Q2 2024 IQVIA Holdings Inc Earnings Call

Participants

Kerri Joseph; Senior Vice President, Investor Relations & Treasury; IQVIA Holdings Inc

Ari Bousbib; Chairman of the Board, Chief Executive Officer; IQVIA Holdings Inc

Ronald Bruehlman; Chief Financial Officer, Executive Vice President; IQVIA Holdings Inc

Shlomo Rosenbaum; Analyst; Stifel, Nicolaus & Company, Incorporated

David Windley; Analyst; Jefferies LLC

Anne Samuel; Analyst; JPMorgan Chase & Co.

Elizabeth Anderson; Analyst; Evercore ISI

Max Smock; Analyst; William Blair & Company, L.L.C.

Jailendra Singh; Analyst; Truist Securities, Inc.

Justin Bowers; Analyst; Deutsche Bank

Tejas Savant; Analyst; Morgan Stanley

Dan Leonard; Analyst; UBS Securities LLC

Charles Rhyee; Analyst; TD Cowen

Michael Ryskin; Analyst; BofA Global Research

Jack Wallace; Analyst; Guggenheim Securities LLC

Patrick Donnelly; Analyst; Citigroup Global Markets Inc.

Matt Sykes; Analyst; Goldman Sachs & Company, Inc.

Presentation

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA second quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, please begin your conference.

Kerri Joseph

Thank you, operator. Good morning, everyone. Thank you for joining our second quarter 2024 earnings call. With me today are Ari Bousbib, Chairman & Chief Executive Officer; Ron Bruehlman, Executive Vice President and Chief Financial Officer; Mike Fedock, Senior Vice President, Financial Planning and Analysis; and Gustavo Perrone, Senior Director, Investor Relations.
Today, we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call on the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com.
Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, which are discussed in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and subsequent SEC filings.
In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Ari Bousbib

