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ICON (NASDAQ:ICLR)
Q1 2020 Earnings Call
Apr 23, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Ladies and gentlemen, thank you for standing by, and welcome to the ICON plc Q1 2020 earnings conference call. [Operator instructions] I must advise you, this conference is being recorded today on Thursday, the 23rd of April, 2020. I would now like to turn the conference over to your speaker today, Jonathan Curtain. Please go ahead, sir.

Jonathan Curtain -- Vice President Corporate Finance and Investor Relations

Thanks, Tim. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended March 31, 2020. Also on the call today, we have our CEO, Dr.

Steve Cutler; and our CFO, Mr. Brendan Brennan. I would like to note that this call is webcast, and that there are slides available to download on our website to accompany the saved call. Certain statements in today's call will be forward-looking statements.

These statements are based on management's current expectations and information currently available, including current economic and industry conditions. After all, results may differ materially from those stated or implied by forward-looking statements due to the risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guarantees of future performance. Forward-looking statements are only as of the date that they are made, and we do not undertake any obligation to update publicly any forward-looking statements, either as a result of new information, future events or otherwise. More information about the risks and uncertainties related to these forward-looking statements may be found in the SEC reports filed by the company.

This presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed consolidated statements of operations U.S. GAAP unaudited. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.

[Operator instructions] I would now like to hand over the call to our CFO Mr. Brendan Brennan.

Brendan Brennan -- Chief Financial Officer

Thank you, Jonathan. In February, on ICON's Quarter 4 2019 earnings call, we outlined our expectations that the COVID-19 impacts for our Quarter 1 2020 revenue would be in the range of $4 million to $7 million, the majority of which was associated with our Chinese operations. Following that call, we have seen a very rapid escalation into a global pandemic. Accordingly, while we are pleased with the operational and financial momentum we brought into 2020, the significant disruption and uncertainty caused by COVID-19 means that we have taken decision to withdraw our full-year 2020 financial guidance.

My following comments will focus on our Quarter 1 performance, and Steve will then outline further details in relation to our current and future operational challenges, as well as the various measures we are putting in place to mitigate these risks. In Quarter 1, we achieved gross business wins of $1.027 billion and recorded $160 million worth of cancellations. Consequently, net awards in Quarter 1 were $867 million, resulting in a net book-to-bill of 1.21. With the addition of these new awards, our backlog grew to $8.7 billion.

This represented a year-on-year increase of 10.4%. Revenue in Quarter 1 was $715.1 million. This represented year-on-year growth of 6% or 6.5% on a constant-currency basis. And on a constant-dollar organic basis, revenue growth was 5% our top customer represented 11.4% of revenue for the quarter, compared with 14.8% in Quarter 1 2019.

Our top five customers represented 39.9% of Quarter 1 revenue, compared to 39.9% last year. Our top 10 represented 52.2%, compared to 53.1% last year, while our top 25 represented 69.6%, compared to 71.6% last year. Gross margin for the quarter was 29.3%, compared to 29.9% in our Quarter 4 and 29.5% in the comparable quarter last year. Our SG&A was 12.2% of revenue in Quarter 1, which compared to 11.9% last quarter and 12.1% in the comparative period last year.

Operating income for the quarter was $106.3 million, a margin of 14.9%. This compared to 15.9% last quarter and 15.1% in the comparable quarter last year. The net interest expense was $1.4 million for the quarter, and the effective tax rate was 12% for the quarter. Net income attributable to the group for the quarter was $91.7 million, a margin of 12.8%, equating to diluted earnings per share of $1.70.

This compares to earnings per share of $1.83 in Quarter 4 and $1.63 in the comparable quarter last year, an increase of 4.3%. On a comparative basis, days sales outstanding were 55 days at March 31, 2020. This compares with 54 days at the end of December '19 and 59 days at the end of March '19. Cash generation from operating activities in the quarter was strong at $142.8 million.

Capital expenditure was $11.3 million in Quarter 1. In addition, $175 million worth of stock was repurchased in Quarter 1, an average price of $141.68. This equated to over 1,235,000 shares, which is in excess of our stated goal of repurchasing 1 million shares over the course of the full year. We do not have any immediate plans to repurchase any further shares.

At March 31, 2020, the company had gross cash balances of $484 million and debt of $350 million, leaving a net cash balance of $134.4 million. It's compared to net cash of $220 million at December 31, 2019, and net cash of $128.6 million at March 31, 2019. In addition to the significant cash profile, we currently have undrawn revolving credit facility of $150 million available to use. Our robust cash generation and strong access to liquidity put us in a very resilient position as we work through the challenges that 2020 brings.

And with all of that said, I would now like to hand the call over to Steve.

Steve Cutler -- Chief Executive Officer

Thank you, Brendan, and good morning to all of you. As we entered 2020, the key industry drivers of a positive outsourcing landscape, growth in R&D budgets and a continued strong biotech environment remained in place. In Quarter 1, we booked strong levels of gross and net awards of $1.027 billion and $867 million, representing book-to-bills of 1.44 and 1.21, respectively. Consequently, we grew our backlog year over year by 10.4% to $8.7 billion, with revenues expanding to $715.1 million or 6.5% on a constant-currency basis.

We achieved a gross margin of 29.3%, and we continued our strong SG&A performance, with SG&A at 12.2% of revenue. This delivered earnings-per-share growth year over year of 4.3% to $1.70. In addition, in April, we are very pleased to announce the continuation of our long-term relationship with our top customer with the signing of a new multiyear services agreement. However, while the impact of COVID-19 was relatively modest in Quarter 1 this year, it is our expectation that we will experience a more severe downturn in our business in Quarters' 2 and 3 and possibly beyond.

And it is clear that 2020 is going to be a difficult year for the CRO industry as we face the extraordinary challenges brought about by the sudden onset of the coronavirus pandemic. Our core Phase 2/3 business is the service line most impacted. New trials are being put on hold, patient enrollment has slowed and approximately two-thirds of our sites have either restricted or stopped access altogether for our CRA, resulting in significantly fewer monitoring business. Furthermore, although a smaller part of our business in our central laboratories, sample volumes received into our facilities have been reduced by approximately 40% due to the drop-off in site activity levels.

The consequences of these challenges will curtail our ability to execute in the quarters ahead. However, despite the obvious issues, we are proactively reviewing and implementing alternative trial monitoring approaches with customers on a study-by-study basis, including remote and risk-based management, and we are seeing significant demand for our at-home services delivered through our recently acquired Symphony Clinical Research Group. The active push to develop a treatment for COVID-19 is also resulting in a large number of RFPs and some significant success with projects that we anticipate will start quickly. In addition, since mid-March, we are seeing conditions gradually improving in China, with over 70% of our sites now reopened and monitoring activities recommencing.

Our hope is that other regions will follow suit in quick order as they stabilize and recover. Furthermore, I want to point out that the impact to our business is not uniform. And indeed, in certain areas, such as our Functional Solutions business, we remain positive in our outlook for 2020 and are expecting year-over-year revenue growth. Whilst access to third-party sites is currently significantly reduced, we are realizing the benefits of previous investments and acquisitions, which are, in part, helping to offset this impact.

