IQVIA Stock

Good morning, everyone. Thank you for joining our second quarter 2026 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Mike Fedock, Executive Vice President and Chief Financial Officer. Eric Sherbet, Executive Vice President and General Counsel; Cirsa Willett, Senior Vice President, Financial Planning and Analysis; and Katie Ward, Vice President, Investor Relations.

Today, we'll be repeating a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following the Events and Presentations section of our IQVIA via Investor Relations website at ir.iqvia.com. Before we begin, I would like to caution listeners to have certain information discussed by management during this conference following 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. As previously disclosed, we implemented a new sector boarding structure effective January 1, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this reporting structure. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Thank you, Gary, and good morning, everyone. Thank you for joining us today to discuss our second quarter results. IQVIA delivered an outstanding second quarter with revenue, adjusted EBITDA and adjusted diluted earnings per share or exceeding the high end of our guidance.

Importantly, the momentum we saw in the first quarter continue with improving market conditions and strong operational execution. Organic growth for the company as a whole accelerated to 6% year-over-year, which is 3x the rate we delivered a year ago.

Adjusted EBITDA margin began improving earlier than we had anticipated due to better operational performance. Let's look at the results for the quarter. Total revenue for the second quarter exceeded the high end of our guidance range, representing year-over-year growth of 8.7% on a reported basis, with FX much less of a tailwind than we had anticipated. At constant currency growth was very strong at 8.5%.

Second quarter adjusted EBITDA was above the high end of our guidance as well represent a year-over-year growth of 9.2%. Second quarter adjusted diluted EPS of $3.15 also exceeded the high end of our guidance range and increased 12.1% year-over-year. The beat was driven entirely by strong operational performance.

Let's discuss the results by segment. On the clinical side, R&D has delivered great results with revenue growth of nearly 9% and organically 7%. We had $3.15 billion in net new bookings, representing 19% growth year-over-year, and 27% growth sequentially with notable strength in full-service bookings, translating into a quarterly book-to-bill ratio of 1.2.

If I may add, this 1.22 was in a quarter where our revenue was up almost 9% year-over-year, stronger than anticipated. I want to point out that the improvement in bookings is not just from this quarter alone. As you know, I always remind you that we are a long-cycle business and it's more meaningful to look at trends over longer time periods. And if you look at our last 12 months net new bookings, they have increased in each of the past 4 quarters with $11.3 billion of last 12-month net new bookings as of June 30, they are up 13% year-over-year. What this metric points to is a consistently improving demand environment as well as improving win rates for our R&D as business.

On the commercial side, organic revenue growth accelerated year-over-year to 5%, which is more than a 4 point higher organic growth than a year ago. And these as clients launched newly approved products and expanded the breadth of services they utilize from IQVIA, Notably, Analytics and consulting grew organically high single digits year-over-year, the highest growth rate since 2022. Commercial engagement services and patient solutions, both continued to grow double digits year-over-year, and our AI offerings gained further traction with increased customer adoption. With 3 consecutive quarters of strong sustained and improving results and pipelines that remain at record levels, there is clear momentum in commercial solutions.

Let me now give you a little more color on what we are seeing in the market environment and let's start with forward-looking demand metrics in the clinical environment. RSP flow growth remains strong with double-digit growth both year-over-year and sequential with improvements across all client segments. Decision timelines continue to shorten and EBP funding continues to be very strong with the second quarter at $35 billion according to BioWorld, which is more than double the Q2 2025 number.

I want to elaborate on this EBP segment. In response to investor feedback and reviewing publicly available information, we are taking the opportunity to update our own classification of customer segments to help you better benchmark IQVIA to our CRO peers.

From now on, we are going to define large pharma by the top 20 companies by Rx sales, midsized companies will be the next 60 pharma companies by Rx sales and EBPs, everyone else. I want to give you the breakdown of R&DS revenue by customer segments, as I just defined them. Large pharma represents approximately 50% of our R&DS revenue, midsize approximately 15%, 1-5 of our R&DS revenue. And EBP represents 35% of our R&DS revenue.

I guess you can see that based on publicly available information, it is apparent that we have more revenue in the EBP segment than any of our CRO peers. And this is extremely important because emerging biopharma continues to be where much of the industry's innovation is coming from. A decade ago, EBPs represented about 45% of all clinical trial starts globally. Today, EBP represent about 70% of all clinical trial starts globally. EBP R&D spend is also expected to grow at 2x to 3x the rate of large pharma R&D spend. And of course, EBP trials are full-service outsourcing. All of this creates a meaningful opportunity for IQVIA given we are the largest EBP provider.

At the same time, Large pharma continues to be a significant segment for us. In fact, we are benefiting from the strategic outsourcing partnership renewals by large pharma over the past 2 years, which we've been discussing several times in the past. And we, as you know, have significantly expanded the number and the scope of our preferred partnerships.

As a result, we have seen our win rate with large pharma improve materially, leading to an expansion of our share of wallet with those partnerships. And in several cases, replacing large CRO incumbent providers. Shifting now to Commercial Solutions. The market environment continues to improve, supported by nearly 45% increase in new drug launches in the first half of 2026 versus the first half of 2025.

As you know, this is important because the launch activity is a significant driver of demand across our commercial portfolio with roughly half of launch-related spending typically occurring in the first 2 years post approval. Addition, as we shared before, there is an increasing trend from our large pharma customers seeking to outsource the full commercialization of certain therapies in select geographies.

And given our global footprint and spectrum of capabilities across information, insights and engagement -- we have been winning a fair share of these opportunities.

I want to take a moment to again remind you how to think about our Commercial Solutions business, especially in the era of AI. We help our clients in 3 main areas: one, in the standard market; two, plan their commercial strategies; and three, engage with their own customers. So one, we have our clients understand the landscape, primarily through our information ordering. Our information business represents about 30% of our Commercial Solutions segment and revenue typically grows at low single digits.

Two, we help our customers plan their commercial strategies, primarily through insights from our analytics and consulting business. This business represents about 20% of our Commercial Solutions business, and it goes mid- to high single digits.

And three, we help our customers engage with their own customers that is health care providers, distribution channels, patients and paints. And we do this through our patient solutions, technology and commercial engagement services. That, in aggregate, is about 50% of our Commercial Solutions business and growth at high single digit to low double digits.

Now we'll continue to see increased demand for these services across the board, that is evident in our own commercial demand indicates. The pipeline continues to grow strong double digits year-to-date. Decision timelines continue to reduce double digits. And of course, we are also winning more with win rates up double digits. When we think about future trends across both of our segments, clinical and commercial, we see the outsourcing market continuing to grow in 2027 and the years ahead.

And inside we think AI will continue to contribute to this market expansion, and we'll continue to see a strong tailwind for IQVIA. On the clinical side, clients are already telling us that AI in discovery will only increase demand for CRO services as more molecules with a higher predictable success are entering developments.

Additionally, IQVIA's leading AI solutions are further differentiating our clinical offerings and deepening our partnerships across all customer segments, large needs and EBP. Our AI-enabled capabilities, which, as you know, we've been working on training on and refining for at least 2 years are already improving study design accelerating timelines and reducing our operational risk across complex global trials.

Let me give you an example of how this is playing out with large pharma. One of our long-standing customers recently expanded its partnership with IQVIA to include our full-service clinical capabilities. That expansion led to an end-to-end award for large complex Phase III stroke outcomes stunning.

These clients specifically told us that our AI-enabled capabilities in site start-up and enrollment along with our therapeutic expertise and global execution model cleans the deal because it will help manage risk and around these studies with greater predictability.

In another example, an EBP awarded IQVIA a complex global Phase III oncology study across multiple treatment arms. And we won here because AI-enabled patient recruitment will help keep a complex study moving at higher speed with much better predictability.

Another EBP selected IQVIA for a series of global autoimmune programs that bring together clinical, laboratory and technology-enabled patient and home solutions. Here, our AI enabled patient reported outcome capabilities made the difference because they have support patient retention, protocol compliance and higher-quality outcomes.

In commercial, we are seeing AI begin to contribute more directly to top line growth as clients are moving beyond pilots and data foundation work and they're starting to deploy IQVIA AI agents more broadly. Let me give you an example of what that looks like in practice. The midsize pharma client is expanding its use of IQVIA AI across an immunology franchise in 95 contents.

We are combining our global syndicate pharmaceutical market data with our launch planning conversational AI agents to give the client an integrated view of market dynamics and help teams get to actionable insights in near real time. Again, the benefit here is speed, precision and accuracy. Another example in commercial.

We are working with a top 5 large pharma to deliver a complete AI-enabled enterprise analytics solution that seamlessly brings together data technology and advisory support. This will deliver customized workflows that accelerate decision-making and improved quality and accuracy. Beyond this broad and deep relationships with our customers, governments and regulatory authorities around the world look to IQVIA for trusted health care expertise and insights.

Recently, IQVIA was the only CRO invited to provide our perspective on clinical trial innovation as a clinical trial round table with the U.S. Department of Health and Human Services as part of their trial blazer initiative. We will subsequently invited to testify at a hearing of the House Energy and Commerce Subcommittee on Health, regarding the FDA's role increasing a more efficient and accelerated path for early clinical development in the United States.

We were the only CRO and also, by the way, the only representative from the biopharma industry to testify it. We are proud of the surest policymakers place in our leading expertise as they consider reforms to accelerate development timelines, modernize trials using AI and strengthening U.S. competitiveness in biomedical innovation. Finally, I'd like you all to mark your calendars for the upcoming IQVIA Investor Day, which we are planning for December 2, 2026. And now to Mike for more details on our financial profile.

Thanks, Ari. Good morning, everyone. As a reminder, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this reporting structure. Now let's start by reviewing Rev.

Second quarter revenue of $4.368 million, grew 8.7% on a reported basis and 8.5% at constant currency. Revenue growth within the quarter includes about 2.5 points of contribution from acquisitions. Commercial Solutions revenue for the second quarter was $1.793 billion, up 8.6% on a reported basis and 8.4% at constant currency.

R&D Solutions second quarter revenue was $2.575 million, up 8.8% on a reported basis and 8.6% at constant currency. For the first half of the year, total company revenue was $8.519 billion, up 8.6% on a reported basis and 7.3% at constant currency. Commercial Solutions revenue was $3,547 million, up 10.1% reported and 8.5% at constant currency.

R&D Solutions revenue was $4.972 billion, up 7.5% on a reported basis and 6.4% at constant currency.

Now moving down to P&L. Second quarter adjusted EBITDA was $994 million, representing growth of 9.2% year-over-year, while first half adjusted EBITDA was $1.926 billion. Second quarter GAAP net income was $256 million, and GAAP diluted earnings per share was $1.53. For the first half, net income was $530 million or $3.14 of earnings per diluted share.

Second quarter adjusted net income was $527 million and adjusted diluted earnings per share was $3.15, representing growth of 12.1% year-over-year. And for the first half, adjusted net income was $1.019 billion or $6.04 per diluted share, up 9.8%.

Now turning to R&DS bookings. The R&D Solutions' net new bookings in the quarter were $3.15 billion, a 19.3% increase year-over-year, resulting in a 1.22 book-to-bill which, as already mentioned, is all the more impressive given revenue grew 9%.

I should also note that cancellations remained within the historical range. As of June 30, R&DS backlog was $34.2 billion and the next 12-month revenue from this backlog was $9.230 billion which is up 7.5% versus last year.

The Ascos, given the long cycle nature of our business, it's more important to focus on the longer-term booking trends. In the quarter, the last 12 months net new bookings were $11.250 billion, an increase of 12.9% year-over-year. And importantly, this metric has been steadily increasing in each of the past 4 quarters and clearly points to momentum in our business.

So let's turn to the balance sheet. As of June 30, cash and cash equivalents was $1.909 billion, gross debt was $15.999 billion, resulting in net debt of $14.090 billion. Our net leverage ratio ended the quarter at 3.59x trailing 12 months adjusted EBITDA.

Second quarter cash flow from operations was $558 million, and capital expenditures were $198 million, resulting in free cash flow of $360 million representing growth of 23% year-over-year. And in the quarter, we repurchased $398 million of our shares, resulting in first half share repurchases of $950 million and this leaves us with approximately $2.8 billion of share repurchase authorization remaining under the current program.

Now let's turn to guidance. To reflect stronger organic revenue growth, and changes in the M&A and foreign exchange impacts, we are raising our full year 2026 guidance for revenue, for adjusted EBITDA and for adjusted diluted earnings per share. We now expect revenue to be between $17.275 billion and $17.475 billion, representing year-over-year growth of 5.9% to 7.1%. The new midpoint of the revenue growth guidance is 6.5% versus the prior guidance midpoint of 5.8%.

This new guidance includes approximately 100 basis points higher organic revenue growth and approximately 50 basis points higher contribution from M&A, offset by of foreign exchange impact that is 80 basis points less of a tailwind than in the former guidance.

The revenue guidance now assumes approximately 200 basis points of contribution from acquisitions and only approximately 20 basis points of a tailwind from foreign exchange. We are also raising our adjusted EBITDA to be between $4 billion and $4.05 billion growing 5.6% to 6.9% year-over-year, reconfirming flat margins year-over-year at approximately 23.2%.

And finally, we are also raising adjusted diluted EPS to be between $12.80 and $13, up 7.4% to 9.1% versus prior year or 8.2% at the midpoint.

Let me provide our third quarter guidance. For the third quarter, we expect revenue to be between $4.350 billion and $4.390 billion which represents year-over-year growth of 5.2% to 7.1%, and adjusted EBITDA is expected to be between $1 billion and $1.020 billion, representing growth of 5.4% to 7.5% versus prior year. And adjusted diluted EPS is expected to be between $3.19 and $3.29, which represents year-over-year growth of 6.3% to 9.7%.

Both this guidance and the full year guidance assumes that foreign currency rates as of July 27 continue for the balance of the year.

So to summarize, IQVIA delivered outstanding financial results. with second quarter revenue, adjusted EBITDA and adjusted diluted EPS exceeding the high end of our items. We accelerated organic revenue growth across both commercial and clinical segments. We delivered strong adjusted EBITDA margins in the quarter. We had strong free cash flow performance, up 23% year-over-year. The R&DS net new bookings were the highest since 2022 and $3.15 billion, growing double digits year-over-year and sequentially with very strong full service bookings.

And as already mentioned, the demand environment for both clinical and commercial has significantly improved as reflected in our forward-looking demand integrators. We raised our full year guidance for revenue, adjusted EBITDA and adjusted diluted earnings per share and we're planning a December 2 as Investor Day, where we look forward to seeing you. Now with that said, let me hand it back to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Eric Coldwell with Baird. Please go ahead.

Almost feel like you're out in the call now. That was a pretty positive update. We can only go south, I think. So last quarter, you had some added disclosures around the bookings profile that helped, I think, help people understand the dynamics and what was optically a lower net book to bill. And this quarter, you're obviously putting up a bigger book-to-bill against a strong revenue growth rate, but I do have to ask, were there any chunky awards or other callouts within those bookings? And you did mention was very strong. What about FSP awards, what about pass-through mix and the awards? Any other notable callouts that you'd like to share with us?

Thanks again for your kind words. Actually, you have a good call in your note a few weeks ago. we have indeed a great quarter. I tell you in over 25 years of reporting earnings in these or other companies have never had as skinny a quarter as this 1 all around. I must tell you, there is absolutely nothing salient unusual abnormal odd awkward in our numbers anyway. .

With respect to your -- the question on the bookings per se, there was strong literally across the board. Nothing unusual, pass-throughs or in the normal range, cancellations are in the normal range, good mix of large lead, I mean, really FSO was very strong, but again, see to what it was before all the multiple crisis erupted over the past 2, 3, 4 years. really good, strong outsourcing continuing from large pharma, good bookings again, strong around FSP, you as specifically low to mid-double digits kind of as usual percentage of total line. I'm really not going to not into core. I mean it's a fair question because the numbers are so good everywhere. I have to tell you, preparer call, we look and say, is there anything we can point to and there is nothing and all very strong. Mike, anything else?

I was just going to add that the therapeutic mix and all that stuff with the trends.

Great job, guys. I'll leave it there. .

Your next question comes from the line of Justin Bowers with Deutsche Bank.

Ari, in your prepared remarks, you talked about outsourcing penetration potentially increasing over the interim. Is that comment broad-based, more focused on some of the conversations you've been having with your large and midsized pharma customers? Just any more color there would be helpful. .

Sure. Thank you. Okay. So as you know, the EBP segment is 100% outsourced by definition. And again, as I want to reiterate, we are the largest CRO provider to the EBP segment. I think it's very clear from the numbers now. So that clearly is all outsourcing, midsized, pretty much similar except for some of the larger ones that some of themselves and lead of FSP. Large pharma is really where you've had the big in-sourcing, outsourcing, et cetera. Look, I tell you that large pharma clients are already telling us that because of the extensive increasing extensive use of AI. And by the way, use of a hyper-large pharma is not starting on July 28 with the presence. It's been going on for more than 2 or 3 years, okay? .

So the use of AI in Discovery will only increase demand for CRO services. Our clients are actually telling us and asking us to gear up capacity as additional molecule will enter development. Some of our large pharma clients are predicting that will double their study portfolio and so they're asking us literally to ask thousands of FCEs in anticipation of those studies.

So the additional demand with CROs is simply because, again, the dynamics of our sourcing remain the same. Some of these new molecules are identified the use of AI or incent therapies where the client may not have all the therapeutic expertise. The additional capacity required, no one is interesting in adding more head count for specific trials. It's always more cost effective to use the CRO. And then global footprint helps, the domain expertise, the regulatory internode for study design, the site relationships and the network of broad therapeutic coverage, the expensive data to land on the best design and successfully recruit more specialist patient populations. All of that lends itself to more outsourcing. So the current outsourcing for large pharma we'll continue to increase as we look at our conversation with our clients and we model it out.

Thank you. That's it for me. .

Your next question comes from the line of Michael Ryskin with Bank of America.

Great. I kind of want to follow up on just the last one. Thinking about your future investment and your future opportunities there. Like you said, you have been talking about AI for a number of years now. you've talked up some of the benefits you're seeing from the solutions you've developed internally. There's clearly some opportunity to partner externally or maybe do some M&A. There was a deal in the space maybe a week or 2 ago. Can you just talk about how you see the development of those solutions over time and where you're putting the incremental dollars. .

Well, I mean, look, we've -- it's again, not news for us. We've been doing this for some time. The idea of inserting intelligence in the design and performance of clinical choice to accelerate outcomes and improve outcomes is really what prompted a merger 10 years ago.

Now of course, with the advantage of frontier models, et cetera, this has just been accelerated over the past 2, 3 years. just to step back in terms of investments and where we continue to focus, as context, I've said this before, but I think it's worth repeating. There are at least 3 necessary requirements to effectively deploy AI models in our industry.

Number one, we need proprietary expert content that is globally sourced, the identified, curated, fit-for-purpose, integrated, interoperable and ready for extraction that's proprietary health care data. And we've got that. Again, it has to meet interoperability, relevance, completeness, traceability, reliability and capacity standards under countless oncologies at a scale that has no comparison to any other industry.

And this is why our clients trust us to work with them on their AI journey. Actually, we recently patron look at the book if you haven't already called Empire of AI. And the author says they are acquiring training data has turned into 1 of the most difficult, expensive and legally fraud activities a frontier lab and otic. There's a phrase in around that the web is empty because the frontier AI models essentially are close to in sorting everything that's out there. And so you got to turn out and proprietary data. And again, we've got that, and that's what we are continuing to invest.

Number two, you need deep domain knowledge to read, understand and interpret these highly complex data sets in the proper context. And of course, we've got that too. And number three, you need to operate within the significant regulatory compliance and privacy frameworks that health care requires. And they vary across countries and geographies. And of course, we've got that expertise too.

So our own agentic roadmap has continued to make great progress. In fact, we now have 294 agents deployed across 90 use cases. I want to remind you, an agent is not 1 model. An agent is built of multiple tasks that are all powered by different models. We work with every single AI company out there in this country and overseas. And you build that -- we've been building that with the help of NVIDIA very successfully. In fact, many of our large pharma clients are recognizing all of this and the limits of AI frontier models and instead, they are partnering with us to develop their AI road maps.

4 of the top 10 pharma companies have already contracted with us to codevelop AI solutions. And 19 of the top 20 pharma companies have already deployed IQVIA solutions in their workflow. So this has been and continues to be our priority area for investment and continues, we are seeing it in our win rates really differentiates us from the rest of the pack.

We've been placing incumbents in the last deal, including large CROs.

Your next question comes from the line of Michael Cherny with Leerink Partners. Please go ahead.

Maybe to build on that last comment you had regarding displacing other CROs and competitive processes -- can you give us a little flavor of what that looks like? And when you go into these competitive RFPs or competitive displacements, what is the discussion looking like on price versus capabilities. First is technology and AI functionality, if you can break it down to those 3 buckets?

Yes. Thanks for your question, Michael. We've shared before that large pharma, literally every single 1 of the third 1 went through a very significant process to renegotiate all of their partnerships. They opened up all of their preferred relationships, and that process occurs over the '24, '25 time frame. We stated before that we were very happy with the outcome of those renegotiations as we both increased the number and the scope of those relationships. And so when there is a specific RFP in the context of those partnerships, a large pharma typically invites the 2 or 3 partners that they have selected in that prior process.

And then the discussion -- by the way, the rates have been typically negotiated during those relationships. So I would say it's less on price on a specific RFP and more on delivery timelines capabilities, technology, site networks relationships, experience with that particular therapeutic area, the skill sets of the individuals involved, et cetera, and of course, our AI capabilities.

Your next question comes from the line of David Windley with Jefferies. Please go ahead.

I wanted to ask a clarification and then more of a content question. So the clarification, I think, Mike, you quantified 2.5% of acquisition contribution. I was wondering if you could break that out between segments. And then Ari, you seem in the mood to talk about the expense of the business. The company has kind of quietly started to build some discovery capabilities. You're talking a lot about AI. I wondered if you might expand the discussion to talk about what your thoughts are in investing in and building out capabilities in the early part of the development supply chain and how you see that folding into your broader strategy leading into your clinical capabilities? And is there an AI angle there as well?

Well, Dave, it sounds like you've been in listening in, in our highly secretive strategy session. All I can say, all I can say is that, yes, we are working on those things, and I can leave it at that. And again, you would expect us to do that simply because we have great relationships with our clients. And we are expanding upwards and downwards, set of capabilities. You saw us buy discovery assets. In fact, we completed the acquisition of the Charles Miller assets in the quarter..

I guess that was the first part of the question to you, Mike, you want to say and that's basically what is normally our acquisitions, we had guided to 1.5 points for the year but now that we did and it's going to add at about $75 million, $80 million revenue.

Yes. And Dave, normally, our -- the acquisition impact is usually about 2/3 commercial, 1/3 R&DS. It's about the same.

Yes, about the same for this quarter.

Your next question comes from the line of Jailendra Singh with Truist Securities.

Congrats on a strong quarter. I want to follow up on your comments around EBITDA margin improving faster than you had expected. Can you elaborate on that? What was the key operational drivers there? And related to that, have you started to see any benefit from any productivity-related investments from AI?

Sure, Jailendra. I'll take that one. So let me give you some color on our EBITDA margins.

Yes, they expanded, as we noted, 10 basis points. And as we started to provide a little bit more color on the composition our operational and productivity programs are going exceptionally well. And we've said that AI is just another lever in that toolkit. So that drove about 90 basis points of operational margin expansion in the quarter. And then by we have nonoperational items like FX that were about 80 basis points , their impact passes of 80 basis points of drag -- so clearly, our operational productivity programs are delivering value. .

Yes. I mean just for the context, Jailendra , if you recall in the first quarter, we reported that we generated 60 bps of operational productivity improvements, now margins, but that was offset by 120 bps of negative impact from the stronger pass-through growth as well as FX.

Now in this quarter, we had no FX virtually, negligible, but we still have pass-through growth, and those created a headwind of 80 bps. Now we generated 90 bps of operational underlying margin improvement and that led to that less 10 bps of adjusted EBITDA improvement.

Yes. And it's also important to remember that we get leverage off of our fixed cost base as we have stronger revenues, that's true. .

Your next question comes from the line of Sean Dodge with BMO Capital Markets.

Maybe just adding a little bit more dimension to what you just talked about with the margins and the guidance. Mike, I think you said 80 basis points of nonoperational headwind EBITDA margins in the second quarter. If you could just kind of help us understand how FX and pass-throughs are going to kind of progress in terms of like nonoperational margin headwinds in Q3 and Q4?

Yes. So in the full year, I think that was the context of your question. I mean, we were pretty explicit in our guide -- you really have to look at all the moving parts that are in there. So obviously, FX tailwind reducing helps our reported margins. We added in M&A, which is primarily Charles River, which, as you know, has lower margins. And then we have our strong productivity programs that are delivering incremental EBITDA margin and value that are helping offset. And when you put all of that together, that's where we're maintaining our flattish margins for the year.

Yes. Just to be clear, helping margins. Less of an FX impact eliminates the headwinds to margins that we have when we started the year. FX, as you know, has changed dramatically over the course of the quarter. The main headwind nonoperational headwind to margins is pass-throughs, which, as you know, come with no profit.

Your last question will be from the line of Shlomo Rosenbaum with Stifel.

Right, I wanted to ask you something. I'm not sure how quantitatively you can answer, but maybe qualitatively, you talked about 100 basis points of better organic revenue growth in the guidance and I'm trying to understand the whole market is getting better. You said that the market environment is strengthening. Are you able to kind of give us an idea of how much of your guidance raised on the organic side is just a rising tide lifting all boats versus the better execution and the win rates that you're having? And if you could give us some color on how we should be thinking about this. .

Well, look, I mean, you need a good market to be able to perform. As you know, we've been facing a lot of headwinds, macro headwinds over the past few years, but there's no question I shared some of the forward-looking demand indicators. No questions that the RFP flows, which we report indicate a every quarter have been improving, quite boon my mind, the RFP flow growth is probably 1 or 2 quarters which we go back and look, I'm sure they were good, probably mid- to high single digits.

And that kind of reflects itself in our books. Now our FPs were up double digits in the quarter, strong bouble digits. And I think that bodes well for the future. And of course, not enough to get an RFP, you also have to win. And so you're right, our win rate has been ticking significantly on the back of all of the capabilities we talked about. And on the back of the fact that the EBP segment, in particular, has seen very, very strong funding growth and that usually translates 6 months here after the funding into awards. And again, given our strong position in the segment in winning a fair share. So that has also contributed.

Anything else, Mike, you want to add?

No, I think. No.

Your next question comes from the line of Elizabeth Anderson with Evercore ICI. Please go ahead.

If we think about the guidance, particularly the revenue increase, how would you sort of allocate that between the improving demand environment that you're seeing in R&DS and anything to call out in sort of either like interest expense or tax rate or anything that changed versus what you were saying last quarter? .

I'm saying no significant changes on the below-the-line assumptions there. And clearly, when you talk about part of the assets is a long-cycle business, so the great bookings that we've had are really more of a '27 and beyond indicators. So we've been getting a lot of questions about our book.

Yes. Well, I think -- I think I answered an earlier question about bookings and the fact they were really broad-based. Again, there was nothing segments, I think it was generally very strong. And I just want to mention the recently, several of you asked about bookings and bookings policy in light of some other people changes to their bookings policies and so on. And I just want to again emphasize that, we continue to have contracted bookings that is that all the bookings need a signature and to take a cancellation, we also need the signature. We feel that the signature is an objective criteria and removed judgment.

And we think that we're going to stick with that best-in-class policy. I'm just giving that as a context for your questions, again, broad-based bookings or contracted bookings. Many of you, by the way, also we received several inquiries wondering if we also have 15% or 16% of our backlog that's in active trials. And we asked the R&DS team to go back. Obviously, we have in our backlog, $34 billion, we've got thousands and thousands of trials, as you can imagine, accumulating over the years.

And we have the R&DS team to review the backlog to identify so-called inactive trials. And just want to make sure that to reassure those of you who ask and several of you asked about the quality of the backlog might provide any comments on that. That were preliminary result.