Thank you, Kerri, and good morning, everyone. Thanks for joining us today to discuss our second quarter results. IQVIA delivered another quarter of strong operational results with 5% revenue growth, excluding the impact of foreign exchange and COVID-related work and 8.6% growth in adjusted diluted earnings per share. The fundamentals of the industry remain healthy, which supports our confidence in the outlook for our business.
On the commercial side, things are starting to gradually improve. And while customers continue to exercise budgetary cautiousness, we see faster decisions and more focus on carrying out mission critical projects, such as those associated with launching new drugs.
As you recall, new FDA approvals for 2023 were 55, which was the second largest year since 2017. And in fact, year-to-date approvals are at 21, which is in line with the average for the last five years. In the quarter, TAS came in a little better than our expectations, consistent with the improving leading indicators that we cited earlier this year. Both consulting and analytics and real-world revenue improved sequentially in the second quarter.
We said TAS revenue growth for 2024 was going to be the mirror image of 2023. And in fact, TAS revenue growth was about 3% in the first quarter and it was 4% in the second quarter, excluding COVID and foreign exchange.
At constant currency and based on forward-looking indicators, we remain confident in our full-year forecast for TAS. This implies 6% to 7% growth for the balance of the year, resulting in full year mid-single digit growth, again, consistent with the target we established for TAS at the beginning of the year.
On the clinical side, while we continue to see the trend we have observed over the past years with large pharma reprioritizing their portfolios or programs and reallocating money to the most attractive ones in response largely to the IRA, demand from our large pharma clients in R&DS remains solid. We are also encouraged by the continued acceleration of EBP funding.
In fact, Value World Reports, emerging biotech funding for the second quarter was $22.9 billion, which is up 32% versus prior year. For the first half, biotech funding is about $70 billion, essentially equal to the entire year of 2023. Obviously, it does take time for funding to translate into RFP flows, but certainly it bodes well for mid, long-term prospects in our EBP segment.
In the quarter R&DS recorded good net new bookings of approximately $2.7 billion, representing a book-to-bill of 1.27. Backlog reached a new record of $30.6 billion, which is growth of 7.7% versus prior year. And in fact, that's actually 8.1% when you remove the impact of foreign exchange. And of course, all of our usual forward-looking indicators are RFP flows. Overall pipeline and qualified pipeline are up.
Turning now to the results for the quarter. Revenue for the second quarter grew 2.3% on a reported basis and 3.5% at constant currency. Compared to last year and excluding COVID-related work from both periods, we grew the top line 5% at constant currency, including approximately 1.5 from acquisitions. Second quarter adjusted EBITDA increased 2.7%, driven by revenue growth and ongoing cost management discipline. Second quarter adjusted diluted EPS of $2.64 increased 8.6% year over year.
Now I'd like to spend a bit of time on highlighting some of our business activity starting with TAS. IQVIA contracted with a top 20 client to expand the implementation of our commercial technology ecosystem. IQVIA's AI, ML offerings, including analytics and OCE integrate seamlessly into the client's technology infrastructure and allow our client to manage their data more effectively and to optimize our customer engagements.
In the quarter, IQVIA won a multiyear contract with a top five clients to increase the effectiveness of the digital communication strategy. Here, our innovative solution enables targeted audience selection and custom content delivery. In our first quarter call record, we shared the preview of a large deal awarded in April for our current OCE offering.
This is a multiyear global implementation for a major division of a top five pharma clients with 1,000 users and is displacing the incumbent. As you know, IQVIA has a rich history of developing AI for healthcare, for the last 10 years, we've invested heavily in artificial intelligence and machine learning algorithms that support our clients from clinical development through commercialization.
Our AI offerings are specifically engineered to meet the demanding standards of precision speed, privacy, and trust that are required in healthcare. Whether it's in patient support services or analytics or pharmacovigilance, our proprietary AI software solutions have become market-leading.
Let me share a few examples of AI wins and awards in TAS this last quarter. We launched a genAI solution which collects structured and unstructured survey inputs from over 30,000 HCPs across 36 countries in multiple languages and in minutes delivers analytics and insights to our clients on how their interactions and messages about their brand resonated.
This work would normally take a week at least for human analyst using existing tools. A top 10 client awarded IQVIA contract to implement our centralized genAI reporting and analytics solution across their entire US salesforce, consolidating different legacy tools.
IQVIA has comprehensive genAI solution enables users to ask questions and get contextual responses in the form of charts, graphs, and KPIs. This AI solution also proactively alerts the user of key trends, anomalies, and the changes that would be required.
In another example, a US MedTech clients selected IQVIA to implement IQVIA's AI solution to onboard and train patients to utilize their medical device for diabetes. IQVIA's AI solution incorporates to real-time sentiment analysis, provides automated transcription, and smart engagement recommendations. It empowers patients to take more control of their treatment, which of course, promote better adherence to treatment protocols.
Lastly, for AI in TAS, IQVIA won the award of best use of artificial intelligence in healthcare out of 4,500 nominations in the 8th Annual MedTech Breakthrough Awards. IQVIA is winning AI solutions here, it's called smart zone enterprise quality management system, EQMS, which simplifies quality compliance and connects regulatory and quality processes for life sciences customers.
Moving to real world. IQVIA won an effectiveness study with a midsized pharma client focusing on patients who have not responded well to their previous migraine treatments. We were selected due to our strong therapeutic expertise, combined with our direct-to-patient approach to accelerate recruitment and reduce site burden.
A US EBP client awarded IQVIA real world post-approval safety and efficacy study in Japan for their coronary intravascular therapy. The aim of the project is to demonstrate the safety and effectiveness of the device, which could potentially increase the client's market share in Japan as well as help the clients registered device in other regions.
Within the quarter, a top 15 pharma client awarded IQVIA a significant contract to study the effectiveness of a therapy for schizophrenia. The study will use data tokenization to link multiple data sources and then apply AI to provide a comprehensive view of patients pre and post therapy in real-world settings to physicians, patients, and caretakers.
Finally, you may have seen that IQVIA was recognized by a respected independent third party research organization as a leader in medical affairs and life sciences regulatory operations. IQVIA's global end-to-end solutions enable medical affairs customers to manage and curate the richness of data coming into your organization, transforming evidence into insights that can enable actionable initiatives.
Let me now move to R&DS. Let's start with the trending therapeutic area, obesity treatments. A top 15 pharma clients selected IQVIA Labs to conduct globally harmonized high volume testing to ensure accelerated enrollment. It's expected this will result in a significant reduction of study timelines for this therapeutic area where speed to market is key.
Our strength in the vaccine development area led to another major award to conduct a Phase 3 trial for a new influenza vaccine that will enroll approximately 50,000 volunteers.
Turning to oncology, which represents once again our largest therapeutic area in R&DS bookings this quarter. I'll offer a few examples. A top 20 client selected IQVIA to conduct a large Phase 3 oncology study focusing on small cell lung cancer, the disease with a high need for effective treatments.
We won this study due to our strong therapeutic expertise, data and analytics capabilities, as well as our proven delivery approach, which includes a dedicated delivery unit project staffing that is exclusively focused on the client's study.
By the way for some time now, we've been deploying this unique delivery approach for large customers who have an especially complex study portfolio across multiple therapeutic areas. A biotech client selected IQVIA to support a large-scale global complex Phase 3 program to test and validate their innovative cell and gene therapy vaccines for colorectal cancer.
Lastly, in oncology, a top 25 pharma client awarded IQVIA a contract to develop an optimal clinical strategy and to execute the bladder cancer study in the US. We were awarded this engagement based on IQVIA's AI-enabled site selection and visibility solutions that will help clients meet aggressive timelines.
I'll discuss AI initiatives in TAS and in fact, AI enablement is also pervasive in R&DS, couple of other such examples. A US biotech client awarded IQVIA four full-service clinical trials, which are supported by IQVIA's AI-enabled data and analytics, increasing the likelihood of success for each trial, reducing the risk of protocol amendments, as well as the need to add countries and sites after the trial starts.
In another example, we were awarded a pharmacovigilance project by a large biotech client to manage all case processing work worldwide using our AI capabilities. The IQVIA AI-enabled solution is designed to dramatically improve productivity, reduce costs, and enhance data quality and accuracy. We will continue to share more exciting AI initiatives across the businesses, hopefully at future investor forums. I'll now turn it over to Ron for more details on our financial performance.