Through our site network model, we are able to provide a proven method to engage physicians and patients into clinical research programs. our embedded staff also have direct access to the site's patient database which helps evaluate the patient population during the study feasibility phase, increasing enrollment and making clinical trial participation a much more efficient process for the physician. As country restrictions ease and enrollment restarts, this network will play a crucial part in accelerating the recruitment process for new and ongoing trials. Our acquisition of Symphony Clinical Research has also positioned ICON as the leading global provider of at-home and alternative site visits, with over 300 clinical trials completed across five continents.

Since the outbreak of the COVID-19 pandemic, we have experienced tremendous interest in this service with serious inquiries from over 60 sponsors. We have been ramping up the scale of this delivery method with staff being transferred from other areas of our clinical research services in order to enable delivery of trials using this approach across more studies. Furthermore, while all CROs and sponsors, including ICON, will be placing emphasis on remote and risk-based monitoring, ICON is also differentiated by its iconic platform and FIRECREST technology. ICONIC helps analyze operational, clinical and real-world data, enhancing the design and delivery of our projects, as well as strengthening our engagement with investigators and customers.

And FIRECREST enables remote management of aspects of clinical trials, such as investigator and staff training on protocol and patient education through portal and video delivery. FIRECREST is used by all of the top 20 global pharma companies with almost half a million registered users. Nevertheless, as we are not immune to the impact of COVID-19, we are taking immediate and proactive cost reduction measures to protect jobs, maintain our business performance and ensure that we are ready to move quickly when business conditions improve later in the year. To address the challenges brought on by the pandemic, we have developed a comprehensive cost-optimization strategy.

It includes our immediate freeze on hiring in certain business units, the removal of contract staff where permanent employees can assume responsibilities and a reduction of our non-labor variable spend in discretionary areas such as travel and facilities. As a people business, the majority of our costs are employee-related, which also means that a major part of our cost-optimization strategy is the implementation of a temporary salary reduction for all employees. Since the middle of April, the board and senior leadership have taken a 30% reduction in fees and salary, respectively. And our Chairman, Ciaran Murray & I, have taken a 40% reduction.

The remainder of the company, we are adopting a progressive approach with the vast majority of employees taking a single-digit salary reduction. Whilst these measures are designed to protect jobs, I realize that these actions are difficult, and I would like to thank all of our staff for their flexibility and understanding. Taking these cost-containment plans into account and in conjunction with our current revenue forecast, our Quarter 2 outlook is for revenue to be in the range of $575 million to $625 million and earnings per share to be in the range of $0.90 to $1.30. Our balance sheet remains resilient and industry leading.

At the end of Quarter 1, we had a gross cash balance of $484 million, $350 million of debt and thus, a net positive cash balance of $134 million. In closing, I want to make it clear that we see the significant disruption caused by this pandemic as relatively short term. And as we move beyond 2020, we expect global conditions to improve and the core fundamentals that have driven growth in the CRO space to reemerge. In the medium to long term, we see increased opportunities to deploy capital more cost effectively and build our global franchise.

However, for the time being, we are well placed to weather the challenges of the pandemic and position ourselves for the growth opportunities that lie ahead. Before moving to Q&A, I would like to thank the entire ICON team for all their hard work and commitment during this challenging time. Your safety and wellbeing are the company's priority. At ICON, our mission is to help our customers to accelerate the development of innovative medicines and devices that save lives and improve the quality of life.

Over the years, we have helped to bring many such treatments, vaccines and medical devices to market, positively impacting the lives of millions of patients. This ethos will remain during the current crisis as we work on a number of important COVID-19 trials on behalf of customers, as well as much needed treatments for our other illnesses and diseases. Thank you, everyone, and we're now ready for questions.

Questions & Answers:


Operator

[Operator instructions] Your first question today comes from the line of Erin Wright. Please go ahead.

Erin Wright -- Analyst

Great. Does your guidance that you just gave for the second quarter, does it assume any sort of improvement throughout the quarter? Or are you just extrapolating what you're currently seeing? I'm just curious how you're thinking about things progressing throughout the second quarter.

Steve Cutler -- Chief Executive Officer

Well, first of all, Erin. I wouldn't call it guidance. We specifically call it our outlook. So it's what we can foresee at the moment, given we're really not only -- we haven't even had one full calendar month of the significant impact.

March was a sort of a month where the second half of it was much more significant than the first half. And so I would call it more of an outlook and what we're seeing going forward. In terms of improvement during the quarter, we haven't modeled any of that at the moment. We're seeing a challenging quarter.

We see it relative. We believe we're kind of at the bottom of the challenges or at the max of the challenges during the quarter. We don't see a particular phased approach during the quarter. At the moment, we're literally just starting to come through April and starting to get some initial indication.

So it's very early days, but we believe that the quarter will be relatively flat and will be relatively stable in terms of being the bottom of the curve.

Erin Wright -- Analyst

OK, great. And then are you seeing any sort of abnormal cancellations? Or are you viewing this more of a timing delay? Or do you think of this as also being a bolus or an acceleration in the back half of the year if the environment normalizes?

Steve Cutler -- Chief Executive Officer

A couple of points there. One is, no, we're not seeing any significant cancellations. You saw our cancellation rate in Q1 was on par. And certainly, as we've gone through April, we've not seen any further cancellations above the normal sort of run-of-the-mill approach there.

We do see this being a relatively short-term issue. And we do see us moving forward as we get into Quarter 3 and particularly Quarter 4 and into next year. That will come through. That, of course, assumes some sort of therapeutic will be developed fairly quickly and possibly a vaccine will be available within the next 12 months or so.

So there are some assumptions with that. But we do see that this is going to be a relatively short-term issue that we need to deal with and we need to work through but that in the longer term, we're going to be in a very good position.

Operator

Thank you. Your next question comes from the line of Jack Meehan. Please go ahead.

Jack Meehan

I wanted to drill in a little bit more on the commentary related to what you're seeing in terms of the sites open versus closed. So it's been roughly two-thirds of your sites have been impacted at some point. If you went from March, beginning of March to beginning into April to where you are today, how has that trended at any given point? And just to confirm what Erin was going after, you're assuming it stays where it is through the end of the second quarter, that's what your outlook assumes?

Steve Cutler -- Chief Executive Officer

Yeah, Jack. In terms of -- I mean, this came upon us incredibly quickly. So really, we talk about two-thirds of the sites being impacted. When I say impacted, that's a number of things.

CRA is not able to get access to recruitment on hold or paused, the inability to sort of exit to do sites, do visits, get on-site and do visits. So there's a variety of different things there that come into that sort of two-thirds of sites. And really, I don't want to say it happened overnight but certainly within sort of, I would say, three to four weeks, that happened. And to be honest, we're not seeing, at least in the last couple of weeks, any further challenges there, any further diminution of our ability to access site.

So about a third of them remain open to us. And we've been doing remote monitoring visits on many of the sites that we can't actually go to physically. But that number came down very quickly and it hasn't, at this stage anyway, further diminished. And so we're hopeful.

And quite frankly, we expect that that's going to be around the number. And from here, it should start to improve, and it should start to come back all as, and I think it will be, in a fairly staged and fragmented manner. These sites start to open up as their countries open up and as the states that they're in open up. Some will happen relatively quickly.

Others, it'll be much slower. Others will have priorities on neither doing COVID trials or doing other things. So it's not just whether the states open up or whether the country is open up, it's the priorities within the sites on what those clinical trials are. We are highly involved in oncology trials, and we believe oncology trials are likely to be a priority as they reengage and as the sites reengage.

