IQVIA Holdings, Inc. (IQV) Q1 2022 Earnings Call Transcript

IQVIA Holdings, Inc. (IQV 0.39%)
Q1 2022 Earnings Call
Apr 27, 2022, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA first quarter 2022 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 Nick Childs, senior vice president, investor relations and corporate communications. Mr. Childs, please begin your conference.

Nick Childs -- Senior Vice President, Investor Relations and Corporate Communications

Thank you. Good morning, everyone. Thank you for joining our first quarter 2022 earnings call. With me today are Ari Bousbib, chairman and chief executive officer; 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 Bryan Stengel, associate director, investor relations.

Today we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events 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. Actual results will differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings.

In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our chairman and CEO, Ari Bousbib.

Ari Bousbib -- Chairman and Chief Executive Officer

Thank you, Nick, and good morning, everyone. Thank you for joining today to discuss our first quarter results. IQVIA had very strong financial results in the quarter and that is despite the broader macro environment. On this note, regarding first the tragic situation in the Ukraine, our thoughts and concerns from the beginning have been around the safety and well-being of our employees, the patients we support, and all those affected by the ongoing events.

We have been actively supporting our employees and their families on the ground with evacuation support, relocation services, and financial assistance. For example, we accelerated bonus payments and actually we continue to pay our employees there regardless of their ability to perform any work. In addition, IQVIA capabilities are being utilized to help support the resulting refugee crisis. For example, Ukrainian refugees are entering surrounding countries with medicines and prescriptions, and medical professionals in those countries are seeking to identify and convert product information on these prescriptions into their local equivalent To help, we've established a free online service for medical professionals to search the product, name, active ingredients, and strength, and the tool generates a list of matching products in whichever the local country around the Ukraine is.

Also, we've been working very closely with our customers, suppliers and clinical sites across the region to ensure continuity of our in-site clinical trials and ensure, of course, that our clients are able to continue to support the effective delivery of medicines to vulnerable patients in the region, who depend on these medicines. In Ukraine, we're providing support to ensure that trial patients, who have begun receiving treatment, remain on their treatment protocols. We've established direct-to-patients shipments of investigational medical product and patient call centers in order to ensure patient care can continue. In Russia, we are guided by ethical concerns to ensure the safety of patients already enrolled in clinical trials.

We are utilizing our global logistics and procurement infrastructure to facilitate the movement of investigational medical products, lab kits, and samples into and out of the country to minimize potential adverse impacts to patient care. For studies that are in start up or early phase in both countries, we are redirecting patient recruitment to other countries based on consultations with our customers. Even though a little less than 1% of our overall revenue and approximately 3% of our global patient recruitment come from the Ukraine and Russia, the operational disruptions I just described will have some financial impact, which we have incorporated into our updated guidance. Now another key focus area for investors in the quarter, as you well know, has been the emerging biopharma funding environment.

We received a number of questions on this topic since our earnings release in February and we have addressed those in multiple forums. However, there are these some lingering questions on the same topic, and I want to take this opportunity once again to reiterate our comments with a specific focus, A, on the funding environment and, B, beyond on our own company's exposure to the CBD segment. I'll start by stating that the concern about EBP funding environment is overstated. I want to support the assertion with four key points.

Number one, the industry has observed a slowdown in public funding compared to the record levels seen in '20 and '21. But the private venture capital markets have continued to be strong and funding in the first quarter of '22 was the third highest ever, according to the National Venture Capital Association. And we also observe that these CBD firms are sitting on large amounts of cash from the very strong funding cycles in '20 and '21. Number two, when there is a reduction in EBP funding or the IPO market contracts, mid and large pharma companies often step up their acquisition activities of the EBP companies, and frankly, that benefits us as we have long standing relationships with these customers.

In fact, you may have seen the recent acquisition of Checkmate Pharmaceuticals by Regeneron, which illustrates this very point. Number three, history tells us that when EDP funding slows, it does not have a significant effect on our business. For example, following the last EBP funding slowdown in 2015, '16, our IQVIA biotech unit saw no interruptions in net new business and revenue growth nor any unusual increase in cancelations. And finally, number four, when we look at either our pipeline or RFP activity, we have simply not seen any slowdown.

No unusual cancelation activity, no unusual delays in decision making. In fact, in the quarter, our overall R&DS RFP dollars were up 13% year over year, and RFP dollars from EBP were up over 16%. The broader industry continues to show strength. We have seen clinical trials start up 7% in the first quarter compared to last year, with a 14% increase in oncology trial starts, which is a therapeutic area, as you well know, that's predominantly sponsored by EBP.

Now, let me focus on our own exposure to this segment, specifically pre-commercial EBPs, which are those EBPs that have zero revenue and are the most vulnerable and exposed to the funding environment. And here I want to make another four points. Number one, as of March 31st, pre-commercial EBPs represented just over 10% of our total R&DS backlog. Number two, less than 7% of our overall RFP dollars in the quarter came from pre-commercial EBP.