Ronald Bruehlman

Hey, thanks, Ari, and good morning, everyone. Let's start by reviewing revenue. Second quarter revenue of $3.814 billion grew 2.3% on a reported basis and 3.5% at constant currency. In the quarter, COVID-related revenues were approximately $45 million, which is down about $70 million versus the second quarter of 2023.
Excluding all COVID-related work from both this year and last, constant currency growth was 5%. Technology and analytics solutions revenue was $1.495 billion, which was up 2.7% reported and 3.8% at constant currency. And if we exclude COVID work from both years, it was exactly 4% growth, as you may recall, Q1 2023 was the last quarter with meaningful COVID activity in TAS.
R&D Solutions revenue of $2.147 billion was up 2.4% reported and 3.3% in constant currency. Excluding all COVID-related work growth at constant currency and R&DS was 6%. And lastly, contract sales and medical Solutions revenue of $172 million, declined 2.3% reported, but grew 2.8% at constant currency.
For the first half, total Company revenues were $7.551 billion, up 2.3% reported and 3.2% at constant currency. Excluding all COVID-related work, growth at constant currency was 5.5%. Technology and analytics solutions revenue for the first half was $2.948 billion up 1.7% reported and 2.4% in constant currency. And excluding all COVID related work, growth at constant currency in TAS in the first half was 3.5%.
R&D solutions' first half revenue of $4.242 billion was up 2.9% at actual FX rates and 3.6% at constant currency. Excluding all COVID-related work growth at constant currency in R&DS was 7% for the half. And lastly, CSMS first half revenue of $361 million increased 0.8% reported and 5% at constant currency.
Let's move down to P&L now. Adjusted EBITDA was $887 million for the second quarter, representing growth of 2.7%, while first half adjusted EBITDA was $1.749 billion, up 2% year over year. Second quarter GAAP net income was $363 million and GAAP diluted earnings per share was $1.97.
For the first half, we had GAAP net income of $651 million or $3.53 of earnings per diluted share. Adjusted net income was $487 million for the second quarter and adjusted diluted earnings per share were $2.64. For the first half, adjusted net income was $955 million or $5.18. per share
Now as already reviewed, R&D solutions bookings were again strong in the quarter. Our backlog at June 30 was $30.6 billion, up 7.7% at actual currency and 8.1% at constant currency. Next 12 months, revenue from backlog increased to $7.8 billion, growing 6.9% year over year.
Let's turn now to the balance sheet. As of June 30, cash and cash equivalents totaled $1.545 billion and gross debt was $13.258 billion that results in net debt of $11.713 billion. Our net leverage ratio ending the quarter was 3.25 times trailing 12 month adjusted EBITDA. Second quarter cash flow from operations was $588 million and capital expenditures were $143 million and that resulted in free cash flow of$ 445 million.
Okay. Turning to guidance with the first half of the year now behind us and better forward visibility, we're refining our financial guidance for the balance of the year. For the year, we now expect revenue to be between $15.425 billion and $15.525 billion. Adjusted EBITDA should be between $3.705 billion and $3.765 billion, and adjusted diluted earnings per share between $11.10 and $11.30.
There is no material change to our previous assumptions about COVID-related step down, acquisition impacts, and foreign exchange impacts. By segment at constant currency ex-COVID, our full-year guidance remains the same and it's unchanged versus what we gave you back in February, which is the same, TAS will grow this year around 5% and R&DS in the 7% range.
Moving now to third-quarter guidance, we expect revenue to be between $3.830 billion and $3.880 billion. Adjusted EBITDA is expected to be between $925 million and $950 million, and adjusted diluted EPS should be between $2.76 and $2.86. Now our guidance assumes that foreign exchange rates as of July 18 continue for the balance of the year.
So to summarize, we delivered another solid quarter of financial performance. R&DS and bookings of $2.7 billion with a strong book-to-bill of 1.27. TAS performed well against our expectations. Adjusted diluted earnings per share increased 8.6% year over year.
We're now leaving behind the interest expense headwinds and are moving back towards resuming double-digit EPS growth. Free cash flow for the quarter and for the first half were strong, driven by strong collections performance, and we remain confident that both TAS and R&DS will achieve the full-year target for revenue growth we provided at the beginning of the year. And with that, let me hand it back to the operator to open the session for Q&A.