So that's, to some extent, advantage. But the bottom line is we believe we've hit the bottom. We hit the bottom pretty quickly, and it's a slow uptick from here over the next six to nine months.

Jack Meehan

Great. And then it does seem like the biggest impact is on the monitoring and recruitment, but there's, obviously, other aspects of clinical trials as well. I was just curious if you could talk a little bit about any success you're having at maybe reallocating where you're focusing the resources of your CRA as some of these sites are closed? Just what are some of the things you're working on?

Steve Cutler -- Chief Executive Officer

Sure, and you're right. The monitoring of our studies is the major impact on this at the moment. And that's significant. But I think one of the benefits we have as a business with our different service areas is the ability to transfer resources across.

So for instance, Symphony Clinical Research Group to people who visit patients in an at-home environment, the people within our clinical business who have nursing qualifications and are qualified to do that work, are able to potentially transfer. And we have been looking and doing that as we've seen, as I say, a lot of inquiries, a lot of interest coming in on that business. The other part of our business is our FSP, which hasn't, at this stage, been impacted in any significant way. And we have, in fact, a requirement for people in that business.

And they are -- hence, we're able to transfer a number of people from our Phase II, Phase III business in the clinical space across to our docs, FSP business. So the ability and the collaboration and the flexibility of resource and the management and deployment is certainly an advantage that we have, and we're actively looking at how we do that. And so that we can minimize the lack or maximize utilization of our resources right across the business.

Operator

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

Elizabeth Anderson -- Analyst

Hi, guys. Good morning. Thanks for the update. I had a question about how sponsors are reacting to sort of more digital solutions.

I mean, you mentioned some and I'm sure some of it's early conversations. But how are people -- are people looking at it more like in terms of forward-going trials? Is it sort of things that they can convert? Are there particular areas that you're seeing more interest in? Any details you could provide there would be helpful.

Steve Cutler -- Chief Executive Officer

Yes. Elizabeth, it's Steve. It's early days for that. We're all sort of just running around trying to make sure that we're getting the basic stuff done.

But I think there's a lot of talk around how the pandemic will impact the clinical trial process in the longer term. And I think we could all see certainly more remote monitoring. And remote monitoring has been going for a while now. There's nothing terribly new about that.

I think it will certainly help to accelerate that within some customers. We certainly see some more interest on the virtual trials, but this is not the time to be setting up virtual trials or hybrid trials. It's more a discussion and there's a lot of talk about it, but we need a more stable environment, I think, in order to actually move that forward. But I do think there's no doubt that that's going to happen going forward, and we'll see more digital opportunities in virtual hybrid-type trials.

It will accelerate the conversation, I think, and I certainly see that happening. However, I've been around this industry long enough to know that things don't happen always as fast as perhaps we would like or we think they will happen. So at the moment, everyone is telling you how things are going to be never going to be the same, and it's all going to be different. That will inevitably, to some extent, be true.

But as we get through this, I think those conversations will increase. People will be more ready to pilot and to move forward. But I don't see a dramatic change in the digitalization of clinical trials at this point, at least not in the immediate future.

Elizabeth Anderson -- Analyst

OK, that's helpful. And then if we think about sort of like the RFPs that you guys have seen in the last few weeks, I know, obviously, the funding market for biotech is largely closed, but they've raised a lot of money. Are you seeing any sort of like significant mix shifts? I mean, obviously, I'm sure COVID RFPs are way up, but in terms of the rest of your book of business?

Steve Cutler -- Chief Executive Officer

I mean, I'm just talking about Quarter 1. And remember, Quarter 1 was moderately normal until the last two to three weeks, I suppose. So in terms of Quarter 1, our RFP dollars were up in sort of the high single-digit number. It was a good.

I was very pleased with our dollars availability. It was across the spectrum, large pharma, smaller pharma. So we're seeing plenty of opportunity. And that continued, at least, in the last few weeks.

We haven't seen a significant drop-off in opportunities. There was a little bit of a slowdown in decision-making toward the end of the quarter with everybody sort of taking a stock of what they were doing. And I think that may well be the case in Quarter 2 as well. But overall, opportunities on a year-on-year basis, we're actually following the trends that they have over the last few years.

Operator

Thank you. Your next question comes from the line of Dave Windley. Please go ahead.

Dave Windley

Hi. Good afternoon, gentlemen. Thank you for taking my questions. I hope you're healthy and safe.

It sounds like you are. I wanted to try to get a little more precision. So Steve, in your comments about sites impacted, you said two-thirds. When you call a site impacted, does that mean that it's basically totally inaccessible? Or is there a way to think about kind of partial accessibility and an ability to move forward? Just wondering kind of definitionally around that.

And then in terms of your ability to pivot to digital remote risk-based type solutions, are you able to put a percentage on that, like the number of visits that you've been able to switch to some type of digital remote access that mitigates the overall downside to visit activity?

Steve Cutler -- Chief Executive Officer

Yeah, thanks, Dave. I hope you're all well as well. I know it's a challenging time for everyone, but I think we're all trying to stay safe. In terms of sites impacted, every site is a little different, to be honest with you.

But the way I'm looking at that number is that we talked about the 65%, the two-thirds are impacted in some way. So that is certainly not totally inaccessible. That is not the case. What that means is either the CRAs can't visit on-site or we're not able to do risk-based or remote monitoring or they've paused recruitment or they're not starting study.

So I recognize there's a whole bunch of different sort of issues and items there. But that's the figure really. About two-thirds of sites are impacted in some way, rather than being totally. There are very few sites that are totally inaccessible in any way.

But there are two-thirds of them that have, and I would say, a significant impact on our business. In terms of the risk-based monitoring, as we look at those sites that can't do the physical on-site visits, it's about a third of those. About a third of sites have an ability to be monitored from a remote basis -- sorry, I beg your pardon. I misspoke.

About two-thirds of those sites can be monitored on a risk-based basis. About two-thirds of it. And there's about a third, so about half of those are actually, that's actually happening. And so there's an element of, yes, we can do it.

But we can't implement it all, at least not in the short term. So we're working with a number of those sites to actually be able to implement that. So as I said that about a third of them can actually do it and two-thirds of them actually do it. But then a third, we can actually implement.

So it's, again, a moving picture and not entirely easy. I mean, this is not the focus of many sites at the moment, so actually implementing the remote monitoring does have its challenges. But it is something we're actively working on and trying to get as many visits as possible. And I would say that about half the time, we're able to move that forward.

And we're certainly being able to implement risk the remote monitoring in those sites.

Dave Windley

Got it. Thank you. So many questions to ask. Only one more left to do.

I'm going to focus on bookings for my second. So appreciate your comments about the environment. It sounds like any impact was pretty late in the quarter, albeit usually, I think the third month of the quarter is a little bit, say, seasonally, if you want to call it, more important to closing bookings. So I guess, what I'm trying to gauge is your gross and net bookings are comparable gross dollars year over year, a little bit down from last year.

So it would seem that if the environment is holding up, as you said, similar to what it has been the last couple of years from an RFP opportunity standpoint that maybe your close rate was impacted by COVID. I wanted to make sure I understood that. And if you're able to put a number on that that would be appreciated. But just kind of trying to understand maybe what bookings would have looked like had you closed what you thought you were going to close by the end of the quarter if not for COVID.

Steve Cutler -- Chief Executive Officer

Yes, Dave, it's hard to say what we would have closed, if not for COVID. Certainly, COVID had a significant impact, I think, right across the business. And I do include bookings in the last couple of weeks of the quarter. And so I think it is fair to say that the number would have been higher absent COVID.