Number three, this exposure to pre-commercial EBP for IQVIA is not only minimal, but also I want to point out and underline that our vetting process for taking on a pre-commercial EBP is extremely rigorous and thorough. The process includes, for example, a review of the client's cash balances, payment history, the viability and quality of their science, and, of course, progress with clinical development. So again, said differently, not every EBP, who knocks at our door with a molecule that they think is interesting, makes it into our backlog. Number four, I would simply remind you that this exposure primarily impacts our R&DS segment.

Approximately 45% of IQVIA's total company revenue comes from our commercial businesses. And as you know, there is virtually zero pre-commercial EBP exposure on the commercial side. With those comments as background, let me now delve into the first quarter results. Revenue for the first quarter grew 4.7% on a reported basis and 6.8% at constant currency.

The $23 million beat above the midpoint of our guidance range was driven by strong operational performance across all three segments, and that was, of course, partially offset by foreign exchange headwinds. Compared to prior year and excluding COVID-related work for both years, our core businesses grew above 13% at constant currency on an organic basis. Ron will provide additional detail in his remarks, including COVID-adjusted numbers for each of our three segments. First quarter adjusted EBITDA grew 9.1%, reflecting our revenue growth as well as ongoing productivity initiatives.

First quarter adjusted diluted EPS of $2.47 grew 13.3%. That was 4% above the midpoint of our guide, which is -- with about $0.03 of the beat coming from operational improvements. I now provide an update on the business and it starts with the commercial and technology side. We've spoken before and you're familiar with IQVIA's connected intelligence framework, which leverages our advanced analytics, technology and domain expertise across the entire clinical and commercial portfolio and has been critical in supporting the emerging needs of the pharma industry.

I want to give a recent example of how these capabilities are being deployed. In the quarter, we entered into a multi-year agreement with Argenx for the development and commercialization of new indications for their rare disease product currently approved for treatment of a rare autoimmune disorder affecting the muscles. Our collaboration with Argenx incorporates IQVIA's connected intelligence to support clinical development, real world evidence, regulatory, and commercial support to accelerate the development of these products for potential treatment of other severe autoimmune diseases and to expand globally. It is an exciting product with a lot of upside potential.

It's currently approved to treat six indications, has the potential for up to 15 indications. Plus, this drug has already been launched in the US and has plans to launch in Europe and in Japan in the next year. Another example of a client selecting IQVIA's integrated capabilities to solve complex problems is Ferrer, a European pharma client, recently selected IQVIA's Vigilance platform and regulatory information management technology. This is an area that's a real headache for our clients and our technology solutions simplify and streamline the processes.

Ferrer will benefit from our technology's integrated AI [Inaudible] capabilities, automation of labor-heavy activities, and easy implementation. To date, over 150 clients have adopted one or more solutions within our safety, regulatory and quality suite of technologies. In real world evidence, I'm sure you've seen that we were selected to support DARWIN, or Data Analysis and Real World Interrogation Network. DARWIN is a strategic initiative of the EMA.

This is a major win for IQVIA as it draws on our proprietary technologies, methods, and deep scientific and operational expertise. It will help us deepen our relationship with healthcare providers and sites across Europe. Moving to clinical technology. IQVIA continues to lead the industry in decentralized clinical trials.

Our end to one solution of integrated technology and services capabilities are being utilized on just over one-third of our full service trials globally. To date, we've recruited over 300,000 patients across 80 countries, covering over 30 indications. Now, whether for traditional or decentralized trials, demand for our suite of digital critical technology offerings continued to increase in the first quarter. To date, over 400 clients have adopted one or more modules within our Orchestrated Clinical technology suite since launch.

One of these key modules, for example, is our clinical trial payment solution. This technology ensures accurate, timely and transparent investigator payment processing. It's a key driver of both site and sponsor satisfaction. All of the top ten and 25 of the top 30 pharma clients have now selected IQVIA's payment technology solution for their trials.

This includes a major award in the quarter with the top ten sponsor to migrate their entire payment ecosystem across several legacy platforms to our technology. The scale of this technology migration is the largest of its kind in the industry and encompasses 120 clinical studies across all phases with over 6,000 sites globally. Beyond these client highlights. Our overall R&DS business continued to see strong momentum in the quarter, delivering over $2.5 billion of net new business, including past-throughs.

This included a record quarter of over $1.9 billion of services bookings, resulting in a first quarter contracted net book-to-bill ratio of 1.32, excluding pass-throughs; and 1.31, including pass-throughs. Over the last 12 months, our contracted net book-to-bill ratio was 1.33, excluding pass-through; and 1.32, including pass-through. Our contracted backlog in R&DS grew 9.1% year over year to a record $25.3 billion as of March 31, 2022. As a result, our next 12 months revenue from backlog increased to over $7 billion, growing 8% from a year ago.

