IQVIA Holdings Inc. (IQV) Earnings Call Transcript & Summary

Good morning, everyone. On behalf of my team at IQVIA, I am pleased to welcome you to our analyst and investor conference. As always, I would like to remind you that the conference is being webcast and the presentation materials will be available later today. Before we begin, I would like to caution you that certain information discussed by management during the conference will contain forward-looking statements. Please take a moment to review the information on the following slides. With that, I would now like to introduce our Chairman and CEO, Ari Bousbib.

Thank you. Well, it's great to see you all. We were last together in person 2.5 years ago. It really feels good to see people in relatively large numbers together in 1 room. When we met in June 2019, we were completing our 3-year post-merger integration period. And I had invited then a group of IQVIA leaders to share where we were on achieving those post-merger integration plan and lay out our goals to accelerate both revenue growth and profit growth for the subsequent 3-year period, '19 to '22, and we had called that strategy, Vision 22, V22. And today, I invited again a group of IQVIA leaders to share with you where we are on executing 2/3 of the way that V22 strategy, and to share with you why we think 2022 is an inflection point, another inflection point for IQVIA and lay out for you preliminary goals for the next phase of our journey: the '22 to '25 3-year period. As I think about it, it's exactly 5 years since we formed IQVIA, and what a journey it has been. I'm really proud of what the team has accomplished and what great company we've built, what great capabilities are under one roof. In fact, it was quite gratifying over the past couple of years, extraordinary couple of years that we've all lived through, we see how those capabilities came to the fore and played a critical role in addressing the COVID crisis. It made us realize how everything we've said and worked for actually was real. Those capabilities were put to use. IQVIA was truly built for this moment. I'd like to take a minute and review with you our performance over the past 5 years. We grew our revenue at high single-digit rates over 5 years. We went from a little over $9 billion on a pro forma basis the year we merged to a little under $14 billion this year at the midpoint of our guidance. Now we always say there'll be mostly organic growth and a point or 2 of acquisitions, and that's exactly what happened here. There's about 150 basis points of M&A in that rate. We also expanded our margins along the way. We grew EBITDA faster than revenue. It went from $1.8 billion to just under $3 billion by the time this year is over at the midpoint of our guidance. We more than doubled EPS to $8.90 at the midpoint of our guidance this year. And cash flow is a bright point for us. For the first 3 quarters of this year, we already are triple the free cash flow performance of the full year after acquisition 2017. Of course, this great financial performance translated into the nice share price appreciation. I have a small confession to make. I was secretly hoping that we would quadruple our share price in 5 years, but we didn't. We came close. Now there are companies that have had a much better performance than this over the past 5 years in many other industries, but it's still nice to see that despite all the skepticism at the time we announced the merger, I remind you the share price dropped 10%, we actually outperformed The CRO Group, the Information Services Group and the broader market index. Now where do we go from here? Now you all know our valuation multiples are not that special. Actually, they are in the middle of the pack. That makes us confident that we've got some runway here. What makes us even more confident is that we have a business that operates in a large, attractive and growing market. Our clients spend over $200 billion a year in the types of products and services that we offer. It's a market that has nice dynamics. You all know venture capital is investing enormously in drug development. I think the amount of capital that has been poured in biotech development over the past 5 years is about $150 billion. If you look at the R&D, the drug development pipeline, it's also at a record high. I think there are over 3,500 new molecules in the pipeline that, of course, bodes well for our CRO business. But importantly, the way the models translate and based on our analysis of the pipeline, we anticipate there'll be at least 300 new drug launches between now and 2025. That's more than 20% higher than the prior 5 years. That will translate for our clients, life science companies, into over $200 billion of incremental revenues. And that bodes well for our commercial execution services. COVID has been the source of a lot of pain in the past 2 years. But in our industry, it's also been a stimulant for innovation. The expectations in the industry have changed. The bar has been raised. The expectation that drug development is going to take 5, 6, 7, 8 years is no longer acceptable. Again, IQVIA was built for this moment. You know that we spent considerable efforts and dollars over many decades building what we believe is the single, broadest and deepest set of capabilities in the industry. First and foremost, our people. We've got over 77,000 people around the world. We cover every therapy under the sun. The breadth and depth of our expertise is unmatched. I am not aware of any organization that covers as much therapeutic expertise under one roof. We are at the nexus of the health care ecosystem. We have deep relationships with regulators, with payers, providers, patient networks, wholesalers. We've built comprehensive, granular analytics and technology applications that are purpose-built to solve our clients' problems. There's actually a lot of capital that's been poured in start-up companies. How do I know? Because they talk to people from our company all the time. Where are you going? I went