There were decisions that were delayed and not made because of that. I'm not going to try to put a number on that, but I do think it was a significant factor, put it that way. And I do think that in Quarter 2, that will probably continue in terms of decisions being made by customers. The whole pandemic is causing them all to look hard at what they're doing, obviously.

And so I wouldn't be surprised to see some impact there in terms of decision-making. But I think what I was trying to say in my comments is that overall, the environment is still pretty positive. The biotech funding might have come down a little bit, and we'll see where that goes. But R&D spending, we can talk about it.

That's a more long-term thing. I think as long as this remains a fairly short-term issue, and that's our premise at the moment, that the overall environment will remain positive albeit with some volatility and perhaps some short-term issues. But I was encouraged to see that the RFP number, albeit for the first quarter, it will be interesting to see where it is in the second quarter. But overall, I think the environment remains solid.

The fundamentals remain good. But there's no doubt there's going to be some short, some very short-term challenges, as we all know, and they will play out, I think, in Q2 and Q3.

Dave Windley

Appreciate your perspective.

Operator

Thank you. And our next question comes from the line of Dan Leonard. Please go ahead.

Dan Leonard

Thank you. So thinking about what the rebound looks like post COVID, do you anticipate any bottlenecks in the clinical trial system with a lot of molecules that have been delayed, all trying to get trials started and continued at the same time? And how does your site network play into your opportunity there?

Steve Cutler -- Chief Executive Officer

I think it's possible there'll be some challenges as everyone rushes back. Although I think as we look at it, it's unlikely that we're going to flick a switch and every site is going to be opened from day one, and we're all rushing back in there. I think this is going to be a staged-and-phased process. It's probably going to happen over, at least, I think, a six- to nine-month period, possibly starting in the next few weeks even.

So I think as you look at it in those ways, I think it's a manageable process as we go back. Clearly, we want to make sure that the studies that we have ongoing at the moment are brought back and made sure we've collected as much of the data as we possibly can. And we've made up for any issues that have occurred or we've rectified any issues. We're clearly trying to do that remotely at the moment.

We want to start. We want to get studies started. No question about that. There will be an element of catch-up as well.

There'll be some work that we can do that will catch up. There'll be some work, of course, that we won't be able to catch up on as well. So it's not exclusively. We're just delaying revenue.

Some of it probably won't happen or at least not in the short term. But there's certainly a large component of work I think we'll be able to catch up as well. But we certainly see there's a huge amount of activity around the COVID space. I'm actually really encouraged about the speed at which these trials are getting up.

I was talking to a customer the other day who submitted an IND. And three weeks later, we think we'll get our first patient in. So this is three weeks after the submission of an IND, which is unheard of, in my experience anyway. So we're probably testing a little bit some of the norms of the regulatory process.

I'm not suggesting that we're going to get studies up in three weeks on a regular basis in the future. But I do think we're looking hard at what we do as an industry to get studies started and perhaps challenging some of those accepted sort of time lines. And it may well be an opportunity. We talk about digital technology and virtual trials.

It may well be an opportunity, I think, to get things moving a little faster in a more normal setting in the future. So that, I think I have some optimism around it. I think we can handle the move back into the sites. I don't think that's going cause us too much pain as we get back to it.

Dan Leonard

OK, that's helpful. And then just secondly, can you comment on the impact on your M&A pipeline from the COVID disruption?

Brendan Brennan -- Chief Financial Officer

Yeah. Thanks, Dan. It's Brendan here. I think, obviously, the focus of the organization is weathering the storm at the moment.

We've done a lot of M&A., and we're very thankful to that. Obviously, businesses like Symphony have been a great bolus to us over the last couple of weeks. But certainly, we'll be looking at being a little more careful with our balance sheet over the next couple of months. We've done some significant buyback in the first quarter.

I did mention in my prepared comments that we're also going to be holding on that for the moment. So I think it will be one where we'll be focusing internally and really making sure that our balance sheet remains at a very good place over the next couple of months, say, the next couple of quarters, and that's where the focus will be.

Steve Cutler -- Chief Executive Officer

I guess, I would just add, I think Brendan's absolutely right. The focus at the moment is on cash conservation and making sure we get through these medium term. But in the longer term, as I said in my comments, we do think there'll be some opportunities. And we're going to make sure we're in a position to take advantage of those opportunities.

Typically, crises provide opportunity. We're very aware of that, and we want to be able to benefit from that, but it's a more longer-term opportunity, I think.

Operator

Thank you. Your next question comes from the line of Stephen Baxter. Please go ahead.

Stephen Baxter -- Analyst

Hey, thanks for all the information this morning. So you touched on this a little bit. And obviously, the business is quite hard model over the near term. But when you look at Q2 revenue with the outlook that you guys gave were down somewhere between 10% to 17% year over year and off your previous trajectory, obviously, by more than that.

I think what a lot of people are trying to figure out is whether demand and the associated revenue over the next couple of quarters is being lost or replaced with lower-cost services or kind of simply shifted out to the right. So I would love to get your perspective on that and anything you can say about the balance between what feels like is likely to be lost versus recoverable at this point would be really helpful. Thank you.

Brendan Brennan -- Chief Financial Officer

Thanks Stephen. I might take that one as well. It's Brendan here. I mean, some of the effects that we are seeing at the moment is more on the delay side of things.

The book of business and the backlog that we have, as we said, we haven't seen significant cancellations off the back of this. So it really is about the accessibility of our sites, getting our CRAs back to those sites and really ramping up on the trials. None of the trials are going away. The activity levels are good.

What we see coming through the door from an RFP perspective is pretty solid as well. So we would be hopeful that this is a delay because of that issue. And as time goes by, we'll burn through our backlog and get back on course, certainly, as we get back into the back end of the year. So we don't see any kind of diminution of our business.

And we don't see significant shift away in terms of profit profile of our business either. And as Steve said, our FSP business is doing well during the course of this year. There are certainly other parts of our businesses like the in-home monitoring and the home nurse business that we'll be doing as well during the course of this year. So that may shift things a little bit.

But overall, we don't see any long-term shifts in our profitability profile.

Stephen Baxter -- Analyst

Thanks. And then just as we think about, at some point, we'll potentially be out of sort of this lockdown situation that we're in. And potentially, the economy is going to be in what is more of a normal recessionary environment. I guess, what are the key metrics that you guys are watching demand side there? And if there's anything that's different about your business this time versus the last recession that we had.

Any changes you've been doing there to recession-proof your business would be great to hear about. Thank you.

Steve Cutler -- Chief Executive Officer

Yeah. We look at our metrics deciduously on a very regular basis right across the operational groups. So all of the normal operational metrics, we're looking at randomization rates, CRA days on-site, contacts with investigators. Obviously, the metric around the sites' availability is going to be one that we're watching very closely.

And as I said, I think we've seen the bottom of that. Certainly, over the last week or two, it hasn't got any worse. So I'm not sure I want to call a victory on that just yet, but we're certainly seeing -- I would like to think some hope or at least experiences, I hope that that number is only going to get better going forward. There'll be fewer sites that are impacted, I suppose.

But those are the sorts of things on -- Brendan can talk, obviously, on a financial basis. But from an operational point of view, we measure a multitude of key metrics across our business. And all of those things will be relevant as we swing back into action. Brendan, do you want to talk about the financial stuff?

