there's less hours, so there's going to be a revenue deflationary sort of effect. And that's just not the case. You know, we have rate cards that are locked in with large pharma for, you know, three to five year sort of periods. So, you know, as we get more efficient, you know, it doesn't matter how many hours we spend on it from a pharma standpoint, right? Like we capture that margin sort of benefit from efficiencies. And then when those come up for renewal, sure, we will sit down and, you know, and show pharma, okay, you know, let's, let's reopen sort of the rate card for the next three to five year period or whatever. And let's talk about sort of AI and productivity savings. And, you know, as usual, we will share in the savings. But, you know, I think the conversations with pharma are very constructive.

Okay. You mentioned in terms of like breadth of adoption, things like that. You talked about, you know, 19 of top 20 pharma already using your agents. I imagine it's not universally broad. Are there, you know, certain leaders emerging versus others? And what's driven that, right? Who's further along the adoption curve and why have you had success there? Trying to get me to name customers?

Pharma X, Pharma Y. No, I won't say that there's any sort of particular leader or laggard from a customer standpoint. I think what was really interesting in this past quarter was a large pharma customer who uses us predominantly for FSP work came to us and said, Hey, listen, you probably heard, you know, we are all in on AI and drug discovery. And they said, we're just letting you know that we see our pipelines expanding significantly. We want you to be prepared to handle that volume, you know, in the coming years. And what was the most interesting thing was they said, and we're going to be outsourcing to you on a full service basis, even though they're an FSP predominantly shop. And why that's important is that, A, it highlights what we've been saying to say the FSP and insourcing, the economics can only go so far before they break down. As you have more volume, it doesn't become sort of cost effective to do it. So again, it's just another sort of proof that, you know, customers are really embracing AI. You know, they're engaging us on very strategic sort of levels. And that certainly is encouraging for the future. Okay.

And this might be more of a hypothetical question, so just putting a bow on it. I think, you know, one of the questions of the debates we have is, like, when will you start seeing tangible impact of it? Like, when we think about, you know, traditional drug discovery takes 12 to 15 years to develop a drug, start to finish, you know, 4% success rate from IND, et cetera. There's a million metrics, and there's a view that at some point in the future, it'll be 10, 7, 5, whatever. It'll be improved. It'll be more efficient. Do you see that in the near-term horizon? Are we still years and years away from that? Is there going to come a point when, in the near future, we can say, okay, clearly, AI is having a tangible impact. This would have taken X amount of time before, and now it's taking Y. How far away have we seen that proof?

Well, I think there's, I'll answer that kind of in two ways. I think on the AI drug discovery side, you know, clearly that's, you know, two, three, four, five years for when we'll start to see that coming into the clinical development frame. And, you know, it's great that some of our clients, like I just mentioned, are already kind of putting us on notice that they see it that way. I think from a benefit standpoint, in some ways, we're already seeing the benefits in our numbers. I think what was great for us, if there was a pleasant surprise in the first quarter, was in our commercial business, in our analytics and consulting. When the AI boogeyman popped its head up, people were saying, your whole analytics consulting business is going to go away. And we quickly said, that's absolutely not the case. AI is going to be a tailwind for us. And then when we size the risk to our commercial segment, which is about $7.5 billion, we said, okay, could some of the lower level consulting and analytics work go away from good enough publicly available data? Okay, fine, maybe. And that'd be about $100 million out of that sort of pie. And in Q1, our consulting and analytics grew mid-single digits. It was the strongest quarter we've seen in three years. And the pipeline in our consulting and analytics is at like near record levels. So what's happening is, is that as clients are embracing AI, and mind you, wrestling with it, just like everybody is wrestling with what the new world would look like, it causes them to ask more questions. And that they're engaging us not just to help them figure that out, but also how can they best leverage our data assets of over 150,000 live data feeds in 110 countries, and it's cleaned, identified, coded, linked. We have 1.2 billion patient lives, and they're looking at the data that they have, and they're engaging us in various ways, and in a lot of ways. We are meeting each client where they are. They're all at very different sort of points. Some of them are coming to us for just questions, like in the analyst consulting. Others are buying like our Desk Plus, you know, offering, which is a data AI enabled sort of informatic platform. How can they better leverage their data and our data together? And even just curious about new offerings we have. So it's really across the board, but again, still very positive about the future.

Okay. One more on AI, and then we'll move on. You talked about 192 agents, 64 use cases. Internal to your organization, how much incremental investment are you putting in here in terms of incremental dollar allocation to build out your capabilities, to build out your toolkit?

Yeah, I think if you look at from a capital allocation standpoint, we're very disciplined with that. And we've done a great job over the past four or five years in particular in having our CapEx as a percent of revenue constantly get leverage off of that and decline. We certainly have reprioritized our internal CapEx investments into this AI roadmap. Good morning. Sorry. And, you know, at the end of the day, we've told our internal teams to say, keep being disciplined. But if you have a really good use case with a really good business case behind it, don't be constrained with the awful budget that the CFO sort of gave you, right? Like we're a well capitalized company. We will fund it. We will fund this AI initiatives.

Okay. Let's go from there on to margins overall. We talked earlier about some of the noise on Mix pass-through. Margins held in pretty well in the quarter. Could you talk about the operational levers you saw in the quarter and also walk us through the rest of the year? Sure.