Yes. I think the team is looking at it, and we'll finalize it in the third quarter. But if there is an adjustment to our backlog for enacted trials, it's in the ballpark of 5%, not that 15% metric that was out there by competitor. And I think that it's important to note that if we do make an adjustment it will have 0 impact on any historical financial results, guidance, the next 12 months revenue from backlog averages reported.

So again, it's something that we're looking into. And if we do something, we will talk about it in our third quarter call.

But to your question about the next -- what is important because as we reported this time very strong growth in next 12 months revenue from backlog -- and then as you know, it's at a record level. What's the number over million 7.5%. 70% growth and has been also increasing quarter after quarter. We want to enjoy your attention also to the net new bookings last 12 months quarter after quarter. If you go back and look over the past 5 quarters, that metric has been constantly increasing in a regular and steady base and year-over-year, it's up 12.9%. All of that bodes well to your question about our revenue going forward, not just guidance for this year but momentum into next year.

And specifically, this year, we're seeing the acceleration growth in both Commercial Solutions and R&DS segment, so we feel good about the guide.

At this time, Mr. Joseph, I turn the call back over to you.

Thank you, operator. Thank you, everyone, for taking the time to join us today, and we look forward to speaking with you again at our third quarter 2026 earnings call. The team will be available the rest of the day to take any follow-up questions you might have.

Thank you. Have a good day.

This concludes today's call. Thank you for attending. You may now disconnect

Great. Thank you. Good morning, everybody. I'm Dave Windley with Jefferies Healthcare Equity Research. Welcome to our 2026 Global Healthcare Conference. We appreciate your joining whether here in person or virtually. Really appreciate the interest and attendance in the conference.

Also very much appreciate IQVIA's participation this year and Ari Bousbib, the company's CEO, joining me here for our fireside chat. IQVIA, as you know, is the leading player in, call it, the broader pharma services and technology space, but particularly in the contract research organization space that I've covered for some time.

So thank you very much, Ari, I thought I'd remind folks that we are coming up on the 10-year anniversary of the forming of IQVIA IMS and Quintiles, respectively, had long histories before that. But in terms of putting the companies together, October 1, I think, of this year, would be 10 years. So congrats on the progress.

You had -- the industry has been through somewhat of a downturn, a challenging time for the last few years, but seems to be pulling out of it. And your recent quarters show strength that would add to that perspective, I think, the improvement.

So let's start with your views of the first quarter and your takeaways from what you saw first quarter or year-to-date and how that sets you up for the rest of the year, but starting with the first quarter. How do you -- what are your views?

First of all, thanks for reminding us about this upcoming 10th year anniversary. When we put together two companies 10 years ago, I remember, I think, that the pro forma EPS was $3.90. And our guidance for this year at the midpoint is $12.85. So more than triple which is not bad.

I can't do that math in my head.

Okay. All right. So the first quarter you saw was pretty strong. In fact, we came in both on the top line and the bottom line ahead of the high end of our expectation. And I think it's good to look at both of our segments. Yes, you said that clinical trials, yes, area of strength. It's about 55% of our revenues, but we've got a very strong Commercial Solutions business as well.

And both outperformed our expectations on the clinical trial side, the first quarter was about 6% revenue growth. When you strip out FX, which was a tailwind for all of our businesses this past quarter, and the benefit of acquisitions, our organic growth was 3 points.

Now that we know what the other -- the ones who report peers have done it's at least a 5-point differential in growth rates. And I guess the only one who has a positive growth. And interestingly, our clinical trial business, which we call, RDS. Organic growth was 3 points, which was 3x what it was a year ago. So definitely improved results. On the commercial side, growth in the quarter was double digits. Again, benefit of FX tailwind and acquisitions brings organic growth in the quarter to mid-single digits, which was double what it was a year ago in the first quarter.

So again, strong revenue, EPS, be it free cash flow was 100% of net income, again, ahead of our expectations, we did really well in terms of results.

Excellent. So as you mentioned, I appreciate you highlighting it. I didn't emphasize it enough. But yes, so a little over half the business, R&DS, so close to half, a little under half commercial. Let's start with the bigger of the two, if you don't mind. In the R&DS and clinical trials market, how would you characterize demand and how that is evolving? I think improving, but I'll let you tell us.

You're correct, Dave. The -- look, let's split the market in 2 broad segments. There's a large pharma, and then there's everything else, it's EBP and midsize. On the large pharma side, our clients are coming out of a period of a lot of disruption, a lot of noise.

The environment is not back to what it was before that noise, that is 2023 or so. But it's improving gradually. I remind you what the noise was, there was the IRA in '23, then there was the MFN and the tariffs and the FDA disruptions and so on and so forth. And all of that created turmoil large pharma delayed decision-making, reevaluated their portfolios, a lot of disruption. That's largely behind all of the programs of reprioritizations and pipeline cleansing and so on, a lot are completely behind us.

And the environment is, in fact, improving. You looked at our bookings in the quarter. They improved double digits year-over-year. Very strong across the board. Our leading indicators are also up mid- to high single digits, whether it's RFP flow or qualified growth in the qualified pipeline of opportunities. So the environment is generally very stabilizing and is improving. And you could see that in our growth -- in the growth of our bookings. On the non-large pharma side, the single most meaningful leading indicator of demand is funding. And you saw that EBP funding improved significantly. I think last year, it was double the prior year.

The first quarter continued to be very, very strong. April is actually very, very strong. Again, you can't make a trend from a quarter or a month. But certainly, directionally it's based, I think April funding was triple what it was last year's April. So we certainly see a lot more confidence in secondary markets to fund follow-on research for EBPs as well as venture capital funding. All of that bodes well for the industry.

Now if you step back and you look at demand -- long-term demand for clinical trials. Large pharma R&D spend will grow 2% to 3%, okay, long term. And that's not changing. I don't think Yes, there's a lot of noise. People talking about synthetic cohort and looking for reasons. But on the flip side, you've got the advent of AI, which is 95% of AI applications at large pharma today and in the foreseeable future or at the discovery stage, which has -- is going to have the consequence of increasing the number of molecules. Bear in mind, many large pharmas are looking at a 5-year horizon with a not insignificant number of LOEs. And so they have an interest in replenishing their pipelines. AI helps identify more molecules that are more likely to succeed in trial.

The bottleneck in drug development is clinical trials. It's not the discovery. So you're going to identify more molecules. In fact, anecdotally, I'd tell you a couple of weeks ago, we were with some of our clients and they've asked us how fast can we ramp up capacity if we dramatically increased the number of molecules we want to take to trial.

So demand environment stabilizing, improving gradually and many signs that it will continue to grow on a better 2% to 3%, I think, is a conservative estimate for large pharma. EBP Is 8% to 9%, and it's long been the major driver of faster growth in the business. In fact, 2025, 65% of new trial starts were from EBP. So again, all around strong signals that demand is returning both for large pharma and for EBP.

Excellent. So I appreciate the bifurcation there on the cohorts. Let's drill, maybe double click one step in on large pharma. You had talked over, I think, the last couple of years about a pretty heavy period of reprocurement, lots of resetting of pipelines and resetting of, to your point, kind of the supply chain to execute or prosecute the pipelines.

To what extent -- I think you've talked about FSP, about pricing. You just mentioned AI. How would you describe what was contemplated in those reprocurements? Like how much of the deck was already set or has been set in the last couple of years in terms of how they want to execute as opposed to, I think, the market is thinking about AI being a big disruptor now. I'm wondering how much of that type of thing was already contemplated in your discussions?

Look, I mean, this is the narrative and then there is the reality, okay? And unfortunately, and current attendees here accepted. Most people now look at investing as based on a narrative and on headlines as opposed to the old-fashioned way that is looking at the fundamentals. And I know you and a couple of others are an exception. But -- there is a narrative out there that AI is a disruptor. It's not a disruptor. Trials are being conducted exactly the same way. We are bidding on trial the same way. Yes, we are executing with higher speeds, better quality, more efficiency because of the AI agentification process, which we at IQVIA, by the way, have been working on for 10 years.

Artificial intelligence is not something new for us. That was the rationale for the merger you referred to earlier. And we've begun the agentification process 2 years ago when we started our collaboration with NVIDIA we've got today over 100 patents, AI patents, 19 of the top 20 large pharma already use at least one or more agents IQVIA AI agents in their workflows, we've got almost 200 agents deployed, both clinical and commercial, representing over 60 use cases. So it's not disruptive. It's a tailwind for our business on the RDS side, it's a driver of speed, quality and efficiency to the benefit of our clients and enables us to gain share and to have an edge versus competition.

Everyone talks about AI. Some of them mean our people use Copilot. And we mean something entirely different. And on the commercial side, it's additive to our revenues because our AI agents, the ones we sell to our clients enable them to perform the traditional commercial functions of launch strategy sales planning, market access, payer reimbursement modeling, et cetera, pricing analytics, all of that, those functions, which require IQVIA data and other people's data.

But bear in mind, IQVIA data is 70% of the data that pharma uses worldwide. Then integrate that data with company-specific data needs all kinds of master data management tools, integration tools, a lot of people to perform analytics. Today, we provide already agents. We sell agents to our clients to perform those tasks a lot faster.

So that creates an incremental revenue opportunity on the commercial side, and it is one of the elements that drove better-than-expected performance in the quarter and is expected to help us continue to grow on the commercial side as well.

In this pendulum swing, I guess, I'll call it, of engagement model with your clients in clinical and R&DS, the swing to FSP is something that does go back and forth over long periods of time. It seems to have moved toward FSP. Kind of wondering if that has -- do you think that has stabilized as a result of kind of the wave of reprocurements that have already happened? Is it perhaps even moving back the other way or hybridizing somewhere in the middle?

Yes. Look, this FSP versus full-service debate has been going on forever. In fact, 10 years ago, when we did the merger, I was told, that's it. Everyone is moving to FSP. And the truth is when demand slows and for whatever macro reasons, and we talked about some of the disrupting macro forces over the past 3 years, when demand slows and goes into a trough typically pharm reinsources some of the activities still need us because you want to be able to flex capacity.

Why does pharma outsource clinical trials. There's 3 reasons. One is cost. Another one is therapeutic expertise. And the third one is capacity. The ability to flex capacity on demand. So this FSP debate is, again, not a real debate has relatively been a stable part of our bookings and backlog. It's about -- it's in the high teens. You can even round it up to 20%. I think it's 17% or 18% of our backlog. And in recent quarters, it's been a lower percentage than that, much lower percentage than that in our bookings. I don't know if we are representative or not, but it might seem to indicate that we're going back to more full service.

Bear in mind, more molecules identified in discovery because of AI, as we discussed before. And the increasing complexity of trials, which is undeniable, the difficulty of identifying the target patient populations, the difficulties of identifying the sites, all of that creates the need for expertise that pharma cannot economically maintain in-house. Pharma is looking to go to different therapy areas, adjacent, therapy areas.

Say you have a diabetes drug, and you all of a sudden, discover that this diabetes drug is effective for obesity or liver disease or cardiac or anything else, you may not have the obesity therapeutic expertise in-house. So to conduct that trial, you're going to have to go outside it, which is exactly what happened. So the need to access site networks that pharma does not have, we -- the CRO industry in general, and we, in particular, have unmatched spectrum of therapeutic expertise, site network relationships, our own sites.

So all of that leads you to the conclusion that outsourcing is a continuing trend, will continue to occur. Today, I think it's 47% of all RDS spend is outsourced, and we see a regular increase of that proportion year-over-year. So I'm not so concerned about this FSP. Again, it manifests itself when there is a trough in demand or a constraint in the environment and pharma pulls back. It's just a phenomena that has happened a number of times. It happens every 5, 6 years but we go back to a full service. And I want to remind you that EBP is 100% outsourced, full service.

Yes. Ari, I think your point about complexity is really important. So people are focused on AI as a deflator, but complexity is an inflator and has been for a very long time, and perhaps AI is even necessary for the industry to be able to handle the complexity. Before we move to commercial, on the EBP end of things and your attempts to gain share in there earlier in '25, you had a kind of a mantra of see more, win more. I believe, in talking to your team that you've maybe been able to put that on cruise, maybe not push that as hard, but I'd let you describe, how are you thinking about growing your share in EBP, how are you positioning IQVIA?

So EBP is an entirely different segment than large pharma in the sense that it requires should I say, white glove handling, more handholding, limited resources, a small group of people, a molecule much earlier engagement is necessary to stick with the customer.

We typically, as a large CRO historically weren't much focused on that. I mentioned before, that 65% of the clinical starts last year were from EBP. If you look at our business, it's exactly the flip side. 65% of our bookings and business is with large pharma. And clearly, it's a great opportunity for us, smaller focused CROs have had a field day because they haven't had us compete with them in that segment as hard as we could.

And so therefore, over the past couple of years, we've decided, as you said, to see more and win more in that segment by engaging earlier the chaos that the FDA benefited us. We hired quite a significant number of former FDAers, therapeutic experts that for that specific purpose, we use them at the regulatory stage to help and support EBPs at a much earlier stage.

We used to never do that. We would wait till the biotech got some good data in Phase I, Phase II and ready now to engage into a real serious trial akin to trials that we conduct for large pharma because at the end of the day, the trial that you're going to conduct for EBP is exactly the same as the conduct for a large pharma. But the engagement within EBP is very different. It requires earlier engagement, more focus on the regulatory side, more handholding. And so we created a specialized units, IQVIA Biotech, we regulatory experts that are able to accompany the EBP earlier in the process. And in fact, if you listen to reports from other competitors that are specialized in EBP, they will tell you that they've seen more competition on their domain or the historic domain and that's us.

We've been very, very aggressive there. And we've made -- we are growing our EBP bookings are growing strong double digits I mentioned before, the segment is growing 8% to 9% long term. And we've seen our growth there strong double digits. So we are making strong inroads there.

Okay. Fantastic. So transitioning to commercial, some players in the commercial space away from you have seen some weakness in pharma advertising and commercial budgets, your business has actually kind of accelerated, I think, since a slower period. To what would you attribute that?

Yes. So look, overall, what's driving our commercial business is the number of drugs approved. And the number of drugs approved has increased. I think the second half of '25 saw the FDA approved 31 molecules, I think, which was double -- more than double what was approved in the first half.

We see the first quarter was very strong, too. And typically, it takes between 6 months and 1 year, 1.5 years between the approval and the launch of the drug. This is really the bread and butter of our business. So more approval means more business for us. The second big driver of growth, and we saw that in the first quarter is what we call patient solutions which includes the parts of real-world solutions that stayed with the commercial business. Patient solutions, a big issue with patients is adherence. We've got a lot of engagement on behalf of pharma directly with patients. In fact, AI plays a role here.

I saw a couple of weeks ago, a great IQVIA AI agents, I saw. Not a real person, but almost there that can help predict when a patient is going to get off a medication and therefore, prompts an intervention by another agent to make sure the patient stays on the drug based on the massive amount of data we have on patients sticking to a drug or getting off and what are the signals that can help us anticipate when a patient is going to get off that drug. So a lot of good work on patient engagement.

Analytics and consulting, again, AI makes our clients want more help, not less help. And you saw that our analytics and solutions business was very strong. Our pipelines there are at historic levels. Our growth rates in analytics and consulting are higher, I mean, the last time we saw that growth rate was, I think, 3.5 years ago. And so really strong demand despite what we might have thought would be an area of vulnerability for AI.

So analytics and consulting very strong. Commercial engagement services where we -- which includes the former CSMS, which is where we contract sales reps, but not just sales reps, nurses, and entire spectrum of commercialization services, including distribution, in some cases, large pharma has decided to get out of commercializing themselves usually legacy drugs usually in overseas markets, and they've begun outsourcing, including to us. We won some significant large multiyear engagements for top 10 pharma companies in various parts of the world, in South America, in Europe, in Asia, where we take on the responsibility of essentially commercializing a set of drugs in a particular therapy.

And we see that pipeline of opportunities grow as well. So these are the 3 main drivers of growth on the commercial side. Digital marketing, you see that people are reducing generally their advertising budgets in large pharma. It's true all over. But the exception is on the digital channels. And there, as you know, we have a very good thriving business.

And finally, AI agents whereas on the clinical side, AI agentification, again, is a tool for increasing speed, improving quality and increasing efficiency. On the commercial side, it's an incremental revenue stream for us.

Yes. With a couple of minutes left, I want to try to touch on AI a little more. You've touched on it through the questions here, but I'm going to start with a little bit of a conceptual question. And it drives it, who's best placed to bring purpose-built AI agents to your customers. So you've got the Anthropics and OpenAIs and you're partnered with NVIDIA, and they are the technology experts. They are bringing some tools to market, but this is an industry that's highly regulated, that's very complex, the management of these projects takes years and a lot of people. And it seems to me that subject matter expertise, which you have tons of matters a lot. And so kind of help the audience understand why this is not a generalist game.

I mean there are 3 things you need for -- you need many, many things but let's say, 3 primary ingredients you need for AI agentification. One, is the content. And for us, that means the data.

Now for most of the headline conversations, that data is available because of the Internet. In our industry, it's not. It's proprietary data. I mentioned before, 70% of all data used by pharma worldwide is IQVIA data. So that's number one ingredient. It's now available.

Two, expertise, as you mentioned, not so simple. This is not about diagnosing a disease, it's not about writing a legal brief. It's a lot more complicated than that. A typical clinical trial can have over 800 standard operating procedures, SOPs with very, very complex workflows.

And three, the regulatory compliance, privacy requirements, which are very high we already 2 years ago, put in place what we call health care-grade AI, which includes all the safeguards and all the privacy requirements, all the compliance requirements. Bear in mind, every country has different protocols, treatment patterns, even the names of the drugs have different the treatment protocols are different. The reimbursement models are different. And so you say, yes, conceptually, a generic horizontal AI tool could get to all of that. but it's actually very complex. And the data, again, go back to the first is just not available.

In fact, we've realized the value of our data has increased exponentially because of AI.

I appreciate you throwing that in. That would have been my next question if I had time. So very much appreciate that.

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

Great to be here.

Usual format 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 recently reported 1Q just about a week ago. What were the key takeaways from the quarter? How has that impacted your confidence in the rest of the year? And just sort of any read-throughs from that?

Sure. Yes. We were very pleased with our print and the performance in the quarter. 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 2x versus the prior year and RDS more than 3x.

And given the AI fears that were out there, it was really good, and we got some -- 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 in the kind of mid- to high single-digit range was -- certainly gives us confidence. And on the Commercial Solutions, the pipeline is very good there. So certainly a great way to start out the year.

I mean you touched on R&DS, the strong bookings. There's obviously a lot of focus on quarterly book-to-bill. Hopefully, I'm allowed to ask that question without any surprise here. But maybe you could just touch on that 1.04 number. There were 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 very strong double-digit growth in the net bookings and the service fee bookings were exceptionally strong, which was great to see. 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 on the call did some back of the cocktail and did math and came up with some assumptions that were pretty well sort of spot on that if the pass-through bookings were within the historical range, like we wouldn't be having this conversation. So it was a good way to start the year.

And you -- I know it's really hard to predict, but what's your expectation on that dynamic for the rest of the year? Is it going to be a conversation we'll be having again and again? Or is it sort of a little bit of a onetime thing?

Yes. Obviously, you can't predict it. I think what gives us comfort that it was just a quirky anomaly within the quarter was going back and looking at the historical trendings. We went back -- I think the FP&A team went back over 5 years to look at that trending. And I can probably count on less than one hand the amount of times it sort of fell out of the -- at a sort of the normal range. So yes, 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. 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.

Yes, it was great. Obviously, we're encouraged by EBP funding, 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 '25. So things are strong there.

And we've been asked a lot about you guys have said 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 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 EBP. 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 3 to 4 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 talking about the lag of it flowing through. More broadly, I think in other parts of [ funding ] business, there's been some fear that 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 the normal transition from money into money out will happen? Or are any 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 II and Phase III clinical development. So that's where the money tends to flow because it's the sure bet of success versus preclinical into Phase I.

And the other thing is that 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 kind of let's roll that together in terms of R&DS performance. We've had prints from some of your peers, not everybody. I think it's something that's been discussed on the calls a lot is there's not a lot of visibility given where the top 3, 5 peers sit in terms of what trends they're seeing, but still it seems like IQVIA has held in fairly well relative to others. What do you think is driving that performance? What separated you the last couple of quarters?

Yes. Well, I'd say even more so the last couple of quarters. If you look back over the last couple of years, we've outperformed on the CRO side, the large competitors out there. And I won't say that it's anything dramatic. I mean it comes down to solid execution by our operations teams. We always say repeat business is the best business. So we have happy customers. But the real thing is that 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 will be a decade that IQVIA has been doing this.

And 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 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 I can give you, for instance, when 6 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, the clients are like, "Oh, my gosh," like that's amazing, and it's trained on the best data that exists in the industry. But they said, the 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.

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 the tools provided by companies like IQVIA? Is it tools provided by more of some of the tech and AI leaders? And sort of how broadly adopted is this sort of been?

Yes. The conversations with our customers have been great. And like I just alluded to, it really has elevated the conversations with customers. And they -- everybody is rushing and talking about we're doing AI. It's almost like when you listen to pharma earnings calls, it's almost like a quote of how many AI mentions you have to work into the transcript there. A, most of pharma's investment dollars are going towards drug discovery, and we think that's a great thing that it's a very high probability that we're going to see much more molecules come through development with higher probabilities of success.

And certainly, our clients are embracing that. And also, we -- it's allowed our clients to sit down with us, and they're really showing us their road maps. And then they're asking us questions to say, well, okay, like IQVIA, you guys are the AI native life science company, well, what are you guys doing? And then we sort of show them our agentic sort of road map. And the conversations are fantastic because very quickly, pharma goes, well, hang on a second. But 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 all those the off-the-shelf tools.

But why do they want to buy something that we're already building. So the partnerships with clients about sort of co-developing on both the clinical and the commercial side have been great. And at the end of the day, there's a big recognition of the data. 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, it really makes sense to come to IQVIA. And that's really what's happening.

And as you said, you've been somewhat on this journey since the merger way, way back in the day. Is there -- so 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 in their workflows. And I think we have over 100 AI-related patents that have been filed. And our road maps are such that we should have over 500 agents in production by the end of 2027. So I think we're really encouraged by the direction of travel.

I mean 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 of 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 agentic AI road map 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 road map there is really inward facing and identifying our internal processes. So over time, it will be more of a margin accretion play, but also it will 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 just called out that a lot of it is net new offerings, but there's a question of will this be an argument for pharma to use the price lever more? And sort of argue if there is less FTE less headcount supporting whatever work is being done, can we adjust price on that? Have those conversations happen? 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 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. We have rate cards that are locked in with large pharma for 3- to 5-year sort of periods. So as we get more efficient, it doesn't matter how many hours we spend on it from a pharma standpoint, right? So like we capture that margin sort of benefit from efficiencies.

And then when those come up for renewal, sure, we will sit down and show pharma, okay, let's reopen sort of the rate card for the next 3- to 5-year period or whatever, and let's talk about sort of AI and productivity savings. And as usual, we will share in the savings. But I think the conversations with pharma are very constructive.

Okay. You mentioned in terms of like breadth of adoption, you talked about 19 of the top 20 pharma already using your agents. I imagine it's not universally broad. Are there 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.

Ex pharma, ex-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 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. And we want you to be prepared to handle that volume 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 that FSP and in-sourcing 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 customers are really embracing AI. They're engaging us on very strategic sort of levels, and that certainly is encouraging for the future.

Okay. And that probably more of a hypothetical question. So just putting a bow on it. I think one of the -- one of the question of debates we have is like when will you start seeing tangible impact of it? Like when we think about traditional drug discovery it takes 12 to 15 years, to develop a drug start to finish, 4% success rate from IND, et cetera, there's million metrics. I mean there's a view at some point in the future, it will be 10, 7, 5, whatever. It will be improved. It will 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. Like how far have we seen that proof?

Well, I think there's -- I'll answer that kind of in 2 ways. I think on the AI drug discovery side, clearly, that's 2, 3, 4, 5 years for when we'll start to see that coming into the clinical development frame. And 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 on our analytics and consulting. When the AI Boogeyman popped its head up, right, 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 would 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 3 years. And the pipeline in our consulting and analytics is at like near record levels. So what's happening 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 we -- 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 DaaS+ 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. So I'm going to ask, you talked about 192 agents, 4 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?

Yes. 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 4 or 5 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 road map -- and 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 the AI initiatives.

Okay. Maybe 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. Can you talk about the operational leverage you saw in the quarter and sort of also walk us through the rest of the year?

Sure. Yes, I think we're really happy with our productivity programs we have internally. And AI -- agentic AI, that is, is really just another tool and our toolkit, so to speak, to constantly drive productivity of our teams. If you take a step back, and I think we've been a little bit more deliberate in the past couple of 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 2 pieces. We have nonoperational 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 and FX in Q1, that was about 120 basis point margin decline, okay? So from an operational standpoint, there's really 2 things. There's mix and mix, meaning where we have lower margin offerings growing faster than higher margins. So that's a headwind to reported margins. And then you have our productivity programs.

And when you smash those 2 operational things together, it was about sort of 60 basis points positive, right? So ignoring the nonoperational items in the quarter, we expanded margins by 60 basis points. And as we go through the year, we expect the FX and nonoperational dynamics to sort of moderate, and you'll see our reported margins 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, yes, I like what you just said there because you can't buy a sandwich with a percentage focused on the dollars. So [indiscernible] that.

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

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 that what we said at our last Investor Day that in any given year, outside of the nonoperational gyrations, we should be expanding margins by 0 to 30 basis points. And who knows? I mean, this agentic world could certainly have us surpass that.

Okay. All right. Maybe we'll 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 trade-off between some M&A opportunities, buybacks, paying down debt. So how would you weigh those priorities out for the rest of the year?

Yes. Well, these -- I can tell you that the current valuations certainly make 0 sense. I mean we were -- 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're 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, it's very attractive from a share buyback standpoint. We do have a fairly full M&A pipeline. We announced we have -- 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 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 from where we sit now in May for the rest of the year, call out a couple of swing factors or maybe potential drivers of upside get you to the higher end of the range, both on -- from a 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 look back to that same point in time last year, we're in so much better of a position and not just IQVIA, I mean, the industry. The macro overhangs are a lot clearer now when they were then. So again, we're going to keep our eye on how EBP funding continues to trend. We're not expecting any massive shifts in policies, especially as we come hurdling into the midterm season. So we're just keeping our heads down and continue to execute. And we had some people come to us say, "Geez, your commercial business was so strong in Q1. And do you think that there's upside? And the answer is like sure. I mean, 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 I think overall, we're just trying to get across to investors that recovery is not necessarily a linear sort of exercise. But I think all of the metrics on the demand side, from an execution standpoint, the promise of what AI could be are all sort of playing out as we anticipated.

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

No, 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. The commercial side, the clinical side and what a powerful combination those 2 things are, particularly as we're entering into a world where the expectation 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 2 things together under our roof is certainly being well received and starting to be recognized 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 yes, we remain very, very encouraged about the outlook for IQVIA.

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

Thank you for having me.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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.

Thank you, operator. Good morning, everyone. Thank you for joining our first quarter 2026 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Mike Fedock, Executive Vice President and Chief Financial Officer; [indiscernible], Executive Vice President and General Counsel; Kate Ward, Vice President, Investor Relations; and [indiscernible], Senior Director of Investor Relations.

Today, we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.om. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements.

Absolute results could differ materially from those stated or implied by forward-looking statements into risks and uncertainties associated with the company's business, which are discussed in [indiscernible] 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 and presentation. As previously disclosed, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, [indiscernible] segment amounts have been recast to conform to this net report instruction. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our first quarter results. IQVIA delivered outstanding financial results, achieving record first quarter revenue and adjusted diluted earnings per share that exceeded the high end of our guidance. reflecting solid top and bottom line performance.