Brendan Brennan -- Chief Financial Officer

Yeah. And I think from the financial side, obviously, we've put in a number of cost-containment measures that are going to action to help us focus very much on the balance sheet in the next couple of months to make sure that our cash collections are solid, to make sure our balance sheet position is very solid. As Steve said, it's industry-leading balance sheet, and we want to maintain that, make good use of it on the back end of this -- hopefully, the passing of this pandemic. And we'll be looking at those metrics every day, say, every month.

And making sure that when we can invest back in the organization that we're ready to do that. So it will be careful management on a day-by-day basis as Steve said.

Operator

Thank you. [Operator instructions] Your next question today comes from the line of Tycho Peterson. Please go ahead.

Tycho Peterson -- Analyst

Hey, thanks. Steve, as we think about getting back up and running, can you talk to how much of a differentiated factor you think the site ownership is on your part just competitively versus some of your peers? And then as we think about the checklist that's going to be required to get some of the sites up and running, how do we think about things like FDA sign-off in terms of changing protocols kind of mid-trial and agreeing on splitting costs with sponsors? Can you talk to some of the other things beyond just having patients having the premium to travel that are required to get sites up and running?

Steve Cutler -- Chief Executive Officer

Sure, Tycho. I do believe our site network is going to be a significant advantage for us as we get our projects back up and running as we come through this. These are sites that we have our own focus in integrated sites embedded and who we have very strong alliances with and who do recruit better and who start-up better and faster, who recruit faster and who have ultimately a better quality in terms of fewer protocol violators and queries. So I think it's going to be an important advantage for us, particularly early on, as we get back to it.

They're going to be ready to go and very much accessible as they are at the moment, where, of course, local guidelines allow them to be. So having said that, I don't want to overstate that because they're still a relatively small part of our overall patient recruitment services. So it will have, I think, an important impact on our business. But I don't want to overstate it in terms of the materiality of it.

In terms of the regulators and the sign-off of protocol changes, I've been very encouraged by the interactions we've seen with the FDA, certainly through our ACRO, the CRO association. We've got a lot of engagement from the EMA and the FDA in terms of how we document protocol changes, how we communicate that and what those changes are. So I think the regulators have put out some guidance and have also -- I think we talked about sponsors moving on and in terms of their attitude toward digitalization of trials, I think we'll see the regulators also seeing that this is going to be an important component of the trials going forward and adjusting their guidance and their outlook and their viewpoints to make sure that they are embracing that. Now that's again, at the end of the day, you've got to do the trials, and they need to be rigorous and the data needs to be -- and so we have to have the auditing groups and all that, make sure we catch up with that.

And we don't want to be in a situation in a year or two where we're submitting these trials for approval and there are questions around the data. I don't think we'll be because we're very deciduous about -- I think all industry is about documenting those sorts of changes and making sure that we're very clear on what's been done and why it's been done and what were the circumstances, etc., etc. So I think the regulators have been extremely accommodating under the circumstances and also very fast moving under the circumstances. In terms of our customers and costs and change, again, we're having a number of discussions, clearly, on a range of all of our projects around the cost implications of the pandemic, what's happening.

Clearly, we're trying to minimize their cost overruns, try to work proactively with them to help to make sure that we don't blow their budgets out, but there are cost implications in a number of cases, and we have to reflect that. We're having good discussions and negotiations around how that's been worked. So that's an ongoing process. And of course, every project is a little different.

Every customer is a little different. But we are engaging with them on that, and they certainly understand the challenges we're all under to make that work.

Tycho Peterson -- Analyst

And a follow-up. I appreciate you talking about the number of inbounds around COVID-related work. Can you just maybe help us put some context on how much you think COVID-related vaccine and therapy work could be a tailwind potentially this year? And then how should we think about Central Lab coming back in the context of the recovery, too? Thanks.

Steve Cutler -- Chief Executive Officer

Yeah. I think the COVID work, such as we're seeing it, will be a tailwind, will be a -- but I think it will be relatively modest. The benefit, of course, is that this is vaccine work and the urgency that I see around getting these studies up and running is quite frankly incredible. And not surprising, given the challenges we're facing, but it really is moving fast.

So I think it will be a tailwind for us. I hesitate, again, to be too bullish on it because it's still a relatively small component of our work, and the trials need to get going. What we've seen is really rapid start-up and ability to sort of recruit. Having said that, there are some trials that have recruited very quickly, and we're starting to see the lab samples come through.

So there's no doubt that they are going to help us. And the work there is going to be a positive. How much? I find it hard for us at the moment to forecast the materiality of that or even put a number on that. It will be certainly a wind going in the right direction, and we can certainly do with all -- as many of those sort of wins as we can.

In terms of Central Lab, I think I quoted to you about a 40% reduction from our run rate in February on samples. I think, again, that will come back slowly. I don't think we're going to get much lower than that. It may be plus or minus 5%.

But I don't think we're going to go too much lower than that. As indicated, some of the COVID work, as it ramps, will will start to ameliorate or attenuate some of that downturn. And we're engaged in some of those trials. So there's a possible sort of attenuation or upside there.

But I think 40% to 50% is probably the idea, and we'll slowly move back up. I think it will probably take most of the year to get back up to a normal run rate. But I do think it will get back. And there will be, I believe, some catch-up there as well.

Samples will have been taken that haven't been sent. There'll be some missed samples, of course, as well. So it won't all be catch-up, but there will be, I think, the opportunity for some catch-up revenue in the lab space in addition.

Operator

Thank you. And your next question today comes from the line of Robert Jones. Please go ahead.

Robert Jones -- Analyst

Thanks for the questions. I guess, Steve, clearly, you've shared your view that you think this -- or the company thinks this could be somewhat short-lived recovery over the next six to nine months. I guess, maybe just to dig in a little bit more on what informs that view as you sit here today appreciating, obviously, that's an extremely fluid situation? And then just related to that, as far as sites being able to come back online, just given the drop in patient visits that we've seen globally, how are you thinking about clinical trials being prioritized relative to just routine patient visits, which clearly will have a backlog as well?

Steve Cutler -- Chief Executive Officer

Yeah. What informs our view that this is a relatively short term. I think there's a couple of things, Robert. I think there's no doubt that the world has been a little bit surprised.

There's been some governments, etc., have been caught out a little bit. Some two, three months ago thought this was going to be much less of an issue than it's turned out to be. So I think that's one area. I think we are forewarned.

And clearly, there's a possibility that the virus comes back, returns in the fall in the Northern Hemisphere, which would cause, if it does, there'll certainly be some further challenges. And however, I don't think it will be quite the impact that we've had over the last month and a half or so. So I think the preparedness or the understanding of what we need to do, I think it will be much more available and much more in place for the fall. I think that's a positive.

I do think from what I've seen around not so much of vaccines, which I think might take a little longer, but around the therapeutics. I think we'll have made some progress in the next three to six months in terms of therapeutics that can be deployed, particularly, obviously, for the higher-risk patients and patients who are at severe -- in a much more serious situation. I think that will help us. And then I think, as I said, the community willingness to address and to move and to move probably a bit faster than we've moved as a global community this time will be there.

Now, of course, you've got to overlay potential for the flu to be an issue in the fall as well. And you add this and all the rest of it, whether there's a vaccine going to be available. I think that's probably -- that will be challenging for the fall, but there'll be some -- I think, some experiments and some Phase III trials, certainly, ongoing out there, which will perhaps help a little bit as well. So that's the sort of information that sort of informs my view that I think we will be moving forward.