to a startup. What's the name of a start-up? I look at the website, and it reads like an IQVIA website. We've got data analytics, technology, expertise. A lot of companies want to be IQVIA, but I can tell you that at best, some of these companies have a small sliver of these capabilities and usually only domestically. IQVIA has the goods at scale. And it's not just the capabilities. The secret sauce is really how do we make all of this to work together in what we call Connected Intelligence. Connected Intelligence is how we use data assets, advanced analytics, AI tools, technology applications and people to bring the right insight at the right time to solve the right client problem. And our clients are responding. I'm not aware of a life science company that doesn't already have a relationship with IQVIA anywhere in the world. We've got over 10,000 customers. Since the formation of IQVIA 5 years ago, the CRO business has acquired more than 1,200 new clients. We have over 350 customers that have deployed one or more applications of the OCE suite in the commercial space, including 169 who were deploying the OCE CRM tool. Over 300 customers have implemented one or more applications of the OCT suite. We don't have to invent new clients. We don't have to knock at new doors. We already are there. Our strategy is simple: gain more share of the existing spend at our existing clients. And so when you step back and think about our journey, we had the merger integration period, we grew mid-single digits, 4%, 6%. Then we said we have a new inflection point here in 2019, in the next 3-year period, '20, '21, '22, we're going to grow faster. We said at the time, 7% to 10%. And I'm confident we're going to get to the high end of that annual 3-year growth rate or more. So what's next? It's early, but the teams are very excited. When we've got those capabilities, that client base, we can't wait for next year to prepare the next phase of our growth, so we already have plans. Ours is largely a long-cycle business. We've got visibility. We've got backlogs. We've got license revenue, multiyear contracts in the real world and clinical developments on the commercial side, and that enables us to plan. And we want to see 2022 as another inflection point, and we want to accelerate in the next phase of our growth in the '25 horizon. We call this new leg of our journey 20 by '25. It alludes to our goal and ambition to be at least a $20 billion revenue company by '25. I know you all want to see the detailed numbers behind. And they are coming, I promise. Underpinning this growth strategy is Connected Intelligence, and I've asked AJ to share with you what Connected Intelligence is, because it's the foundation of everything you're going to hear today. AJ?

Thank you, Ari. IQVIA's unique ability to derive value by connecting data, analytics, technology and services is unparalleled. And in this time of unprecedented disruption in health care, this capability empowers our clients to discover new opportunities, drive smarter decisions and unleash agile ways of running their businesses. We call this Connected Intelligence. IQVIA's view is that intelligence is the key to growth and transformation, yet most organizations that we work with struggle to harness its value. Working with life science leaders across the industry and around the world, we see 3 consistent challenges. First is the ability to find insights; second is the ability to use that insight across their organization; and third is the ability to optimize business performance based on that insight. In health care and life sciences, the amount of data, stakeholders, technologies, service capabilities, it's, frankly, overwhelming. It's complex. How do you hear signal from all of that noise? The answer lies in intelligent connections. Our ability to integrate data analytics and technology in new and strategic ways is allowing us to help our clients transform and drive their own digital transformations. Connected Intelligence is allowing us to reimagine things like patient recruitment for clinical trials. What you all know has historically been a lengthy and challenging process to find and recruit patients has been transformed. Our ability to connect robust patient data with advancements in artificial intelligence and machine learning allows IQVIA to find protocol-eligible and more diverse patients with much greater speed and precision than we had in the past. We are seeing 34% faster recruitment of patients to trials compared to legacy IQVIA benchmarks. We are seeing 2x better-than-average increase in diverse trial participants with these capabilities. Our industry-leading decentralized trial capabilities are a step change in how trials are being [indiscernible]. What once took us years is now taking us months, and patients are not even leaving the [indiscernible]. Our advances in patient engagement technologies have placed us at the center of arguably the most important clinical trials in the world over the last few decades. Our ability to enable trial consent, randomization, trial management and data capture through things like telemedicine, connected devices and electronic clinical outcomes assessment tools is all being managed virtually. From thousands of client interactions, we know the impact that the right insight in the right context at the right time can have on decisions. Connected Intelligence is allowing us to accelerate the commercial transformation of the life sciences industry. The pandemic was a radical accelerant for the industry's ongoing digital transformation journey. Commercialization, to be hyperbolic, was largely a field-based push model where sales representatives and medical representatives would drive awareness, trial and usage of new medicines, vaccines or medical devices largely through static segmentation, targeting and messaging that was not dynamic, not multichannel, certainly not sophisticated in its application. The pandemic literally overnight shifted commercialization to a pull-based model. Health care professionals