We are seeing continued positive year-over-year momentum across the portfolio. with strong acceleration of organic revenue growth. In fact, year-over-year, our organic revenue growth rate in Commercial Solutions doubled and our organic revenue growth rate in R&DS triple. On the commercial side, revenue growth accelerated as clients continue to launch new products and increase the breadth of services they utilize from IQVIA. We saw particular strength in patient solutions, which is the part of real world that remained in the commercial segment.

Also, particular strength in analytics and consulting, which had the highest growth we've seen in 3 years and strength as well in our commercial engagement services which includes the former CSMS segment. We feel good about demand on the commercial side with pipelines growing to record levels, and we think AI has something to do with it. AI is causing our clients to have more questions. It's causing them to increase their demand for IQVIA's differentiated AI capabilities and for the innovation we are embedding across our commercial offerings.

On the clinical side, we also delivered very strong performance in the first quarter with better-than-expected reported and organic revenue growth. We had solid bookings with double-digit growth year-over-year, both as reported and as recast. In particular, we have solid growth in net service fee bookings that is excluding pass-throughs. Net service bookings growth in the quarter were solid year-over-year as well as sequential, both as reported and as recast. And I should note, cancellations in the call were within the normal range.

While our book-to-bill ratio 1.04 in the quarter despite solid service fee bookings growth and normal cancellations. Now, AI has nothing to do with it. What happened was that pass-through bookings were unusually low in the quarter, simply due to the particular mix of indications of the clinical trials we booked in the quarter, which included more full-service trials with lower pass-throughs than usual. And I want to note that the proportion of FSP in our bookings this quarter was consistent with historic levels.

Now regarding the overall demand environment, forward-looking demand metrics continue to point in the right direction. Our backlog reached a new record of $34.2 billion at the end of the quarter. And noteworthy is the amount of dollars from our backlog that will convert to revenue in the next 12 months. We have $8.9 billion out of our backlog representing nearly 8% growth year-over-year versus the recast numbers last year.

Our qualified pipeline grew mid-single digits year-over-year with notable strength in RFP flow grew high single digits year-over-year, driven by growth both in large pharma and in EP. All of these comparisons are, of course, apples-to-apples, that is versus prior year numbers that have been recast to reflect the new segment reported. Finally, you may have noticed evenly funding was very strong in the first quarter, reaching $25 billion according to [indiscernible], which is almost double the funding in Q1 2025.

Now let's turn to the results in the quarter. We delivered outstanding revenue and profit results. Total revenue for the first quarter exceeded the high end of our guidance range. representing year-over-year of 8.4% on a reported basis, 6% at constant currency. First quarter adjusted EBITDA was up 5.5%.

First quarter adjusted diluted EPS of $2.90 also exceeded the high end of our guidance range, and it increased 7.4% year-over-year. Let's now review a few highlights of business activity. Let me begin with an update on AI. As a quick reminder, IQVIA's AI solutions are built on our unparalleled proprietary data foundation best-in-class compliance with the privacy, regulatory and interlude standards, health care grade AI demands and are connected to our deep life sciences and health care expertise. We've been integrating AI into our operations and solutions at scale for nearly a decade. It's part of who we are and what we do. we already function as an AI-native company in life sciences.

A few weeks ago, we unveiled IQVIA AI at NVIDIA's GTC Conference. This is our agentic AI portal and marketplace, purpose built for life sciences. It provides clients a single access point to their purchase IQVIA AI solutions, enabling centralized control with their internal user base while also enabling visibility to a broader AI portfolio to support future solution adoption. Our deployment of highly specialized life science industry AI agents is progressing as planned.

To date, we have 192 agents deployed in the field, covering 64 use cases across both our Commercial Solutions and R&D businesses. 19 of the top 20 pharma companies are already using IQVIA agents in some of their workflows, underscoring broad industry trust in IQVIA's AI capabilities.

Let's now switch to client activity first in Commercial Solutions. This quarter, we saw clients increasingly selecting IQVIA to build AI-ready data foundations, which facilitates the incorporation of AI agents, including via agents into their workflows. These new services expand the scope of our partnerships with clients. A few examples of wins in the port. The top 10 pharma clients awarded IQVIA contract to modernize performance reporting on markets and therapeutic areas using an AI-driven analytics platform. The engagement replaces hundreds of disconnected reports and dashboards from multiple vendors with a centralized managed AI powered IQVIA Insight solution.

IQVIA secured a multiyear partnership with a midsize client to provide a scalable AI ready data foundation. [indiscernible] demonstrate IQVIA's plug-and-play capabilities within a client's multi-provider technology ecosystem. Pfizer and IQVIA entered into a strategic regional promotion agreement covering selected Pfizer products across 23 countries in Europe. This collaboration brings together Pfizer scientific leadership. With IQVIA's promotional expertise, market intelligence and AI-supported technology to support long-term impact. We entered into a strategic long-term collaboration with Boehringer [indiscernible] to transform the global commercial intelligence Foundation.

[indiscernible] selected IQVIA's Data as a Service DAS platform as the core accelerator to harmonize and upgrade global commercial operations, enabling more scalable analytics and a single version of the truth across therapeutic areas and geography. This collaboration will support upcoming product launches and market reporting across 59 countries. IQVIA was awarded a multiyear agreement to serve as the primary patient information and analytics partner across [indiscernible] full portfolio, including our Data as a Service platform. This partnership is designed to drive strong visibility into existing brands step change improvements in analytics, insights and pipeline assets and more intelligent commercial and portfolio decisions. Let me now turn to R&D solutions.

Our strategy in R&D has been to leverage our AI solutions to optimize trial design and execution to reduce time lines for our clients. Of course, we've been doing this for years through protocol optimization, site identification and operational risk mitigation. We're taking this to the next level with AI agents, which leads to much faster study execution and increases quality by reducing errors and rework. For example, the AI identification of the complex database setup process in a study start-up or the AI densification of tasks involved in finding multiple documents in the [indiscernible]. We are increasingly embedding these AI agents in our delivery model. Let me share a few examples of recent wins on the back of these capabilities. The top 5 pharma companies selected IQVIA to provide AI-enabled global medical safety and pharmacovigilance services, building on a decade-long relationship and strong performance across both FSP and clinical delivery models.

The deal consolidates safety operations under a single scalable model to improve efficiency and reliability while enabling ongoing innovations. The top 10 pharma clients awarded IQVIA a multiyear agreement to serve as the primary partner for delivering full-service global clinical trials. We differentiated ourselves through AI-enabled innovation that accelerates development and improve execution quality. IQVIA awarded contract of a global midsize pharma to deliver a Phase III clinical study supporting a high-profile oncology assets.

In this case, we were selected based on our experience running similar studies as well as our ability to deliver AI-enabled trial design, protocol optimization and site identification. The top 20 pharma company selected IQVIA to support a late-stage clinical program in asthma in overweight patients. [indiscernible] win highlighted AI-enabled clinical solutions, including a protocol and design strategy optimization, regulatory compliance and study document filings. For we are delivering a global late-stage clinical program that integrates clinical and laboratory services within a single operating model with a [indiscernible] analytics embedded across site feasibility and selection performance and performance forecasting.

Lastly, in the quarter, we announced a strategic collaboration with the Duke Clinical Research Institute to advance clinical research in obesity and related cardiometabolic conditions. The collaboration brings together IQVIA's global operational scale and execution capabilities with Duke's academic rigor and scientific leadership, creating an integrated end-to-end model for large complex clinical trials. The partnership is designed to accelerate trial start-up improve execution efficiency and support regulatory submissions and commercialization. IQVIA contributes deep expertise in obesity and metabolic disease having supported more than 120 obesity trials and enroll more than 90,000 patients, including work across all FDA-approved GLP-1 therapies to date providing sponsors with a proven operational foundation.

This partnership with Duke has already resulted in a significant pipeline of opportunities and a few wins in the second quarter. Now to Mike for more details on our financial performance.

Thank you, Ari, and good morning, everyone. As Barry noted earlier, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this new reporting structure. Now let's start by reviewing revenue. First quarter revenue was $4.11 billion grew 8.4% on a reported basis and 6.0% in constant currency.

Revenue growth includes about 2 points of contribution from acquisitions. Commercial Solutions revenue for the first quarter was $1.75 billion up 11.6% on a reported basis and 8.5% at constant currency. R&D Solutions first quarter revenue was $2.397 billion, up 6.2% on a reported basis and 4.2% at constant currency. Now moving down the P&L.

Adjusted EBITDA was $932 million for the first quarter, representing growth of 5.5% year-over-year. First quarter GAAP net income was $274 million, the GAAP diluted earnings per share was $1.61. Adjusted net income was $492 million for the first quarter, and adjusted diluted earnings per share was $2.90 and representing growth of 7.4% year-over-year.

Now turning to RDS bookings. To provide an apples-to-apples comparison the numbers on this chart from last year's Q1 2025 net new bookings and backlog have been recast to reflect the real-world late phase and certain other real-world offerings that are closely related to the clinical trial business, which we moved from pads to RDS.

On this new basis, R&D Solutions net new bookings in Q1 2026 was $2.5 billion, a double-digit increase year-over-year. RDS backlog at March 31 was $34.2 billion, which is an increase of mid-single digit year-over-year. And additionally, the next 12-month revenue from this backlog was $8.9 billion at March 31, which is up high single digits versus last year on a recast basis.

Now reviewing the balance sheet. As of March 31, cash and cash equivalents totaled $1,947 billion and gross debt was $15.83 million resulting in net debt of $13,886 billion. Our net leverage ratio ended the quarter at 3.62x trailing 12 months adjusted EBITDA. First quarter cash flow from operations was $618 million and capital expenditures were $127 million resulting in strong free cash flow of $491 million, which represents 100% of adjusted net [indiscernible] 15% increase year-over-year. And in the quarter, we repurchased $562 million of our shares, which leaves us approximately $1.2 billion of repo authorization remaining under the current program.

Now turning to guidance. We are reaffirming our full year 2026 guidance for revenue and adjusted EBITDA, and we are raising the guidance for adjusted diluted [indiscernible] per share. We continue to expect revenue to be between $17,150 billion and $17,350 billion, representing growth of 5.2% to 6.4% or 5.8% at the midpoint. This revenue guidance continues to assume approximately 150 basis point contribution from acquisitions and approximately 100 basis points of tailwind from foreign exchange. These assumptions are unchanged from the prior guidance.

We continue to expect adjusted EBITDA to be between $3,975 billion and $4, 025 billion, growing 4.9% to 6.3% year-over-year or 5.6% at the midpoint, and we are raising our adjusted diluted EPS to be between $12.65 and $12.95, up 6.1% to 8.6% versus prior year or 7.4% at the midpoint.

Now turning to the second quarter. For Q2, we expect revenue to exceed between $4,280 billion and $4,340 billion, which represents year-over-year growth of 6.5% to 8.0%. Adjusted EBITDA is expected to be between $955 million to $975 million, representing growth of 4.9% to 7.1% versus prior year. and adjusted diluted EPS is expected to be between $2.98 and $3.08, which represents year-over-year growth of 6.0% to 9.6%. Both this guidance and our full year guidance assumes that foreign currency rates as of May 4 continue to the balance of the year.

So to summarize, I see to deliver outstanding financial results with first quarter revenue and adjusted diluted EPS exceeding the high end of our guidance. We delivered strong acceleration of organic revenue growth in both Commercial Solutions and R&D R&DS net new bookings grew double digits year-over-year with solid year-over-year and sequential growth in net service [indiscernible].

We continue to make very strong progress in the deployment of highly specialized life science industry AI agents with more than 190 agents deployed covering over 50 use cases across Commercial Solutions and RDS businesses. that 19 out of the top 20 pharma companies already using our agents in some of their workflows. And the forward-looking indicators continue to point in the right direction for both commercial [indiscernible] and R&DS, repurchased $552 million of our shares in the first quarter, and we reaffirmed our full year '26 guidance for revenue and adjusted EBITDA and raised the guidance for adjusted diluted earnings per share. Now with that, let me hand it back to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Michael Cherny with Leerink Partners.

Maybe if I can just dive in a little bit more on the services versus pass-through bookings that you saw in the quarter. As you think about the demand dynamic, how should we think about that conversion of what you're winning a lot of the contract subs you went through against the margin progression RE. I just want to make sure I understand we all understand the push and pull on what's coming through across the -- into the backlog versus how profitable it is relative to the core business, especially if these are a lot more full-service-oriented wins within the R&DS segment?

Okay. I hope I understood your question well. But just the service fees versus pass-throughs, you understand that pass has 0 profitability drop through, right? I mean that's clear. So pass-throughs are irrelevant to profitability. We have to report them because that's an accounting requirement. We have solid execution in the quarter. We booked $2.5 billion of trials in the quarter. It just happens to be that the mix of indications was such that we had trials that have full-service trials are less pass-through, not FSP, just full service trials, they had less pass-through.

In fact, if you look at the pass-throughs, I think -- I don't know if we disclose this generally, but the first quarter was -- pass-throughs was like about 1/3 lower than the historic average. It's always within a range, but it was significantly lower. I guess had we had a regular mix our projects consistent with the long-term history and a consistent level of pass-throughs, then we would not be having this conversation the infamous quarterly book-to-bill ratio would have been quite significantly high. So there is no impact on margins, on expected margins has no impact whatsoever. I want to point out that on the pure service fee bookings year-over-year and sequentially, we were up very significantly. Now the ignoring the fast- issue, generally, Q1 N&B is always lower than Q4 sequentially. And if you look at our history, it's usually lower 16%, 17% Q4 to Q1. And this quarter, it was lower, less than that. I think it was 13% down. So it was lower as always, but a little bit less than usual. Frankly, we also have the most conservative bookings policy in the industry, you only book business when it's contracted. So if we are awarded a couple of trials at the end of the quarter, and the client Board is only meeting on April 2, and that's when the cars are designed, then that's when we book it. It's not the first quarter win. So their this can have on the reported book-to-bill is very, very significant. Again, I said this when we reported book-to-bill ratios of 1.3 I said it when we reported book-to-bill ratio of 0.9. And I say again today, the quarterly book-to-bill metric is really a bad metric to predict future growth. I can point easily to many of our competitors who reported great book-to-bill ratios and are going to have very negative growth going forward. I'll point to [indiscernible] last year at this time, we reported a book-to-bill of 1.02. And if this were predictive of growth, this quarter we would be showing really poor limit growth in our NPS. And yet, we are reporting very strong 3% organic growth, over 6% reported. So restrict a couple of points from FX and [indiscernible] point from acquisitions, our organic growth in RIS was 3%. [indiscernible] have predicted that from reported book to be last year. The answer is no. So again -- and again, this 0 impact from AI in our bookings. I just don't want to an wrong or questions, I can report that the number of trials that we lost to anyone using Jean-Paul or any other AI tool, the number of trials that we lost to any of the AI solutions is exactly 0. And again, those impact on margins whatsoever from the unusually low pass-throughs in the bookings this quarter. I hope that gives you enough color.

Your next question comes from the line of Justin Bowers with Deutsche Bank.

Two-parter maybe, one for Ari and one for Mike. So just in terms of the wins you saw here, it's interesting to hear FSO the FSO dynamics and that having less pass-throughs, but is that more of a function of how customers are the clinical strategy that you're deploying? And/or are you seeing any shift there from large pharma either in the quarter or what's in the funnel. That's number one. And then part 2 of that would just be on the margins. Is that something that we would see this year? Or is that more of like a 2027 and beyond dynamic?

Thank you again. Look, again, I want to repeat again. One quarter doesn't make a trend. And 1 quarter of bookings, $2.5 billion of bookings that are going to bid to revenue over the next 4 to 7 years, is not going to affect our margins on bit. Now it's not indicative of any change whatsoever. It just happens to be that trials that we won this quarter had lower price had nothing to do with a change in customer dynamic. Not just happens to be, that's the deck as we were served and that we went after some trials, like, for example, your record vaccine trials has enormous amount of passes. There are certain types of long cardiovascular studies that require a lot of patients and a lot of procedures to perform the protocol of the trial may require more reimbursed expenses. That just wasn't the case this quarter. It's unusual. Here we would have lower pass, but that's what happened. Nothing more to it and I wouldn't read anything about changing plan dynamics or anything like that. Not at all. just you're trying to understand the demand, which I think is the right question. And frankly, we see no change at all in the fundamental drivers of outsourced clinical development the try or the level of complexity in trials is rising. They need to execute trials globally is rising. The growing use of data and analytics, all of these point to the need to outsource more, not less. So in our conversations with pharma, we see a constructive demand environment. Yes, in the near term, we see that the environment has stabilized. And we see also that large sponsors are still taking a more deliberate approach to capital deployment that recall that coming out of 3 to 4 years of policy-driven macro headwinds and all kinds of disruptions. So we still see perhaps a slower then we haven't returned to the decision-making speed that we saw before all of these period started. It's then there, we're seeing things going back to in the right direction. That's a ton on the DP side, financial funding, which is growing at a very nice pace, which points to renewed confidence in the assets in the pipeline in general in the industry. And as you know, we take a year, 1.5 years before funding drives an award and certainly into the [indiscernible] but the main indicators are quite strong. Do you want to address that other question?

Sure. Yes, I'm happy. So firstly, just to reemphasize Ari's point about do not draw sort of margin inclusions from 1 quarter booking. You have to remember that every dollar we book now burns over like 5 years. But I'll give you some more color on our margins and [indiscernible] as an example. So when we reported 60 basis points of EBITDA margin contractions, all of that was due to nonoperational headwinds, which are really sort of the FX and pass-throughs driving that. And we're -- we have a very, very strong productivity programs. So when you look what happened operationally, right, obviously, we're dealing with adverse mix in sort of our portfolio, but our productivity programs more than offset that mix. So operationally, we expanded margins actually quite significantly in the quarter. So it just further highlights the point to say, when you look at sort of a quarter sort of bookings or even several quarters of bookings you can make no correlation to future sort of margin.

Yes. I want to add that we just take the opportunity to once again retire, we reported because you wanted this ratio -- but it's really -- and we give you a lot of color on work in our bookings more cover than anyone else in the industry. And by your way, our #2 competitor is part of a larger conglomerate, and we know nothing about their numbers. And our competitor, we have no clue what their numbers are now or in the past 3 years, not yet at least and another 4 and 5 competitors are private. We have no through what their bookings are [indiscernible] and that's it. There's no one else out there. We can't be compared to anyone else. And then you have 2 marginal competitors. So we are disclosing an enormous amount of information, and it's not comparable to anyone else. So even from a competitive standpoint, frankly, there's very little rationale for us to give you so much core bookings, a, because we derive conclusions that are really forced and is leading; and b, because it's competitive information that we give the competitors don't disclose anything.

Your next question comes from the line of Luke Sergott with Barclays.

This is [indiscernible] on for Luke. I wanted to talk more about the upside in Commercial Solutions. And I know you called out a few of those businesses that were really strong during the quarter. But it would be great to hear more about maybe which areas were the most surprising versus your internal expectations? And then also, if you could remind us on the mix of the more recurring revenue offerings within this business versus what's more discretionary?

Thank you very much for your question. And our Commercial Solutions business is way, way underappreciated and I'm thanking you for highlighting the business. We performed very well in the first quarter you will recall that when the industry went through difficulties over the past 3 years, the headwinds caused our large pharma clients to pause discretionary spending. As a result, our growth rates never went negative, but they slowed down to low single digits organic growth. We then started to rebound. And a year ago in the first quarter, our organic growth rate was well, about 2%, 2.5% thereabouts. Our organic growth rate in Commercial Solutions this quarter was 5%, we reported, I think, always the growth rate 11.6% at actual effect, as you know, we have a strong tailwind from currency this quarter. If you take that out, the constant currency growth rate is 8.5%, and we had acquisitions. And when you strip that out, the benefit of acquisitions last year, when you strip that out, it's 5% organic growth. So it's double the underlying organic growth year-over-year. What's driving this -- you heard me say in my remarks that customers have more questions than they had before because of the -- if I can speak generally, our work on AI on the clinical side is focused on creating efficiency and improved execution and reduce time lines. So we are embedding agents within also existing processes and workloads clients accelerate timelines, which is simply an evolution of what we've been doing over the 7 years since the merger, which was predicated on utilizing data insights and intelligence to reduce time lines. On the commercial side, we are focused on innovation that is creating new offerings and those are gaining traction with our customers. customers are dealing with a massive amount of data from us, from third parties and generated by their own operations. They are also dealing with a legacy of disparate systems that has been built over the years. AI identification processes enable our clients to sort of bypass and leapfrog all of these systems and multiple vendors and data sources and have the ability to analyze information much faster to derive insights and to make decisions informed by AI agents at much higher speed. And we have been focused on developing agents that enable our clients to do precisely that. Our agents control with the regulatory requirements of the health care industry. They are not generic solutions. They are tailor-made what we call [indiscernible] AR agents. And we found that our clients are very interested in those solutions. We have pipelines that have reached record levels in part in France by the operates that we put into the market that we continue to put out. A lot of concern was voiced by investors and analysts in the past few quarters consequent on an article about how AI will replace services industries. Nothing on the sort is going to happen. Quite the opposite, it creates new demand for our service. The part of our commercial business that theoretically would be most vulnerable to AI disruption is what we call analytics and consulting. And yet, we have a record pipeline in analytics and consulting. We had very strong growth, the best we've had in 3 years in the quarter, and we see this continuing in the balance of the year. The underlying demand in Commercial Solutions is simply fueled by the amount of new drug launches. For example, in Q1, there were new drug launches. A drug launch is the brand and butter of our commercial solutions business. So I think last year, at this time, we got 6 or 7 launches. And it's increasing because of the number of molecules that have been approved by the FDA over the past couple of years. Our win rates in the business continue to be strong. I think you asked about the balance of -- nothing changing in terms of our outlook for the different parts of the business. If I can just summarize the interest of time, our info business is about 30% of the total and we continue to grow low single digits, a little bit stronger than that because it's more demand for data that our own AI agents create -- the fact -- that's the slowest growth business. The fastest growth business within Commercial Solutions is what we call patient solutions, which is the pieces of real world that were left with commercial solutions, and those have very strong double-digit growth. And then everything else, analytics and consulting, commercial tech and cultural engagement services, which is -- includes the former CSMS business. By the way, now also supplemented with AI agents. Those will grow mid- to high single digits going forward. But I hope that gives you more color.

Your next question comes from the line of Shlomo Rosenbaum with Stifel.

I wanted to get just a view on the market in general. The commentary that you've had is that it's stabilizing. What we're seeing things like talking about analytics and consulting that you say is the highest growth in 3 years that very often is a leading indicator that things are actually improving, and we're seeing things get better. I wanted to ask you where you could point to us where you're seeing things actually growth accelerating versus just stabilizing or getting less negative if there's anything like that? And do you think that the performance that you have is indicative of market growth? Or are you noticing an improvement in the win rates of the business. I asked me that in light of the fact that there is not a lot of data from other public companies, but just whatever you can see and comment on that.

Yes. Well, look, I completely understand the question. I mean, it's a question we just had a moment ago, again, on the demand environment. And it's not while coming out of period, really 3 to 4 years of significant turmoil in the industry largely driven by an the post coding deflationary environment, the post bottle decline, which was strained budgets, the IRA on the mining administration and see all the announced for inactive policies on the travel administration, the fans, [indiscernible] the FDA changes, et cetera, et cetera, and all of that creates constraining the demand environment, both on the clinical and the commercial side. And so it's always when we come out of a period like this is always difficult to evaluate. Well, are we out there are these real green shoots or not? So I understand the construct. And frankly, we ourselves are surprised by how well we performed in the quarter. And I mean around every single measure, I think we believe and we strongly it was an extremely clean quarter. We beat on every one of our financial metrics pretty much, we surpassed our own expectations on both businesses. And the AI disruption concern that actually, as we said, a tailwind for our business, as we are seeing it already, we feel confident that this structure will continue. So that's the overall kind of 40,000 foot perspective. Now in our conversations with clients, large pharma, as I mentioned before, is much more constructive both on R&D and commercial. I would say a little bit more on commercial because large vehicle trials, large capital programs always take more time to get started. And again, coming out of a long 3-, 4-year period of more deliberate, slower decision-making, we have not returned to business as usual cruising altitude, if you will, before all of this started. But we are much improved versus where we were. So the environment is more constructive in large pharma, not quite back to where we were on pharma, but we're getting there. On the EV front, EBITDA funding is reaching record levels, $205 million in the first quarter is almost than what it was last year. Again, it takes time, but the fact that people commit very significant capital to specific programs in [indiscernible] is indicative of renewed confidence and comfort levels, higher comfort level going forward. I think that we're going to continue to see this environment. Your question is, are we going back to where we were before. Next quarter, I don't think so. I think the balance of the continue to be on the large pharma side, a little slow than it has been much better than it was last year, much better than it was 2 years ago, but more deliberate thinking. A large [indiscernible] clients told us actually, if I can share that anecdotes, that they plan to double the number of molecules in their pipeline because they are using AI to identify more targets, meaning most of what [indiscernible] has been doing so far, on the AI front is at the discovery stage. And that -- and maybe that may be counterintuitive to some, but to us, it's pretty obvious that will increase the number of trials because that will increase the number of molecules that are selected and farm are telling us directly that it will increase, and they are even asking us questions about capacity how do we increase capacity to be able to handle a much larger number of stock back. Bear in mind, there are a number of LOEs coming up in the 4- to 5-year time frame. And pharma has to replenish their pipeline. AI [indiscernible] used today, which, again, 90% plus of the clinical side, we had the discovery stage is increasing the number of assets that are going to be pursued. When you feel you have a higher chance of success and you are going to launch the program, and AI discovery stage enables you to identify more targets for such development. That, in my mind, increases demand for CRO services and not the opposite going forward and our conversation with [indiscernible] clearly indicated. And that is the case. They been asking us what would it take to ramp up capacity. We're not talking next fall, obviously, but in the mean term. So that's for clinical and commercial, I already commented on it.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI

I was wondering if you could comment on sort of the drivers of the margin, particularly on EBITDA as we move through the year. Obviously, I think the second quarter guide implies a little bit lower EBITDA margin versus consensus. I'm wondering if that's sort of rightsizing of some of the mix impact? And then how do we think about that perhaps as you're thinking about the back half of the year?

I'll take that one. So if you look at our EBITDA progression that's implied in our guidance is pretty consistent with history. So I think there's nothing noteworthy to call out there. I think just to add a little color on the margin side. As we mentioned when we gave our Q1 sort of guidance, Q1 has the largest FX teens and you'll see that start to moderate as we go through the back end of the year. So given the previously mentioned strength in our productivity programs, we're very confident that we'll see the reported margins sort of flip to positive as we progress through the year.

Your next question comes from the line of Eric Coldwell with Baird.

So I'm going to start going back to the bookings, maybe look at it a little differently. You exited 25 with about $10 billion of total net awards I don't know what the normal exact pass-through mix is. But if I use a, I don't know, a swag of 30%, that would be about $3 billion a year of pass-through bookings about $750 million a quarter, 1/3 below would be about $250 million. And if we add $250 million back to reported awards as if pass-throughs were normal, that would get us to about a 1.15 book-to-bill. I just want to make sure that, that logic and thought process is somewhat consistent with what you're trying to express today and maybe that will [indiscernible]

Eric, you're amazing. The answer to your question is yes. By the way, if we -- if in addition to that, our revenue in R&DS would have been what we planned as opposed to the strong bid because we converted faster, we burn faster in the quarter than it would have north of that. I'll let you figure it as you do well at math.

Yes. So I guess I won't insert my joke of what is the book-to-bill in Q2. I do have 1 other serious follow-up. Can we get the constant dollar organic growth in both segments? I know you did give some approximate details on commercial maybe you could solidify can solidify those comments for us and then give us the R&DS numbers on a recast basis.

Yes, absolutely. Absolutely. Okay, I'm going to say from memory, but you [indiscernible] the growth on R&DS reported is 6.2%. Is that the number?

Correct.

Right. Two points of that is FX, 1 point is acquisitions, right, across the earnings. And so therefore, organic growth for R&DS in the quarter was 3%. A year ago, it was 1%. On the commercial side, reported is 11.5 of then the FX impact is 3 reports and the acquisition impact is another 3 points or a little bit more than 3 points, right? So organic on the commercial side is 5% which is really was last year.