We will be getting better. I don't think we're going to be back to normal in Quarter 4. But I do think we're going to be certainly on the up and up. And as we get into Quarter 1 and the first part of next year, we will return, I think, to a much more normal cadence.

That's certainly my expectation. In terms of the priority for clinical trials for sites, as I see it, this may actually even help in some ways. The understanding that we need treatments for, things like COVID-19 and many other diseases as well, could push sites to be perhaps more involved in clinical trials. As I said, I think the regulators have moved very quickly to adjust protocols, and they've been very flexible on that.

I think the time lines that I talked about the three weeks from IND to first patient, that won't happen on a regular basis. But I think we're challenging some of the norms there. And I think the administrative processes around clinical trials could be challenged a little bit. And I think that may well be a net positive in the more medium to the long term in terms of trials with insights and the priority of trials.

Clinical research as a care option is something we've been pushing, particularly through our site network for a long time now. I think there are a number of organizations who do the same thing. And so we see that as something that really is perhaps even going to get a tailwind or get a push along from this pandemic. I've never heard so much talk about clinical trials and new drugs in the development process.

And I think in the end, the public's imagination, the public's understanding of what we do as an organization, as an industry, is going to be enhanced by this whole crisis. And that, as I say, may well have some long-term benefits.

Operator

Thank you. Your next question today comes from the line of John Kreger. Please go ahead.

John Kreger -- Analyst

Hi. Thanks very much. Steve, congrats on the Pfizer renewal. Are you able to elaborate at all on any interesting sort of changes of scope or structure of that relationship? Or should we view it as pretty much kind of steady as she goes versus the old contract? And do you have any other kind of significant renewals that we should be thinking about for the remainder of the year?

Steve Cutler -- Chief Executive Officer

Hi, John. And no, there's nothing in particular that we changed in terms of the Pfizer. There are some areas of discussion. But really, it was a very collegial and a very positive negotiation with Pfizer.

So no major changes to that. And as I think about it, no, I don't think there are any significant alliance agreements that are up for discussion or negotiation specifically anyway for the remainder of the year.

John Kreger -- Analyst

Excellent. That's good news. And then one quick follow-up. You mentioned China is showing at least some signs of opening up.

Are there any lessons you can take away from that as you watch that play out as to what you might see later in the year in Western Europe or the U.S.?

Steve Cutler -- Chief Executive Officer

Yeah. We look at how China is starting to open up, albeit relatively slowly and some of the other Asian countries as well. And we do take some solace from how that's moving forward. And we believe that it can be broadly applied.

Obviously, China is a relatively small part of our business. So I hesitate to draw too much from one particular country. But given that it was the epicenter of the initiation, the start of the whole pandemic and the fact that it does seem to be moving long now, it gives us, again, hope that this is a relatively short-term issue that we believe we can get through, as I said, by the end of the year. But I'm a little -- I want to be a little careful about lessons learned from China.

John, just to go back to your previous question on the alliance. I think the other area is in the labs where we've been seeing some opportunities. And certainly, we've been able to agree and a couple of significant opportunities aligns partnership for our lab operations, our Central Lab and our Bioanalytical lab in the last six months. So I tend to think about clinical, of course, as it's the largest part of our business, but our lab operations have been able to secure a couple of partnerships recently, I think puts them in a good position to really build that business.

Operator

Thank you. And your next question today comes from the line of Patrick Donnelly. Please go ahead.

Patrick Donnelly -- Analyst

Steve, maybe just on the biotech funding environment. I know you mentioned a couple of times. Obviously, there's been a bit of a pause here, given the disruption, new raises have been pretty minimal. When you look out to the other side of this and even maybe the midterm view '21, years like that, has your opinion changed in terms of what the growth rate could be for the overall market, given a little bit of pullback in that funding? Or do you think things come back pretty quickly, and we're in a pretty normalized market for next year?

Steve Cutler -- Chief Executive Officer

Go on. Yes, sorry, go ahead. I'll let Brendan have a crack at that one, Pat.

Brendan Brennan -- Chief Financial Officer

Yeah, I think we've seen a pretty stable environment from a funding perspective and the growth that we've seen there have been well funded as we came into this year. There's some good science set there as well, which is always the underlying piece in terms of what our biotech deserve to get funded or not. And as we go out, and I think your question is a good one in terms of the longer term, we still think there's opportunity there. It's been a really strong part of our marketplace.

I suppose the fundamentals of this pandemic that we're seeing don't really change the fundamentals of drug development. So we do see that there is continued opportunity, particularly in the biotech space, where there has been a lot of innovation, a lot of creativity. And we would expect that the good signs and decent funding levels, as well as the fact that folks are still looking for decent returns on our cash and putting money out there to persist. I think it will persist and get to take a bit of a pause as we think about this year as the entire global economy probably will.

And certainly, as we think about 2021, we would be pretty hopeful that we'll do that bounce back quite well.

Patrick Donnelly -- Analyst

Great. And then, Brendan, maybe another quick one. Obviously, DSO has been a big focus for you guys. I assume this external shop changes things a little bit.

But what's your perspective on the focus there as we go through this pandemic?

Brendan Brennan -- Chief Financial Officer

Yeah, and it'll still be. Listen, well, we're still very focused as an element of our business. And we saw decent progress. I mean, we didn't see any great diminution to it as we came into the first quarter.

And I see even as we started off Q2, cash collections remain relatively solid. So we're not seeing any particular issues there yet. That said, we're going to be keeping a close focus on it as we go through the months and quarters ahead. But at the moment, it still looks like we're in a very solid position.

Operator

Thank you. And our next question today comes from the line of Sandy Draper. Please go ahead.

Sandy Draper -- Analyst

Thank you very much for squeezing me in at the end of the call. I'm glad you guys are doing well over there. All things considered. My question is on the expense side.

I mean, that's an area you guys have incredibly outperformed over years and years and done a great job there. Brendan, when you think about your near-term cost controls and what you're doing, when we start to come back to a more normalized environment, are there specific areas you think you may be able to take more of a look at and say, "hey, you know what, we thought we really need to spend here, but we realized we can live without this or we can do it differently?" I mean, do you think this changes maybe longer term how you think about the cost structure of the business? Or basically, once things come back on, do all those costs that you're pulling out all have to ramp back up in line, if not faster, than the revenue? Thanks.

Brendan Brennan -- Chief Financial Officer

That's a good question, Sandy. We're pretty tight cost managers on a good day. This has, obviously, been a very challenging period, and we are thinking about our cost base from that perspective and have looked at the leverage that really, how we take that down a step. A large chunk of that is around remuneration and salaries.

That is something I think that will ramp back up. That said, however, I think this whole environment in this kind of -- this virtual work environment, does give us pause for thought around what is absolutely necessary. So we'll be looking at our cost base as it does ramp up. Some of it certainly will come back in.

There's no question about that. And we would like to see that come in sooner rather than later with, hopefully, a recovery in the general business environment. But certainly, we'll be looking at all cost lines and actually very much asking the question, can we do things more virtually? Do we need as much travel? I think there are questions that we constantly ask ourselves, and I suppose this environment has tested all businesses in the world as to whether they can be more virtual in how they operate. So that is certainly something we'll bear in mind as we go through this.