Question and Answer Session

Operator

(Operator Instructions) Shlomo Rosenbaum, Stifel.

Shlomo Rosenbaum

Hi, thank you very much for taking my questions. Looks like a very solid quarter and we're seeing the TAS improving, which is definitely heartening. Question I have Ari and Ron, is just the guidance is raised for revenue and EPS at the midpoint, but if you look at the EBITDA guidance, it was lowered a little bit.
Maybe you could talk about what's going on in the nature of the revenue that's coming through for the year and maybe just a little bit also in terms of the kind of pacing we got the third quarter, so we could imply the fourth quarter. And if you could talk a little bit about the ramp you expect in the fourth quarter. Thank you.

Ari Bousbib

Yeah, thanks, Shlomo. Look, I wouldn't read much into the tweaks in the guidance. It's what we review all of our business unit forecasts and we build all that up and it falls wherever it falls. And we know that the FX is slightly more favorable than it was last time we reported. So that kind of injuries is driving a little bit in aggregate, the higher -- a little bit higher on revenue. Again, I wouldn't read much there.
EBITDA, whatever the mix of business fell, okay, when you have a little bit more of certain offerings than others, and as a result, you've got, you know, the margin fell whatever it fell, but look, we would say we're still, you know, delivering margin growth.
And even yeah, I see what you mean. I mean, frankly, I didn't even -- we don't focus on that. These are small tweaks and I wouldn't, it could vary again next quarter. So there's nothing other than wherever the mix of business fell, frankly.
We're still delivering at this level was the margin expansion here about 30 basis points at the midpoint and 50 basis points at the high end. So that's very strong, given the markets we've been navigating here from the for the first half. And on the EPS, I think it's largely a better control of CapEx, which in turn, as you know, a bit more favorability on DNA, it is below the line, basically, you know that drives the EPS, the higher point on EPS. Again, these are tweaks, I wouldn't draw much conclusion on that.

Operator

David Windley, Jefferies.

David Windley

Hi, thanks for taking my question. Good morning. Ari, you've talked in some of your recent public commentary about price pressure or price expectations from customers. And in your opening remarks, you mentioned budget sensitivity, I think in the context of TAS. Could you just kind of bring us up to current on your assessment of the market environment in terms of customers' willingness to pay your asking price?

Ari Bousbib

Good question. I did talk about this in the past and there is no change there. It is true. Again, I mentioned in my introductory remarks, it's not like we've all of a sudden moved to a different bullish environment, clients, large pharma to focus on that segment first.
It has announced -- I mean, there's barely a large pharma company that has not announced a massive cost cutting program, multibillion dollars. And often that comes first with a review of their procurement practices with their vendors. And we are a top vendor to pharma. So there's no surprise here. What I said before is still valid. Those budgetary constraints persist, the cautiousness persist.
And of course, you know, it's not like we can price whatever we want. Now clients still need to do some projects. Many of them had been postponed and delayed. We see that improving. Decision timelines had started to improve and now they have improved more dramatically. They are not where they were before this whole some cautiousness begun, but they have improved significantly, which is why we feel more confident with the forecast.
Pricing, yeah, I mean, look, a large pharma clients are more disciplined in their spending and therefore, it's a tougher fight out there in terms of negotiations, no question about that. And it's true in TAS and it's true in R&DS, frankly.
At the same time, you know, you get on the R&DS side on the CRO side, you get really an industry that has kind of segmented itself in a way with very large players and a bunch of smaller ones, including some who are sometimes desperate for business and becoming disciplined with respect to how they go about approaching their bids and so on, so forth and obviously clients. You can expect clients fully taking advantage of that.
So again, the answer to your question is pricing continues to be tough for the reasons I just mentioned, both on the commercial and the R&DS side. We, of course, respond with continued increase in our productivity programs, cost containment programs, as well as a lot of deployment of AI within our own operations. And those things take time. Obviously, there is always a lag when we implement these solutions before we can get the full benefit. But that's what's happening on pricing. Thank you, David.