As you can see, there is a lot of strong positive momentum across the business regardless of the choppy macro environment. On a final note, IQVIA was named the top CRO in overall reputation by clinical trial sites around the world in the 2021 Central Awards Global Site Benchmark Survey. This is a big deal for us. It is a rigorous and independent survey that is highly respected in the industry.

Over 60,000 investigators, trial coordinators, research nurses, and other clinical professionals representing clinical trial sites from around the world were asked to rank and score 29 CROs across 35 performance-related attributes. We're proud for being selected and named the top CRO in overall reputation that is specifically will receive high marks, especially high marks, for our comprehensive decentralized trials, direct-to-patient recruitment, and therapeutic clinical, regulatory, and technology expertise. I will now turn it over to Ron for more details on our financial performance.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Ron, thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. First quarter revenue of $3,568,000,000 grew 4.7% on a reported basis and 6.8% at constant currency. In the quarter, COVID-related revenues were approximately $375 million, which was down about 35% versus the first quarter of 2021.

In our base business, that is excluding all COVID-related work from both this year and last, organic growth at constant currency was about 13%. Technology and analytics solutions revenue for the first quarter was $1,439,000,000, which was up 6.8% reported and 9.8% at constant currency. Excluding all-COVID related work, organic growth at constant currency in tech and analytics solutions was just over 10%. R&D solutions first quarter revenue of $1,934,000,000 was up 3.5% in actual FX rates and 4.7% at constant currency.

Again, excluding all COVID-related work, organic growth at constant currency in R&DS was approximately 17%, which was consistent with our expectations. Contract sales and medical solutions, or CSMS, first quarter revenue of $195 million grew 1% reported, and 5.7% at constant currency. Excluding all COVID-related work, organic growth at constant currency in CSMS was mid-single digits. OK.

Let's move down the P&L now. Adjusted EBITDA was $812 million for the first quarter, which represented growth of 9.1% on a reported basis. First quarter GAAP net income was $325 million. That was up 53.3% year over year.

And GAAP diluted earnings per share was a dollar $1.68, up 54.1% year over year. Adjusted net income was $477 million for the quarter, up 12.2% year over year, and adjusted diluted earnings per share grew 13.3% to $2.47. Now as already reviewed, R&D Solutions delivered yet another outstanding quarter of net new business. Our backlog at March 31 stood at a record $25.3 billion, an increase of 9.1% year over year.

Net 12-month revenue from backlog increased 8% year over year to just over $7 billion. And I would note that both the backlog and net 12-month revenue numbers I just quoted were affected by FX rates at quarter end, and that is to say they were lower than they otherwise would have been due to the strengthening of the dollar during the quarter. OK. Moving now to the balance sheet.

First quarter cash flow from operations was $508 million and capex was $177 million. That resulted in free cash flow of $331 million. And as a reminder, our free cash flow in the first quarter of each year is affected by the timing of annual bonus payments. At March 31, cash and cash equivalents totaled $1,387,000,000 million and gross debt was $12,637,000,000, which resulted in net debt of $11,250,000,000.

Our net leverage ratio at March 31 was 3.64 times trailing 12-month adjusted EBITDA. In the quarter, we repurchased $403 million of our shares, which leaves us with slightly over $2.1 billion of share repurchase authorization remaining under the current program. I would group the guidance. For the full year 2022, our expectation remains unchanged, but organic revenue growth, excluding COVID-related work, will be low to mid-teens at constant currency.

Since February, FX fluctuations have caused an incremental full year revenue headwind of over $200 million as of yesterday's rates. In addition, we currently estimate the revenue disruption from the Russia-Ukraine crisis to be in the $40 million to $50 million range. Accordingly, we are updating our revenue guidance range to reflect these two factors. For the full year, we now expect revenue to be between $14,450,000,000 and $14,750,000,000, which represents year-over-year growth at 6.9% to 9% at constant currency and 4.2% to 6.3% reported, both compared to 2021.

Now, as a reminder, in the revenue guidance we provided in our Q4 call in February, we absorbed a $70 million FX headwind versus the initial guidance we provided in our analyst and investor conference in November. Our projected revenue growth includes just over 150 basis points of contribution from M&A activity. Now, despite the macro factors that affected our revenue guidance, we're reaffirming our full year 2022 adjusted EBITDA and adjusted EPS guidance range that we provided on our fourth quarter 2021 earnings call. This includes absorbing the earnings impact of lost revenue in Russia and Ukraine, as well as the costs that remain there, such as salaries and assistance provided to employees.