now needed to pull the information and services that pharmaceutical and biotech companies typically provided, but needed to do it through their phones, through their laptops. IQVIA was built for this, and we met this moment. By integrating sales data, social media data, channel preference data, marketing data and leveraging the power of AI and ML integrated into the very technologies that sales and marketing professionals use every day, we were able to drive this commercial transformation, improving life science companies' access to health care professionals in the process, leading to impactful, evidence-based conversations valued by all parties in that value chain. We improved the effectiveness of digital marketing campaigns to patients and doctors, prioritizing who they should see, when these interactions should occur, what message to deliver and what information to convey based on all the intelligence gathered on the physician's individual preferences for how they wanted to be engaged. Today, the industry's efforts are largely upside down. The vast majority of resources are allocated to cleaning up data while the real goal of these companies is to spend most of their time and capital focused on generating insight from that [indiscernible]. Compounding that inefficiency is the fact that most analytics projects fail due to actual end-user adoption. The human being simply does not take the suggestion, recommendation or the prediction. Analytics fail because they are disconnected from the actual running of the business. There is no feedback loop to know what has worked, what has been tried, what should be amplified. The world is more dynamic today than maybe at any point in human history. Our thesis at IQVIA is you can no longer strategize your way to success in an ivory tower. You need to see what actually worked in the real world, adjust and amplify what is leading to better performance. Most of these life science companies and health care companies that we've been discussing were not built to manage those aforementioned challenges. IQVIA was built for this. We were made to meet this moment. We created the world's leading intelligence cloud. This took us decades, billions of dollars. We refer to it as IQVIA's Human Data Science Cloud. It's what we use to run IQVIA. It's how we deliver Connected Intelligence. It's how we drive deeper value by connecting our data, our services, our technologies, our analytics. It's how we enable our clients to handle their challenges. Now I wanted to make this more tangible for you. I want you all to think of Amazon. Many of you may be familiar with Amazon Web Services, and you might know that Amazon actually built AWS to run [indiscernible]. They invested in capabilities to allow themselves to support their own operations and business. This was later offered to clients and what we now know in the [indiscernible] world as AWS, and hence, the era of kind of cloud computing services was [indiscernible]. I want you to think in a similar vein to what we've done with the IQVIA Human Data Science Cloud. It's what we use to run one of, if not the, largest health care data company. It is battle tested. It is what we use every day. It is what we use to run IQVIA, and it's now what we use to power our client. To bring the Human Data Science Cloud to life, let's say our client is looking to improve the patient experience for a clinical trial participant or they want to see how a drug is performing in new patients in real-life settings on a new therapy or they want to improve the patient journey for a newly-diagnosed patient that's starting a new medicine or vaccine. IQVIA leverages the power of the Human Data Science Cloud [indiscernible] in each of these examples, but in very different ways. In the past, clinical trial site would have been chosen based on the expertise of the investigator. Now in addition to that calculus, site can be chosen because we actually know the appropriate patient lives near that site and can easily travel for the trial. In the past, a new medicine would have relied solely on the proven efficacy and safety in a randomized, controlled trial to drive regulatory and payer approval. Now regulators, payers, physicians and patients are demanding supplemental real-world evidence to understand the usage, the outcomes and the value of these therapies in clinical practice. This can only be accomplished by actually connecting regulatory-grade data sets with capabilities like artificial intelligence and machine learning. It can't be done. In the past, a patient new to therapy would have literally relied on paper materials being mailed to their home, their apartment. That would have informed them about the dosing and administration of a new therapy that they were taking to help hopefully mitigate adverse events. Today, IQVIA is helping to provide that patient insight into their medicine and/or their vaccine through literal alerts on their phone or their watch, daily e-mails directly to the patient, inviting them to Zoom calls and Team meetings with actual nurses aiding them as they start this new therapy. Now it is one thing for me to get up here and talk to you all about the power of Connected Intelligence. It's entirely different for you to hear it directly from our customers. I have personally spoken to hundreds of C-suite executives across the life sciences industry and health care industry. I do this on a daily basis as part of my job. These leaders realize they can tap into what we've already built at IQVIA and focus on other strategic priorities for their organization. As one CIO stated, "Why am I trying to build all of this myself?" Our capabilities are modular by design, they are interoperable and they are purpose-built exclusively for the life science and health care industry. Connected Intelligence is transformational, and it demonstrates the unique value that only IQVIA can provide in the [indiscernible]. Richard and his team will now describe how Connected Intelligence is allowing us to reimagine drug development. Richard?