Operator

Anne Samuel, JPMorgan.

Anne Samuel

Hi, thanks for taking the question. I was hoping perhaps you could speak a little bit more about the performance of your different business segments within TAS and perhaps where you started to see some of that outperformance? Thank you.

Ari Bousbib

Yeah. You mean TAS, within the different segments. Look, I mean, the data business continues the same. You know, there's no news there and the rest of the business has begun to improve. Sequentially, we've seen improvements everywhere. Year over year in aggregate, it's up, again, excluding COVID and FX.
The rest of the business, as you know, data is low single digits flattish and the rest of the business in aggregate has started to grow low mid to high single digits overall. Real world, I would say, in particular, real world in particular has picked up significantly this past quarter.

Anne Samuel

That's great to hear. Thank you.

Operator

Elizabeth Anderson, Evercore ISI.

Elizabeth Anderson

Hi, guys. Thanks so much for the question this morning. Can you talk about the burn rate maybe in the back half of the year? Is that something you sort of see based on the mix of business at this point that you think could creep up sequentially? How do you kind of view that as we progress through the back half?

Ari Bousbib

On the clinical side?

Elizabeth Anderson

Yeah.

Ari Bousbib

Yeah, I mean, look, this fluctuates. First of all, I mean, you know, the reported revenue and even after excluding COVID and FX, sometimes it's hard to predict exactly where pass-throughs are going to come in. And so some of that quarterly fluctuation if you will, is passed through the mix of pass-throughs. That's essentially with what we saw this quarter and probably next quarter and then rebounding for the fourth quarter.
But basically of R&DS, we see a growth exactly where we forecasted at the beginning of the year, which is, you know, in the after you adjust for COVID and at constant currency in the 7%-plus range. With respect to the mix of offerings, as you know, we do have a disproportionate share of the oncology programs out there, again, not surprising.
The critical decision factors here are our therapeutic expertise and the ability to enroll patients, which is where our unique capabilities with data analytics and AI solutions come in. And as a result, the mix of our bookings and in our backlog continues to increase towards those more complex studies in oncology as well as rare diseases. So the burn rate is largely influenced by that.
You can see by the way that is a trend in the industry. If you look at the burn rate for our competitors and they are also going down. Now in the first quarter, the first quarter backlog burn was 7%, is that what I recall was 7% and Q2 backlog burn was about the same, it was a little bit higher, 7.1%. And for the balance of the year, we're expecting it to be very similar.
We are encouraged that the next 12 months bookings are up. I think we said next 12 months, the next 12 months revenue from backlog is $7.8 billion that's up from what we reported first quarter. My recollection is $7.3 billion. It's up $7.3 billion last. And then this quarter, $7.8 billion, that's about 6.9% up. So we feel confident in our conversion and consequently on our burn of projects and revenue growth in the balance of the year and next year.

Elizabeth Anderson

Great. Thank you.

Operator

Max Smock, William Blair.

Max Smock

Hi, good morning and thanks for taking our questions. And apologies if I missed this, but within R&DS, did you quantify how much RFP flows in the qualified pipeline were up at the end of the second quarter? And then how are you thinking about the timeline for those that convert to potential uptick in bookings?
Could we see an acceleration in book-to-bill above 1.3 times before the end of the year here or given kind of where we are in the year, are we now at a point where you think a more meaningful potential rebound in bookings is more of a 2025 event? Thank you.

Ari Bousbib

Thank you, Max. We are laughing here because when did 1.3 become the benchmark. I mean, I know we reported a little over 1.3 book-to-bill ratios in the past couple of years, largely because of the COVID studies and so on. But you know, we're very happy with 1.27 and we're happy with 1.2 and we're happy with this book-to-bill, they are very, very strong.
And you're talking about a rebound in bookings. We had excellent bookings. I don't know what -- we are happy with this performance, there is no rebound. It's very good. I think the bookings we reported this quarter are the first -- third-highest ever. So I'm not sure what the question is with respect to bookings, did you ask about conversion as well? Or I'm sorry, I didn't --

Max Smock

Yeah, you set such a high bar. But yeah, in terms of the first part of the question --

Ari Bousbib

That's true, we are paying the price.