Accordingly, we continue to expect adjusted EBITDA to be between $3,330,000,000 and $3,405,000,000, representing a year-over-year growth of 10.2% to 12.7%. And we continue to expect adjusted diluted EPS to be between $9.95 and $10.25 or year-over-year growth at 10.2% to 13.5%. Now our full year 2022 guidance range assume that foreign currency rates as of yesterday, April 26, remain in effect for the balance of the year. Moving on to second quarter guidance, I'll remind you that the first half of last year represented our peak for COVID-related revenues.

And as a result of that, the second quarter should be the toughest year-over-year compare in terms of revenues. So for the second quarter, revenue is expected to be between $3,470,000,000 and $3,520,000,000, representing growth of 4.6% to 6% on constant currency basis and 0.9% to 2.4% on a reported basis. Excluded -- excluding COVID-related work, we expect organic revenue growth at constant currency to be in the low to mid teens, consistent with what we had in Q1 actuals and our projected full-year revenue growth. Adjusted EBITDA is expected to be between $790 million and $805 million, up 9.4% to 11.5%.

And adjusted diluted EPS is expected to be between $2.35 and $2.42, growing 10.3% to 13.6%. So to summarize, we delivered very strong first quarter results on both the top and bottom line against what had been a very strong first quarter of 2021. Our base business maintained low teens organic growth at constant currency, excluding COVID-related work, with double digit growth on its basis in both [Inaudible] and R&DS. Our R&DS bookings -- excuse me, business recorded its largest ever quarter of service bookings.

Contracted backlog exceeded $25 billion for the first time, rising over 9% year over year with over $7 billion expected to convert to revenue over the next 12 months. We maintain our net leverage ratio at 3.6 times 12-month adjusted EBITDA on a trailing basis. And finally and most importantly, despite the turmoil around us, we remain very confident in our outlook and accordingly have maintained our full year 2022 profit guidance. So with that, let me hand it back over to the operator for our Q&A session.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Eric Coldwell from Baird. Your line is open. Please ask your question. Thanks very much.

Good morning.

Eric Coldwell -- Robert W. Baird and Company -- Analyst

Two quick ones, both on geography. First with Russia, Ukraine, I -- I'm sorry if I missed it, but could you tell us the impact in Q1 and then how the $40 million to $50 million of annual impact is phased through the year? I guess I would assume the majority of that or a significant portion is been to 2Q but we'd love to get your sense on how you face that $40 million to $50 million projected impact. And then secondarily, early in the pandemic, IQVIA was the first and perhaps most vocal company to talk about the impact of China in Asia-Pac when COVID first broke out. Obviously, a lot of conversation these days on the rolling lockdowns in China.

I'd love to get an update on what you're seeing from the impact in that market and how you're operating across that region, given the governmental actions ongoing today. Thanks very much.

Ari Bousbib -- Chairman and Chief Executive Officer

Thank you. Good morning, Eric, and thanks for your questions. On the first one, Ukraine. Look, Ukraine, Russia is like not even 1% or about 1% of all of our revenue.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Less.

Ari Bousbib -- Chairman and Chief Executive Officer

A little less. So call it $130 million, $140 million, let's say. And obviously, there's been significant displacement in the world that cannot be done, primarily in R&DS. I might point out, some of that may come back.

Some of the trial will obviously needs to continue and will be delayed. It just takes time and -- because of the disruption. You want to answer specifically the question on how much per quarter. We said -- we size it at $40 million to $50 million.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Right. Well, it's less than a proportionate impact in Q1, obviously, because the conflict didn't start until late February. So we had a few million dollars of impact in Q1, not a huge impact. You're right that the it's probably the $40 million to $50 million is probably front end loaded in the year because we should recapture a little bit as we get late in the year and we start shifting work.

But that always takes longer than you think it's going to take. So, we're not assuming a huge recovery of work in 2022, but ultimately, as we find new patients and move the clinical trial activity outside of Russia and Ukraine, we should recover a lot of that.

Ari Bousbib -- Chairman and Chief Executive Officer

Probably, back end of the year or early next. Now, with respect to China, just to situate the conversation, China is about 2.5% of our global revenues, and that's about half and half R&DS and commercial. Now, to take the commercial side first, we saw virtually no impact, even at the worst of the COVID crisis when everything was shut down in China on our commercial business, obviously some of the business that requires some face-to-face interactions like PMR, consulting, and so on obviously went to zero. But the rest of the business, the technology, the analytics services continued pretty much intact.

So we had no concerns there. On the R&DS, the obvious concern is that we're locked down, our ability to access sites. Now, right now, it's a fluid situation. We're tracking closely what's happening on the ground.

We've seen some disruption to site access and patient visits, again, mostly in Shanghai, because that's where the lockdown has been limited to so far. It's hard to imagine that these are going to be prolonged for a very long time or expanded throughout China. But again, we -- no one can tell. So that's where we are.

