IQVIA Holdings (IQV) Lowers Q1 Guidance on Coronavirus Scare

IQVIA Holdings Inc. IQV, on Thursday, announced that it has lowered guidance for the first quarter of 2020 considering the impacts of coronavirus. The company has also provided an update regarding its business operations.

Lowered Q1 Guidance

IQVIA Holdings has lowered first-quarter 2020 guidance from what was unveiled during the fourth-quarter 2019 results reported on Feb 12, 2020. The prior guidance included an estimated revenue impact of $25 million.

The company now expects revenues of $2.71-$2.74 billion compared with the prior guidance of $2.79-$2.84 billion. The Zacks Consensus Estimate of $2.81 billion lies above the current guidance.

Adjusted earnings are now projected between $1.46 and $1.51 per share compared with the prior guidance of $1.59-$1.65. The Zacks Consensus Estimate of $1.61 lies above the current guidance.

Adjusted EBITDA is now anticipated between $555 million and $565 million compared with the prior guidance of $595-$610 million.

Segmental Operations

IQVIA Holdings started 2020 on a solid note, with all three segments — Research & Development Solutions (R&DS), Technology & Analytics Solutions (TAS) and Contract Sales & Medical Solutions (CSMS) — performing well during January and February. However, with the worldwide spread of coronavirus, beginning early March, the company started witnessing a negative impact across all three of its reported segments.

The R&DS business witnessed almost 35% global site closure during March and exited the first quarter with nearly 70% of global sites being temporarily inaccessible. Though this led to a reduction in site-based monitoring, the company has been able to implement remote and risk-based monitoring as a partial offset. New trial start-up activities have been delayed due to site closures. However, business conditions in Asia have been gradually improving. The company expects an unfavorable revenue impact of nearly $60-$70 million on this segment during the first quarter.

The R&DS business did not witness any COVID-19-related trial cancellations. Business development activities have been solid and the company continued adding to its contracted backlog during the first quarter.

TAS segment is shielded from the impacts of the virus due to the presence of higher recurring license revenues. However, portion of the company’s Real World business, which requires site monitoring activities, witnessed losses in March. Similarly, businesses depending on face-to-face interactions or in-person events, conferences or gatherings are witnessing significant disturbances. The company expects a revenue impact of nearly $20-$30 million from COVID-19 on this segment during the first quarter.

During the quarter, technology deployments continued and demand for analytics and technology remained solid. However, business development activities had slowed down toward the end of the quarter due to meeting postponements and delayed decision making related to certain projects in the wake of the coronavirus outbreak.

The CSMS business has become more challenging due to a reduction in sales rep visits and physician attention diverted to the COVID-19 crisis. However, the company expects this business to perform in line with its original expectations for first-quarter 2020.

Conclusion

Overall, the company anticipates a continued recovery in Asia, with difficult conditions to carry on working in Europe and North America through the end of the second quarter. The monthly revenue impact of COVID-19 is anticipated to be higher during the second quarter. However, cost-reduction measures should reduce the proportional adjusted EBITDA drop-through impact during the second quarter.

Zacks Rank & Stocks to Consider

Currently, IQVIA Holdings carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Business Services sector are CoreLogic CLGX, Booz Allen Hamilton BAH and Charles River Associates CRAI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected EPS (three to five years) growth rate for CoreLogic, Booz Allen Hamilton and Charles River Associates is 11%, 11.9% and 13%, respectively.

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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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