Max Smock

Yeah, sorry, victim of expectations. But my first part of the question was just around whether or not you can provide any sort of detail or more detail around just how much RFP flows in the qualified pipeline [are up this quarter]?

Ari Bousbib

Yeah, so again, RFP flows, total pipeline -- qualified pipeline in this some are up basically all around the 45 pipeline, I think was up. That was the number, 12% -- it was up 12%. Total pipeline is up single digits, RFP flows as well, right, mid-teens

Ronald Bruehlman

RFP flow is up single digits, yeah.

Max Smock

Got it. Thanks for taking the question.

Operator

Jailendra Singh, Truist Securities.

Jailendra Singh

Thank you, and thanks for taking my questions. I want to go back to the individual businesses. You talked about in past RWE and consulting both improving second quarter. Last quarter, you called out RWE some recovery after some slowdown in Q4, consulting taking a step down, how are you thinking about these individual businesses as you think about TAS expectations in second half, considering that recovery in consulting remain relatively volatile? And is RWE back to mid to high-teens growth rate or is there still room for recovery there?

Ari Bousbib

No. I mean, we see overall TAS in the second half in the 6% to 7% range at constant currency. Okay, that's what we see after -- obviously, businesses are rolling up their forecasts and they are always higher than that. But we take some contingency. We evaluate the environment and we discount that and that's where we are now in the 6% to 7% range in aggregate.
And you know, you can make the assumptions yourself, you could see that in order to get to that if 30% of the business is essentially flattish, that's the data. So the 70% has to grow in the high single digits in aggregate in order to get us to those numbers. So that's where we see the forecast. And we feel very confident based on the leading indicators that we look at.

Jailendra Singh

But your real world numbers down optimistic.

Ari Bousbib

Which one? Double digits (multiple speakers) not high teens, maybe -- could be low teens, but high single to low teens for real world.

Operator

Justin Bowers, DB.

Justin Bowers

Thank you, and good morning, everyone. So just in terms of the strength in TAS and the outlook for the rest of the year, how much of that is in your sense the underlying market improving versus IQVIA winning its fair share of business with some of the tools that you have? And then part two of that would be, what are some of the changes that you've made to manage the part of the business this year versus, let's say, last year at this time?

Ari Bousbib

Well, thank you. First of all, it's not like the market is rebounding. I mentioned before that client cautiousness and budgetary discipline continues, especially at large pharma. It didn't go away. But what we did say before was that within the portfolio of offerings that we have, there are certain things that are mission critical for our clients. And what happened last time was -- last year at this time is that we expected those things to happen and they were pushed to the right, okay. They were delayed.
We said all along that at some point those things have to be done and that is what is happening now and what we see happening in the second half. So it's not like the market overall has grown, it's that but the segments of the market that are a must do for our clients are finally happening and they will be happening in the second half. So that's number one for the market.
So from that sense, you could say that the market is a little better in the sense that the clients are willing to spend that money. But again, I mentioned before, the negotiations are tougher. So to answer the second part of your question, what we're doing differently here is obviously being more responsive to our client needs. We are being more accommodating with their terms and we are commercially being more aggressive to make sure that we're actually doing those projects, that the markets are putting out there, the clients are putting out there for bid.

Justin Bowers

Understood. One quick follow-up, in terms of the improving decision making timelines that you referenced earlier to, is that for is that around some of the stuff that was pushed out to the right? Or is that for some new opportunities as well or just something you're seeing more broadly? Thank you.

Ari Bousbib

It's true broadly. Obviously, the mission-critical stuff is mission-critical and needs to be done. So yeah, that is improving the overall average. But I would say, even for the rest, I think we've seen improved decision making, faster timelines. Thank you.

Operator

Tejas Savant, Morgan Stanley.

Tejas Savant

Hey, guys, good morning and thanks for the time. Just following up on that line of questioning on TAS, I guess could you share a little bit of color around what gives you confidence that this improved decision making timeline sort of dynamic continues your particularly given the election cycle that's sort of heating up as we speak?
And then on the analytics and consulting piece within TAS, are you starting to see the work related to those new drug approvals? You talked about both year-to-date and last year starting to show up in the project backlog. Or is that still upside to come heading into year-end in '25? Thank you.