So again, 3% organic for R&DS, 5% organic for commercial, 4% for the enterprise.

At this time, Mr. Joseph, I turn the call back over to you.

Thank you, operator. Thank you, everyone, for taking the time to join us today, and we look forward to speaking with you again on our second quarter 2026 earnings call. The team will be available the rest of the day to take any follow-up questions you might have. Thank you. Have a good day.

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

Good morning, everybody. Luke Sergott. I cover life science tools and diagnostics for Barclays. With me, I have Mike Fedock, CFO of IQVIA.

I think we were just kind of talking offline, like one of the biggest issues facing you guys and overall CROs is just obviously, this bogey of AI is coming, right? And it's really hard to just prove the negative. So kind of -- and already talked -- and you guys talked about having 70 agentic modules running out. Can you open up the sheet a little bit and just show us like here's what you guys have been working on. Here's where it's going and then like interest in where you think like the initial demand is going to translate into business growth.

Yes, yes, absolutely. No, great question and obviously incredibly timely. Firstly, this AI phenomenon's has -- it's a great for us, because, a, AI is a net positive to IQVIA on both in terms of revenue and margin expansion over time. And what it's done is it's actually put a spotlight on our crown jewels at IQVIA, which is really our proprietary data and our domain expertise. And that's the first thing, I think, that was being misunderstood was the data, right?

And you get this like kind of this high-level narrative with the AI bogeyman to say, well, you have data, and you sell data to pharma and therefore, you're going to be displaced. And that is just fundamentally false. If you think about our data, and obviously, everybody has kind of gotten around the notion of if you're building models, your models are only as good as the data that is built upon. And we, by far and away, have the most robust dataset in the industry, hands down. It's not even close.

We have 150,000 live data feeds of prescription data and claims data, and genomics data.

I mean, you name it, it's coming in. And that raw data that comes in every day is, in a sense, useless. And where -- what our secret sauce is, is that we take that data and you -- it's de-identified and you clean it and you code it, you bridge it, you link it together to actually make it useful. And that's our data moat. So that data is not available out there in the marketplace. And so clients have realized that. And it's actually changed -- it's fundamentally changed the way clients are engaging with us.

The whole theory of the merger in October, we'll have our 10th anniversary as IQVIA was to take that at the time, 60-plus years of IMS data and use it to completely transform clinical development, right? So that's the whole theory of why IQVIA came to be in the first place. And over the years, we would build all of these like amazing -- leveraging that data, and we would build all these agents, let's say, like on the clinical side, one of the first things we built was an AI-enabled study optimizer sort of tool. And we would sit down with a pharma company and they said, you ask us to bid on this protocol.

And we bid it to spec because it's competitive, but here's our AI team has ran it through our models, and we've taken your protocol and we've optimized it. If you go to this site, if you change this assessment, this is what it's going to do to speed up enrollment and reduce sort of dropout. And years ago, pharma would go, "oh my God, that's amazing. But thank you. We've always done it this way. But now that's changed because now pharma wants to use the data to inform decisions. So it's like elevated.

So now they're actually pulling us in. And in '25, I think we've deployed over 150 agents. Our roadmap is by '27, have over 500 agents. So we're going sort of at pace. And we even learned this week in some of our internal management meetings that already 19 out of the top 20 pharma already are using agents that we built within their operations. So yes, it's a net positive for us, and we're excited about the outlook.

Is that across both the research side and...

Yes, both clinical and commercial. Yes, absolutely.

On the clinical side, I mean, I was just thinking when I just mentioned 10 years ago, you did a deal like PTSD feels like yesterday. Elizabeth Anderson and I putting together a deck when you guys do the deal. I remember when you guys came out with a heat map, and we were just like, Oh my God, this is amazing. You can figure out which doctors are ordering based on this data and just accelerating. And this just feels like giving that backbone of your business like steroids, this is like a natural evolution of how things are going. And so when you're engaging with customers now that their mentality flipped to be like, oh, we know what we're doing, to, how can you help? How much are you leading with the AI piece? How much of that is your biggest differentiator right now?

Yes, we're leaning hard into it. And our teams are super excited because that engagement is being received on the other side. We -- one of the big fears that kind of came out is particularly on the commercial side, there was like, oh, people would have this hypothesis that your consulting business is going to go away. No, it's not going to go away. And we -- our teams are locked into virtual rooms, and we try to beat the hell out of all of our offerings and try to say, okay, where are we vulnerable? -- and where do we have net gains to have there.

And when we looked at like our analytics and consulting, there are some offerings like primary market research or key opinion leader searches where you could probably scrape together good enough data that's out there. But we even kind of ran the simulation say, let's use Claude to come up with the top 10 key opinion leaders in a particular therapy and compare it to what our data shows us. And out of the top 10, Claude got like 3 out of the top 10, right? So even in the most basic use cases, it's still not as good. And what our clients -- what we're finding with our clients is there's so many use cases out there, particularly in the commercialization area that it's just not economical for them to go and try to build all of these like agents themselves.

You might as well come to us that's trained on our data. And we even learned that one pharma company in particular, I think, started out with doing 700 internal AI initiatives, and they've already killed half of them. So everybody is playing. And that's from drug discovery to clinical and to commercial. So the level of engagement we're really leaning into the AI effort and what we bring to the table.

Yes. And I mean, I feel like it's one of those -- it's all promise right now. And we -- the rapid adoption and potential disruption really needs to come from showing that it is shrinking -- like the overall trial spend. It is accelerating the time-to-market. And that's what you guys have always done. Can you talk about kind of what you're -- from internally, what you guys have run, some of the use cases that you've actually shown to be like, oh, if we did it this way, our trial execution would have been like 10% or 20%. Have you guys done anything like that on internal studies or looked at that?

Yes. I would say just to help people think how to think about kind of AI and how that will start manifesting in our numbers over time here. And I think time is the key thing to put out there. On the commercial side, it's a shorter cycle part of our business. So I think that you will see organic revenue growth acceleration and margin accretion as those agents get at scale and are adopted at scale. And we're already selling them, and it's already in our numbers, but that's $7.3 billion part of our business, right? So it takes time for you to see it, but it is already happening.

On the clinical side, a lot of our efforts over there are around sort of identifying our internal processes. So it's more of a margin expansion play there. And the thing that people need to realize is that in quite literally the 1,000 individual processes that kind of underpin the execution of a clinical trial, when you make an agent and you deploy it, let's say on something like that's very laborious like site activation, right? Where you have to get the sites contracted and inform consents and things like that, huge potential.

But when you have that agent, because of the regulatory nature of those studies, you can't drop that into live studies, so, it's going to come out as new studies start to get launched, you'll apply those agents on a go-forward basis. So there's a ton of promise in the clinical side around accelerating particularly site start-up, how you handle the regulatory documents for like Trial Master Files. It makes your CRA more efficient and you can get more throughput through them. So -- and then obviously, there's some benefits in like Data Management. You can speed up the setup of the database and things like that.

Yes. And that's one of the key questions has been and pushing back on just broad cloud adoption and disruption is like you have to plug into the funnel, like there's a lot of hesitance to put like your tax returns up on cloud right now. Like pharma, that's like that's it. That's their whole terminal values like on that side.

Exactly.

So it's like this -- they're already working with you, right? You're already doing the services. And if you're building out these applications for them, like why would they build that internally?

Correct, right. And obviously, with the -- it's built on our data, which is more robust than then building it on their internal datasets. And I think one thing that's been resonating over the past 3 weeks or so with investors on the clinical side that to kind of dispel the bogeyman in that part of our house is just reminding people to give an analogy, right? And I remember like when the headlines were coming out to basically say AI is going to fundamentally disrupt the CRO business model, right? You kind of -- you talked about PTSD. I go back in the early 2000s, right, when I remember the headlines were CRO business models are going to collapse because people are going from paper CRF to Electronic Data Capture and pharma was going to have all the data and CROs make a lot of money.

And what happened? If you look back, CROs and budgets grew and even accelerated. And absolutely, there were certain line items or services in the budget that went away. I mean CROs used to charge $2 a page or whatever it was for double data entry of paper, and that goes away. But because you had Electronic Data Capture, we can get access to the data in real-time and it's being cleaned and coded, well, like new offerings came up like centralized monitoring and remote monitoring, those are like net new services. And trial complexity accelerated because it's like, oh, if I can collect data easier, I want more data to inform my trial. So we think that AI is going to do something similar on the CRO side. It's going to open up new potential offerings.

Yes. And so I promised I wouldn't go over half our time talking about AI. I'd love to talk about other than -- it's fascinating because it's so unknown, and it's just one of those things where I feel like the entrenched players have an edge and they're just not being given that credit. And I think from a -- when you think -- so let's talk more about just the demand environment itself on the clinical side. It's been recovering. Book-to-bill has been improving. You guys have been showing nice growth in the bookings side.

Can you talk about just that existing demand environment right now? I mean, -- and we all -- the problem is we all go back to like the heyday of pre biotech spending, right? And like pharma was just like everything was up and to the right. And so now it's been this kind of -- is this one of those another false starts that we're getting? And I know that you guys get a good early look on the late-stage clinical side, and you're building out more on your biotech piece. So just give us the lay of the land of what you see right now and not how that comped before, but like how -- what's been changing?

Well, with book-to-bill, I think it's pretty well known about our feelings on that particular metric. I mean it is used metric in the industry and people over-rotate, both to the good and the bad on any quarterly book-to-bill, and we don't forecast book-to-bill. It's an impossible test. But when you take a step back and you look at book-to-bill over time, it's an indicator, and it's interesting. What I can say is that from the metrics that we track and the conversations that we're having with our conversations, it certainly is encouraging in the outlook.

Our demand metrics like our RFP and our qualified pipeline, are healthy. We watched as we went through '25, the decision timelines kind of moderate. And the conversations with our clients, there is clearly more certainty this year than compared to last year. So it just feels better. And then you throw on top pretty robust actually biotech funding. All that together certainly feels like '26 is going to be a better year. Now the rate and pace of that and how that translates into the quarterly book-to-bill, I don't know, nobody knows. But certainly, the interactions with our customers is a lot more optimistic.

I mean '26, just better than last year, right?

Better than last year. It's kind of a low bar, but we're excited about it. That's true.

That's true. And then on the See More, Win More strategy with biotech, Talk about early traction there. Any new logo wins? -- obviously, not going to give those, but how that has really translated and revitalized that part of your business?

Yes, it's been great. And I think part of maybe the misnomer and maybe we didn't do a good enough job at explaining kind of the See More, Win More strategy, everybody just went to like it's like a price thing. And that's really not the case. I mean when you're competing for EBP work, price is always a factor. But really, giving EBP customers the confidence that you're going to give them the attention. And we have a biotech delivery model. I think Quintiles bought Novella in 2013, and that's like IQVIA Biotech. So none of this is new for us.

So doing a better job of telling our story and highlighting like we have a bespoke delivery model for what you need is key. And the other thing that we did was really twofold. One is looking at our engagement model with these customers. And we realized that we probably needed to engage with these customers early on, even well before they have an RFP to go out the door. And we also capitalized, quite honestly, on the churn with the FDA, where you had a lot of reviewers and regulatory therapeutic and regulatory experts leaving the organization.

And we were snapping them up because you take with that experience -- and then you get that early engagement with Chief Medical Officers and Chief Scientific Officers at these biotechs, and that engagement is there. And the other thing that is very encouraging about biotech is that, obviously, the funding is in a good spot and continues to be. It's the fastest-growing segment of the market. It's generally full service work that comes with higher margins. And you are seeing biotechs take their development further into clinical. It kind of used to be, as you probably know, that they used to get to like a Phase IIa proof of concept and then they would out-license. But now they're going deeper. Now we're even seeing biotech companies actually want to go into some of the commercialization, which is great for us.

Yes. On the -- I mean, that was one of the feedbacks. But also your definition of Emerging Biopharma. Some of those are pretty big biotech, right? I mean it's $500 million revenues, $250 million...

I am constantly amazed at the depth of that market. I mean there's so many companies out there across the globe and doing great science. And part of our, I would say, vetting, but our process around EBP is that, obviously, we're very disciplined from a funding standpoint to make sure that when we make a sale, right? And we put it into our backlog, fund, we have that funding certainty. But also from a scientific standpoint, we really are pretty particular about vetting the science and making sure that what the client has when we want to invest in that early engagement to help them that the science is robust. But yes, it's an amazing part of our industry.

And given the depth of that market right now, and you're talking about this being the fastest part, is there a certain size that's outstripping the other? Or is it just kind of broad-based across that?

I think for us, I think we've been really pleasantly surprised at going deeper into that market in the smaller size and really seeing the science that's out there and their openness to work with us and their engagement with us to help them through their problems. It's really encouraging.

And you're talking about getting in earlier and earlier with the customer. It feels like investment banking, where you want to be involved at the very beginning. But kind of my terrible way of segueing into the Charles River deal. Where I was going with that segue whatever. So the -- just walk us through the strategy here on those European assets from Charles River getting even further upstream from where you guys have traditionally played.

To give you a little bit of context on that, we started looking at a little bit more focus on discovery. I would say, 2021 and '22, we started looking in that area. We saw that it was an opportunity for us to expand our capabilities. And then we also saw the prospect of where this AI could potentially go and help drug discovery and identify and pull more molecules through. But in '22, I believe it was, we bought a company called Specifica. And that was part of our -- we put that in our lab business. And Specifica is a large-molecule drug discovery business that we're delighted with.

And since then, we've been looking in the market for a small molecule discovery business. And we looked at a bunch of companies and either the valuations weren't right or the capabilities. So we were delighted when Charles River obviously has been very vocal about their efforts to look to divest what they term non-core parts of their business. And when our head of our lab business, Dave Morris and our corp dev guys came to us and said that Charles River reached out, they laid out here's the capabilities and the footprint that they have and they mesh that up with what we already have with Specifica, and it was like a hand-in-glove. So we were delighted to sign the deal on that asset at a very good price at that.

And is it more because of the couple of deals, do you envision or is the strategy just to continue to -- it's either we want to get even bigger in there or we're just going to be more opportunistic when we see really quality assets that fit well with what we do.

I think it's a little bit of both, but we're pretty excited about the prospects for Discovery in general. And if you look at the client segmentation when it comes to Discovery, typically Large Pharma keeps a lot of them in-house. And we also see it as another mechanism that Biotech really needs Discovery. So to your point, it helps us get in...

That makes total sense. In the last 2 minutes here with the CFO, I think we should probably talk about margins. So we've talked about the pass-through. You have FX headwinds kind of coming through. But when the FSP has been a continued trend here, pass-throughs are relatively elevated versus what they've been in the past. Can you just walk us through those changes and how you see -- what are you guys doing from an offset? What levers are you pulling? You talked a little bit about AI, but like what else can you do in the near term and long term?

Yes. I mean, look, we have a great track record IQVIA in expanding margins year in, year out. And I think that it was the only 2 times in the past 9 years where we haven't expanded margin. One was 2020, and obviously, that was the pandemic. And last year in '25, where our reported EBITDA margins contracted by 70 basis points. And what we've been telling people is to say, if you look at our margin, and this is maybe a construct, especially going forward on how to think about our EBITDA margins, you have non-operational dynamics like pass-throughs and FX.

And then on the operational side, you have mix issues, mix and pricing that you were alluding to and our productivity programs. If you take just 2025 and that 70 basis points, almost all of that reported margin degradation was because of non-operational. So we just want to make the point to investors to say, operationally and structurally, right, we are very sound. And I had somebody tell me one time, they're like, yes, you can't -- you got to focus on the EBITDA dollars, not the margins because you can't buy a sandwich with a percentage thing.

But we certainly understand people's focus in there. So if you look at the mix headwinds from things like FSP and CSMS, let's say, growing faster than some of our higher-margin parts of our business, our productivity programs generally cover or are the things that give the margin accretion there. And our productivity programs are things like the blocking and tackling like spans and layers and looking at the levels of the numbers of managers to employees and real estate and all those other things. But automation has been our cornerstone, whether it was Robotic Process Automation and now agentic AI is just the next lever. So we remain confident that our productivity programs will continue to outpace any mix headwinds we have.

Great. Thank you.

No problem.

That's all the time we have, unfortunately. Thank you.

[Audio Gap] The Leerink Global Healthcare Conference. My name is Mike Cherny. I'm the health care tech distribution analyst. It's my extreme pleasure to have with us the IQVIA management team, Ari Bousbib, CEO; Kerri Joseph, Gustavo Perrone, who run the IR team.

Mike Fedock, our new CFO.

I didn't even see Mike there. I apologize, Mike. So we got a whole squad here. I'm glad that Ari didn't bring any slides because I got plenty of questions to keep us busy. But I think it's important, I think, to start with the topic of the day, which is all things AI. So I'm going to keep this very high level. As you think about where IQVIA is positioned across your organization, what do you see as your AI-oriented strength? I think that's the piece that maybe has been a bit overlooked and your perception on the perception versus reality debate that's currently undertaking the market.

Yes. Well, thank you, and thank you for inviting us. Look, I think obviously, that AI is and its application to our industry are very largely misunderstood. We are a services company. We provide services to life sciences mostly, and we got lumped into the services bag. These AI companies are spending a massive amount of CapEx on developing their models. I think someone told me it's -- as a percentage of GDP, you have to go back to the Louisiana Purchase to have that kind of level of spend.

And when they're being asked, so why are we spending so much money and how do you support such valuations? And the answer is, well, we're going to capture half of the $13.5 trillion services industry. Now why it's misunderstood in our industry? It's because the industry itself is quite unique. This is not any services industry.

And secondly, our company, in particular, within that industry has a very unique position and a unique moat. It starts with the data, but it's not just the data. AI for us, and I can say this after having punched at the bag many, many times internally, is a very strong net positive, very strong net positive, whether it's on the clinical side or on the commercial side, you are aware we have 2 large businesses. We help our clients develop drugs, and we help our clients commercialize the drugs.

And in many aspects, not everything, but many aspects of what we do, AI will be an enabler, a facilitator, a driver of efficiency as well as a net revenue generator for us. So that's the general question. I can go into more detail if you'd like.

And maybe I think some of the dynamic at play that we've all seen is that we see something come out from a broader multiscaler LLM and suddenly, it's okay, what can they replace. But I think sometimes what gets missed is what's already being done. And so are there real-world examples, no pun intended with the real-world evidence basis, but that you can give us on where AI encapsulates both within the clinical and commercial side right now?

Well, look, first of all, most of what our clients are doing on AI, most of it, I'd say, 90% is in early-stage discovery. And early-stage discovery is a more frustrating part in pharma because you have to sort through so many molecules and try to decide what's the most likely one that it will be successful and it will be a successful outcome. And the fact is there already are, before the advent of AI, many, many tools and simulations and models that enable you and algorithms that enable you to sort through that.

In fact, we did some work with one of the top tier pharma company on list and benchmarked, okay, [indiscernible] with the existing tools and let's do it using the most advanced French first name tools possible that applies to early-stage discovery. And let's see what the outcome is and the AI model got it right once out of 6 times. And that's using the most -- the brightest, most advanced PhDs to do the prompts.

Now you can say, well, over time, it will. But the answer is no, because it doesn't have access to all that data. And so I want to start with that. You have to step back and understand that about 70% of all the data used by pharma, from early-stage discovery through clinical development through commercialization is IQVIA data, 70%. That data is not out there on the web and in a particular company, it's not accessible. Once everything -- after everything is said and done, you can have the most advanced AI model that's been trained on whatever you want it to be trained on, if you do not have the right ingredients, you're just not going to be able to generate any meaningful outcome. That's number one that the data is proprietary.

Number two, that data is dynamic. It's not static. It changes daily. It's updated. Number three, it's got to be hugely compliant with a gazillion regulations, privacy, they vary country to country, et cetera.

Number four, even if you had theoretically access to all that data, it is not usable. You got to work it, you've got to curate it, you have to bridge it, to code it [Technical Difficulty] the work that we do. And that magic sauce, we don't sell to clients. We sell the final product. Clients can just take that data and then use an AI model and put it to work.

So that's a huge moat that people do not understand. And it's not the only moat. We've got the analytics. We've got the domain expertise. We got the workflows and how those workflows are embedded in the business models of our clients at every stage is really for a quadruple moat that people fail to understand.

To your question about specific examples, whether we talked about early-stage discovery, but even when you get to start a trial, so protocol design, site identification, site start-up, patient enrollment. These are all activities where we -- several years ago, when we merged the largest clinical trial organization in the world with the largest provider of data and analytics on the commercial side, that's exactly what we set out to do. We set out to base those processes on data and evidence and optimize those workflows to make them more efficient.

So if you could do -- if you could put AI agents on top of those, then you make those even more efficient. But again, bear in mind, you got to have the data and you got to have the optimized workflows. Otherwise, it doesn't help. So there's a massive amount of documentation that's exchanged between regulators, sponsors, investigator sites, the CRO when there is one involved, when you want to start a site. There is a massive amount of documentation involved in informed consents between the sponsors and the investigator sites and the patients that are enrolled. All of that in a traditional process involves many interactions with all the white spaces that are involved in those interactions, you got to wait for a response, et cetera.

So over the past 1.5 years, working with NVIDIA, who made available to us all their foundation models, we built over 150 agents that we've deployed already in our workflows. And those agents -- by the way, we have filed over 90 patents in AI. So when you step back and you look at the universe of AI in health care, we feel -- obviously, I'm touting my own book here, but if you feel free to go and verify by talking to clients, we are the AI company in the life sciences industry. And we've been at it for a while. And as you know, the further away you are, the fastest you go and the harder it is for us to catch up because our AI agents are trained at a much more advanced stage. So that's on the clinical side.

And on the real-world evidence side, you ask -- real-world evidence requires you to sort through massive amounts of scientific literature, which obviously is done in a much better way with AI agents, but it's not just the available scientific literature, it's all the data. We have data on over 1.2 billion patients worldwide, deep, granular privacy compliance data that is simply not accessible to people who are not within the 4 walls of our company.

And on the commercial side, again, we launched a number of agents. We have the IQVIA AI assistant, which enables a sponsor to model and simulate the entire launch of a new authorized product and literally be able to make decisions on where to launch, which channels, which demographics, how do you promote the drug? How do you price the drug in a matter of a few days versus many months. And you have to understand pharma employs thousands and thousands of people to do these launches. And then they ask us to help with analytics and with advice and so on. So we can now provide those AI agents, enabling pharma to generate huge efficiencies internally. And to us, it generates incremental revenue.

I mentioned before that about 70% of the data used in life sciences is IQVIA data, but there's another 30%. And that's company-specific data, that's third-party data. How do you integrate all of that within the walls of a particular pharma company. So we launched a product called DaaS, Data as a service plus. And I think pharma companies are not always willing to have us publicize what we do for them. But I think we had a press release a week or 2 ago of the launch of this product with Boehringer Ingelheim and there will be more.

This is an AI agent that enables you to integrate those various sources of data in a seamless fashion and be able to connect the global, regional and local data. So you have one single version of the truth and enables a lot of decision-making in a fluid manner, whereas in the past, you would have needed a lot of interactions with people involved. Bear in mind, when I speak about AI agents or agentification, that means that you could have -- I've seen long chains of e-mails, please produce this analysis for me. Can you get me that data? How should we price for that demographic? And at no point in time in that e-mail chain, is there a human. It's all agents speaking to each other and going through routines and workflows that we have already AI, so to speak, or agentified.

Now you always need a human in the loop to oversee things, but 80% of some of these processes, we already are deeply involved in doing them. So that helps us generate efficiencies for our clients. And it also will help generate top line growth at a higher clip than we are today.

So just along those lines on that last point, in terms of the offerings you have now and the ability to utilize your partnerships, I appreciate you bringing up NVIDIA as a partner to drive value. You basically -- will it be sold as new tools, new -- I mean, the data as a service is clear one, but -- or will it be something that filters into the way that you compete on price and RFPs within the clinical side? How should we see it mathematically working?

Right. No, we sell this as incremental. Obviously, when you introduce a new product, the pricing is always the first client that adopts it, second, et cetera. But we have -- like for this DaaS plus, we have a huge pipeline of opportunities. We're asking ourselves what's the right pricing. It's not like it's cannibalizing anything else. It's giving our clients the opportunity to generate savings within their own organizations by utilizing that, which we already sell to them, the data, the analytics, et cetera, in a better fashion.

So it's really for our clients to decide, I want to use this and replace 1,000 people, okay? So what we go to clients with is, look, the savings you could generate. And obviously, we're going to charge for that. It's not cannibalizing something that we already do. Now I don't want to be just positive. There are negative aspects to it. Not everything we do necessarily utilizes advanced sophisticated curated data. Not everything we do utilizes advanced knowledge, which is not replicable easily by AI agents. There is -- we have in our commercial side -- on the commercial side, we have what about -- for this year, we said about $7.3 billion, $7.4 billion of revenue. About 20% of that is what we call analytics and consulting. So that's kind of more analytics and advisory work. And we estimate that about 5%, which is about -- let's round it up, about $100 million of existing revenue that potentially can be displaced over time.

The paradox is it's actually growing faster [indiscernible]. But this is what happens when you have a substitution. It takes a lot of time for it to happen. But again, I said before, it will be a net positive because that will be replaced over time by all these AI agents revenue that is growing. So it's not going to happen overnight, but we feel that that's kind of the most threatened, if you will. And on the clinical side, it's the basic task. Some of the most simple medical writing, some basic stuff that sometimes clients do themselves, sometimes for convenience they outsource, potentially can be done with more advanced AI models. But again, it's a small portion of what we do. And that's why I said, and I'm going to emphasize, it's a net positive for us.

I did bring a lot more questions. So maybe jumping past the AI discussion. That was all very helpful. Last couple of years have been volatile on the clinical side from a demand perspective. There's been ebbs and flows on RFP flow, on RFP wins, on cancellations. Where do you think the health of the market is right now? And for IQVIA's position in the market, like what has vacillated up and down in terms of your ability to win the representative share that you're pushing for?

Yes. Look, a lot of what has happened is macro-induced. It was the IRA. It was the post-COVID bubble. COVID created -- I mean, our company grew -- I don't remember, quarter-over-quarter was like 20% to 30% growth. And for anybody who was involved in this industry, the post-COVID period is a deflationary period because people overspent. And when you overspend, you kind of tighten the belt and after that, you spend less.

Now the interesting part is if you look at very large companies that we compare ourselves to or people like Thermo Fisher, Danaher and some of these very, very good companies and very high-performance companies, they experienced negative growth as a result of that post-COVID deflationary environment. We didn't. Even though we grew at 20% plus over that short period of time, we continued to grow after that, not at the same pace, obviously. And that is because the clinical trial business is a long-cycle business. It's not like you could just decide that you're going to -- you're in the middle of a trial, it continues and it continues to generate revenue. So that's number one.

The number two factor with this IRA, which introduced the notion of price negotiations and people sort of -- our clients started pausing decision-making. And then you had the Trump administration with the MFN, the tariffs, the changes at the agencies and frankly, let's call it, unstable environment that was created as a result of all those pronouncements. The good news is all of that is behind us. And from what we can tell from our interactions with the agencies, with our clients, with the administration, things have returned to more stability. As a result of which our clients have accelerated -- reaccelerated decision-making. And you've seen that in the RFP flows, the growth of our bookings, and it has been -- we think the trough, which was probably in the '24, '25, first part of '25 time frame between middle of '24 and middle of '25 is behind us and things have started going back up. You can see that in the numbers. And the momentum continues as far as we can tell.

I can't make predictions. I don't know how people can forecast their bookings. We can't. I only find out at the end of the quarter or a week or 2 later, what -- where are we? A lot of the decisions are often done at the end of the quarter or you can slip one quarter to the other. So I've often said if you have been listening to me for a while, you know that I hate that metric called book-to-bill, and I feel that it is a disservice to investors because people get excited when it's a high book-to-bill and they get disillusioned when it's not. And it doesn't really mean anything. It's a long cycle moving business, and you got to look at your bookings over long time periods and the growth of your backlog.