We -- again, we are relatively confident outside China that when these things happen now we've learned how to deal with it with our remote capabilities and our expected development of decentralized trials, etc. We've become more adept and we are prepared to address those situations. We believe with the same would be true if, God forbid, in China the situation were to deteriorate. But frankly, at this point we haven't seen much.

Again, is the sum and we haven't taken any adjustments or anything like that in our forecast for China. Any other comments, guys?

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Thank you, Eric.

Operator

Your next question comes from the line of Shlomo Rosenbaum from Stifel. Your line is open. Please ask your question.

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

Hi. Thank you very much for taking my questions. A quick question, just is the year's revenue and profitability pacing the way that you expected as you entered the year? I mean, obviously, a little bit of change with Russia and stuff like that. I just -- the second quarter guidance is a little bit lower than what the Street expected, obviously, the Street doesn't.

Have the insight into the pacing that you guys have at that level of detail. And it could be that we just didn't get to seen, kind of COVID headwind roll off year over year. And I just want to, kind of start with that question and have one follow up.

Ari Bousbib -- Chairman and Chief Executive Officer

Well, so thank you for your question this morning. The -- look, I think Ron mentioned in his introductory remarks that last year's first half included the highest -- the peak revenues from COVID. The second quarter will be the toughest compare year over year with COVID in, like the biggest step down year over year of COVID revenue will be in the second quarter. That's one factor.

Secondly, on a reported basis, if you look at -- again, assuming that rates remain where they are for the balance of the year, the worst comparisons year over year in terms of FX impact are in the second quarter. The underlying businesses, when you take these out, COVID and effects, you guys help me out with the numbers. The second quarter is consistent.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Yeah, very consistent. And that's why we're giving you ex-COVID constant currency organic because that cleans out a lot of the items that cause the volatility that you're seeing. And really across the quarters of 2022, when you look at it on that basis, very consistent growth rate.

Ari Bousbib -- Chairman and Chief Executive Officer

So again, I mean, in tires, I tell you, the -- our -- what's built in our forecast and reflected in our guidance is due to constant currency organic growth, excluding COVID-related work, in the high single digits. So very consistent with the first quarter. R&DS due to constant currency organic growth, excluding COVID-related work, will be upper teens; and CSMS will be low single digits, excluding COVID-related work at again constant currency organic growth. So you're right on the reported basis, the number that we the actual quality working through that it looks a little choppy sequentially, but the reality of the underlying business is pretty consistent and very strong.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Yes, the other thing I'd say, Shlomo, is that's pretty much in line with our guidance that we gave. I mean, the linearity and how it's progressing over the quarter is exactly what we were expecting.

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

OK. Perfect. And this is another one for you, Ari. Just you have a really good history of being aggressive on share repurchases when the stock dips, and the stock has pulled back a lot.

And it's -- at the Analyst Day communicated being -- and just know actually more recently.Of having a lower leverage target in a -- for a longer period of time. But would you consider taking up the leverage to take advantage of the stock price, given the fact that it seems like the trends in the business really haven't changed despite the changes in the stock price?

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Look, my first inclination would be to do that. But frankly, we're not going to do that. We can buy -- thankfully, there's a third factor in what you're articulating, which is our cash flow generation. And as you've seen, it's been pretty strong.

And that allows us more flexibility and affords us the ability to do both. That is to maintain a normal leverage ratio and aggressively pursue share repurchases. You saw we bought over $400 million in the first quarter. Frankly, there are time windows that we cannot buy.

We reported earnings, I think in February and then we approached the end of the quarter. So we don't have a lot of time. And now we're already April 27, but yes, you can expect that we will be in the market level as well as any level. And so I again, logically, the question is, yes, we will do aggressive share repurchase, but no, we will not increase the leverage ratio.

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

OK. Thank you.

Operator

Your next question comes from the line of Jack Meehan from Nephron Research. Your line is open. Please ask your question.

Jack Meehan -- Nephron Research -- Analyst

Thank you and good morning. One of the big debates from the serum industry has also been labor. How did your wage and turnover trends compare versus prior periods? Can you just comment on how you're managing through that?

Ari Bousbib -- Chairman and Chief Executive Officer

Yeah, well, look, it's interesting. We've -- we're obviously experiencing the same trends that we've talked about before, which is given the strength of the industry backdrop, there's obviously competition for talent. And we are really, really actively recruiting and hiring to meet the incremental demand. We also saw, like in the rest of the industry, attrition pick up toward the end.

I think it has stabilized, I would say, over the past few weeks. We track these very carefully. I look at it on a weekly basis. And it seems to have kind of plateaued.

And these attrition levels have plateaued and maybe even start to come down a little bit. Look, we have approximately 82,000 employees and we recruit thousands of employees a year. So we do have the talent acquisition capabilities to be able to meet this increased demand. And we have we actually fascinating back to the Ukraine situation.

