IQVIA Holdings (NYSE:IQV), a provider of contract research services and data to the life sciences industry, reported its second-quarter earnings on Wednesday.

As predicted, revenue continues to grow at a modest clip on the back of strong win rates. Management successfully used the increased sales leverage to drive margin expansion, which helped fuel outsized growth on the bottom line. When combined with stock buybacks, adjusted earnings per share continues to grow at a double-digit rate.

IQVIA Holdings Q2 results: The raw numbers


Q2 2019

Q2 2018



$2.74 billion

$2.58 billion


Adjusted earnings before interest, taxes, depreciation, and amortization

$578 million

$533 million


Adjusted net income

$306 million

$270 million


Adjusted earnings per share




Data source: IQVIA Holdings.

What happened with IQVIA this quarter?

  • Market watchers were expecting $2.69 billion in revenue and $1.49 in adjusted earnings, so both numbers compared favorably to estimates. All of the company's key numbers came in above management's guidance range, too.
  • Technology and analytics solutions (TAS) revenue grew 9% to $1.1 billion. Research and development solutions (R&DS) revenue jumped 6% to $1.44 billion. Contract sales and medical solutions revenue fell 1% to $203 million.
  • R&DS backlog expanded 15% to $18 billion.
  • The book-to-bill ratio expanded sequentially to 1.59.
  • Cash balance at quarter-end was $938 million. Total debt was $11.4 billion.
  • Management spent $236 million on stock buybacks during the quarter. When combined with other buybacks, shares outstanding have dropped about 5% over the last year. Management still has the green light to repurchase an additional $1.9 billion.
Lab worker holding a vial containing a yellow liquid.

Image source: Getty Images.

What management had to say

CEO Ari Bousbib was happy with the company's quarterly performance:

"The team delivered excellent financial and operational results, with TAS and R&DS sustaining their strong momentum and CSMS continuing to improve. Our significant investments in innovation are driving a higher growth rate, and as a result, we are pleased to raise our full-year 2019 revenue and earnings guidance."

Looking forward

Management shared the following guidance with investors for the third quarter of 2019:

Metric Q3 2019 Forecast Implied Growth at Midpoint
Revenue $2.73 billion to $2.78 billion 6.5%
Adjusted EBITDA $580 million to $595 million 4.8%
Adjusted EPS $1.53 to $1.59 9.9%

Data source: IQVIA Holdings.

Wall Street was expecting IQVIA to post $2.75 billion in revenue in the third quarter and $1.59 in adjusted earnings, so the midpoint of this guidance is a bit below estimates.

On the bright side, management favorably tweaked its full-year guidance range:

Metric 2019 Previous Guidance 2019 Updated Guidance
Revenue $10.9 billion to $11.1 billion $11 billion to $11.15 billion
Adjusted EBITDA $2.375 billion to $2.425 billion $2.385 billion to $2.415 billion
Adjusted EPS $6.20 to $6.40 $6.25 to $6.45

Data source: IQVIA Holdings.

IQVIA's stock is trading slightly higher in the wake of this earnings report, which is a bit surprising given the weak guidance for the third quarter. Traders appear to be focusing their attention on the upbeat second-quarter numbers and the full-year guidance raise.

Short-term price movements aside, this report was filled with good news. Revenue continues to grow, margins are expanding, and management is using its financial strength to rapidly reduce the share count. The combination is leading to double-digit bottom-line growth, which is an impressive accomplishment given that this is a relatively mature business.

IQVIA's stock has performed very well over the last few years and is currently trading near its all-time high. With every metric heading in the right direction, that enthusiasm is warranted.

Shares are currently valued for about 22 times next year's earnings estimates, which is pricey in absolute terms, but it's not all that expensive for a business that is expected to grow its profits at a double-digit rate over the next five years. If the company can continue to crank out upbeat results, I see no reason shares can't continue their steady march upward, even from today's lofty valuation.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.