So I think the environment in a nutshell is a lot more stable. Our clients are more confident. Funding has returned to biotech. You could look at the numbers that's available. And people always -- they say, well, R&D spend is not growing as fast. It's 2%. It used to be 5%, it's only 2%. And that may or may not be true for large pharma. But people forget biotech. That's the single largest driver of growth over the long term, EBP, R&D investment grows high single digits, 8%, 9%, 10%. And that's a significant growth factor. You can see it from -- we have -- there's a tiny, not so tiny, but a CRO that's 100% focused on biotech, and you can see their numbers. So that gives you a sense for why biotech is a big driver and funding has returned. So that's -- again, all of that makes me more optimistic about demand for clinical trial services.

I can safely tell you we here at Leerink don't forget about the biotech funding environment. With that being said, though, on biotech and EBP, how do you feel that IQVIA is positioned now? And given that this tends to be much more of a full-service market for some of the FSP you've seen on pharma, how are you making sure to prioritize resources so that your win rates on the EBP side can continue to remain high and potentially grow?

Yes. I mean, the win rates on the EBP side are not as high as on large pharma because large pharma, we have preferred relationships. By and large, with maybe one exception, the top 25 pharma companies only work with 3 people, I mean, us and the 2 other large providers. And the rest, they fight it out for biotech. So our win rate has continued to improve. We have dedicated resources, therapeutic experts that accompany the assets earlier in the journey. We didn't do this before. We've been a little bit more aggressive in terms of taking on work. We, from a commercial point of view, are extremely conservative in EBP historically. And we tended to be scrutinized at a very extreme degree, the scientific validity of the molecule and the financial viability of the company.

Many times, the EBP companies are 15 people or 10 people and they might be very well funded, and it could be a $50 million clinical trial, but they don't have any resources. And you want to make sure that you're going to get paid really. And we've been a little bit more forthcoming going to these companies much earlier. We've had a strategy actually of investing in funds, in biotech funds, very tiny positions, a few -- $5 million here [indiscernible]. So we are invested in, I think, 40 different funds, and this is a recent activity. So we get a first look. And then finally, internally, we've organized, we have IQVIA biotech, we have dedicated resources. So all of those actions are helping us grow our biotech business.

And on the large pharma side, have you seen any change in tenor cadence of how large pharma wants to partner with you? You talked about strategic partnerships, which I know has been a big part of your growth. But are they changing what they're asking from you from that partnership side? I think about this against the backdrop of your -- the earlier discussion on the Agenetic AI rollout, like how does that factor into the continued expansion of these partnerships?

Yes. Well, as you know, just leaving AI aside for a moment, over the past 2, 3 years, pharma -- large pharma swung the pendulum a little bit more towards FSP, right, just resourcing, which is lower margin and you control less of the clinical trial. This often when it happens, is because the industry demand is shrinking and pharma companies appropriately so want to use their own resources as opposed to outsource the trial. And we spoke before about all the drivers that sort of reduced the demand at large pharma.

Historically, this pendulum swings back. Why does it swing back? Because the reason we exist is because no pharma company in the world is going to make the investments that are required to have the full therapeutic expertise and maintain all the resources that are required to run clinical trials. Even a large pharma company doesn't have -- we are running at any given point in time, 2,500 trials. So we've got a lot of scale and footprint and resources. A pharma company -- a large pharma company may be running 20 trials, 30 trials. They often grow by acquiring biotech assets in which they may not have therapeutic expertise.

So there are many reasons why the pendulum swings back. And for us, we saw FSP creep up from 15% approximately of our backlog to 16%, 17%, 18%. But then we saw last quarter, I think in our bookings, FSP was like 7% or 8% of the total bookings. So it's already going back. And there are many reasons why economically it doesn't make much sense for a pharma company to just do everything internally.

But we partner with our clients. So whatever it is that we can help them do, this is what we are here for. We are here to -- as an extended partner of the broader enterprise of our clients, and we try to make ourselves unavoidable.

We're going to run out of time quickly, but I do want to touch on the Cedar Gate deal. IQVIA has a long history of being acquisitive, lots of tuck-in acquisitions. The platform lends itself to doing that. Cedar Gate being the most recent one and somewhat of a notable asset, like what does Cedar Gate bring you relative to the platform in terms of your expansion potential and opportunities?

Yes. So Cedar Gate is a little bit outside the usual. That's why you bring it up, and I thank you for that. It's active in the payer provider space. So we have a payer provider business. It's tiny, but it's all overseas, Europe, Middle East, in particular. And we sell platforms, analytics platforms that help connect payer, providers and the patients. Increasingly, we have pharma companies [indiscernible] patient-centric. In fact, I didn't mention. One of the AI, the most successful AI tool that we've launched is called PRM. It's patient relationship manager, which essentially uses natural language to facilitate the interaction between the patient and the caregiver and the pharma companies. So this is to increase adherence to improve outcomes.

So we never found an asset in the U.S. that would enable us to augment this patient analytics. And because of circumstances in the market, it became affordable. It's a great company. It's about $140 million in revenue, I'm going to say. It's got great margins, maybe $20 million in EBITDA thereabouts. And it's growing very nicely. It's essentially a patient adjudication. It's got a lot of data on patients. We have synergies, and it helps expand the set of capabilities with respect to patient issues, patient data, patient claims. It connects very well with our real-world evidence business.

Awesome. We look forward to seeing that build in the rest of the business.

Thank you very much.

Thank you so much. Thanks, everyone for being here.

I think we can look to get started. Thank you, everybody, for joining us here at the Citi MedTech Access Day. I'm Patrick Donnelly, the tools and diagnostics CROs analyst here. Happy to have a unique opportunity here with Ron and Mike, incoming CFO, outgoing CFO. So it should be a good conversation.

And Ron, maybe we can start with you and then obviously, we'll kind of work our way around. I wanted to start on TAS, not surprisingly, given the level of focus there. Had a pretty good 4Q. I think it grew about 7% constant currency. Can you just talk through the different components of that? Obviously, consulting is a focus of the AI stuff, which I'm sure we'll get to. But maybe talk through TAS and then we can kind of work through there.

No, you're right. We did have a strong fourth quarter. Actual currency, we were close to 10% growth, constant currency about 7%. And strong organic growth in TAS. And that was versus a pretty tough compare in the prior year where we grew over 9%. So we're happy with what we saw in the TAS business. And if you break it down into the components, historically, TAS is going to become a new Commercial Solutions segment with a few changes going forward. But looking back historically, we would break it down and say, okay, the fastest-growing piece historically has been a real-world business in TAS. Now we've shifted a good piece of that business to Commercial Solutions, I mean to R&DS going forward.

But in the fourth quarter, TAS, the real-world part of the business in TAS grew double digits. And the other pieces, which is consulting and analytics, info and tech all grew in the low to mid-single-digit range. So overall, a really nice quarter for us. And I'll say, in particular, since you mentioned consulting, we're a little disappointed earlier in the year about the bounce back in that business, and we did see sequential improvement as we went to the third quarter into the fourth quarter. So that's a positive sign.

Yes. And then maybe just for people to contextualize, I think we've gotten a lot of questions recently about just the components of TAS in terms of what makes it up in terms of how big is consulting, how big is real world. Can you guys just help break down -- maybe we use legacy TAS.

Yes. We'll start with legacy TAS, about 1/3 of it is real world, about 1/4 of it is info. And then you have the consulting business, 20% and the balance is the tech business, which is low 20s.

Okay. Perfect. And then, Mike, maybe we can look at the go forward, the new Commercial Solutions segment. I think you're guiding for that to grow 8%. Your R&DS more mid-single, 4%. Can you just talk about the underlying growth components on the Commercial Solutions side? What part of the old TAS pieces are in there? It would be helpful to kind of talk through this.

Yes, I think it's a -- listen, we were -- as Ron said, we finished up the year with a lot of momentum, and we were encouraged by a lot of the leading indicators within the commercial business, things like drug launches are something we keep a close eye on. Our pipeline is good. Client decision-making was improving in that segment as well as within sort of the RDS segment.

So I think our range was about 7% to 9% reported, like you said. And again, I think the growth drivers are the same as what we've seen historically within TAS, right? It's now the Patient Solutions segment, which is really the remaining pieces of that commercially oriented real-world business are still growing quite strong as well as the info and some of the other parts of the business as well, kind of in that low to mid sort of single-digit sort of growth range. So yes, we've got a lot of good momentum. And you guys probably saw that the Cedar Gate acquisition that we did at the very end of last year, that was a really nice platform in the U.S. to add to our payer provider segment, which is part of that real-world patient solutions part of our segment. So yes, there's a lot of good stuff happening there.

And then, maybe you mentioned the deal front. We always get questions about M&A contribution in each segment. Can you just help kind of frame up which -- what's the right way to think about M&A in each part for?

Yes. Within our guidance, I think we said about 150 basis points at the enterprise level. And it's still about the same, right? It's still about maybe 2/3 would be towards Commercial Solutions. And then the balance in RDS. I mean, listen, RDS growing at 4% is terrific, actually in this climate. And it was actually somewhat rewarding that we started to get the recognition, I think, from investors that there was a bit of a nice separation last year in the growth rates versus some of the other traditional CRO competitors there. But yes, we feel pretty good about this year.

Yes. And Mike, maybe just given the recent shifts in the segments, can we just talk through Commercial Solutions, R&DS, the margin profiles of both progression and how we should think about the 2 would be helpful.

Yes. From a revenue growth and margin standpoint, I don't -- you guys aren't going to see sort of much difference. The clinically oriented real-world pieces that we moved into RDS, which was ostensibly real-world late phase that people are most familiar with, had a very similar both margin and revenue growth profile as existing RDS segment. So you won't see anything there. And that part of the business had a lower margin profile than some of the more traditional TAS. So if you did nothing else, you would expect the margin sort of uplift. But then we move the CSMS business into kind of this new Commercial Solutions group, and that has a lower margin profile. So net-net, you won't see any changes there.

Interesting. And then, Ron, maybe on the kind of R&DS side, are you seeing pharma clients consolidating vendors more aggressively on the commercial side? How do you guys think about your share capture on the consolidation side? What's the opportunity there for you?

Well, look, we've historically talked in the R&DS business CRO industry in general is being very fragmented. And we've picked up share over the years there, and there has been some consolidation. But when you look at the commercial side of the business for pharma, the vendor landscape is even more fragmented. And it's in part because there are so many different components to the commercial business and in part because there's a lot of local competitors as well.

But we are seeing consolidation, in fact, in the Commercial Solutions area. And I would offer up a couple of examples of that to demonstrate why. One is we're increasingly seeing pharma clients come to us and want to outsource chunks of their commercial organization, analytics, and even the end-to-end commercialization of products in certain cases. I think we announced on our fourth quarter call that we had our first deal with a large pharma client in Asia to take over end-to-end commercialization of their products. And the reason we can do this, and it's a good opportunity for us is we have -- of course, we have the data. We have the analytics. We have the domain expertise, but we also have a contract sales organization, which was part of CSMS, that is the biggest part of CSMS that we're now rolling into the Commercial Solutions business. So we can offer pharma end to end.

And the reason our pharma clients are looking to outsource more is they're trying to decide how to allocate resources between new drugs that they're launching and existing platforms. And very often for existing drugs, they're looking for someone to help them out so that they can use -- utilize their resources, allocate them more efficiently. And we're in a very good positioned to do that given the assets that we have. And so we're seeing more and more of those sorts of deals come down the pipe.

And we even just got awarded another one of those programs this week. So it's definitely the trend is continuing.

Okay. Interesting. And then maybe we can talk some AI. I know, surprise. We waited 10 minutes to get into it. So Ron, maybe we can start and we'll kind of go through different pieces. But I think a lot of investors are concerned AI as a threat to kind of the core business. The data mode, I know you guys have talked about. Can you talk about just how that can stop AI vendors from partnering with pharma, bypassing you guys in terms of the data. I know that's a big focus. And obviously, Ari.

Sure. And Ari has talked about it on the call, and I'm going to repeat some of what Ari said because I think it bears repeating. I'm not sure it's fully sunk in yet in the market.

But look, in order to be effective in deploying AI, you really need 3 things. You need data and you needed at scale and it needs to be fit for purpose. You need domain expertise. And finally, you need the technology and you need to know how to use the technology. And all 3 of those, we think, work to our advantage, not just are they competitive moats against our business being broken into or taken away by AI, but they actually offer us the opportunity for organic revenue growth. Increasingly, clients are coming to us for AI solutions.

But let me talk a little bit about why this is a moat that is our data in particular. The first reason is that our data is proprietary. There are certain things out there where you've seen some articles about Anthropic and others putting out variations on their agents that can, for instance, analyze legal cases and things of that matter, maybe displace a LexisNexis or something like that. In our case, our data is not publicly available. In fact, it's all very proprietary data that we've collected over a very long period of time. The other thing about our data is our data is, I would say, I'll use the term, very messy, which is to say you need to not just be able to gather the data, but you need to be able to cleanse the data, bridge, code, anonymize, link the data. What we get in terms of data is extremely messy. I mean it's multiple oncologies. It comes from various spots around the globe. It's not like there's just one big trove of data there.

The third distinction I would make about our data is it's very dynamic. It's never changing. It's not static. I mean it changes daily. We process more transactions daily than the New York Stock Exchange. So you have to be up to date with your data to meet your clients' needs. And the last thing I would say is the data is very complex and it's very sensitive. And when I say sensitive in the sense that we need to meet very strict privacy and compliance regulations in order to use the data. And those vary across the world. So you have to have experience working in very specific jurisdictions. It's just not like you can go out and get the same data and use it in the same way in Germany as you can in the U.S. as you can in Japan. You have to know how to work with the data.

Now look, theoretically, someone could -- we get asked this question all the time. Could someone recreate what you have in data? And the answer is, theoretically, yes. But practically, it's very difficult because we've been at it for 71 years. We get the data from 150,000 different data feeds around the globe. And we do a lot -- we spend hundreds of millions of dollars annually on that data, and we spend additional hundreds of millions making that data fit for purpose. So yes, theoretically, someone could recreate our data set. Many have tried. Practically speaking, nobody has to date. It's a very difficult thing to do. So we think it's a very durable moat around that data. And then another thing that makes it durable is just knowing how to use the data, and that's a domain expertise. You need to know the business rules. You need to know how to work with the data. And it sounds perhaps trite or trivial, but it is. It's very, very tough thing to do.

And the last thing on AI, you need to know how to use AI to use the data. A given process may take dozens of AI agents because you have so many subprocesses that need to be agentified and then you have to have one kind of orchestrating agent over top of it. So in order to use AI data, it's not a simple thing to do. And that's why so many of our customers are coming to us to ask for AI solutions because theoretically, a client could take the data and say, okay, we're going to try to do something with it. But it's very hard for them to do and their economies of scale and having us create solutions like launch planning solutions that we can sell across multiple customers. And in fact, there's another restriction there that when we license data to our customers, they have -- we do it for specific purposes. It's an end product that we're giving them, not all the ingredients that are underneath that. And we have -- they have to -- we have third-party arrangements or agreements that specify exactly how that data can be used.

So it's not like a client could just take our data and go give it to one of the AI companies and say, "Hey, have at it", they would need our approval to do that. So there are many, many reasons that we don't feel we're vulnerable here. And actually, on top of that, many reasons, particularly the economies of scale of developing these AI agents for -- and selling them across multiple customers, we think it gives us good upside looking forward. And in fact, we haven't seen clients behavior change where they're not buying stuff from us that they did before. In fact, quite the opposite. They're coming to us and saying, "Look, we want to do things more efficiently". We got this huge staff of people, again, I'll go back to the launch planning example, working on taking various data sources and spending months doing -- planning for a launch, can you do that for us much quicker using AI. And that's just an example of one of the applications. In fact, I think we now by year-end, had done 150 different AI agents covering 30 use cases, and it's changed then since it's gone up. It changes daily.

Yes, this whole shift to AI is fantastic for us. I mean because -- I mean, listen, if you step back and go back to the theory of the merger of IMS and Quintiles coming together, right, the whole ethos of our company was taking that 70-some-odd years' worth of data in disrupting sort of clinical trial development. And what it's done now is that it's put it front and center in our clients' minds. So now the conversations with our clients, we are elevated in their minds, right? They're restrained on capital and they're sitting there going, at the end of the day, can they build some models themselves? Sure. But your models are only as good as the data it's trained on. We have the best data in the industry, both on the clinical and the commercial side. So the types of engagements now are completely sort of elevated, and that's why we have clients coming to us.

Yes, rough estimation of the amount of -- where pharma gets its data is about 3/4 of the data pharma uses comes from IQVIA across the industry. So that gives you an idea of how important our data is.

Yes. And one of the questions I get, and again, I think people are trying to get to the root of the AI question is where does the data come from? Why do you guys have so much versus others? Do you want to just spend a few minutes in terms of the root of the data and why it's such.

So where does it come from? I mean it comes from multiple sources. It comes from scripts. It comes from electronic medical records, claims data, lab data, genomic data. And one of the key is the ability to link data longitudinally on a de-identified basis. So I can go and look at your history, your person X, you're not Patrick. We don't know who you are, but we can trace your prescription habits, look at the electronic medical records, look at the claims data. That's one of the basis for using real-world data is being able to do longitudinal studies across large masses people. And like I say, it comes from 150,000 data feeds, and we are the only company that can do this globally. We have competitors on the script side in the U.S. or Germany or Japan or wherever, but we're the only person that can put together a global view for a brand manager of how the brand is doing. And that's a huge differentiator.

All of those thousands of business rules that govern what Ron just talked about, how you pull the data together that only we have -- our clients don't have access to it, which is why it makes sense for them to come to us.

Yes. Okay. And then another area of task from our conversations with investors, people are looking at is just the durability of the consulting business inside there. I mean what would you guys kind of frame up as a response to the consults?

Look, the first thing I would say is there will be small areas of our business that are going to be eroded by AI. There's no question. But I would emphasize small, limited. And an example of that would be in the consulting business and primary market research, in particular, in places like the U.S. where a lot of this data is publicly available. But to put a number on that, if you look at primary market research is maybe 5% of the 20% -- 5% of the consulting and analytics business globally, which is 20% of the TAS revenue. So we're talking about relatively small numbers here. And even within that 5%, not all of it is exposed.

Now there may be other -- there probably are going to be other little pockets of low-end work that are going to be exposed. But the upshot of it is we really feel like the opportunities far outweigh what we're going to lose. Mike, maybe you can expand on some of those.

Yes. So I think kind of sizing me to the numbers Ron is throwing out there, I mean, you want to take a pessimistic case, maybe $100 million. That's the kind of sort of scale of revenue that we think could be at risk. But people really need to start pivoting and think about sort of the opportunities there. So -- and I'll give you a couple of examples on sort of several different dimensions about what we're doing.

Let's just say from a revenue protection standpoint for some of that lower level kind of work, right? We launched last year our Agentic AI kind of like copilot kind of thing that we put on top of several of our offerings that we have out there, right? So we're modernizing some of the lower level to keep it relevant and to keep clients sort of stuck into us. Then you guys may have seen a press release we did with Boehringer Ingelheim fairly recently with -- that they were -- they bought our DaaS+, data-as-a-service offering. And that's an agentic AI offering, which essentially allows the client to take their subnational, national and global sort of prescription data with an information management platform to then help hook in sort of data that they have, so they have one single source of truth for all of their data. Now that inherently brings a lot of value to our customers.

What it also does for them is that if they want that capability, they have to buy all of our data, right? So if there's -- it protects our data sales, right? But it also in areas where they may have had, let's say, a specific country, they were sourcing that script data in that country for somebody else, well, they have to now buy it from us. right? So that's another kind of example here. And then you have, and Ron mentioned it, kind of the more transformative offerings that are coming out on the commercial side, like our launch planning tool. And pharma employs thousands upon thousands of people who are specialized with, let's say, sort of market research and competitive intelligence and sales forecasting and things like that.

At our Tech IQ conference last year in London, we rolled out and we have some clients on it, this launch planning sort of agentic AI module. And our teams came back and said, literally like pharma's jaws were like on the floor because one person can go and say, "I'm going to launch this drug, give me a global sort of launch strategy". And the agents are going through all of our data and all of those sort of verticals, the forecasting, market access, things like that and just spits out like a board-ready sort of like launch plan in a minute. Now that gives pharma options that they can either redeploy those thousands of resources sort of internally, and that brings a lot of value.

So to Ron's point, any technology changes, some things are going to go away. And one thing on the clinical side, just to kind of give a corollary there, I was thinking back to like with all this AI hysteria going on at the minute here, if you go back to like early 2000s, right, the narrative at the time, I remember was going from paper case report forms to electronic data capture, the headlines were CRO's business models are going to collapse because they make a lot of money with people sitting there sort of like doing typing.

And what happens? Like if you look back in retrospect, CROs didn't collapse, they grew. And the ones that adapted like IQVIA is adapting with this technology grew even faster. And the question is why, right? Well, in that specific instance, right? Yes, certain line items, let's say, of a CRO budget like double data entry, those went away, okay? But what that did do was is that because the data is now in an EDC coming in, in a more contemporaneous fashion, it allows for new services to pop up like centralized monitoring or risk-based monitoring or you can do more interim analyses because the data was coming in more frequently. So with any technological disruption, like there are going to be upshots. And the other thing that happened there is because it was easier to collect data, it actually helped study trials to become more complex. People started adding more assessment in the trials, and that's obviously a net benefit. So whether it's on the commercial side or the clinical side, there's a lot of opportunity there and our moats that we have around our data and our workflows is key.

Yes, it's easier to visualize the downside in AI than it is the upside. And trust us, what we're seeing is that there's going to be a lot of upside here.

Yes. And Mike, you've framed that $100 million number. Is that more -- obviously, Ron talked about the 5% of the 20% of the 50%. Is that kind of...

Yes, that's what I'm talking about. Yes, yes.

Okay. Got you. And then maybe on AI, just overall, improving efficiency and workflows in clinical trials, right? If time lines get shorter, burn gets faster. How -- what are you hearing in terms of how those savings, if you will, would be distributed to CROs, to IQVIA? What's the right way to think about this ecosystem?

There's no large pharma procurement people listening to this call are there? No. I mean, listen, just to give another kind of like framework here on how to think about this. You hear pharma companies out there now AI, AI, AI. And I think when Pfizer had their call recently, people were like, "Oh my God, Albert mentioned it 15x. Like what does that mean?" And most of what we're hearing from our clients is that where they're focusing AI first is like on the drug discovery side, right? So our theory, and it's a pretty prevalent sort of theory in the marketplace is that, that is going to be an area where we start to see the first kind of like step change benefits of AI is in the drug discovery space.

So you can easily envision pick a time price in 3 to 5 years, probably somewhere in that window where more molecules are going to be identified with higher probabilities of success, which fundamentally changes the ROI calculations. So there's going to be, in our estimation, a lot of molecules coming through the discovery area into clinical. And by the way, I just mentioned discovery, we announced yesterday we bought a great asset off of Charles River's hands in the discovery space. So again, that sort of played into our thinking on that front. But pharma, and I think Pfizer even said it, pharma is going to reinvest the savings in the economies into improving their pipelines because at the end of the day, that's how pharma companies are valued, and they always have these patent cliffs looming over their heads. So there is going to be a virtuous cycle of this efficiencies.

And to get to this specific part of your point about how this is shared, I mean, look, in the clinical space, I think people need to realize a couple of things. One is it is highly, highly regulated. And it moves very slowly. So even we have -- we're looking at quite literally 1,000 individual processes that underpin our CRO for identification, right? And we're going as fast as we possibly can. But once you develop an agent, in some cases, you can't just pick that agent up and deploy it on studies and flight, right? So there's that regulatory break to how fast this stuff can come through.

I think the other thing people need to sort of remember here is that at the end of the day, we have -- with large pharma, we have deals and rate cards that are 3 to 5 sort of years long. So the fears of some immediate deflationary shock to the CRM numbers, it's just not going to happen, right? And generally, what happens kind of going back to that EDC analysis is that when we get more efficient, yes, we pass some of that sort of on to our clients in the form of negotiations. And in our budgets, some people kind of misconstrue that CRO budgets because they're heavily labor-based, they're not time and materials contracts, right? You have unit-based rate cards that have certain effort assumptions baked into it. But it's a unit. So if I can identify faster, right, I get to keep a big part of that upside for myself, and some of it will be shared to the negotiations. So at the end of the day, what we think is going to happen is that our margins are going to continue to improve in RDS, and we're going to continue to take share.

And pharma will -- with the better ROI that they're seeing on their investments in research and development is going to -- the big question is, well, are they just going to put that in their pocket and not develop additional drugs. And I would argue in what we're hearing from clients is the opposite. No, improving ROI means we're going to invest more in drugs because we're valued on our pipelines. And to the extent that we can put more drug candidates into our pipelines that have now better return on investment prospects, we will.

Yes. And Mike, you touched a little bit on it, but in terms of that upstream versus downstream, it sounds like your guys' view is AI kind of in the upstream molecule screening piece, it almost is going to increase the number of viable programs. Is that...

That's our opinion. Yes. Yes. And that's what we're hearing from our clients as well.

Yes. But the one thing to keep in mind is that still most of the development that's going on or -- our research work is going on is traditional still. I mean, it will accelerate over time, but it's not like you're throwing a switch here. The second thing to remember is that drug discovery is still, to an extent, serendipitous. For instance, if you look at Viagra and Minoxidil, those were originally -- those drugs were originally indicated for conditions other than ED and hair loss. And it just so happened that in a serendipitous manner, the industry discovered that they had other uses and that were even higher valued. And that happens all the time. And that's going to continue to happen even in the face of more rigorous use of AI for discovery.

Yes. Okay. Maybe we can flip a little bit to kind of the core business. On the R&DS side, can we talk through, I guess, 4Q bookings, cancellations? It sounds like cancellations were a little bit at the higher end. It was a little unclear. Was it 1 or 2 big chunk ones? Was it not? Maybe you can talk on the cancellation side, and then we can dive into the...

You're going to bake me into a book-to-bill ramp here in a second here. But no, listen, I think we've talked previously that 2024, we really saw elevated cancellations about -- in a normal year, the CRO side, we see about $2 billion worth of cancellations. '24 was about $3 billion, and that was really driven by the mass pipeline reviews that were really triggered by the IRA. 2025, we absolutely saw that trend stop. Our cancellations for full year in 2025, even with them being a bit elevated in the fourth quarter, we're really back to normal reasons like drug futility and things like that.

And I just want to be crystal clear given the AI hysteria, nothing that we're seeing relative to cancellations, RFP flow or anything is being impacted by anything related sort of AI, right? Like what you're seeing from a cancellation standpoint is just study-specific idiosyncratics sort of events and things like that. So we feel pretty good about Q4 was -- Q4 has some seasonality to it, like Q2 and Q4 are generally the bigger kind of like gross bookings, cancellations, there's no seasonality to them. Whenever they get reconciled and come out, that's when they come out. So P, I just want -- I say that to caution people not to try to extrapolate some linear sort of trend there because kind of Q1 and Q3 are generally lower quarters coming off of a year-end and obviously, the summer sort of holiday period just for some additional context for some of you who overly obsess on this quarterly sort of book-to-bill metric. But no, it was -- there was nothing out of the ordinary to call out there from a cancellation trend standpoint.

Book-to-bill is actually being highlighted, I think, because one of our competitors is undergoing some accounting scrutinies and it's calling into question book-to-bills. And again, I'll maybe do a micro ranch here. But listen, it is without a shadow a doubt, particularly now that there are only 4 people who talk to book-to-bill, it is the most misunderstood and missus sort of metric in the industry. It's a long-cycle business. I hope you guys know this. I'm sorry for repeating it. But the way our stock moves with whatever quarterly book-to-bill we put out there, or whatever somebody else puts out there that has nothing to do with us, it feels like our stock always moves down no matter what we do. I'm sure that's not the reality.