We are actually looking now at repositioning individuals from these countries, Russia and also Ukraine in different geographies and utilize them in other places. So it's -- we are really -- literally our global footprint allows us a little bit more initiative. We are seeing some margin pressure from labor cost increases but as -- we have the flexibility again because our global footprint to do some arbitrage and moving things around the world to optimize our cost structure. We, of course, have our ongoing -- that's part of our DNA.

We are continuing -- that's what we do day in, day out, productivity initiatives and cost optimization actions. Look, we've also increased rate cards on existing RFPs and we are looking for ways to pass along some of those cost increases into pricing, where we can. So the combination of all of that, obviously, this is easier to do the pricing lever easier on short cycle resources than on the longer cycle businesses where we've already priced in some price escalations where they don't always reflect the wage inflation that we actually see in the market. But again, the combination of all of these levers allows us to manage that situation fairly effectively.

And by the way, all these cost pressures that I that we talking about already factored in our guidance. Also, I want to point out, I mean, maybe that's I don't have a sense on that but we pay in aggregate the highest ever level -- dollar level of bonuses for 2021 to our employee population. In aggregate, we continue to pay, I would say, at a very respectable, high level bonuses to our employees even during the worst of the pandemic. And I think we've seen in our employee surveys, which we view very frequently, higher and higher satisfaction levels and loyalty to our company.

My understanding is not every one of our peers has done that. And in fact, we know specifically over the year that it has been zero or very little bonuses last year. So, that also has created some employee exodus at some other peer companies and we are benefiting from that as well. So it's a complex situation.

Wages are going up. There is attrition and so on, so forth. But there are a lot of moving parts here, including competitive ones. And we feel confident that we can address these issues without changing anything in our guidance.

Thanks for your question.

Operator

Your next question comes from the line of John Sourbeer from UBS. Your line is open. Please ask your question.

John Sourbeer -- UBS -- Analyst

Hi. Thanks for taking my question. I was wondering if you could just talk a little bit on the real world evidence business growth in the quarter. And is this still going to be a double digit growth this year, even if maybe some of the COVID work is going away throughout the year?

Ari Bousbib -- Chairman and Chief Executive Officer

OK. Well, look, real world evidence, we saw strongly. You saw, that it does in general, organic, constant currency revenue growth, excluding COVID, was just over 10% in aggregate. And the high growth segments, as you point out, are real world evidence.

And, of course, as you all know, commercial tech, which continue to be strong drivers of growth. And I gave several examples, specific client examples of how in the commercial world, in the technology space and real world evidence, we are utilizing a unique capabilities. So, real world evidence is -- do we disclose the numbers here or not?

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

I mean, I can say it continues to be a high, my driver excluding any COVID impacts. So, the numbers we've been giving for real world have excluded that from the beginning. So that business has been consistently in the high to upper teens growth rate. And we see that continuing.

Mike Fedock -- Senior Vice President, Financial Planning and Analysis

Yeah, yeah, exactly, John. We see that continuing to your last question, with good outlook.

Ari Bousbib -- Chairman and Chief Executive Officer

Look, with respect to the COVID lockdown in revenue, which we've been talking about for a while now, we've always said during the height of the pandemic. That it is true for real world, it is true for commercial and certainly is extreme [Audio gap] the business. COVID work essentially crowded out the rest of the business. Refocus their dollars on COVID, whether it's vaccines or therapeutics or [Audio gap] government work to track and monitor COVID patients, etc., and they turn to us.

As you know, we had a very strong [Audio gap] market appropriately. And the concerns that some of you had expressed at the time is, well, one that goes away, then what happens? Well, we [Audio gap] when that would go away, the base business would come back because we knew that there were a lot of projects that were -- have been [Audio gap]. And that there was a lot of pent-up demand that needed to be addressed. And that's exactly what is happening.

Exactly what is happening. [Audio gap] And it's true certainly in R&DS. Thank you.

John Sourbeer -- UBS -- Analyst

Thanks. And then there's maybe one follow up. As you're floating around that 3.5 times lever any thoughts on M&A and what areas are potential [Audio gap] what businesses would you be looking at if there were to be bills?

Ari Bousbib -- Chairman and Chief Executive Officer

Well, look, we always said, [Audio gap] will be done. And that's been consistent. By the way, you can look at our record is between one and two points of the of our [Audio gap] in the long term has been supplementing our organic growth. We make acquisitions within our core businesses, strategic and our capabilities will allow us to enter the adjacent markets where we think we can add value.

Have walked away -- we do walk away from I want to say 90-plus percent of the companies we look at in the. We always felt that valuations were very frothy and we did not want to despite the rate, we did not want to pay for assets more than what they were worth. And unfortunately for those who did it, you now find yourself taking a beating. And now, you've got a lot of private equity owned businesses that are very attractive that we would like to buy.

