IQVIA Holdings (IQV 1.43%) reported its second-quarter results on Tuesday, July 24. The leading provider of contract research services to the life sciences industry yet again showed top- and bottom-line growth that outpaced the high end of its guidance range.
Let's dig into the company's results to see what happened during the period and find out what the future may hold for this thriving business.
Image source: Getty Images.
IQVIA Holdings Q2 results: The raw numbers
|
Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$2.57 billion |
$2.36 billion |
9% |
|
Adjusted earnings before interest, taxes, depreciation, and amortization |
$533 million |
$467 million |
14.1% |
|
Adjusted net income |
$270 million |
$229 million |
17.9% |
|
Adjusted earnings per share |
$1.29 |
$1.03 |
25.2% |
Data source: IQVIA Holdings.
What happened with IQVIA this quarter?
- Revenue from Technology & Analytics Solutions -- which was previously known as Commercial Solutions -- grew 14% to $1.01 billion.
- Research & Development Solutions revenue grew 9.6% to $1.35 billion.
- Revenue from Contract Sales & Medical Solutions -- which was formerly known as Integrated Engagement Services -- fell 13% to $206 million.
- Adjusted EBITDA grew 14% to $533 million. This figure also exceeded guidance.
- Management spent $573 million on buybacks during the period. The company had the green light to buy back about $1 billion worth of stock as of the end of the quarter.
- Diluted shares outstanding fell by 5.6% year over year thanks to the company's generous repurchase program.
- The book-to-bill ratio during the period was 1.27.
- R&D Solutions' backlog expanded to $15.7 billion at quarter-end.
What management had to say
IQVIA's CEO Ari Bousbib was pleased to report that the company's spending plans have been paying off for shareholders:
The significant strategic investments we have been making in innovation across our businesses over the past 18 months are beginning to build operating momentum. The team secured major wins for our tech offerings during the quarter, and we had our largest ever R&D bookings quarter, including record awards for our next-generation clinical development offering.
Looking forward
Management projected that the company's momentum will continue into the upcoming quarter:
| Metric | Q3 2018 Guidance Range | Q3 2017 Actual | Growth |
|---|---|---|---|
| Revenue | $2.55 billion to $2.6 billion | $2.47 billion | 3% to 5% |
| Adjusted EBITDA | $540 million to $560 million | $512 million | 5% to 9% |
| Adjusted EPS | $1.35 to $1.42 | $1.19 | 13% to 19% |
Data source: IQVIA Holdings.
The better-than-expected start to the year allowed management to bump up its full-year guidance:
| Metric | New 2018 Forecast | Change From Previous Guidance at Midpoint |
|---|---|---|
| Revenue | $10.25 billion to $10.4 billion | $20 million |
| Adjusted EBITDA | $2.17 billion to $2.23 billion | $15 million |
| Adjusted EPS | $5.20 to $5.45 | $0.125 |
Data source: IQVIA Holdings.
IQVIA's second-quarter results continue to demonstrate that this business is executing incredibly well. The growing backlog, strong book-to-bill ratio, and raised guidance should also provide investors with confidence that the company's future continues to look bright.
Wall Street bid up shares a few percentage points in early-morning trading following the report. The bullish move makes sense given the company's solid results. Even with today's bump, shares are only trading for about 22 times the midpoint of full-year adjusted EPS guidance. I think that's an attractive valuation for a company that is clearly executing well and is projecting to grow profits in excess of 15% annually over the next five years.
Count me as a bull.