But we just want to caution people that when everybody -- it's not a GAAP metric and everybody's got a different sort of booking policy. One of the first things Ari did when -- after the merger was -- and Ari comes from manufacturing environments and defense, right? He said, well, what's the industry's standard? Like everybody does it on this as awarded on verbal and stuff like that. And the first thing Ari did was like no, we're going as contracted. So we firmly believe when we stand behind that as contracted basis to put things in your backlog is absolutely the right measure, right? You look at the GAAP measure that everybody is out there, this remaining performance obligation, which is a little bit different than backlog, but it's close and you look at what our CRO backlog is versus what our enterprise RPO number that we disclose every quarter is. And those numbers are really close, right? There's like $3 billion.

And to stress, the RPO is a GAAP number.

Correct. Correct. And you look at some of the other competitors, and they have -- their backlog is far in excess -- I mean, you could drive a truck through -- and it really caused us to ask ourselves sort of a lot of questions, that's why that is, right? So again, at the end of the day, we stand behind sort of our processes. We feel that we have some of the most robust sort of non-GAAP as well as sort of kind of gap disclosures in the industry.

Yes. Understood. I appreciate that the micro ramp. Maybe on just the overall backdrop again, gross bookings seem like they're ticking up. What are you guys seeing from, I guess, both pharma, obviously, biotech has had this nice funding recovery. I know you guys have plenty of exposure there. What are you hearing from customers? And what are you seeing just on that gross bookings backdrop?

Well, generally, if you look at the leading indicators, we indicated -- we gave you in Q4, it all looks good. The pipeline is good. The RFP flow is good. We saw a nice bounce back in the back half of the year and emerging biopharma funding and our conversations with clients have been good. I always caution that, as Mike did there, don't put too much emphasis on quarterly book-to-bill because things fluctuate around. I would look if you're going to choose a statistic to track, track the 12-month rolling anyway. But overall, the environment looks very healthy.

Anything you want to add to that, Mike?

No, I would agree.

Okay. And again, it seems like, obviously, we had the pharma, there was multiple headwinds for a long time. It seems like things did loosen up midyear, again, biotech funding picking up. Are you seeing customer conversations kind of steadily improve on both fronts? Is biotech notable with the funding fees?

No, I think they're both good. They obviously are dealing with -- they have their own sort of kind of flavors to them. But there is this general sense of comfort and people more willing to make the decisions, right, now with whether it's sort of policy sort of uncertainty sort of being clarified or funding on biotech. And that's why we've said on both the clinical and the commercial side, we've steadily seen sort of client decision times trend in the right direction.

Okay. And then maybe talk some guidance metrics, which I guess you now own, Mike, so I'll point them towards you. I guess how do you think about maybe down the P&L, the gross margin piece, we get a lot of questions about some of the pricing stuff that's happened last year. Obviously, some of the peers with pass-throughs and pricing have seen noise there. Maybe we start with gross margins, what you guys are seeing and maybe talk a little bit about pricing.

Yes. Let me kind of frame this out a little bit because to be fair, I think given the dynamics and what's going on, we probably should talk a little bit deeper than we have historically about it.

If you look back at IQVIA since the merger, I believe every single year, we've expanded margins, EBITDA margins, with the exception of 2020 when the pandemic hit and 2025, right, where we declined 70 basis points on a reported basis. And I'll give you -- I'll use '25 as kind of a construct, right, an illustrative construct. So there's a couple of things going on here. One is you have some very significant nonoperational dynamics going through our EBITDA margins, right? And that's FX and pass-through. When the dollar changes, particularly when, let's say, when it weekends, our revenue goes up, but our -- the denomination of our cost base, IQVIA is pretty sort of muted from any sort of currency changes. So you don't see a lot of change on profit. So FX kind of can throw swings and roundabouts into your margin from that. And that's obviously a gross margin-related item.

And then you have pass-throughs, right? I would love if we never had to report on pass-throughs, let alone try to forecast multiple billion dollars of pass-throughs and when they're going to hit and all that stuff. But again, and we saw pass-through tailwinds. So those 2 things just mathematically compressed our margins. If you take those 2 nonoperational dynamics themselves in 2025, I'm speaking in rough generalities there, those 2 things were about a 70 basis point headwind to our reported margins. Then you get into things like mix and a little bit of pricing kind of in the mix. And when I say mix, meaning where we saw things like services were like FSP with lower margins growing faster than the core CSMS growing faster than some of the commercial stuff, things like that and maybe a little bit of pricing kind of thrown in the mix here. That in '25 was about another point of margin sort of headwind. So absent us doing anything else, our margins would have declined on a reported basis, 170 basis points.

But we have our productivity programs, right, that we've been -- that we do sort of all along. And to be honest with you, agentic AI is just another tool in that toolkit there on the horizon. But that added about 1 point of tailwind, right? So if you look at our 70 basis points and how you should think about IQVIA's EBITDA margins going forward, really, our productivity programs kind of offset mix plus or minus. And that's what gives us confidence when we're constantly asked about that long-term outlook we disclosed in our Investor Day that, look, in any given year, we expect EBITDA margins to be between 0 to 30 basis points of margin expansion. That's kind of really what we're talking about. Could FX and pass-throughs kind of distort that? Yes. But kind of operationally, that's really what's going on in our business. So we're very disciplined there. And we're really trying to get people to focus more on the EBITDA dollars than the margins just given some of those distortions.

Yes. And you mentioned the mix pricing piece. I know that was probably a bigger concern and discussion maybe a year ago at this time. It seems like things have eased up. What's the pricing environment?

Pricing environment is stable. I mean, really. And one of the reasons why when people were pushing like aren't you worried about sort of the pricing. And we're not being dismissive of it, right, because pharma is very sophisticated. But here's the reality. If we make, a, we're very disciplined when we make sort of very smart strategic disciplined decisions in our pricing. But when we do make a bet on something and lean into a particular sort of price, it goes into our backlog. It goes into a $32-plus billion backlog. And that study is going to burn over 3 to 5 years, right? So we have our ongoing productivity initiatives, and we consistently monitor, like on a full-service trial, we monitor the margin that, that study was sold at versus how it's being delivered. That's actually one of the beauties of the EAC methodology at any given point in time, you kind of -- that's what you stare at. And we consistently deliver on a portfolio basis, 1 to 2, 3 points higher than what we sold at, right? So we're confident in our ability to continue to drive productivity.

Okay. And then maybe the balance sheet leverage, I think, 3.6 at this point. Can you just talk about where we're heading on that front? Again, you guys have done a good amount, you mentioned the Charles River deal. You've done some deals, share repos. What are the priorities? And how should we think about the leverage piece?

I think we continue -- nothing's changed on that front is the short answer. I mean, leverage within the 3 to 4 kind of turn range is something that we're more than comfortable with. We always try to do acquisitions because they are obviously platforms for growth. If you asked me that same question 3 weeks ago before the AI drama sort of ensued, I'd say we'd probably be more opportunistic in M&A. But certainly, our share is a screaming buys -- our stock price is screaming buys sort of right now.

Yes. We are opportunistic, which is to say what -- how we divide up our capital deployment between share repurchase and acquisitions depends on the strength of our pipeline and pricing, what people are asking for and then also our stock. And obviously, given where our stock is today, it's -- you can imagine where our head is about the balance between the 2.

Yes. Yes, that's fair. And then maybe in the last few minutes, a unique opportunity here with the outgoing and incoming CFOs. Mike, as you take the seat here, is there any different approaches you have versus what Ron did, whether it be deployment, cost savings, et cetera?

Yes. What a devilish question has asked with Ron sitting right next to me. So Ron, why don't you put on some ear muffs here for a second here. Listen, the short answer is no. I mean the word that comes to mind is continuity, right? I've worked with Ron and Ari for 9 years. We're going to continue to be sort of very disciplined sort of financially. We're going to continue to have very high standards across the organization in all areas, including an ethics compliance and things like that. And look, I'm excited to where this agentic kind of runway we have in front of us and to be able to support taking the business forward. I don't know if you want to...

Well, look, I would -- I'd be disappointed if Mike didn't do stuff differently than me. That's one of the advantages of making a change. When you've had a CFO or an executive in a seat for a long period of time and you bring somebody new in, you always get new ideas, and that's a good thing. So I'm sure Mike will be making some changes. But as you said, we've worked together very closely. So it's not like bringing somebody in off the street. We've kind of work hand in glove and share a mutual philosophy.

It's a great opportunity now. I mean we are -- I was sitting there lamenting kind of the weekly report that the IR team sends us, and we're currently trading at a PE of 13, which I'm not going to speak for other companies, right? But it surely doesn't make sense for IQVIA. Our historical PEs are high teens sort of low 20s, right? So to people who own our stock who we talk to and are frustrated, well, look, this is not -- this does not make sense where we're being sort of valued right now. Our fundamentals are incredibly strong. I mean, look at the guidance that we put out there relative to what's -- especially relative to what other people are starting to put out there. And the entire IQVIA team is laser-focused in just keeping their head down and executing on that.

And kind of to those people who don't own our stock right now, I would say, this makes no sense right now, right? The fundamentals are strong, and we're laser-focused on continuing to kind of keep delivering sort of value here. So we're pretty optimistic.

Yes. And look, we see AI as an opportunity, not a threat. It's clearly being priced into our stock right now is a threat. We feel that's inappropriate and see it as an opportunity, and we'll just have to prove that out over time because it's very hard to disprove a negative, a generalized negative like we're dealing with right now on AI.

Thanks for having us.

Yes. That's a great spot. Thank you so much. Ron, enjoy your retirement.

Thank you.

[indiscernible] and the trip.

Thank you, guys.

Thank you.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

Thank you, operator. Good morning, everyone. Thank you for joining our fourth quarter and full year 2025 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer, Ron Bruehlman, Executive Vice President and Chief Financial Officer; Eric Server, Executive Vice President and General Counsel; Mike Pita, Senior Vice President, Financial Planning and Analysis; and [indiscernible] , Senior Investor Relations.

Today, we'll be referencing a presentation that will be visible during this call for those of you on the webcast. This presentation will also be available filings following the Events and Presentations section of our tibia Investor Release website at ir.iqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Accident results could differ materially from those stated or implied by forward-looking statements of the risks and uncertainties associated on these phases, 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 guidance. 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.

Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2025 results. We closed 2025 with a strong fourth quarter resulting in full year revenue growth of 6%, adjusted diluted earnings per share growth of 7% and free cash flow of $2.1 billion, representing about 100% of adjusted net income. As I reflect on our accomplishments in 2025, I'm proud of the results delivered by the IQVIA team given that our industry faced significant challenges with heightened uncertainty around macroeconomic and government policy as well as continued pressure from interest rates. This macro environment led to slower customer decision-making and tempered biotech funding. This impacted R&D bookings and revenue earlier in the year.

But as the year progressed, the environment stabilized somewhat and demand indicators became more favorable and funding increase. Despite the environment, we at IQVIA continue to invest in developing innovative offerings and more integrated solutions to advance development programs and drive commercial success. Examples of the depth and breadth of our clinical and commercial offerings and significant investments in 2025 include increasing our Phase I trial capabilities to test new drugs in healthy volunteers with the acquisition of a facility in the U.K., expanding our science management organization with the acquisition of -- next Oncology, a network of specialized sites serving patients enrolled in early-stage oncology trials.

Helping clients advance critical programs, ranging from global Phase III oncology and obesity trials we're launching innovative treatments in rare and underserved patient committees, seeing great demand among the large and midsized pharma clients for our DAS solution does data as a service, which provides AI-ready data as a single harmonized source simplifying customers' data management and building a strong foundation for AI analytics.

This offering integrates global to local data, highlighting IQVIA's unique ability to more proprietary assets, data assets with third-party data assets we are compliance scalable framework. Advancing the digitization of patient support programs to streamline workflows for treatment access and adherence with the research launch of the IQVIA Patient Experience platform, which already has 6 new customers on. Working with the same vaccine Institute to provide more than 640 more vaccine doses to top for a Phase II trial during the nation's first more virus disease outbreak partnering with local health authorities to evaluate safety and efficacy.

Winning our first full service commercial outsourcing deal in Asia with the large pharma client. A last example, enhancing our capabilities in patient solutions and payer analytics with the acquisition of Federate Technologies in the fourth form.

Let us now turn to the results for the quarter. Revenue for the quarter came in above the high end of our guidance range, representing year-over-year growth of 10.3% on a reported basis and 8.1% at constant turns. Acquisitions represented about 2 points of this growth. Fourth quarter adjusted EBITDA increased 5% versus prior year. Fourth quarter adjusted diluted EPS of $3.42 increased 9.6% year-over-year. On the clinical side, net bookings totaled over $2.7 billion growing 7% year-over-year, 5% sequentially. This resulted in a net book-to-bill ratio of 1.18, reflecting the continued improvement in customer trends as well as solid execution from our sales teams.

I should point out that in the fourth quarter, our cancelations, while in the normal range were really slightly above the normal range due to specific esosycratic aspects of certain trials that had to be canceled. T-demand metrics for the quarter continued to be positive. Our qualified pipeline is about 10% higher year-over-year, with growth across all customer sends. RFP flow grew double digits year-over-year with growth across all segments, largest gains in large barge and in EP. Our win rates improved year-over-year, several percentage points. Backlog reached a new record of $32.7 billion at the end of the quarter growing 5.3% compared to the prior year. And encouragingly, EVP funding was strong in Q4, reaching this $33 billion of quality to buy world.

On the commercial side, Tara continued to perform very well in the fourth quarter, achieving better-than-expected results despite the anticipated tougher year-over-year comparisons. We delivered growth in terms of 9.8% reported 7.1% at constant currency, highlighting the resilience of our broader commercial portfolio.

And now a few highlights of business activity in the fourth quarter. We announced the strategic collaboration with Amazon Web Services namely AWS as our preferred agentic car provider to accelerate the industry's digital transformation. With the world's largest pharmaceutical companies already relying on IQVIA and AWS. We believe this partnership remains AI more revenue available across life sciences, medical affairs and health care analytics and enable faster delivery of life-saving treatments to patients worldwide. IQVIA was recognized by Everest Group for our AI leadership, the only clinical research organization to receive the #1 ranking for generative AI leadership in life sciences. You will recall that we started on this AI journey quite a while ago, and specifically, a little more than a year ago, we announced a partnership with NVIDIA, which with whom we have been working for over a year to build agents into our workflows, both in clinical and commercial, and we have made significant progress to date.

In commercial, demand for our AI-driven innovations is gaining momentum with our clients, especially in large pharma. A few examples, a top 20 pharma client selected IQVIA to provide comprehensive AI-enabled information and analytic solutions for a major U.S. gastroenterology franchise. The top 15 pharma clients shows IQVIA as the strategic partner for a multiyear program to deliver analytics and agentic AI solutions across the -- another pharma selected IQVIA deploy our AI-enabled patient relationship manager solution for rare disease hub services, improving patient engagement and therapy adherence.

On the clinical side, in RMBS, I'll share some key wins in the quarter, focusing on large pharma and biotech companies and focusing on AI capabilities. The top 50 pharma clients selected IQVIA for a major respiratory development program, where our IQVIA ability to integrate AI-driven planning tools to accelerate time lines and improve efficiency was key to secure the win. A large pharma client chose IQVIA to manage a large full service program of MASH studies, utilizing AI-enhanced planning toes and advanced recruiting strategy. IQVIA was selected to manage a pivotal oncology study with end-to-end services and leveraging Pages AI-enabled technology solutions, including patient randomization and drug supply optimization.

Now I would like to take your means to share how we are simplifying our organization in 2026 to strengthen collaboration, enhance efficiency and support continued growth. Our goal is to better align our teams with how our operating model has evolved to adapt to the new ways our clients are purchasing our capabilities. In the clinical space, clients are incorporating real-world evidence earlier in clinical development programs. And in the commercial space, as I mentioned in prior calls, we are seeing clients increasingly looking to outsource integrated commercialization programs that use IQVIA suite of capabilities from analytics to field-based sales and medical forces. Against this backlog, we implemented a simplified organization that consists of 2 reporting segments: Commercial Solutions and R&D. Under this new reporting set model, the CSMS segment, which has become more grossly integrated into commercial offerings in the talk segment, and represents $788 million in 2025 revenue is incorporated into the top segment, which has remained commercial solutions.

Additionally, certain offerings currently reported in the tough segments consisting of real-world late phase, as well as certain other real-world offerings that have become more closely related to the critical trial business are linked to the RNDS segment. The business dynamics and growth patterns of real-world late sales and these other offerings mirror those in the clinical trial business -- they represent $674 million in revenue in 2025. So simply put, commercial solutions is tag across the CSMS segment minus the clinically-oriented real-world offerings that were moved to RNDS. These new segments reported aligns with industry evolution and the company's operating model. It has a negligible impact on segment growth rates, as you can see on the chart.

We believe our growth and differentiated capabilities position us well to pursue enterprise-wide partnerships across these 2 segments as clients continue to consolidate vendors. I want to take another moment to acknowledge and congratulate our employees around the world for the ninth year in a row. IQVIA was named one of the world's most admired companies in Fortune's annual serve. And importantly, for the fifth year in a row, IQVIA was named the #1 most admired company in our category.

Finally, this is the last earnings call for our long-time CFO, Ron Bruehlman. I want to take a moment to acknowledge Ron I've been working with Ron for the last 3 decades. He's a proven extraordinary world-class leader who plays an instrumental role in shaping and executing our company's financial strategy and transformation. Ron, steady leadership and long-term strategic vision have been essential in building a high-performing global finance organization and how IQVIA remain resilient through unprecedented times. On behalf of the entire IQVIA team, I want to thank Ron for his exceptional service. And the good news is not going anywhere and only transitioning into a senior advisory role, assuming he returns from his upcoming track in Nepal.

And now to Ron for more details on our financial performance.

Thanks for your kind words, already I promise I will make it back -- good morning, everyone. We'd start by digging into the numbers a little bit more. Starting with the fourth quarter. Fourth quarter revenue was $4.34 billion. That was up 10.3% on a reported basis and 8.1% at constant currency excluding all COVID related work revenue grew over 8% at constant currencies. This included approximately 2 points of contributions from acquisitions. Technology & Analytics Solutions revenue for the fourth quarter was $1.821 billion. That's up 9.8% reported and 7.1% constant currency.

R&D Solutions fourth quarter revenue of $2.33 billion was up 9.1% reported and 8.2% at constant currency, and excluding the step-down in COVID-related work R&DS revenue grew over 8.5% at constant currency. Finally, our contract sales in Medical Solutions or CSM Fourth quarter revenue of $210 million increased 18.6% reported 15.3% at constant currency and about 5 points of that growth was due to the acquisition we mentioned in the third quarter call. For the full year, revenue was $16.31 billion, up 5.9% reported and 4.8% constant currency. That included tech and analytics solutions revenue of $626 million, which grew 7.6% reported and 6.2% constant currency. R&D Solutions full year revenue was $8.896 billion, up 4.3% reported and 3.5% at constant currency.

And finally, full year CSMS revenue was $788 million, up 9.7% reported and 8.2% at constant currency.

Now moving down to P&L. Fourth quarter adjusted EBITDA was $1.046 billion, representing growth of an even 5%, while full year adjusted EBITDA was $3.788 billion up 2.8% year-over-year. Fourth quarter GAAP net income was $514 million in GAAP diluted earnings per share was $2.99. Full year GAAP net income was $1.360 billion or $7.84 of earnings per diluted share. Adjusted net income was $580 million for the fourth quarter and adjusted diluted earnings per share was $3.42, that was up 9.6% that brought the full year adjusted net income to $2.68 billion or $11.92 per share, up 7.1%.

As already noted, we had a strong net new bookings growth this quarter, which confirmed the improved demand environment that we started to see in the second quarter. R&DS backlog at December 31 was $32.7 billion. That's up 5.3% year-over-year and next 12 months revenue from backlog was $8.3 billion at year-end.

Okay, now turning to the balance sheet. As of December 31, cash and cash equivalents totaled $1.980 billion and gross debt was $15.724 billion, which results in net debt of $13,745, billion. Our net leverage ratio ended the year at 3.63x trailing 12-month adjusted EBITDA. Cash flow from operations in the fourth quarter was $735 million and capital expenditures were $174 million which translated into free cash flow of $561 million. For the full year, free cash flow was $2.51 billion, representing 99% of our full year adjusted net income. In the quarter, we repurchased $212 million of shares, bringing our full year share repurchase activity to $1.244 billion at an average price of $159 per share.

Now I'll turn it over to Mike Fedock, who will show details on our 2026 guidance. Mike?

Thank you, Ron. For full year 2026, we expect revenue to be between $17.159 billion and $17.359 billion. This includes about 150 basis points of contribution from M&A and approximately 100 basis points of tailwind from foreign exchange versus prior year.

Our adjusted EBITDA guidance is $3.975 billion to $4.25 billion, and our adjusted diluted EPS guidance is $12.55 and to $12.85. Now let me provide some color on the below of the line costs. This guidance includes approximately $610 million of operational D&A, net interest expense of approximately $760 million, which is about $80 million higher than 2025. This increase reflects the full year impact of the senior notes issued in June 2025, swap maturities and refinancing activity we expect to complete in 2026 partially offset by the lower interest rate on our variable debt. And finally, our guidance assumes an effective income tax rate of just over 17%. And average diluted share count of just over $171 million and assumes that foreign currency rates as of February 4, continue for the balance of the year.

Now let's look at revenue at the new segment level. As Ari mentioned, we will start reporting 2026 under 2 segments: Commercial Solutions and RBS. This change to better align and simplify our operating to the evolving market landscape. We will provide full recast of relevant historical financials for the 2 segments, starting with the first quarter 10-Q and the 2026 10-K. And in the meantime, we have included a recast of 2025 and 2024 revenue in the press release that accompanies this earnings presentation. On a recast basis, 2025 full year revenue for the 2 new segments has Commercial Solutions at $6.730 billion and RDS at $9.570 billion, with this new reporting, TAS transfers $674 million of real-world late phase and real-world clinical-related offerings in RBS and Commercial Solutions received the full $788 million of CSMS revenues. For full year 2026, we expect Commercial Solutions revenue to be between $7.2 billion and $7.3 billion, which represents growth of approximately 7% to 9%.

RDS revenue is expected to be between $9.9 billion and $10 billion, which is a little over 4% growth year-over-year at the midpoint.

Now let's review our first quarter guidance. For the first quarter, we expect revenue to be between $4.50 billion and $4.150 billion. Adjusted EBITDA is expected to be between $920 million and $940 million. And adjusted diluted EPS is expected to be between $2.77 and $2.80.

Now before we move to Q&A, I just want to take a moment to thank Ron for his support and guidance and nutrition. I've enjoyed working with Ron over the last 9 years. First as CFO of the lab business, then as CFO of R&DS and most recently leading the corporation on DNA function. I'm grateful for everything he shared with me along the way. Now with that said, let me hand it back to the operator for Q&A. Operator?

[Operator Instructions] Your first question comes from Shlomo Rosenbaum with Stifel.

Ari, maybe you could just talk about the concerns everyone is having in the market about the potential for AI to disrupt various established businesses. And if you could just talk about why you think your business is insulated or why it would be hard to disrupt it? And then why you think AI is really more of an enabling technology for the business versus anything that investors should be concerned about?

Well, I don't where to start I wish we will be spending the next few moments talking about our great results for the year and our great guidance for 2016. We're very excited about how business is going. But an article was published a couple of days ago and all of a sudden, it's the end of the world. I don't know why it was news to people. It certainly is not news to us. We started on this AI journey a long time ago. Specifically, I mentioned again, we've been working with NVIDIA for over a year to build agents into our workflow, and we made a lot of progress. We've seen this opportunity for our business very early. And again, I stress, it's an opportunity, not a challenge.

There really is nothing new here for us other than, obviously, I want to take the opportunity because it's obviously not clear to people to clarify what I believe is fundamental misunderstandings of both what our business is and why we're not offer. There are 3 requirements for AI agents. Number one, significant ready-to-consume data ingredients at scale. Number two, domain expertise. And number three, technology, meaning the AI tools everybody talks about with French names, and the processing capability to enable this AI agents to work. Now the first 2 are absolutely necessary, meaning the data ingredients and the domain expertise. The third one can be bought, and it's typically a combination of tools that constitute a tech stack from a variety of ecosystem players.

I want to focus on this first 2. Let's start with the data. First, our data is proprietary. You need to understand that our data is not readily available on the web. It's proprietary. It's not like KR, Jes prudence, company financials, consumer information it's just not available. This is a lot more than simply aggregating data vacuum cleaning everything that's on the web and organizing uniquely for somebody to use with an AI tool. It's just not there.

Second, it's sourced de-identified, cleansed, curated and integrated into data lakes that enable fit-for-purpose extraction algorithms to do their work. We do this at a huge cost and on a massive scale, and we have been doing this for decades. By the way, many have tried to replicate it. No one has duplicated it.

Third, health care data is dynamic data. That is -- it changes every moment, and it needs to be updated constantly. It's not like a legal case. It remains the same legal case forever. It's status for health care data is subject to significant regulatory compliance, privacy frameworks that vary across countries and geographies. Do you really think that Germany is going to allow, let's call him Jean-Paul to access and play around with individual health care data of their citizens.

Fifth, health care data needs to meet interoperability, relevance, completeness, traceability, reliability and linkerbility standards under countless ontologies at a scale and level of complexity that has a 0 comparison to any other industry.

Sixth, the data that we sell to our clients is for specific defined uses. We do not sell all the data that we source, we sell the final products, not the ingredients and the ingredients, which have much higher latency and higher levels of granularity are what you need to train differentiated and specialized AI agents. Now obviously, as we go on and on about why healthcare IQVIA bears no resemblance whatsoever to data in any other industry.

But let me switch to the second important requirements to do AI identification, and that is domain expertise. In some industries, a couple of lawyers will do to interpret a case. Not so in health care. To build the algorithms required to develop AI agents, you need to have the ability to read, understand and interpret these highly complex data sets in that profit context, so the agents can perform these workflows at the level of precision, accuracy, trust and compliance required by the regulators in health care. That is it in what we've been calling with our clients, health care-grade AI. And this is why our clients trust us to work with them on their own AI journey. On the one hand, it helps us differentiate in clinical research and win more business.

On the commercial side, we've seen an uptick in demand for AI-enabled analytical offerings. A lot of work we do with our pharma is being discussed. It's a partnership with IQVIA. Bear in mind, our agents have been training on our data assets for over a year now. And to date, we've deployed over 150 agents covering over 30 use cases across the business, clinical and commercial. The portal to understand about how this AI densification is done. And for this me if I'm being simplistic can explain obvious things, workflow includes many tasks. Each of these tasks can be performed by an AI agent so we did a workflow that could be 10, 15 or 20 agents that are involved, and they work together under the oversight usually of an orchestration agent that sits on the top. Now for each of these tasks, we choose the model that's best suited to the task -- so for a particular task within a workflow, it could be open AI.

For another past, it could be claude. It could be one of our own tools or a number of models and tools. So within 1 identification process of 1 workflow, you may have many different tools working together. And the goal is to pick for each task the best suited tool.

And of course, optimize the overall cost as some of these tools are actually quite expensive. Here is where deep domain expertise is critical to be able to choose the best model and fine-tuning that model on proprietary domain-specific data to optimize performance.

Now finally, the investment required to put this all together is quite significant. It's only justified if you have the scale across both clinical and commercial across a broad array of therapies and across the globe to make the economics worthwhile. Now we sell to over 10,000 clients and therefore, we have that scale. That's why we exist in the first place long before AI came to the fore. Everything we do our clients will do. But they have is a lot more economically rational to us source it to us and to partner with us. Same here, -- so I would say overall, in answer to your question, forgive me, and I beg your patience for the time I took to answer your question that it's important to clarify Overall, I would say AI identification is a positive for our business across both clinical and commercial, and I understand it's hard to distinguish between us and other CROs, us and other information services provider. And so I could give you some detail, and we could go up in more detail in for calls. -- you saw a desire, I hope we can go to the main subject of the call, which is the results and our guidance.