Operator

Thank you. And our next question today come from the line of Juan Avendano. Please go ahead.

Juan Avendano -- Analyst

Thank you for fitting me in. And I joined the call late, so I apologize if this has been asked. And so I'll try to ask a couple of questions from left field. I guess, can you talk to us about how remote monitoring activities impact CRO revenue and profitability? In particular, I guess, I'm interested in how alternative site visits could impact pass-throughs.

Based on some of my research and consultations, it seems like remote monitoring could be a positive mix for CROs, but I was curious if you could confirm that.

Steve Cutler -- Chief Executive Officer

Yeah. Well, I think the potential for us to -- if we do remote monitoring effectively and well, actually, is a tailwind from a profitability point of view. There's a lot of time spent. And then I think it's also a boom for customers potentially too and that they will spend less money getting their data review.

We'll be able to do -- I would say, that gives us more opportunity to do more work. So I think it's a, dare I say it, a win-win, I'm sorry to use a term, from a profitability point of view, but also from a customer point of view going forward. In terms of pass-through, I don't think that's going to make a huge difference. The pass-throughs in terms of monitoring a pretty modest -- a major part of the pass-through costs are investigator fees.

So while it may have a small impact and Brendan can maybe comment on that, but I don't think that's going to have a huge impact. But I'm optimistic in terms of remote monitoring and how that's going to go forward. However, at the end of the day, I don't think it's going to happen, as I said, as fast as perhaps everybody thinks it is. It will get the conversation going.

We'll certainly be doing some more virtual trials and some more remote monitoring, but we were already doing quite a bit of remote monitoring anyway. I think it'll just move the conversation forward and accelerate the conversation rather than transform the whole industry. That's my assessment.

Juan Avendano -- Analyst

OK, got it. And kind of a follow-up, I guess, is I understand the studies in the start-up or activation phase could possibly be the most prone to delays on potential cancellations. And so can you tell us what percentage of your studies are in the start-up phase versus accrual and past database lockout?

Steve Cutler -- Chief Executive Officer

I can give you sort of high-level ballpark one. I'm not sure we certainly haven't seen any evidence that the studies in start-up are more likely to cancel. We had, I think, two cancellations, which is on par with where we would normally be. So we haven't seen an uptick in cancellations and certainly haven't seen anything related to the start-up of studies in terms of cancellations.

Yes, I would say probably 20%, 25% of our studies are in the start-up, about 50% are in -- 50% to 60% are in sort of ongoing recruitment and enrollment and data plays. And then there's probably 20% that are in sort of the final stages of database lock and report writing, etc. Very broad high-level figures, but I think that's where it would be to say. We haven't seen any evidence that studies early on in their life cycle are more prone to be canceled.

Juan Avendano -- Analyst

OK, thank you. And SG&A as a percentage of revenue actually picked up by 10 basis points on a year-over-year basis. This is the first time that I see this happening in many years. Can you talk about how perhaps the COVID-19 dynamic could be impacting -- would impact, if any at all, your ability to continue to offshore to minimize SG&A leverage?

Brendan Brennan -- Chief Financial Officer

I mean, we'll continue to look at that one as time goes by. I mean, I don't think this is a block to any of the cost-control pieces that we've done in the past. There's no real issue why one country or another country will be better or worse from that perspective. And to be honest, as well, to be honest, the dollar amount didn't change from Q4 to Q1 in terms of SG&A.

So yes, in percentage terms, you see a bit of a mix, but we'll continue to manage our cost base deciduously.

Operator

Thank you. And your next question comes from the line of Dan Brennan. Please go ahead.

Dan Brennan -- Analyst

Thanks for taking the questions. I guess, I was hoping to get a little color on how you think about kind of gradual throughout the year, maybe Q4, we get back or maybe Q1 some normalcy. But if we think about the 65% that are impacted in some way, shape or form today, if we're sitting here like December 31, I mean, is that down the 5%, 10%? Obviously, we don't have a crystal ball, but you're in a better position than we are to kind of have a sense of how these sites may open up.

Steve Cutler -- Chief Executive Officer

I missed the first part of your question, Dan, but I think what you're asking is of the sites that are impacted, the 65% today, what's the sort of the logical sort of bring back or what -- at what rate will it come back to me. Is that fair enough?

Dan Brennan -- Analyst

Exactly. Yeah, exactly.

Steve Cutler -- Chief Executive Officer

OK. So as I said, I think the 65% is an idea. I don't think we're going to go much below that. Maybe it's 70%.

But I think that is pretty much an idea. I think as we get deeper into the second quarter, third, fourth, I would like to think that by December 31, that number is going to be much -- I would just say under 20%. In that sort of range? No. I would love to think it's zero.

But we're not expecting this to completely disappear in the sort of immediate future. We do think there'll be some impact. And I do think that those 20% of sites that are impacted, if it's that number, they'll be accessible in terms of remote monitoring that they may have some impact in terms of slower recruitment rates, etc., etc. But I think it will be a vast majority of the sites, but still a reasonable proportion that will have some impact.

And I think as we get into next year, that number will -- assuming that the virus doesn't reappear, and we don't have all that further lockdowns, and that's a big assumption. But that's what we're saying. As we get into the first quarter, I think that will get to zero.

Dan Brennan -- Analyst

Got it. And then, that's a good kind of lead-in to my follow-up question, which I think you mentioned earlier in the conversation there'll be some ability to catch up on kind of what's been delayed here. But we've had several conversations with some experts, and I think investors alike, I mean, 2020 volatility is just extreme but a lot of people are trying to think about '21, '22 and how it looks on a normalized basis. And we've heard mixed things about the ability to catch up next year, and you could see actually some overage.

You can actually see some upside from where you might be pre-COVID in '21 versus others have suggested maybe the capacity of the system just can't handle that. So it's really hard to catch up. So I'm just wondering, as you look ahead further, could you comment a little bit on that? I'm not expecting a number, but if we think about going beyond '20 and the potential to catch up and see possibly some upside? Is that fair? Or are there structural issues in the system? And capacity issues and things like that that just will lead to more of like just a deferral and a pushout?

Steve Cutler -- Chief Executive Officer

Yeah. I would hesitate to say that we would be able to catch up everything that is going to -- every sort of reduction that we're going to see in the next couple of quarters. But I think there'll be some catch-up. And I think the system is maybe part of the issue.

But at the end of the day, if data isn't collected or samples aren't taken because patients didn't visit or there's not much to catch up. You're just going to have to miss that piece of data, that sample. So it certainly won't be anything like 100%. And so I would be very careful about upside or tailwinds.

I think it's more likely that the catch-up will help us get back to a more normal cadence. And then our normal growth curve will kick in. That's the way I'm thinking about it at the moment. I don't think there's a huge bolus of work out there that we're going to suddenly be able to get done in Quarter 4 or Quarter 3 that will make up for the challenges we're going to see in Q2 and in Q3.

I think that would be overstating it. But I do think there is some work that will -- and that uptick that I think we'll see in Quarter 4, part of that will be the catch-up work that we'll be able to do.

Operator

Thank you. And our next question today comes from the line of Eric Coldwell. Please go ahead.

Eric Coldwell -- Analyst

Hey, thank you. So first one, it was briefly addressed. I think I got the answer, but I want to be very specific. Pass-through versus service level impacts, both for bookings and revenue outlook, please?