Great. Well, thank you, AJ. As we start today, what we'd like to do is frame what we think the target opportunity in front of us looks like and then spend a few minutes talking about the significant investments we're making in order to drive our growth. We saw a continued uptick in our target opportunity in 2021, bringing the outsourced spend to $52 billion. That's inclusive of labs and pass-throughs. We see a $55 billion target opportunity in 2022, and based on industry sources and our own management estimates, we expect a strong, sustaining growth of about 6% annually, taking the overall segment up to $67 billion by 2025. At the same time, we're seeing the lab segment grow at about 5%. We're seeing the clinical tech space grow at about the same pace as the CRO, 6% to 7%. And then within that, we also see higher growth segments like patient engagement and feasibility growing at 7% to 10%, and the FSP segment growing at 8% to 9%. With healthy segment growth combined with our continued differentiation, we expect to expand our position in the market and grow well above industry rates through 2025. So what's driving that growth? As we start to break down what the target opportunity looks like, this time excluding labs and pass-throughs to really focus on core clinical and the FSP business, we see a $36 billion target opportunity in 2022. And there are a few areas of the industry that are growing at higher rates that we want to peel back the onion on. So first, from a customer standpoint, we see continued growth in the biotech sector driven by strong science, increased commercialization opportunity and a robust funding environment. According to the National Venture Capital Association, the VC funding through the first 3 quarters of this year has actually already matched last year's total. And when we look at overall funding, including IPOs, we see that the biotech sector has raised over $215 billion over the last 2 years, and that is fueling 9% to 12% growth in that area. And we expect our differentiated IQVIA biotech solutions to see revenue growth north of 20% through 2025. Unlike the offerings of most of our peer companies, our IQVIA biotech solution is a stand-alone business unit with its own dedicated resource, its own SOPs, its own technology stack in a differentiated operating model that meets the specific needs of biotech customers. In the mid to large pharma segment, we expect to see more modest growth in line with what we've seen over the past few years, although we do expect to see a slight shift from traditional full service work to FSP. From a regional perspective, North America and Europe are expected to grow largely at market rates. A lot of that is due to the strength and maturity of the biotech sector, which we referenced earlier. The region that we foresee growing the fastest is Asia Pac, with a growth rate of about 11% to 13%. A lot of that is driven by China, where we expect to see extended strength for the next 5 years. In fact, in China, as we know, they've got a very robust funding environment. We know drugs from China-headquartered companies now represent 12% of the early-stage pipeline, and that's up from 2% 10 years ago. When we look at all of the dynamics in that market, it justifies the continued investment that we're making in our Asia capabilities, inclusive of rolling out IQVIA Biotech in Asia in May of this year. From a therapeutic perspective, we clearly saw a huge growth in infectious disease and vaccine spend largely due to the pandemic. And while we don't expect the 2020 spending levels to continue into future years, what we do expect to see is continued significant investment in that therapeutic area. Beyond that, oncology, central nervous system or CNS, and cell and gene therapy, all these therapeutic areas continue to see the highest growth. And it's on these types of studies, studies in complex therapeutic areas, personalized medicine, this is where Connected Intelligence becomes a huge differentiator for us as an organization. When we think about the journey that we've been on in R&DS, our mission remains the same. We are transforming clinical research in order to more effectively and more efficiently develop products for our customers and ultimately the patients that they serve. Ari referenced earlier how drug development is rapidly evolving due to scientific innovation, technology adoption, new digital patient pathways and a greater focus on patient centricity. What we know is that COVID has been a catalyst for accelerating this evolution in our [indiscernible], and that evolution is driving our vision in R&DS. Thankfully, since 2018, we have increased our investments in such areas of decentralized trials, clinical analytics, tech interoperability. And because of these investments, we are well positioned as we set our sights on making studies more patient-centric. We see patient-driven clinical research is the next horizon of clinical development, and this will be the foundation of our future delivery value proposition. So what does patient-driven actually mean? For us, what we see is that it has 3 ways that is impacting how we operate. First, where data is being generated from. It's being generated from wearables, connected devices, patient-reported outcomes. They're all playing a greater role in research. EDC used to represent about 70% to 80% of the data used in clinical submission. That's now down to 35%. The other thing we're seeing is the continuing evolution of technology and automation at both the investigator sites and embedded in our clinical operations to power how we run studies. We're leveraging data and technology to help us target the right patients for each study and then proactively engage them to participate in those studies. And then as we move forward towards decentralized trials and the patient-driven approach that we're moving forward with, we see new ways that we're engaging patients from telehealth to ePRO data collection, mobile nursing and home health testing. And what differentiates us from our peers is that we have all of these capabilities within the 4 walls of IQVIA. So what I'd like to do next is introduce Costa Panagos to walk us through some of the investments that we've made in our decentralized model. Costa?