But again, our proprietary data assets, which are not stopable by horizontal AI models are more valuable than ever actually. Our services are differentiated because they leverage deep domain expertise that very few, if any, healthy organizations possess in-house. So yes, some lower-level consulting and analytics work may be displaced. But at the same time, we see increasing demand for new offerings including the next generation information management task solution that I spoke about in my introductory remarks. And by the way, these introductory remarks were written long before the AI drama erupted a couple of days ago. So I hope that addresses your questions, Rob.

Your next question comes from Eric Coldwell with Baird.

Thanks very much, and I was hoping to dig into the latest acquisition, Cedar Gate. Perhaps help us better understand holistically what the value and driver of that acquisition is for the organization and how it fits into the total IQVIA ecosystem -- and then technically, could you provide any color on the specific revenue and profit contribution of that business? Is it accretive, dilutive, maybe give us a sense of the margin profile. If you could, that would be very helpful.

Yes. Thank you very much. So look, we've been doubling around the payer provider analytics business for some time, we never at scale. I think overall, before the Cedar Gate acquisition, our overall payer provider business for the company is like it's a couple of percentage points of our total revenues, and it's mostly in the EMEA region, in Europe and in the Middle East with specific technology platforms. So in the U.S., we've looked at several assets before, but nothing that would be that was a sufficient scale. And obviously, the valuations were not rational at the time. Cedar Gate itself was a great opportunity. It's basically, it transforms happier data into insights for improved patient outcomes and provide analytics to payers.

It does have a great technology platform as well. It was -- it has the right scale. You asked for the numbers. It's about in '24 it was about $125 million in revenue, and it has somewhere $33 million of adjusted EBITDA. That's what I have in from 32.7% to be precise. So -- and 25, we have a little bit higher than that 140, maybe that and about Yes, single market Yes. Okay. So that's for the numbers. So yes, it helps improve patient outcomes, higher quality of care, reduce cost across the system. It utilizes data from the customers, I think it has for pain Bayer and about 60 million lives. So obviously, they don't utilize, they are purchased on IQVIA or other third party. It has to expand our solutions -- and that has some synergies with our data analytics and technologies.

Your next question comes from Justin Bowers with Deutsche Bank.

All right. everyone. Ari, I may add one, if I may, but I do recall in your 2019 Investor Day where IQVIA is highlighting its investments in the cloud and AI and ML. And -- and I think a lot of those investments may not have been accretive to cash flow at the time or over the course of those few years. And maybe now is the time where IQVIA really starts to monetize those investments whereas the rest of the gold was caught up. But I think the 1 question at the risk of oversimplifying is just to understand whether this is an opportunity or risk for your business? And is it sort of accretive, mutual or decremental to growth, whether it's RTS -- and I think your response at the end, to Shlomo's question, is that it's potentially accretive to the long-term growth rate of IQVIA.

So I just want to confirm that that's what you're messaging? Or maybe you can restate the thoughts on what the impact is or opportunity is for the segment growth rates.

And then just secondly, it does sound like what you're seeing in RDS is an improving business environment based on your prepared remarks. And is that are we on course to really sort of get back to the 1.2 book-to-bill throughout 2026? Does the pipeline support that? Or is it sort of too early to tell?

Yes. Well, thank you. I mean I don't really know where to start. It's really frustrating that everything we've been saying on you refer to -- you went back to 2019, it's true. But again, we've been accelerating all of this over the past year, and we've communicated this over and over again. It's really hard to disclose a generic assertion like AI is going to displace your business. It's exactly the opposite. I said before, and I'm going to repeat it again. AI justification is a positive, has been a positive, will continue to be a positive for us. IQVIA has the largest proprietary health care information assets in the world and is the foundation of our value to clients. That access is not available. We have that access to nonpublic granular high-frequency data that nobody can license at that level of debt, which is the level of debt as required to build the agents I don't know how much to say it.

Number two, industry expertise and global presence cannot be replicated by general purpose AI like it can be in any other services. Our value counts of 7 decades of big knowledge across 100-plus countries, deep understanding of local health systems. It cannot be systemized or replaced by generic LLM just can't outside Healthcare. -- believe if we could be ready know. So we are our company is integral to our clients' ecosystem. AI is more likely to augment the clients' team, but not to replace us -- our client AI initiatives are enabled by our data services and workflows and people. The scale and the centralization that makes IQVIA the natural health care AI partner are should be evident. A little bit in remind me, just to item, a little bit over a year ago or about a year ago, I was here in people telling me that R&D investments in drug development is over.

No one is going to invest in drug development anymore. I had people stating that as a fact. Okay. So I've said what I have to say, you can remit the streetscape. I just want to remind you, again, AI delivers the most value when it's embedded in existing workflows. Why should you build the new wheel if the existing one works and you can simply optimize it.

Most of what AI does by the way, it covers 80% of what needs to be done. But you still not need to have someone with the subject matter expertise to complete the remaining 20%. Otherwise, you keep compounding errors and you end up with an incomplete product, which is health care is now not to begin with. You're also forgetting regulations. AI is all about productivity. It's all about enabling people to do more. It will not replace. It will help enhance and improve.

RMBS and bookings. So the metrics -- the demand metrics are very strong. They continue to be double digits, whether it's post pipelines, RFP flow. The book-to-bill -- again, I'm always pushing back on -- you've seen that it has improved during the year. We had ferrata, -- we -- this quarter had cancellations of -- for futility reasons. But we had very strong bookings. Look, despite the naysayers who were telling as to Urbat we were done in any business, we booked again $10 billion of business this year. like a few other years, circa cancellations. So what the book-to-bill will be next quarter, the quarter after next year, we don't project that. So I don't know. But again, demand indicators are strong. And for strong EMP demand has come back largely because funding has come back. Our large pharma is a very rich pipeline of opportunities we're working on. So I don't see anything here that's unusual.

You next question comes from Elizabeth Anderson with Evercore ISI.

I don't want to beat a dead horse, but -- have you actually seen -- I think 1 of the fears that came out this week, and I'd just be curious your thoughts on it that -- I think Pfizer and maybe some others have talked about using AI in terms of trial efficient, improving trial efficiency. And when I heard that it seems sort of in line with sort of what you and others have maybe previously said about sort of an increase just generalized increase in that over time. Have you seen any difference in sort of behaviors from that large pharma segment in terms of what they're asking for you? Because I think the fear comes down to like are they going to need fewer FSP seats or something like that, and that would be a drag on revenue -- or is this -- so one, I guess, have you heard over that?

And then two, maybe on the financial side, anything you can point out in terms of the cadence of profitability this year that would be sort of different than what in prior years.

No, nothing different with respect to large pharma AI efforts and the idea that clinical trials can be made more efficient with AI. We've been talking about this for a long time. The very creation of IQVIA was predicated on this idea and the innovation of new tools that allow AI justification, we find on that right away -- and we've been working on it. And in fact, I would say, with respect to client clinical trial efficiency improvements through AI agents large pharma with us. With respect to large pharma work on AI early in process, which you alluded to that is on discovery, which, by the way, this is the board. When you hear large pharma mentioned, AI 99% of what they mean is using actuation tools way, way upstream to try to source through the molecules to try and decide and anticipate in advance which trial will be more successful.

So that doesn't affect what our business is, you can conclude theoretically that as a result, they will start less trials. But that at all. In fact, if you talk to an large pharma we'll do more trials and will be more successful. -- it. There are policy obviate they did that, most of the innovations, if you go back actually came for 2 weeks, not because they prove the initial hypothesis. So it's a different discussion, but innovation in some cortical has often come per change, so to speak in the course of a trial that was trying to somebody else. Either way, we do not see any change in demand dynamics. We only see opportunities for productivity improvements. We are on it. We help our clients with those proponents. It helps us as well. We work in partnership with our clients and our business is stable and growing and nothing has changed. And we believe that we will continue to grow, gain market share, as we've been doing and execute on the strategy. There is nothing new here because an article was published, nothing.

Your next question comes from David Windley with Jefferies.

Super -- thanks for squeezing me in here. Ari, I wanted to ask a question about margin. Your margin year-over-year was down a little bit in the fourth quarter, but it looks like to us, your pass-through growth was quite high. So that more than accounted for that margin pressure and maybe you did actually gain some productivity apart from that. So my question if my question is twofold, sorry. So one is this more simple version of what is the trajectory of pass-throughs and how should we think about how that's affecting margin the bigger question though is dovetailing on your productivity points and thinking about how those productivity gains are shared with the client historically, my best understanding was kind of the expectation of some sharing.

I guess what I'm interested in is, you've also talked about having been through a period of pretty significant reprocurement has the price taking the price pressure by pharma in those reprocurements been their way of extracting that productivity value and then you go get it? Or is it more of a program-by-program, contract-by-contract discussion with them, where the strategy on the trial drives shared efficiency. I'm just trying to understand how you monetize the efficiency that you're chasing?

Yes. I think, again, the procurement report, I'm just going to answer the second part of your question procurement is term in rates and so on and so. So you would conclude normally that that's the -- it's the form, not the like. Having said that, obviously, in a given trial, still they need a little bit of negotiation given if. But look, on long-term, you share productivity gains with the clients. That's no question. No secret. But you're asking about the short-term, not that it is in that sense. What was the first...

Trajectory pass-throughs and how we should think about that?

Yes, yes, yes. You answered your question yourself at...

The biggest driver that gross margin is finally saw was very strong pass-through growth in the quarter. And there's some mix -- product mix impact that gets into that as well. Now as we go into next year, you saw we're guiding towards flat. Overall, EBITDA margins and the pass-through growth will moderate going into next year into 2026.

And it's basically, yes, to answer to your question, you said -- talked about productivity, yes. I mean we -- we offset some of this with the productivity gains when you have or with a lot of passes, then there's just that much you can do.

Yes. You'll see that the SG&A margin continues to improve and a lot of that is productivity related.

Yes.

That was our last question.

Last question -- thank you, operator. Thank you for taking the time today to join us, and we look forward to speaking with you again on our first quarter 2026 earnings call. The team and I will be available the rest of the day to take any follow-up questions you might have.

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

All right. We're live. Next up, we have IQVIA. Representing IQVIA is Ari Bousbib. Ari, welcome.

Thank you, Dan.

Ari, you just reported your third quarter results, and I was hoping we could start there. If you could walk us through the highlights. What did you find encouraging? And where is there more work still to do?

Well, no news, but we reported financial numbers at the high end of our guidance, and that was -- that's good. We try to do that always. We gave guidance for the balance of the year, which is also consistent. We plan to deliver over 5% of revenue growth. We shared our main metrics.

We booked quite a bit of business in the third quarter. We had a decent book-to-bill of 1.15. We booked on a net basis, $2.6 billion of new business in our clinical business. The leading indicators trended favorably. We look in particular, and we've increased our focus on measuring decision time lines, which had become elongated during the period of uncertainty that we just went through in our industry.

And those decision time lines have started to trend towards normal decision time lines. Our request for proposals increased very strongly. They were up 20% in dollars year-over-year. We think end of '24, beginning of '25 was probably the trough of the cycle we just went through.

And relative to the first quarter, our bookings in Q3 were up over 21%. They were up 13% year-over-year. So again, good trends, favorable trends and an improvement overall in the environment.

Okay. And one of the themes that came through in your call was this concept of the uncertainty lifting in pharma. And I was hoping you could talk more about that because at least just tracking the dates of the news flow, Pfizer Tuesday didn't happen until September 30.

So presumably, that ought not to have affected your third quarter. So tell me what you're seeing in your interactions.

Well, look, I mean, we just went through a period of significant turmoil in our industry. And I would -- even before that period of uncertainty, which started exactly a year ago with the new administration and the nomination of RFK Jr. and all the preannounced policy changes that we've heard of.

I think, firstly, you have to remember, there was a period of overspending and overinvestment in the industry, frankly, in the '20 to '22 time frame because of the COVID pandemic. Every available and unavailable capital flowed into the industry.

We had a massive amount of investments, a lot of it towards infectious diseases, vaccines, COVID-related therapies. And post-COVID, all of that went away. I mean our own company grew 20% plus during that time year-over-year for a company our size, that's quite significant.

And so we've got the climbing down from that peak period and the restraint that accompanied that period of time where people were -- the pendulum swung the other way. There was no capital available really on the emerging biotech front. That's number one headwind that we faced.

Secondly, we had the IRA under the Biden administration, which included provisions to begin negotiating certain prices of drugs. And we had a period where in the end of '23 and through '24, where large pharma, in particular, spent a lot of time revisiting their pipeline of projects in light of potentially new pricing assumptions and the resulting more unfavorable IRRs.

As a result, we had an elevated number of cancellations of clinical trials that had either just started or that had been awarded but not started. That was a second significant headwind that the industry faced and of course, tempered our net reported bookings because we were facing elevated level of cancellations, not just due to futility reasons, but also to this process that [ Claus Pharma ] went through and cancellation wave based on economic reasons. That is largely behind us as well. And the third macro headwind was the uncertainty you described.

So it's not just one thing, but it's a series of macro events that created a difficult environment for us. The wave of uncertainty triggered about a year ago, the changes at the FDA, different people in charge in and out, talks about tariffs, talks about MFN, et cetera.

And that created a lot of uncertainty because those pronouncements weren't clarified for a long period of time. And when you do not have good information, you don't want to make large capital investment decisions. No one wants to take those kinds of risks. And as a result, while our pipelines continue to grow, decision time lines continue to elongate as large pharma sort of paused decisions and biotech investors paused their investment decisions.

Secondary markets were closed, as you know, and unavailable. And so all of that created a difficult climate. So after having faced elevated cancellations, now we were facing a reduced number of available trials and demand that was constrained. So that was through the first part of this year, but already beginning in the second quarter and certainly confirming it through the third quarter and continuing now, we see that level of uncertainty being lifted. It's not so simple to have tariffs in biopharmaceuticals.

It's the issues about pricing of drugs, which are always an issue that people like to talk about. The implementation, the executive orders that were issued sort of clarified what it would apply to and removed a lot of uncertainty. And we knew this before the September 30, meaning...

Before the Pfizer announcement.

Yes. And I think that's one element. The other element, which sort of is independent of what the administration decides is if you have a good drug that's got a molecule that has very good preclinical results, possibly good Phase I data, if you want to go -- you know that it's going to take 3, 4 years before that drug gets to market if everything proceeds well.

And you want to be there quickly. Every month that you waste is a lot of money for. And pharma is valued on the pipeline. And you also have an upcoming wave of expirations -- of patent expirations between now and 2030. And the growth in this industry essentially is driven by the net of new molecules approved minus patent expirations.

So you want to constantly refill your pipeline. And if you are holding off on investments, you're just delaying that. And so in conversations with clients, it became apparent that we cannot wait forever to understand exactly what the administration will do or will not do, we need to proceed.

And I think that started even before those meetings and all of those elements that -- all of these events that sort of contributed to reduce the level of uncertainty.

Got it. What's your degree of conviction that all of the IRA reprioritizations are behind us?

Well, look, we work with everyone in the industry. I think there's no one in the world of biopharma that doesn't buy something from IQVIA. And so we have very good relationships with our clients, and we've participated in those processes. And we are very convinced that that's over.

Okay. And what's your level of conviction that we're not going to have an MFN reprioritization wave?

Look, the events that you referred to and the administration has more or less clarified what they will focus on. No one can be certain. We could always be surprised with the new executive order. But I think in conversations with the industry and with people in the administration, I think we are fairly confident that essentially, we know where it's going.

Okay. Moving on to some of the leading indicators you mentioned, specifically the 20% growth in RFPs year-on-year, that's accelerated every quarter year-to-date. There's been a lot of discussion in the investment community over the past 12 months about the reliability of that as a leading indicator given potential changes in customer behavior. Do you feel that, that 20% RFP growth is a genuine demand signal that you're confident in?

Well, I mean, yes, not every request for proposal turns into an award. But -- and we don't include in our RFP metrics any request for proposals. These are all validated both in terms of the science and in terms of the availability of funding for those programs.

So I'm not sure what you're referring to here, but we've always looked at RFPs in dollars as a very important leading indicator. And we go back in history, if the RFP flow went down to low single digits or negative that usually in the following 2, 3 quarters, you had the difficult bookings.

And if your RFP flow is strong, then you also -- it has to come together with a good -- stable win rate. If we had an RFP flow that's increasing and at a win rate that decreases, then yes, you could say, well, I'm seeing a lot more opportunities either because I'm more aggressive commercially or because there are more people that are throwing bids out there, but I'm winning less.

So it's -- I would agree that it's relevant. But in our case, we are winning more, okay? So yes, and of course, an RFP doesn't translate into a booking immediately. It does sometimes in the same quarter, sometimes in the following quarter and sometimes 2 or 3 quarters later, it depends on the nature of the trial. But I think it's a pretty good indicator.

And we don't rely just on that. We have a pipeline, a qualified pipeline. It's supplemented with a lot of conversations with our clients.

Sure. And you answered my question with the win rate, but what I was referring to, to clarify is this concept that clients might be issuing RFPs to 6 providers instead of 3 providers, almost inflating the RFP velocity, if you will.

So this is absolutely not true for large pharma. It's actually the opposite. Large pharma went through a process over the past year, 1.5 years, where they essentially decided to reopen all of their relationships with vendors and requalify who they wanted to do business with.

And the main objective was to consolidate a lot of the spend. So if anything, with respect to large pharma, it's less people that are bidding on a given trial, not more because it's been prequalified and it's within the context of already negotiated market, master service agreements.

With respect to the EBP, I mean, it's a very, very vast market. There are smaller CROs. We spend our time talking about the R&DS segment of our business, which is 55% of our total, but we also have a large and well-performing commercial business. But on the R&DS side, there are smaller competitors that are focused essentially on the biotech sector.

And I was myself surprised when I saw that some of them -- actually one of them deliver extraordinary results and our teams report that they never meet them, right? We never see them in the marketplace that essentially tells you that it is an entire part of the market that we are not even looking at.

So the market is on the EBP side is much bigger than what people think. And certainly, we've decided to go after that -- those segments of the markets that we weren't looking at before. So that may be part of why we have more RFPs. But we are -- again, our win rate is increasing across segments, large pharma or EBP.

Can you comment on how your biotech win rate is trending specifically?

Going up -- similar. Actually higher than even in large pharma.

Yes. And how is the -- apologies for the R&DS loaded portion of the Q&A. We'll get to TAS. But how is the pricing environment trending post those reopening of all the large pharma contracts and the funding challenges in EBP? I think there were some comments on pricing a couple of quarters ago, which caught investors' attention, and I'm hoping for an update.

It has largely subsided that environment, and it has essentially stabilized. There's no -- currently, things are stable. Yes.

Okay. And another topic, FSO versus FSP. I feel like that's volatile for IQVIA quarter-to-quarter, but can you tell me where is the direction of travel? Where is the trend between those 2 different service offerings?

Look, I've been in the past 8, 9 years through several cycles of this where I'm told that everything is going FSP and then the pendulum swings back. I can't quote the exact number, but it's between 15% and 17% of our backlog, RFP flow and revenue on the R&DS side, that's FSP.

And it moves -- it has tilted up slightly, meaning from 15% to 16% to 17%. But certainly, in the last quarter, I think it was a very like low single digits of our bookings. So it tends to swing. Look, in times of tightened demand and large pharma tends to try to use its own people. And so they switch to FSP.

In our experience, they find that it actually is more expensive and then they come back. That's one element where you've got more FSP. The other one is it's difficult to do FSP when you don't have all the capabilities in-house. Very often, large pharma acquires innovation.

Large pharma buys biotech companies. If you look over a long time series, the majority of new drugs comes on biotech and large pharma essentially buys that innovation. And often, they don't have that -- those capabilities in-house. That's large pharma. EBP is 100% FSP, right, outsourced.

And again, when people express concerns about the sort of a deceleration of R&D spend growth going forward, it's true but it's only mathematically because you had this huge spike of spend in the COVID years where you had 7%, 8% annual R&D spend.

And now it's -- I'm talking about large pharma and usually, the forecasts are for the top 15 pharma companies. They are around a 3% annual growth. It's still growth.

And when you exclude the spike of the COVID years, it's really a regular trend, and these are very large numbers. But people often ignore the EBP segment, which grows 8% to 10% per year in terms of R&D spend over long time periods. So smaller in terms of aggregate dollars, but it grows a lot faster.

And that would balance any FSP trend in large pharma.

Correct.

Got it. Understood. Well, maybe let's move on to TAS. We had a conversation at dinner last night that Wall Street had mismodeled TAS in the third quarter, and I'll confess I'm guilty of that as well. So the message was TAS came in line versus your internal plan. Our models were a little bit too high.

Can you talk about that, though, because the growth did decelerate in Q3 compared to the first half of the year. And I know there was a comparison issue, but if I strip out acquisitions, if I strip out M&A, the comp didn't seem that bad.

I think it was a 5% organic figure in the prior year quarter. So just help me understand getting from that, we calculated a 1% organic growth figure for TAS in Q3, how that accelerates from here? And maybe performance by subunit because I know TAS did a lot of different things.

Yes. I mean, look, first of all, sequentially, it still grew, right, in Q3, even organically versus Q2. And if you go back and you look 10 years, 5 years, you will see that Q3 most years is down versus Q3 -- Q3 is down versus Q2 sequentially. And that's because Q3 is essentially -- is the lowest quarter on the commercial side.

Europe is shut down for 2 months. And so this quarter, we had actual growth Q3 over Q2 in dollar terms. Last year, you pointed out to our growth. I don't know that your numbers are correct, but we reported around 9%, was it, 8.6% last year growth, which was really unusually high.

So we had already alerted investors to the fact that we will have a compare issue year-over-year. So nothing surprising, and it came in line with what we expected. We always told you that the TAS business has essentially 3 big parts.

One is a data business, which has very high margins, but very low growth. The fastest-growing piece of the TAS business is the real-world evidence business, which grows double digits or more. And then you've got all the analytics and the advisory, the consulting work, which is sort of mid-single digits type of grower. So that's kind of where we see TAS in the 5% to 7% long-term growth.

And so the recovery that you're hoping for is in that latter piece you mentioned, the tech and analytics?

That's right.

Okay. What do the leading indicators look like there?

Well, again, pipelines are strong. The project wins are also good. We went through a period where even though it wasn't connected to IRA or the excessive post-COVID spend on projects that didn't matter or the uncertainty on the new administration's policies, but pharma constrained their budgets, and they are only now starting to do projects that they need to do.

When a drug is approved, and there have been a record number of molecules approved last year, you need to launch the drug. And launch activities are one of the major drivers of growth in that analytics business for us because pharma needs to understand where are they going to launch, which segments, which HCPs need to be targeted, what's the pricing, what are the promotional activities.

So launch activities are really the sweet spot of that section of the business. And many of the launches have been delayed due to the uncertainty period that we just went through, and all those are now being released. So because of that, we see the business coming back.

Okay. One more TAS question before I zoom out. Can you talk about the agreement announced with Veeva? How did that agreement come about? And what are the implications?

Look, we had a long-running dispute with Veeva around IP infringement and so on. People probably misunderstand why we decided to resolve this. I don't like to use that word so much, but for lack of better terminology, the pharma works with an ecosystem of companies.

And with the advent of AI and agentification of processes, a lot of the old technologies and applications, CRM and all that stuff is going to become irrelevant. The way pharma operates increasingly requires the collaboration of the people who provide the ingredients and the content and the services with people who provide technology applications.

Those technology applications need to speak to each other, we have suites of applications. Veeva has suites of applications. If you can't put our data into their applications and we can't use their applications with our services, then you've got too much friction in the system. It's not just Veeva, it's a bunch of other technology companies that participate in any given clinical trial or in any given set of commercial activities.

And so this wasn't good for clients. And we're both very big providers of different things to our clients, and we needed to work together and not against each other. And that kind of drove a decision to just settle our disputes, and we were satisfied that our concerns were addressed. And so was with Veeva and we moved forward.

Okay. I'll zoom out here in the last 7 minutes. Can we talk a little bit about 2026? You made some comments on your earnings call framing 2026, I think, is at least a 5% growth year. Can you elaborate on that and talk through what your expectations would be by segment?

So I'm not going to talk about 2026. I probably shouldn't have spoken about 2026 on the earnings call. The finance team here wasn't happy about that. But as you and colleagues do a good job at trying to extract more visibility.

And all I said was, look, I'd be surprised if we don't deliver top line growth that's at least what we are planning to deliver this year, okay? We spoke about all the headwinds and the difficulties we've been through. And we still are going to deliver over 5% growth this year.

So with all of that uncertainty receding with our bookings, improving with the pipeline of projects we have on the commercial side, all of that, I think, again, we haven't finished our planning period, and we will share detailed guidance as we always do when we release Q4 and full year earnings early in '26. But it's hard to see that we will grow our top line faster than what we grew our top line this year. That's all I said.

Sure. And is that reflecting that we're in a period right now of maximum uncertainty. So you would expect, given your leading indicators, things shut down.

Sure. We think that the environment generally is very favorable. And I think if you speak to other participants in the industry, you will hear the same. So it's not just us. Yes.

So that 6% to 9% growth long-term construct, that remains fully in play.

Yes, absolutely.

What about the flat to positive 30 basis points of EBITDA margins that are embedded in that construct?

Right. So that's a long-term guide. You know that we've been growing our margins for the past decade, almost consistently. This year, we -- I think our margins last year, EBITDA margins were about 24%. And this year, they'll be about 23.5%, so about 50 bps of contraction. You have to think about our operating margins as follows.

What influence margins if we do nothing else, is the business mix. I mentioned as an example, real-world evidence growing much faster, obviously, than the data business within TAS and real-world evidence is lower margins than the data business.

You brought up FSP. If you have more FSP mix in a given year, then you have an unfavorable mix on margins because FSP margins are lower than full service margins. So in 2025, the headwinds from business mix were 50 bps. In addition to that and separate from the business mix, we account for pass-throughs as revenue.

Several years ago, the SEC made a change and require that from an accounting standpoint, we report pass-throughs, reimbursed expenses as revenue. Now obviously, that comes with no margin. Pass-throughs are essentially mostly investigator fees that we pay to investigators, to doctors and pharma reimburses us for that.

There are many complex trials that require a lot of imaging, MRIs, PET scans, all of those procedures, we pay for and the sponsor reimburses us. So these are pass-throughs. It's significant. We disclose what they are, but they come with no margin.

So if you have a mix of more complex trials that have a lot of pass-throughs. And by the way, full service trials have a lot of pass-throughs. FSP have no pass-throughs. So we do want a lot of pass-throughs because that reflects a better margin profile on the RDS. But the pass-throughs themselves come with no margins.

This year, in '25, pass-throughs cost us 50 bps additional to the 50 bps I call, approximately, I'm just framing the numbers. So really, if we hadn't done anything, we would have gone from 24% margins to 23% margins. Now obviously, people know we work constantly on efficiency. We have the largest scale in the business. We've got a lot of -- we have, I think, 30,000 people in India, in Nepal, in the Philippines, and we constantly balance the mix of where we do work and where our labor is.

We haven't spoken much about this, and we don't have the time, but we've been engaged on a -- for exactly a year on a process of identifying our SOPs together with the help of NVIDIA and others and that creates efficiency.

So all of those activities have offset 50 bps of that 100 basis points of margin erosion. So absent the pass-through impact, which is really not predictable and not relevant to the dollar numbers on our operating margin, we would have had essentially flat margins this year despite all the uncertainty and the headwinds we talked about.

So I think that going forward, it all depends on the mix of business, on the mix of pass-throughs and how much we can offset. In general, we feel very good that we can at least offset, if not do better with our cost reduction initiatives than the headwind caused by business mix.

So that flat to 30 bps of margin expansion on average per year going forward still stands. And it's supported long term by the AI agentification activities that we are engaged in and which are really not comparable to anything else because it's all dependent on, as you know, AI agents are only as good as the ingredients they're trained on. And only we have those ingredients in the industry.

Okay. Well, Ari, with that, we're out of time. Thank you so much for sharing your insights.

Perfect. Thank you so much. Thank you for the invitation.

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

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.

Thank you, operator. Good morning, everyone. Thank you for joining our third quarter 2025 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; and 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 at ir.iqvia.com.

Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. 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 as 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.