Brendan Brennan -- Chief Financial Officer

Pass-through versus -- just let me make sure I understand your question. You're looking for what?

Eric Coldwell -- Analyst

Well, you've got revenue down -- sorry, you've got revenue down 10% to 17% in the second quarter. Is pass-through at the midpoint of that range just like service or more or less?

Brendan Brennan -- Chief Financial Officer

I think you can -- given that most of the impact is in the clinical business, where the pass-through happens, Eric, you can model it in the same lines faster and direct equally.

Eric Coldwell -- Analyst

Equally, thank you. The second question here, tons of cost actions, cost controls, all the rational reasonable stuff. I don't think we ever got an actual number on the savings projected. It would be very helpful if we had that.

Brendan Brennan -- Chief Financial Officer

No, no. You didn't get an actual number, Eric. I'm not sure you're going to get an actual number, unfortunately.

Eric Coldwell -- Analyst

Even if I twist your arm?

Brendan Brennan -- Chief Financial Officer

No, not right now. We'll be looking at it. The reason being, Eric, listen, we're all here. We've given you guidance for Q2.

We're very hopeful that we see a better recovery, and we're hoping for that in Q3 and Q4. But that number might have to change. If we don't see that pace of that recovery. So it is a little fluid at the moment.

And obviously, it's baked into the earnings guidance that we've given you for Q2. Beyond that, obviously, we'll give you more color when we get to Q3 and Q4.

Eric Coldwell -- Analyst

Maybe I could ask it this way. It looks like based on the guidance given if we've -- if our quick math is accurate, that you're calling for basically a net 40% decremental margin in Q2. Would we be expecting the decremental to improve as 3Q, 4Q unfold as volumes come back and maybe some cost actions happening in the second quarter are fully recognized in the third and fourth? And if that decremental target is to improve, maybe some color on how much you think it could improve?

Brendan Brennan -- Chief Financial Officer

I think it's fair to say that our expectation is that it should improve in Q3 and Q4 as we see revenue coming back in. That being said, I think there are cost actions, it's depending on speed. If the revenue comes back, that will actually ease up on a little bit, which will probably keep the margin a little flatter. So probably the way to look at it, Eric, from your margin perspective is not a massive amount of variance.

So you're probably in a 2% margin range as you go through the next couple of quarters with cost containment managing that profile as revenue comes back.

Eric Coldwell -- Analyst

That's very helpful. And last question. You have highlighted some businesses that have performed better, been more stable. The in-home nurse and the monitoring, the remote monitoring, of course, functional service provider.

Are there any other businesses you would call out that have actually seen upside from pandemic response and implications taking things like maybe bio stats, but I'm not sure. And then conversely, would it be possible to get you to talk about which businesses have been most impacted on the negative side? Central Lab, obviously, bigger impact there than I was hoping for. Maybe thinking Phase I and some other areas that possibly in the short term have been more severely impacted, but I was hoping you could go into a little more granularity on that.

Steve Cutler -- Chief Executive Officer

Yeah. Let me hit with the upside. I mean, we sort of outlined, Eric, where we're seeing them and the Symphony, the at-home patient services, that's, again, a relatively small part of our business, but that's seen a lot of activity going forward. We do think the site business is poised for some opportunity as we get back into restarting studies.

So I think that's an area we're confidence is going to move along nicely. In terms of the pharmacovigilance, medical monitoring, there's been certainly no diminution, I suppose, in those parts of our clinical business. Whether there's upside there, I think it's a little too early to tell. We're certainly not seeing a dramatic upside in that area, but we're certainly seeing plenty of work still going on there.

Biostats and data management haven't been impacted too much at the moment. But again, I hesitate. There's not too many areas where we're really seeing upside at the moment. Vaccine trials and MERS services, I think, are probably where we're seeing some opportunity, but those vaccine trials will play into, of course, our clinical group, which has been impacted, and that's -- I think we've talked enough about that.

Phase I, we've certainly seen some impact. Again, that's a very small part of our business. So it's not hugely material, but the CPU that we have, we have the one CPU in San Antonio, certainly, has been doing a very limited amount of work and some of our other sites that we do early phase studies that have been fairly limited as well. So I think those are the areas that we've seen sort of most impact.

On the other -- on the -- back on the upside, I think the FSP businesses certainly continue to expand based on some significant wins we had at the back end of last year. We're actively recruiting. And again, as I said, the ability for us as an organization to move and shift and redeploy resources, take significant resource cost out in one area and deploy them in another where we're actually earning solid revenues is, I think, a strength of our organization.

Operator

Thank you. And our final question today comes from the line of George Hill. Please go ahead.

George Hill -- Analyst

Thanks, guys, for taking the question. And I'm not going to let Eric Coldwell off the hook that easy. I guess, one thing that hasn't been touched on is, could you guys talk about, I guess, engagement by client size? And should we think about the sites that are continuing to do business or the sites that you expect to come back first, would we -- I guess, is there any correlation between client size or client funding type? Or is it more therapeutic area, where we should see kind of the growth come back first or on the business come back first?

Steve Cutler -- Chief Executive Officer

George, it's a little early to be calling sort of correlations in that. I hesitate to do that in terms of larger clients or smaller clients or midsized clients doing things differently. Certainly, in terms of the larger pharma customers have taken a fairly conservative attitude, I would say, or approach in terms of their trials and perhaps the biotech's a little less so in terms of specific instructions around how we should manage their trials. At the end of the day, the sites and the availability of the sites is the major determinant in terms of what we can do and what they ultimately are going to do in terms of our trial.

So I don't think it's necessarily there's a correlation between client size in that respect. In terms of therapeutic areas, as I mentioned in my comments, we have a significant amount of oncology business. And I believe that will be less impacted than some of the other more -- there I say, less life-threatening-type indications. Clearly, the vaccines and the COVID stuff is a high priority, and that's moving forward very fast.

But I think oncology and those life-threatening trials, those life-threatening conditions will come back faster than others. And certainly, we'll reignite return in terms of recruitment faster than the others. That's the way I look at it, and that's to our benefit. In fact, most of the industry is in oncology.

So I think those will be a priority, but we'll see the rest of them come back up in the medium to longer term.

Operator

We have no further questions. I'll hand back to Steven Cutler for closing remarks.

Steve Cutler -- Chief Executive Officer

Thanks, Tim. So thank you, everyone, for listening in today. As the impact of the COVID pandemic continues to evolve, ICON is focused on protecting the safety and well-being of our employees and patients and continuing to service the important work we undertake on behalf of our customers and in turn, preserving the strength of our business. I want to take this opportunity again to recognize our entire workforce and to thank them sincerely to the tireless efforts and the ongoing resilience they're showing during this very challenging period.

Thank you, everyone.

Operator

[Operator signoff]

Duration: 83 minutes

Call participants:

Jonathan Curtain -- Vice President Corporate Finance and Investor Relations

Brendan Brennan -- Chief Financial Officer

Steve Cutler -- Chief Executive Officer

Erin Wright -- Analyst

Jack Meehan

Elizabeth Anderson -- Analyst

Dave Windley

Dan Leonard

Stephen Baxter -- Analyst

Tycho Peterson -- Analyst

Robert Jones -- Analyst

John Kreger -- Analyst

Patrick Donnelly -- Analyst

Sandy Draper -- Analyst

Juan Avendano -- Analyst

Dan Brennan -- Analyst

Eric Coldwell -- Analyst

George Hill -- Analyst

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