IQVIA Holdings Inc. (NYSE:IQV) Q3 2018 Earnings Conference Call - Final Transcript

Oct 22, 2018 • 09:00 am ET

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IQVIA Holdings Inc. (NYSE:IQV) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the IQVIA Third Quarter 2018 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. As a reminder, this conference is being recorded Monday, October 22, 2018.

I would now like to turn the conference over to Andrew Markwick, VP, IR. Please go ahead.

Executive
Andrew Markwick

Thank you, Jennifer. Good morning, everyone. Thank you for joining our third quarter 2018 earnings call. With me today are Ari Bousbib, Chairman and CEO; Michael McDonnell, EVP and CFO; Eric Sherbet, EVP and General Counsel; and Nick Childs, SVP, Financial Planning and Analysis.

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 & Presentations section of our IQVIA Investor Relations website at ir.iqvia.com.

(Forward-Looking Cautionary Statements)

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.

Executive
Ari Bousbib

Thanks, Andrew, and good morning, everyone. Thank you for joining our third quarter 2018 earnings call. I'm pleased to report that Q3 was another quarter of strong financial performance, and once again, we reported results at the high end or above our guidance ranges.

To review the numbers, the third quarter revenue of $2,594 million came in at the high end of our guidance range, and that's despite a headwind from FX of approximately $10 million. Revenue growth was 6.3% at constant currency. Technology & Analytics Solutions revenue was strong, despite the traditional Q3 demand softness on the commercial side of the business. Constant currency Technology & Analytics Solutions revenue growth was 15% in the third quarter. And again consistent with the first and second quarter, organic constant currency growth was about 4%. I think actually year-to-date constant currency organic growth rate on Technology & Analytics Solutions was over 4%.

R&D Solutions revenue grew 3.5%, at constant currency. Early in the third quarter, we marked the anniversary of all acquired R&D businesses, and therefore this growth is organic. As you know, we've experienced some quarterly lumpiness associated with the timing of revenue recognition and pass-through under ASC 606. In fact, pass-through this quarter cost us several hundred basis points of R&D growth. As expected, third quarter Contract Sales & Medical Solutions growth was down about 12% at constant currency.

Switching to profits, adjusted EBITDA of $561 million was above our guidance range, and it grew 8.4% at constant currency. Third quarter adjusted EBITDA margins expanded 80 basis points reported and 40 basis points at constant currency, reflecting the continued impact of our synergy realization and cost containment initiatives.

Let's look a bit at