Ari Bousbib

Thank you. Well, look, I don't think the election has much more influence on the day-to-day decision making with respect to the launching of drugs. And in order to respond to the second part of your question, the answer is yes, those approvals, obviously, it's not common for a client site that they're not going to launch a drug that's been approved. So there is usually a six months to -- six to nine month time lag before that leads to between the approval and the time that the drug is actually launched and the work associated with it comes to us.
So not much, this was delayed a little bit longer versus what it should have been. And some of these projects that should have happened earlier this year are happening in the second half of the year. Again, no surprises here. Thank you.

Operator

Dan Leonard, UBS.

Dan Leonard

Thank you. So I have a question on the guidance. It seems that the inferred Q4 sales ramp compared to Q3 is a bit greater than typical. Can you talk about the drivers of that and perhaps even elaborate further on your conviction in the recovery in TAS in the back half? Thank you.

Ari Bousbib

Yeah, you want to answer that? Anybody? I mean, look, the first of all there is recovery in TAS. We just talked about it at length in the past few questions, so that's understandable. Secondly, the compare is more favorable. We had a deterioration in the fourth quarter last year. It was the lowest quarter of the year last year.
And we said all along that there will be a mirror image in '24 versus '23. That is the first quarter would resemble the fourth quarter, the second quarter will resemble the third quarter, et cetera. So we do see fourth quarter up. And it's not unusual by the way, there is a seasonality in Q4 that you can go back many years. It's always the case that Q4 is much stronger. So these are the three reasons. One, recovery in TAS accelerating; two, compares; and three seasonality, which is not surprising. Anything else guys you want to --

Ronald Bruehlman

No, I think that covers it, [simply said].

Operator

Charles Rhyee, Cowen.

Charles Rhyee

Yeah, thanks Ari. I guess I wanted to ask about M&A. I think so far you spent maybe it was $220 million-odd in terms of acquisitions so far in the first half, can you talk about sort of what the revenue contribution has been? Because I think the guide was about [150 basis points] of revenue growth. I'm just curious, has that been in TAS or in R&DS or both, and how much do you still need to maybe due for the back half of the year? Thanks.

Ari Bousbib

Yeah, thank you so much. Yes. So look, we said all along that it will be -- the acquisition would contribute to a better point to our growth this year. And we do more acquisitions, but valuations continue to be high and we have a big pipeline, but it's not always the case that we are able to close.
So far for the year, it's a little bit more than a point, and it's a little bit more in TAS than in R&DS, but that's it. And look, we haven't spent much so far, but we hope to spend more in second half, and we'll see what happens.

Operator

Michael Ryskin, Bank of America.

Michael Ryskin

Great. Thanks for taking the question. Not sure if you addressed this before, but there have been a couple of prominent cancellations of clinical trials in the industry in the last couple of months. You called out one specifically on 1Q that impacted your performance and your book-to-bill. Then just wondering if cancellations have trended any better recently, I know that the prominent ones always make the news, but just wondering what's happening behind -- below the surface on that trend.

Ari Bousbib

Yeah. No, I mean, look, I mentioned in my commentary, and we've said this every quarter in the past few quarters. And it's just not a secret, the world knows that large pharma, large in response to the IRA and hypothetical impacts down the line, large pharma has been reprioritizing their programs and they have taken off the shelf some programs that they felt were either too competitive with other existing drugs or that didn't have the same risk return profiles that they had assumed pre-IRA when those programs were launched. So as a result of that, there have been a little bit more cancellations than usual, really for the past few quarters.
I think in general, look, we don't tell you what the cancellations are. We report the net bookings. Our average quarterly cancellations are in the $0.5 billion range. That has been the case for a long time and as kind of, you know, $500 million-plus-or-minus, whatever $100 million to $200 million, some quarters it is less. It could be $300 million or 400 million. Some quarters, it could be more, $600 million to $700 million or more.
Most of these cancellations are $10 million, $15 million, $20 million, $25 million programs that last quarter because it was well publicized and because it was a huge one-time number, we chose to let you know about it, we have had questions, everyone knew that we were the ones doing that program and pre-call we've had questions. So we decided to let you know about it.
Yes, that's, what it was. It was -- I don't remember the exact number in the [core billion dollar] in one shot, but that could happen. We have no -- companies announce usually when they terminate a program, it's partly this reprioritization that I just discussed. And sometimes it's simply because of the data.
And in the case of the program that we disclosed last quarter, it wasn't a reprioritization, it was simply that the data wasn't supporting a continuation of the program and essentially the program failed as it often happens in this industry.