Yeah, I think we're really happy with our productivity programs we have internally. And AI, agentic AI, that is, is really just another tool in our toolkit, so to speak, to constantly drive productivity for teams. If you take a step back, and I think we've been a little bit more deliberate the past couple quarters in helping investors actually understand our margins. And I'll use the first quarter as an example. In the first quarter, our reported EBITDA margins declined by 60 basis points. And let's break that into two pieces. We have non-operational forces at play there, and it's primarily pass-throughs, which come with no margin, and FX. And in Q1, FX is probably the biggest tailwind that we're going to see in the quarter and obviously had the biggest just mathematical dilution to our reported margin. If you just take pass-throughs in FX and Q1, that was about 120 basis point margin decline. So from an operational standpoint, there's really two things. There's mix, and mix meaning where we have lower margin offerings growing faster than higher margins. So that's a headwind to report margins. And then you have our productivity programs. And when you smash those two operational things together, it was at about sort of 60 basis points positive. Right. So ignoring the non-operational items in the quarter, we expanded margins by 60 basis points. And as we go through the year, we expect the FX and non-operational dynamics to sort of moderate. And you'll see our reported margins, you know, flip positive in the back end of the year, as our guide would indicate. And we're just really encouraging investors really focus on the EBITDA dollars, not so much the margin. And we had one investor say to me, he's like, yeah, I like what you just said there, because you can't buy a sandwich with a percentage. Focus on the dollars. So amen to that.

I mean, to that point, 60 bps, that's well above your LRP and sort of what we've come to expect.

It is, yes. So please don't everybody start updating their models that it's going to be 60 basis points every quarter. But we're still confident of what we said at our last investor day, that in any given year, you know, outside of the non-operational gyrations, you know, we should be expanding margins by zero to 30 basis points. And who knows? I mean, this agentic world, you know, could certainly have us surpass that.

Okay. All right. Maybe let's talk a little bit on the capital deployment, cash use side. You were active on buybacks. There's always sort of a little bit of a tradeoff between some M&A opportunities, buybacks, paying down debt. How would you weigh those priorities out for the rest of the year?

Yeah, well, I can tell you that the current valuations certainly make zero sense. I mean, we had a board meeting last week where we went and asked for an additional $2 billion worth of repurchase authorization. So we now have something like $3.1 billion at our disposal. And when we were preparing for that, we were like, gosh, our stock price now. is about the same as it was in 2020 when we delivered EPS of $6.40. And our updated guide that we just put out there is going to deliver $12.80. So you explain that to me. Like, this makes no sense, sort of, whatsoever. So certainly, you know, it's very attractive from a share buyback standpoint. We do have a fairly full M&A pipeline. We've signed, but we haven't closed the Charles River divestiture and the drug discovery side. We're excited about that. And there's some other assets that are out there, but it's always because M&A is such a binary thing. We'll see what we can get done. And we're certainly, we like some of the assets that are in the portfolio, but, you know, can we get them at reasonable prices? We'll have to see, but we'll continue to be buying back our own shares. And we're in Vegas, so we're betting on ourselves.

Maybe kind of rolling it all together, just taking a step back as you look, you know, from what we said now in May for the rest of the year. Call out a couple of swing factors or maybe potential drivers of upside gets you to the higher end of the range, both on from like sort of demand, top line environment and on earnings versus a couple of things that you're kind of keeping an eye on as potential risks for the lower side.

Well, I mean, there's no question that where we are now, when we looked back to that same point in time last year, we're in so much better of a position and not just IQV, I mean, the industry, you know, the macro overhang. You know, are a lot clearer now when they were then. So again, we're going to keep our eye on how's EBP funding continue to trend. We're not expecting any massive shifts and, you know, policies, especially as we come hurtling into the midterm season. So, you know, we're just keeping our heads down and continue to execute. And, you know, we had some people come to us and say, geez, your commercial business was so strong in Q1. And, you know, do you think that there's upside? And the answer is like, sure. I mean, you know, but it's early and it's a short cycle part of our business. So again, we'll continue to monitor our pipelines and the demand metrics. And, you know, I think overall, we're just trying to get across to investors that, you know, you know, recovery is not necessarily a linear sort of exercise. But, you know, I think all of the metrics on the demand side, from an execution standpoint, the promise of what AI, you know, could be are all sort of playing out as we anticipated.

Okay. All right. Thanks. Got a couple minutes left. Maybe we'll just go with our standard concluding question, Mike. Anything right now that, based on your conversations the last couple weeks, you think is really misunderstood, underappreciated by investors about IQVIA? Or any closing remarks you'd like to leave people with?

I appreciate that. I think, firstly, is that with the, maybe doing some of the segment realignment to sort of help this because we had to talk more about it, but people are really starting to embrace the enterprise of IQVIA, you know, the commercial side, the clinical side, and what a powerful combination those two things are, particularly as, you know, we're entering into a world where the expectation is, is that clinical development will continue to accelerate and get more efficient, which means more drug launches, which is a huge driver of the commercial business. Having those two things together under our roof is certainly being well-received and starting to be recognized a A little more. And finally, The data assets that we have that I talked about sort of previously, I mean, it is unreplicable, if that's even sort of a word there. And so it's great to have sort of clients come to us and we have discussions about what that really means and how that really can help them going forward. So, yeah, we remain very, very encouraged about the outlook for IQV.

Okay, great. Thanks so much, Mike. Appreciate it. Thank you, everyone.

Thank you for having me.