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IQVIA Holdings Ends 2017 Strong, Shares Bullish Guidance

Woman in lab coat looking through a microscope

IQVIA Holdings (NYSE: IQV) , which was formerly known as Quintiles IMS Holdings, reported its fourth-quarter and full-year results on Wednesday, Feb. 14. Revenue and profits continued their upward climb as the company's push into technology helped it win more than its fair share of new business.

Let's put IQVIA's results under the microscope to learn more about why it performed so well during the period.

Woman in lab coat looking through a microscope

Image source: Getty Images.

IQVIA Holdings Q4: The raw numbers

Metric Q4 2017 Q4 2016 Year-Over-Year Change
Revenue $2.16 billion $1.95 billion 10.7%
Adjusted earnings before interest, taxes, depreciation, and amortization $582 million $541 million 4.7%
Adjusted net income $300 million $266 million 13%
Adjusted earnings per share $1.40 $1.09 28%

Data source: Quintiles IMS Holdings.

What happened with IQVIA this quarter?

  • Revenue of $2.16 billion came in at the high end of management's forecast .
  • Commercial Solutions revenue grew 10.6% to $1.03 billion.
  • Research & Development Solutions revenue grew 6.6% to $947 million.
  • Integrated Engagement Services revenue fell 3.3% to $187 million.
  • Adjusted EBITDA of $582 million came in toward the top of management's guidance range.
  • Adjusted EPS of $1.40 came in $0.03 above the high end of guidance.
  • The company's book-to-bill ratio over the last 12 months ticked up to 1.24, which hints that demand for the company's services remains robust.
  • The backlog at the end of 2017 grew 2% quarter over quarter to $10.54 billion.
  • Stock buybacks during the quarter totaled $369 million. After the end of the quarter, IQVIA's board increased its repurchase authorization by $1.5 billion. In total, the company now has the green light to buy back up to $1.7 billion more in common stock.

Zooming out to the full year, here's a review of IQVIA's headline numbers from 2017:

  • Revenue grew 4.3% to $8.06 billion.
  • Adjusted EBITDA increased 65% to $2.05 billion.
  • Adjusted net income grew 290% to $1.04 billion.
  • Adjusted EPS increased 328% to $4.67.

It is important for investors to remember that these eye-popping profit growth numbers are still being heavily impacted by the merger of Quintiles and IMS Health in 2016.

What management had to say

Here's what IQVIA's CEO Ari Bousbib had to say about the quarter: "We closed out the year with fourth-quarter financial results on or above our targets, driven by strong operational execution. We are pleased with our progress during our first full year as a merged company and look forward to delivering another solid performance in 2018."

On the call with investors, Bousbib also stated that the company's focus on technology is helping it to gain traction in its core research and development markets. Specifically, he stated that the company had over $5 billion of gross bookings awarded in 2017, which is a company record.

Looking forward

On the investor call, CFO Mike McDonnell spent a great deal of time explaining that the company has adopted a new accounting standard called ASC 606 as of Jan. 1, 2018. This change will impact the company's revenue recognition policy and hence will make year-over-year comparisons difficult. To account for this change, McDonnell provided investors with guidance for 2018 that assumes that ASC 606 had been adopted in 2017 as well so investors can make an apples-to-apples comparison.

Knowing that, here is the guidance that management is offering for the full year 2018:

Metric 2018 Forecast 2017 Actual (ASC 606) Growth
Revenue $10 billion to $10.2 billion $9.70 billion 3% to 5%
Adjusted EBITDA $2.15 billion to $2.22 billion $2.01 billion 7% to 10%
Adjusted EPS $5.20 to $5.45 $4.55 14% to 20%

Data source: IQVIA Holdings.

And here's what management is projecting will happen in the first quarter of 2018:

Metric Q1 2018 Guidance Range
Revenue $2.42 billion to $2.47 billion
Adjusted EBITDA $520 million to $540 million
Adjusted EPS $1.23 to $1.30

Data source: IQVIA Holdings.

McDonnell ended his prepared remarks on the investors' call by summarizing the company's key accomplishments in 2017: "We successfully merged two large organizations, repositioned the company in the market and rebranded the company as IQVIA, and of course, we were honored to be included in the S&P 500. We look forward to delivering another year of strong financial performance in 2018."

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends IQVIA Holdings, Inc. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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