Operator

Jack Wallace, Guggenheim Securities.

Jack Wallace

Hey, thanks for taking my questions. I just wanted to go back and ask a follow-up to the EBITDA guidance questions from earlier. Ari, you called out there was some mix shift impacting margins in the back half of the year and with the past guidance largely reiterated strong second quarter. I wonder if you could help us get a better understanding for the mix shift at which sounds like it's intra-segment. Thank you.

Ari Bousbib

Yeah, I don't think I can give you much more confidence. It is just where the chips fell, okay. And I know that this would attract two questions. You know, we would have to look at it again at this range. We just build up our forecast and that's where the most appropriate range fell.
It could be also, you know, we did a little bit more acquisitions this quarter. And generally acquisitions come in at a very low margin in the first year. So that could have impacted. It is not a big different number, frankly in the grand scheme of things. So I can't give you much more color than that.

Jack Wallace

Fair enough. And then on a positive side here, right, in those CE you won a sizable chunk of the top five client. Can you just give us a better understanding for the one or handful of reasons that led that client to switch from a long-time incumbent? Thank you.

Ari Bousbib

I think they liked our solution better. I think it gave them more ability to achieve their goals. I can't go into the details of the program. That's -- they just like it better. Thank you.

Operator

Patrick Donnelly, Citi.

Patrick Donnelly

Hey, guys. Thanks for taking the questions. Ari, you talked a little bit on the capital deployment side about wanting to do more in M&A. Maybe the environment is not too friendly at the moment. But how are you thinking about priorities there? I know you guys have bought back some stock. You seem pretty comfortable with the leverage ratio. So maybe just talk through your priorities, M&A landscape, and then again, I mean, any targets on the leverage side with the [debt] would be helpful.

Ari Bousbib

Yeah. The line came across a little bit blurry, but if I understand you asked about capital deployment and acquisitions. Look, you saw that our cash flow performance was actually very strong in the quarter and that obviously helped continue to reduce our leverage.
I think we have on a 12-month trailing basis, we ended the quarter at 3.25 times EBITDA, which is very good. I remind you, we were not too long ago in the high-4s, and we said that we were continuing to deliver naturally as EBITDA grows.
Acquisitions, yeah, look, our long-term guidance always contemplates a couple of points of contribution from acquisitions to continue to boost our top line. So far, we've been able to do just over a point. Obviously, we have a rich pipeline and it's hard for me to predict what acquisition will be the second half or in the years to come. It's a binary outcome. So I don't know. I'm not sure if that was your question, but that's what I heard.

Operator

Your next question --

Kerri Joseph

Okay. This will be the last question, operator.

Operator

Understood. Matt Sykes, Goldman Sachs.

Matt Sykes

Hi. Good morning. Thanks for taking my questions. Ari, you mentioned the strong funding trends in the EBP segment, at the same time you're still seeing some caution from large pharma. How should we think about the potential revenue mix-shift to EBP versus large pharma and would there be any implications for FSP versus full-service mix in that? Thank you.

Ari Bousbib

Thank you. Well, look, first of all, when there is a timeline between funding and -- on RFP and then the timeline between an RFP and a booking. So this is a business that has long cycles. So it's good that we have just as we were cautioning you not to panic when funding declines, and we said it's not going to affect us for a while. We don't get excited because funding this quarter was very strong. Yeah. It's good for our midterm and long-term prospects, but it's not like it's going to affect the mix.
Also, we have a very large backlog, the largest in the industry. And it's not going to meaningfully change the mix of what we do in the next few quarters and what's large pharma, what's EBP, what's full-service versus what's FSP. But you are correct that the more EBP, the more full-service, and that certainly helps mitigate the recent trend we've seen where, as we discussed in the past, large pharma has been swinging the pendulum a little bit more towards FSP as it has happened many times in the history of this industry.
So you are correct from that standpoint that as more EBP funding is there, there'll be more EBP work in the quarters to come. And therefore, when that backlog converts into revenue, there'll be a higher mix of full service versus FSP relative to what it is now. Thank you.

Operator

With no further time for questions, I now turn the call back over to Mr. Joseph.

Kerri Joseph

Thank you. Thank you for taking the time to join us today, and we look forward to speaking with you again in our third quarter 2024 earnings call. The team will be available for the rest of the day to take any follow-up questions you might have. Thank you and have a good day.

Operator

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