Thank you, Kerri, and good morning, everyone. Thank you for joining us today to discuss our third quarter results. We delivered another strong quarter, [indiscernible] when profits were towards the high end of our guidance, reflecting its solid operational performance. Free cash flow was particularly impressive this quarter. It was actually the highest quarterly free cash flow ever, even when you [indiscernible] the large advances we got during the COVID era for vaccine trials. This strong free cash flow, of course, reflects a good and disciplined working capital management by the team, but also an improved overall industry backdrop.

On the clinical side, net bookings in the quarter totaled exactly $2.6 billion, which resulted in a net book-to-bill ratio of 1.15, also reflecting the improving trends in customer demand that we started seeing in the second quarter as well as, of course, solid execution from our sales teams. In fact, our third quarter net bookings were 5% higher sequentially, 13% higher than a year ago and 21% higher than the trough that we experienced in Q1 this year. Key demand metrics were also strong in the quarter. The EBP funding momentum is building this year with each quarter delivering steady sequential growth, reaching $18 billion in Q3 according to BioWorld. Our qualified was up 6% year-over-year, driven by large pharma and EBP segments. You will recall that in the second quarter, we had high single-digit sequential RFP flow growth and low-teens growth year-over-year. This quarter, we saw again high single-digit RFP flow growth sequentially and 20% growth year-over-year with growth across all segments. Importantly, client decision-making time lines have been improving sequentially. Finally, our backlog reached a new record of $32.4 billion at the end of the quarter, showing a growth of 4.1% compared to the prior year.

On the commercial side, [ tariffs ] continued to perform well in the third quarter and delivered strong results despite tougher year-over-year comparisons. In fact, if you look historically at sequential revenue growth, Q3 is generally flat to down versus Q2, and we were slightly up this quarter. This was driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio.

I do want to mention the good growth we had this quarter in CSMS, about 1/3 of which was from an acquisition. We decided to increase our capabilities in this segment as we are seeing a developing trend of large pharma clients, increasingly looking to outsource commercial operations for established brands in specific markets. These tend to be large multiyear engagements typically spanning across therapies and geographies, and IQVIA is uniquely positioned to capitalize on this trend by combining our information and analytics and domain knowledge with a local sales force footprint.

Let me turn to the results of the quarter. Against strong revenue and profit results, revenue for the third quarter came in at the high end of our guidance range, representing year-over-year growth of 5.2% on a reported basis and just under 4% at constant terms. Third quarter adjusted EBITDA was up 1.1%. Third quarter adjusted diluted EPS of $3 increased 5.6% year-over-year.

Let me just now, as I usually do share a few highlights of business activity, let me start with TAS. New drug launches continue to be a key area of strength for IQVIA. A few examples, a biotech client who awarded us a multiyear integrated partnership to support faster product launches. This will include a full suite of information assets and analytics capabilities. A top 10 pharma clients awarded IQVIA program to support the launch of a novel oncology therapy. Top 20 pharma clients awarded IQVIA a contract to support the launch of a dual indication metabolic therapy, utilizing AI capabilities to integrate advanced patient insights into product utilization and patient response. The top 10 pharma clients selected IQVIA to provide large support for a new autoimmune disorder therapy. The engagement includes advanced AI-enabled patient level solutions that enable performance tracking and analytics near real time and integrate specialty pharmacy data and payer insights.

A good example of the commercial outsourcing trend I mentioned earlier was a very large award from the top 5 pharma clients to manage end-to-end commercialization and promotion of an established brand portfolio in a very large overseas market.

We're progressing as planned to deploy highly specialized industry AI agents. So far, we have approximately 90 agents in development covering 25 use cases across commercial, real world and R&DS. We, in fact, are now seeing growing demand to help our clients accelerate AI adoption. We are increasingly helping our clients build data infrastructures that are robust and AI ready by leveraging IQVIA health care-grade AI ecosystem, combining advanced information management, integrated platforms, security, safety and privacy along with domain expertise. Let me share a few examples of key wins in report.

The top 20 pharma clients selected IQVIA to deliver a next-generation information management solution that streamlined hundreds of sales data feeds into an AI-enabled centralized simplified global warehouse. Another top 10 pharma clients awarded IQVIA a contract to deploy a next-generation AI-enabled SaaS platform to optimize global compliance supporting. The biotech client chose IQVIA to deploy a new global master data management program to enhance AI-enabled omnichannel marketing and analytics operations.

Our real-world business continues to perform well. Here are some examples. Top 10 pharma clients selected IQVIA to lead a post-market commitment study evaluating treatment outcomes in African-American patients with lung cancer. A biotech client selected IQVIA to lead a prospective real-world study supporting a regulatory commitment to a rare oncology disease. Biotech client selected IQVIA to deliver a retrospective real-world study, supporting post-marketing commitments for their newly approved drugs to fulfill regulatory requirements.

Turning to R&D Solutions. The positive momentum that we saw in Q2 continued to build through Q3. A few standard wins with our biotech customers first. In oncology, a first-time sponsor selected IQVIA to lead the Phase I trial for a novel leukemia treatment. Now the biotech client IQVIA to lead a complex Phase I and Phase II trial in hematologic oncology targeting multiple cohorts across 2 indications. We were also selected as the exclusive CRO partner for the biotech [indiscernible] program. And of course, this recognized our leadership in cell and gene therapy and cardiovascular research as well as our ability to execute globally.

Large pharma is also strong in the quarter. We were, for example, selected to lead a Phase II study in stroke therapy, demonstrating our deep neuroscience expertise and global trial capabilities. Another top 10 biopharma client selected IQVIA to manage a global Phase III [ mass ] program, leveraging AI-enabled pathology tools and a robust site network to accelerate execution. We were also selected to lead a Phase III ovarian cancer study, highlighting our deep therapeutic expertise and the strength of the integrated delivery model in [indiscernible] clients.

Now before I turn it to Ron for details on our financial performance in the quarter, I want to say a word about the CFO transition we've announced some time ago. As you know, Mike Fedock will step into the CFO role on February 28, 2026, succeeding Ron Bruehlman, who will retire after a remarkable tenure. Ron, and that's the good news, Ron will stay on as a senior adviser to continue to help us on specific projects and to help ensure a smooth transition.

Ron has been a highly valued leader of this company for many years. In fact, Ron and I have been working together for over a quarter century. Ron has been instrumental in shaping IQVIA's financial strategy, driving its transformation into a leading global organization. He was here from managing the IMS Health IPO in 2014 through the Quintiles merger in 2016, and of course, he returns in 2020 to help us navigate the pandemic. His steady leadership and strategic long-term vision has been essential in building a high-performance global finance organization and helping IQVIA remain resilient during unprecedented times over the past few years.

Mike brings deep industry experience, and he has held key financial industry roles across IQVIA, including as CFO of our R&D Solutions business, and prior to that, as CFO of our IQVIA Laboratory business. He works closely with me and the senior team for years now and is very well positioned to lead our finance function into IQVIA's next phase of growth.

Let me now turn to Ron for more details on our financial performance.

Thanks, Ari, and good morning to everyone. Let's start by reviewing revenue. Our third quarter revenue of $4,100 million grew 5.2% on a reported basis and 3.9% constant currency. Now excluding COVID-related work from this year and last, revenue grew 4.5% at constant currency, and this included about 1.5 points of contribution from acquisitions.

Technology & Analytics Solutions revenue for the third quarter was $1,631 million, that was up 5% reported and 3.3% at constant currency. R&D Solutions third quarter revenue was $2,260 million, growing 4.5% reported and 3.4% at constant currency. Now excluding the step-down in COVID-related revenues, R&DS revenue grew 4.5% at constant currency. And lastly, our Contract Sales & Medical Solutions business, or CSMS, grew revenue of $209 million -- had revenue of $209 million, and that was up 16.1% reported and 13.9% at constant currency.

Year-to-date revenue for the company was $11,946 million. That's up 4.4% reported and 3.7% at constant currency, and excluding all COVID-related work, our year-to-date growth was approximately 4.5% at constant currency. Tech & Analytics Solutions revenue was $4,805 million year-to-date, that's up 6.7% reported and 5.8% in constant currency. R&D Solutions year-to-date revenue of $6,563 million was up 2.5% at actual FX rates and 1.9% at constant currency. Excluding COVID-related work from both periods, revenue grew approximately 3.5% at constant currency. And I'd say CSMS year-to-date revenue of $578 million was up 6.8% reported and 5.9% at constant currency.

Let's move down to P&L now. Adjusted EBITDA for the quarter was $949 million representing growth of 1.1%, while year-to-date adjusted EBITDA was $2,742 million, that's up and even 2% year-over-year. Our third quarter GAAP net income was $331 million, and GAAP diluted earnings per share was $1.93. Year-to-date, GAAP net income was $846 million or $4.86 of diluted earnings per share.

Adjusted net income was $515 million for the third quarter, and adjusted diluted earnings per share was even $3. Year-to-date, adjusted net income was $1,480 million or $8.50 per share. Now as already noted, we had a strong net new bookings this quarter, confirming the improved demand environment we started to see in the second quarter. The R&DS backlog at September 30 was $32.4 billion, up 4.1% year-over-year, and next 12 months revenue from backlog was $8.1 billion, that's up 4.0% year-over-year.

Reviewing the balance sheet. As of September 30, cash and cash equivalents totaled $1,814 million and gross debt was $14,957 million. That resulted in net debt of $13,143 million. Our net leverage ratio ended the quarter at 3.52x trailing 12-month adjusted EBITDA. And third quarter cash flow from operations was $908 million and capital expenditures were $136 million, which resulted in record free cash flow for the quarter of $772 million.

Now I'll turn it over to Mike Fedock, who will share details on our guidance. Mike?

Thanks, Ron, and good morning, everyone. Let's start with our full year guidance. We are confirming our full year 2025 guidance and are narrowing the ranges for revenue, adjusted EBITDA and adjusted diluted earnings per share, and are maintaining the midpoint of our prior guidance.

We expect revenue to be between $16,150 million and $16,250 million, representing year-over-year growth of 4.8% to 5.5% or 5.2% at the midpoint. This revenue guidance includes approximately $100 million of COVID-related revenue step down entirely in R&DS, approximately 100 basis points of tailwind from foreign exchange and approximately 150 basis points of contribution from acquisitions. These assumptions are unchanged from the prior guide.

We expect adjusted EBITDA to be between $3,775 million and $3,800 million, growing 2.5% to 3.1% year-over-year or 2.8% at the midpoint. We expect adjusted diluted EPS to be between $11.85 and $11.95 of 6.5% to 7.4% versus prior year or about 7% at the midpoint.

Now turning to the fourth quarter. We're expecting revenue to be between $4,204 million and $4,304 million, which represents year-over-year growth of 6.2% to 8.7%. Adjusted EBITDA is expected to be between $1,033 million and $1,058 million, representing growth of 3.7% to 6.2% versus prior year. And adjusted diluted EPS is expected to be between $3.35 and $3.45, which represents year-over-year growth of 7.4% to 10.6%. And this guidance assumes that foreign currency rates as of October 27 continue for the balance of the year.

So to summarize, in the third quarter, we delivered strong top and bottom line results as well as record high free cash flow. R&DS net bookings were $2.6 billion, growing 13% year-over-year and resulting in a net book-to-bill ratio of 1.15x.

The forward-looking demand metrics in the clinical business continue to trend in the right direction, with 20% of our [ free ] flow growth year-over-year and sequential improvements in client decision-making time lines. TAS performed well and delivered solid results driven by ongoing momentum from drug launches and the strength of our broader commercial portfolio, and we reaffirmed our full year 2025 guidance.

With that, let me hand it back to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of David Windley from Jefferies.

Ari, I wanted to ask you about what I think you call your see more, win more strategy and how that has played out through the middle of the year or through this year in terms of contributing to the RFP flows improvement that you're highlighting as well as your win rate, and how we should think about an amount, if any, price competitiveness you're applying in that strategy and how that plays out through the P&L as that business converts to revenue.

Okay. Well, usually, we keep the best for the last, but you start with the big strategic question. So let's start with that. Okay. Well, look, the strike in bookings momentum and RFP flow, I think we have to say, and we can see it in the industry in general, I think reflects a reduction in the level of uncertainty in the market environment and the macro political environment. I think there have been a few developments that have sort of helped [ tilt ] decision-making at large pharma on certain programs favorably and the climate overall has improved. That's undeniable in our sector. So that certainly is a big driver of our growth.

The specifics of our see more, win more strategy, which we started earlier this year, which, as you know, now has a lot of imitators has borne fruit as well in the sense that we've been looking at markets that we previously hadn't been touching and had left some more marginal players essentially [indiscernible] the monopoly situation in all segments, and we've decided to go after that.

The pricing conversation is a little bit overdone in my opinion. In a climate where markets dynamics were unfavorable with a lot of uncertainty and less deals to be had, there was more competition on pricing, and all we did in the first part of the year, was to align to those pricing discounts that were being offered as opposed to walk away in order to continue to build our book of business.

We don't see that trend continuing. It hasn't been an issue at all and certainly, this past quarter and the opposite, we walked away from deals. And we think that the sector in general is a lot healthier in terms of market dynamics, the level of uncertainty has gone down and pricing has returned to normal levels.

You had a question, a follow-up on P&L implications. Look, we have the $32-plus billion backlog, and only a tiny portion of that was subject to a few discounts that we did earlier in the year. Those -- the revenues associated with those things are going to bleed over our P&L already in the next 5 years, and we do not expect that to have any impact whatsoever on our P&L going forward.

Your next question comes from the line of Justin Bowers from Deutsche Bank.

So Ari, it sounds like the business environment is improving, fundings up, consumer confidence improving. And both of the segments, TAS and R&DS are strengthening at least on a 2-year stack basis. Is this momentum that we should expect to continue over the next few quarters and into 2026? And maybe if you just give us a glimpse of how you're thinking about those two.

Yes. Well, look, I can't -- I don't have a crystal ball here, and I'm not going to give you 2026. This was a clever way of asking me about 2026 guidance. We're not going to do that here. As you know, we usually provide guidance for the year concurrent with the release of our fourth quarter and full year earnings early in the year. So end of January or early February, we'll provide that. We are in the midst of our planning process and still in October.

And -- but look, what I can tell you is we are going to deliver this year over 5% in top line revenue growth, which frankly, given what we've been through and the environment we've been in, in the past 1.5 years, 2 years, I think is a very, very strong performance. And you can see that compared to our larger -- certainly the larger CRO peers, we are doing very, very well.

So I cannot tell yet what '26 will be in the next few quarters, but I mean, look, I would be surprised if revenue growth in '26 is not at least the same or better than the growth that we are seeing this year. So I say that with a certain amount of confidence.

Your next question comes from the line of Elizabeth Anderson from Evercore ISI.

Congrats, Ron, on your retirement. I was wondering if you could talk a little bit, Ari, about some of the differences between what you're seeing on the pharma side versus the biotech side. I think you covered the biotech side nicely in the see more, win more answer. But just sort of wanted to peel back a little bit on the pharma side as well.

In the large pharma side. Look, large pharma went through a lot of transformation internally in terms of their investment programs. You -- going back to the [ IRA, ] there was this whole phase of reprioritization of programs and reviews of their pipelines, which led to an elevated level of cancellations due to this reprioritization activity. Last, last year for 1 year, 1.5 years, beginning mid of '23 and certainly continuing through '24, we see that activity as having essentially being completed. And we haven't seen any further cancellations as a result of that type of activity. So we think that the pipelines are now fully sanitized. Of course, there will continue to be cancellations that can -- but they are all like more business as usual due to futility or other reasons and nothing unusual.

Large pharma actually, the RFP flow for our pharma is very strong. I mentioned that our RFP flow growth year-over-year is 20%. And that applies to large pharma and to EBP equally. I mean there's a strong, strong momentum. And again, that's helped by the more calming environment and perhaps more certainty around what's coming. And it's also held by the fact that these reprioritizations have been largely completed. And the programs that are now on the table are programs that our clients want to engage in and want to go forward with.

Our cancellations, I always say in recent years were about $0.5 billion a quarter, plus or minus a couple of hundred million dollars. So they could range between $300 million and $700 million in a given quarter. So a couple of billion dollars plus year in, year out. In '24, we had more than 50% higher cancellation than that by over $3 billion in '24 because of this reprioritizations from large pharma. That essentially is behind us. And year-to-date, our cancellations portal, the regular pattern, I think, [ stretches ] somewhere between $500 million -- around on average, about $550 million per quarter, I saw the numbers yesterday.

I think nothing much to talk about this quarter. I think we're a little bit towards the higher end of that range. But again, not because of reprioritizations, it's simply normal course of business. Our gross bookings were very strong, very, very strong this year. And you can see that also in our $2.6 billion of net bookings, which were up 13% year-over-year, up sequentially mid-single digits. And the trough we experienced, Q1, part of it was the trough. We don't see that in the details.

So again, large pharma dynamics returning to normal business conditions to trending towards normal business conditions. And biotech pharma is improving, which actually is a driver of EBP growth. And that, again, is reflected in our bookings and in our RFP flow as well.

Your next question comes from the line of Michael Cherny from Leerink Partners.

Maybe if I can ask a little bit about TAS. Nice growth against, obviously, a tough comp. As you think about the pathway forward, what do you see as the contributions you're getting from some of your inorganic advancements? And where do you see the best opportunities to continue to expand that business above and beyond your own R&D, talk AI, talk anything along that vein, that would be great.

Thank you, Mike. Well, you spoke about inorganic. I think we said the 1.5 points of the [indiscernible] to the company as a whole. As you know, almost has been the case. The bulk of that is in TAS. So I think in this past quarter, we did a large acquisition that was in R&DS and [indiscernible]. I think that we spent [ $485 million ] that we spent in total. And most of that is one acquisition called the next oncology, which is an SMO specialty in oncology, very attractive business. We acquired this end of Q3. So not much contribution in Q3. And the inorganic contribution to R&DS will be a few million dollars, I guess in the double digits like $50 million or thereabouts of revenue to R&DS in Q4.

With respect to TAS, we didn't do much in Q3. And so I guess the acquisition contribution for the year -- well, we did the CSMS deal as well, right, which is -- it's small, obviously. But since CSMS is a small segment, it was a large piece of it. So not much in TAS in Q3. In general, we try to buy technology companies, companies that can add capabilities to our suite of products, analytics companies, there's a lot of innovation, as you know, in the [ AMI ] space. [indiscernible] Medical affairs, real world. Real world is a very strong -- real world evidence was really very, very strong in the quarter, and we expect that to continue into the future.

So yes, I mean -- yes, I mean, for the year, again, 1.5 points, I would say 50%, 60% of that will be TAS and the rest for the year, right, 'for 25, and then the rest R&DS and then a little bit CSMS.

Your next question comes from the line of Shlomo Rosenbaum, Stifel.

Ari, before I ask you a question, I just want to also commend Ron. But Ron, I've seen you retire before, and I'm not fully convinced to you're gone right now.

The wrong words to describe Ron, not retiring.

Yes, you've dragged [indiscernible] of retirement in the past already. So I don't know. Ari, I want to ask you to talk a little bit about the subcomponents in TAS and how they're growing in terms of real-world evidence and consulting and analytics. And just some of the trends that you're seeing there. I know consulting often kind of leads the trend in terms of you see that picking up. That means that the environment is getting better. And maybe you could just talk a little bit about each of the components and what you're seeing and maybe what that says about the market.

Yes. So look, the growth rate in Q3 is hard to derive big trends because, as you know, Q3 in general is the weakest quarter in the year. But specifically, this year, we had a [indiscernible] compared with last year, it was the growth of TAS in Q3, last year it was like 8.6%. I want to say that [indiscernible] 8.6% growth last year. So we knew we had a tough compare this quarter. But as I mentioned in my introductory remarks, sequentially, we were slightly up and usually because Q3 is the toughest quarter, given nothing happens for 6 weeks in [indiscernible]. It used to be 3 weeks, then 4 and now 6 and going to 8, and where nobody is working.

So I think that the performance this quarter was very strong. It was affected largely by the real-world evidence, which was very, very strong. And everything else was -- obviously, data is usually low single digits. And everything else was between low to kind of mid-single-digit growth against very fast compares, same for consulting.

Are you seeing a pickup in that consulting?

You will recall that -- I know you are asking consulting because it's kind of the most discrete, and it's positive in terms of being an indicator when things were trending negative territory, consulting went down very rapidly in the '24, end of '23 or the first part of '24 time frame, consulting was down actually negative. One of the [indiscernible] maybe it was on negative double digits. But it's positive this quarter. And again, everything outside real world evidence in aggregate was mid-single digits or thereabouts.

Your next question comes from the line of Eric Coldwell from Baird.

I'll stick on the TAS question here just to make sure we're all level set for the fourth quarter. Back in February, you guided to $6.3 billion to $6.5 billion. That was quite a while ago. A lot of things changed. But if I use that original range and I take out what you've done year-to-date, that would put the implied fourth quarter revenue guidance about $100 million to $300 million below the Street on TAS. That's a big range and obviously a lower number than more consensus lies today. So I'm just hoping you can give us a little specificity on what you're thinking for TAS in the fourth quarter so we aren't ahead of our skates here.

Yes. I'm not sure. You're talking about our targets and then you talked about the Street.

Yes. You guided in February to $6.3 billion to $6.5 billion. And the year-to-date number through 3 quarters is $4.8 billion, a little over $4.8 million. So that leaves less than $1.5 billion to less than $1.7 billion to get to the full year, if I've done the number.

Yes. I want to talk to the finance team here and ask it. I don't have the number in front of me. But what you were suggesting that TAS would be lower than our guidance, I don't see that.

Well, I'm not really suggesting anything. I'm hoping you can tell us -- yes, I'm hoping you'll tell us that things have changed since the February numbers, but it is possible that maybe the Street is just a little high on the segment. I mean, it looks like you'll cover it with R&DS and CSMS. But I just want to make sure we're...

Eric, I think you are -- we are delivering on guidance. Is that...

Eric, we'll help you with some of the Q4 details. But on a full year basis, there's been no change all year with TAS that the full year [ CFx ] growth rate will between sort of 5% and 6%. So there's no change there. So we can help you with the numbers.

We always said 5% to 6% growth year-over-year, correct?

CFx.

CFx.

I think you said 5% to 7% constant currency, and I think -- I believe it was 5% to 7% on February 6 was the range.

We narrowed our guide in the last call there. So we're still sticking with the 5% to 6%. There's no change from the prior guide and no change where TAS is going to land in the full year.

Yes, we don't -- well, there's no change, Eric.

Yes. We'll help you with TAS with the Q4, but there's been no change.

Yes, perfect. Just want to make sure we're not ahead of our skates. I appreciate that very much.

And anything else you had on this clarification?

I had 42 questions, but you told us to stick to one. Let me...

I am going to give you a special discount because that wasn't really a question.

Well, look, I mean...

That was like a commentary. You were trying to [indiscernible].

I appreciate it. So I appreciate it. So I'll sneak two in. I'll take advantage and give an [indiscernible], I'll take a mile. Two things just quickly. One, do get some ongoing questions on those couple of mega trials that you mentioned earlier this year. I'm just curious if you can tell us what the status is. I think one was definitely ramping back up here in the back half, and I believe the other was still pushed out till next year, it's happening at all. So maybe just an update on the mega trials.

And then secondarily, Ari, in your prepared commentary, you highlighted some interesting wins and you mentioned Phase I a couple of times and my historic interpretation of past conversations was that you weren't really a big Phase I shop, maybe you partnered with some others. But I'm curious on what your involvement is these days and actually managing or even having Phase I [ CPU ] units. Maybe give us a little more color on what you're doing there.

Yes, it's a very good observation, Eric. We are seeing a lot of demand for Phase I work. And we are the network partners. We don't have a significant presence in that segment, but we are expanding, and it's why I chose to highlight a couple of examples. It also, by the way, part of our see more, win more strategy. And it happens to be that there is more demand. Things are getting sort of "restarted" again and the pipelines are strong. And so we are seeing more demand, and we are ourselves being more present in the segment.

Yes. And Phase I in oncology is a little bit different because you're not dealing with healthy volunteers. So it tends to feed your later business than other Phase I trials. So there is some distinction there, and that's what's next in oncology with Phase I oncology.

Yes. And then the 2 trials.

Yes, the 2 trials, there's no change there. We don't have anything factored into our fourth quarter guidance for revenue burn from either of them. So I suppose that's a slight change from what we said.

It's basically a little push out to the year. And it's not contemplated in the guidance. Yes. Bear in mind that we mentioned these -- what is it, like 1 year ago at this time because it caused us at the time to change our guidance for R&DS. These were fast burning and had already gotten started and they were interrupted. And so that caused us to change our value for R&DS in the fourth quarter, for the fourth quarter of last year. And so we had to mention it.

We also mentioned specific trials to the extent we can, and we try to be very careful because we are mindful of confidentiality for our clients and so on. So we cannot say very much. But we do mention it when there is a significant event attached to 1 trial, in this case, was 2, and that caused us to change anything in our numbers. But bear in mind, at any point in time, we're working on a couple of thousand trials. And we keep building backlog, as you saw. And thankfully, we have had very positive momentum on our bookings, and it's continuing. So we feel good about that and it continue to stagger on our book of business. So yes, but -- which may enable us to continue to deliver, and we've been better on R&DS even without those trials resuming this year.

Thank you, Eric. You want one more question? One more.

Next question, operator. This will be our last question.

Your last question comes from the line of Jeff Garro from Stephens.

I want to ask more about AI and maybe I'll try to make it a 2-parter. First part being if you have any insights how AI is changing your customers' business models and specifically their appetite for outsourcing? And then the second part would be, how is IQVIA using AI internally to deliver results for clients that may be a little bit more efficiently and whether you have any visibility into potential gross margin improvements from those internal use cases?

Yes. So thank you, Jeff. We've spoken about this in the past. And so far, we have about 90 AI agents in development that cover 25 use cases, and we continue to progress that. By early '27, we plan to develop 500 highly specialized agents. And what this do is they essentially eliminate a lot of physical labor from the tasks that we perform for our clients.

So currently, in the second part of your question first, certainly, that will help improve our margins longer term. Now it takes time to deploy, obviously, and it takes time to translate that into margin improvements. We've had great examples. On the commercial side, we have -- we use, for example, AI tools to compare patient cohorts to each other and highlight differences with natural language output, which leads to improvements in cycle times from several weeks to a couple of weeks. We really have a lot of examples and it takes a long time to recite those. But we see significant value in continuing to do more with less to deploying agents within our internal processes.

For our clients, I gave a number of examples in my introductory remarks. Our clients are very interested, of course, in using AI. So early, early on before we get involved in discovery, there's a lot of focus from our clients in the discovery space to try to use AI to sort out molecules and try to identify the "most likely" to succeed trials to tackle a specific disease. We participate a little bit with some models and some tools that we have.

But later on -- look, the issue on the clinical side is that it's highly regulated and you've got to go through standard processes that are defined by regulations and you have to use the intermediary stasis between those regulatory interactions to utilize and deploy AI. At the sites, it's very helpful. And our clients are using, of course, AI in their technology tools that some of which are our tools that they use commercially. They use AI. I gave a few examples to manage their promotion campaigns, marketing campaigns. They use AI to get patient insights in the real world. Real world is a big area for us, and one of the reasons we experienced such great growth is we've got very advanced capabilities given our vast information assets in real-world patient data using AI tools and try to evaluate how a drug behaves in the real world. Using AI becomes a great, great opportunity. So these are the areas.

Now with respect to the margin, as you know, we've had a lot of -- we have some margin headwinds certainly this year because of more pass-throughs largely because of the FX tailwind, which all -- which comes with our profits and a little bit of the mix, for example, in Q3, CSMS was stronger and CSMS with lower margin. So when you have market headwinds like that, certainly, we are counting on our usual cost reduction programs, offshoring and so on. But longer term, AI, certainly AI enablement will help mitigate those headwinds and help us long term improve margins.

Thank you, and I think the team will be available for follow-up questions as always. Thank you.

Thank you for taking the time today.

[indiscernible] I will turn it back over to you.

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

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