The point for those current owners. At the time the acquisition was very high and so I just don't know how -- it's going to take time. I am suggesting that we are going to, if we were always cautious, we are going to continue to be cautious now. We will step up to the plate when the acquisition is extremely attractive, extremely accretive to our operations and our financials.

And we've done that in the quarter. Actually, we bought significant large business, which is very attractive. I believe that's the bulk of our operations in the quarter.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Yeah.

Ari Bousbib -- Chairman and Chief Executive Officer

And we like very much the large business. As we discussed before, these are very strong and necessary capabilities and our lab business has been doing spectacular. We -- obviously, we look at CROs when they come up, but again, the valuation premiums on those assets have been out of reach for us. On the commercial side, we've bought technology companies and we will continue to look at the digital space.

We've got, as you know, a strong interest in growing -- in continuing to grow on the commercial side. The commercial side is becoming increasingly sophisticated with the go-to-market strategies of our clients becoming a lot more akin to how larger consumer-oriented businesses look at the world with much better -- we see what you see with our OCP suite, our OC -- ecosystem, those with a lot of embedded intelligence. It is no longer we're not talking about a simple CRM point solution, as is the case for most of the competition. Our system is an ongoing live with the sophisticated AI analytics that enable the users to make decisions on a timely basis with respect to targeting the right customer at the right time with the right message.

And so anything that complements or advances our position in the U.S. digital and European digital commercial spaces, where it's most advanced, we will look at. And we will be aggressive enough to to enter those spaces and complement our capabilities. So that's what I just gave you, my overall strategic panorama here in terms of acquisitions.

John Sourbeer -- UBS -- Analyst

Thanks for taking the questions.

Operator

Your next question comes from the line of Luke Sergott from Barclays. Your line is open. Please ask your question.

Luke Sergott -- Barclays -- Analyst

Good morning. Thanks for the question here. Just a couple of cleanups on the code. Step down and two quick reminders.

I might have missed this one. Can you remind us what you guys did in 2Q last year? And by the segments, just so we have an idea how that phases out?

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

We had a combination of projects in the [Inaudible] segment. You'll recall we did a lot of government work, which is stepping down as we go through this year. In the R&DS segment, we were working on some mega COVID, COVID vaccine studies and safety monitoring work and also therapeutics. But we were involved in hundreds of different COVID-related projects.

Ari Bousbib -- Chairman and Chief Executive Officer

So are you asking what type of work were we doing or [Inaudible]

Luke Sergott -- Barclays -- Analyst

[Inaudible] I'm just trying to get a sense. I don't know if I missed it.

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

The numbers, like I told you. We did about $375 million in -- are you talking in Q2 or Q1 now?

Luke Sergott -- Barclays -- Analyst

Q2 of last -- I'm just trying to get a sense of the step down because you have [Inaudible]

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Q2 was the high end last year. And you infer from the numbers we gave you on the conference call what Q1 was last year, which was over $550 million and Q2 was slightly larger than that last year.

Luke Sergott -- Barclays -- Analyst

That's helpful. That's exactly what I was looking for. All right. So something here a little more strategic as you think about it.

So, I mean, when, Ari, when you guys came on after the merger, you started going after the fat tails of biotech. Right, and going after all the bookings. And so now when you're getting up to, you know, record booking levels, 1.9 plus, are you guys at capacity of what your business can handle? And I guess it's more of a sense of I understand it's hard just to add additional bodies given the tight labor market. So give us some sense of the type of work you're now taking on how that's changed.

And if we should expect the overall bookings to continue to climb or if this is kind of peak at your capacity right now?

Ari Bousbib -- Chairman and Chief Executive Officer

Well, first of all, I -- capacity always is people driven in this business, as you know. But I would say, you know, if anything, certainly since the merger, our ability to take on more work with the same amount of people has increased significantly because of our decentralized clinical trials capabilities. The increase in technology content in data analytics, process improvements that we've done since the merger is really dramatic. So our ability to take on more work with the same amount of people is significantly enhanced.

So I don't see, frankly, as the team where we work because somehow we don't have the capacity, we just don't do that. Again, with the minor exception of what I just had before in my introductory comments for pre-commercial employees that knock at our door for assistance and that don't qualify based on our rigorous vetting process. But with that minor exception, we are able, willing, eager to take on any and all work. So certainly I hope that we continue, assuming the underlying dynamics of the market, continue to grow, which is, I think, a very, very valid assumption and a completely conservative expectation.

And assuming that we continue to gain market share, which is also, I think, a conservative expectation, you should expect our bookings to continue to grow over the long term. No question about it.

Luke Sergott -- Barclays -- Analyst

All right. Great. Thanks.

Ari Bousbib -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Patrick Donnelly from Citi. Your line is open. Please ask your question.

Patrick Donnelly -- Citi -- Analyst

Hey, guys. Thanks for taking the questions. Ari, I just want to circle back on EBP, really helpful commentary during the script. I mean, it sounds like even if you did see some softening, your business is diversified enough where the impact would be pretty negligible.

But to date, you haven't seen anything. And just to clean up, I guess, why you wouldn't be seeing it versus some competitors like one yesterday you called it out there. Is that coming down to your vetting process? You're maybe not taking on higher risk trials that others are? Or do you think it comes down to that process internally?

Ari Bousbib -- Chairman and Chief Executive Officer

Look, I know I'm not going to speak for other competitors. I obviously people in the industry know or have knowledge of what their peers focus on in terms of market segments. Look, from the beginning of this merger, we said we were going to be a lot more thorough in terms of would get into a backlog. If you recall, we switched from "awarded business" to contracted business.

We became a lot more rigorous in terms of the specific booking analytics. I mean again, I want to, I, I shaking your head, we never, ever you hear from us, God forbid, that we are making an adjustment to our bookings because we are some kind of obvious some meteorites came from the cosmos and here's our backlog you haven't heard that from us quite the opposite and so. We tell you what the numbers are and those numbers are thoroughly and rigorously scrubbed. I repeat, we're not going to take it.

You know, there are many believe there are many clients that call or companies that call or venture D.C. firms. There are a lot of biotech stuff all over the world with high hopes. And they'd love to have us help them and support them.

And they sometimes even want to leverage the fact that they are supported by IQVIA in order to raise the money. And of course, we just don't do that. That's not our business. There could be you know, it is often the case that that's an EBP at a very early stage with one molecule and high hopes and a nice-looking management team go around raising money and they come in with at least an assertion that there is a CRO already involved and that has vetted their the scientific basis, etc.

And the more credible the CRO, the better chances they have of raising money. Now, we don't do. That simple. Others do so that there are significant differences between how we do business.

Someone asked you about capacity and I said this can happen to be a capacity issue for us. But look, it's not like we are desperate for business. We have business, so we're not going to take on anyone. So I think that may be one difference.

And as I said, market segment focus. You have -- Mike, you have any other comment to make?

Mike Fedock -- Senior Vice President, Financial Planning and Analysis

Yeah, thanks. Just to build on those comments, in addition to the vetting on both a financial and scientific basis, the nature of work that we typically take in is in the later-stage clinical timeframe, whereby there's a lot more, I think, historical data versus whether you're down dealing in is mainly in the pre-clinical or first in-human space. I think that's another benefit to the [Inaudible]

Ari Bousbib -- Chairman and Chief Executive Officer

Thank you. Very important.

Patrick Donnelly -- Citi -- Analyst

Yeah. That's really helpful. Appreciate it.

Ari Bousbib -- Chairman and Chief Executive Officer

And your first comment, frankly, was the right one, which is it's a very small part of our overall business, our company.

Patrick Donnelly -- Citi -- Analyst

Right. Understood. And a quick one, Ari, on the pricing environment, what you're seeing there. I know that's a concern.

As biotech falls off, maybe pricing softens. It sounds like you guys still have nice power there. And on the back of that, any delay in terms of getting reimbursed on some of the shifting trials in Russia, Ukraine? Just wondering as you put in a change order, is there near-term margin pressure that then alleviates as you go through the year and get reimbursed? Just trying to figure that piece out as well. Thank you.

Ari Bousbib -- Chairman and Chief Executive Officer

Yes, yes, of course. But again, it's a small, small piece of the overall and we are absorbing that cost. So, we haven't changed our profit outlook and we don't plan to do that. For now there's no reason to do that.

We can absorb it. We have enough initiatives. We are large enough, diversified enough that we can handle the Russia-Ukraine disruption in our clinical trials so long as it -- that's what it is now. OK.

Nick Childs -- Senior Vice President, Investor Relations and Corporate Communications

Thank you, Patrick. Thank you all for joining us today. We look forward to speaking with you again in our next earnings call. Myself and the team will be available for the rest of the day for any follow-up questions.

So feel free to reach out. We look forward to talking to everyone again soon. Thank you.

Duration: 61 minutes

Call participants:

Nick Childs -- Senior Vice President, Investor Relations and Corporate Communications

Ari Bousbib -- Chairman and Chief Executive Officer

Ron Bruehlman -- Executive Vice President and Chief Financial Officer

Eric Coldwell -- Robert W. Baird and Company -- Analyst

Shlomo Rosenbaum -- Stifel Financial Corp. -- Analyst

Jack Meehan -- Nephron Research -- Analyst

John Sourbeer -- UBS -- Analyst

Mike Fedock -- Senior Vice President, Financial Planning and Analysis

Luke Sergott -- Barclays -- Analyst

Patrick Donnelly -- Citi -- Analyst

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