Very good. Thank you, Richard. So decentralized trials. As we look at the time line here, we see that DCTs have been around for nearly a decade. Key megatrends, including the emergence of social media and mobile technology availability influenced all industries as we know, health care being no exception. Ultimately, these moves empowered the patient as a consumer and gave them more control over their own health care as well as their participation, of course, in clinical trials. Like most evolutions in our industry, the adoption of decentralized trials took time. Really, when you think about it, this is a 20-year journey. But as a leader in this space, noteworthy that IQVIA has always invested ahead of the curve, whether it was mobile technology, remote monitoring, home health care and the like. And you may be aware that we built a specific decentralized trial business unit well ahead of the peer group, with a focus on patient-centric trial management. Now as we've heard, the COVID-19 pandemic significantly accelerated the application of decentralized trials. But as already pointed out, it also changed the expectations of key stakeholders in the industry. Today, most investigators are interested in conducting decentralized trials. The majority of patients are comfortable using technology to engage with their physicians, and our customers now expect hybrid trials to make up the majority of all trials over the course of the next few years. So you see the game has changed, but at IQVIA, we are already playing it. We absorb this slide for a moment. We used to bring the patient to the trial. And now we bring the trial to the patient. As you look at the middle of the slide, you see the patient journey for any given trial flowing from the left to the right. Now focus your eyes on the top half of these boxes. You see some of our technology solutions and products we have within IQVIA. We help connect patients to investigators through what we call innovative patient engagement solutions. Really, in plain English, that means the prospecting and referral of patients into trials. But we also help sites and sponsors manage their trials virtually through tools that we've heard about, such as electronic consent and connected devices. And finally, we manage this entire ecosystem of data through our custom-built Decentralized Trial platform. But you see, the secret isn't just in the technology alone. We couple this tech with significant domain expertise. In the bottom half of the slide, you see some of our DCT fit-for-purpose operations. These are folks -- literally all they do all day long is think about execution of Decentralized Trials across the business whether their job is a patient concierge, for example, a home study nurse. But when we take a step back and look at the big picture, it's really this combination of technology and services that makes IQVIA unique from a stand-alone technology or a service-only competitor. See, we don't have to partner with a tech company. We already have a tech. We don't have to partner with an operator because we are the subject matter experts. So again, this isn't the promise of what is to come. These are proven solutions at scale. You see the numbers at the bottom. We literally have hundreds of examples across the globe spanning multiple therapeutic areas. Our DCT capabilities integrate seamlessly with patient lives, ultimately helping to improve their health and their wellbeing. It's interesting. I'm not sure if you would agree. We've had unbelievable developments in oncology and other therapeutic areas over the years. We're all quite well aware of what we see in the news. But as I thought about it coming into today, in my lifetime, arguably, there's nothing more impactful on health outcomes than COVID vaccines and treatments. Now as you well know, IQVIA, along with others, to be fair, played a critical role in the COVID space, and we did so using our DCT capabilities. On the lower left here, you see that our actual services were much faster than they were before. You might say, okay, fine. Not so surprising given the circumstances of the pandemic. On the other hand, you also see that we delivered these COVID trials 80% faster than we delivered similar vaccine trials in the past. As you move clockwise, you see some of the numbers [ under ] the technology heading there in terms of what our tech supported for these trials. In a couple of weeks, we'll be celebrating Thanksgiving here in the United States. I can remember a year ago sitting around a table and talking about technology bandwidth of these vaccine trials, the way that Best Buy might think about a Black Friday shopping event. And yet, we at IQVIA delivered. And then you see this logistics setting. Who would have thought that we at IQVIA would have to operate like Federal Express, Amazon, the U.S. Army? To manage these trials, we managed millions of supplies, oftentimes direct shipments to patient homes. We also organized over 120 mobile research units. These are literally health care trailers across the United States that we did in conjunction with the federal government. And by the way, we did that all in the span of a very few short months. It's sort of a different way of thinking, isn't it, for a traditional life science service provider. And yet again, we delivered. Here's what I'm most proud of. We did this work for the greater good. We're very proud of that. But we also played a role in transforming health care. How, in this case? By improving the diversity and the inclusion of patients into these trials. And we did that faster than our peer group as well. I go home and tell my children each and every day how proud they should be of IQVIA. But for today, I can share with all of us here that you can trust that IQVIA has the best interest of customers, of sites and the patients in mind. And now we'd like Cyndi to share how we use Connected Intelligence to further underscore our focus on patient-centricity.

Thank you, Costa. Since we've created IQVIA, it's brought disruption with the use of real-world data, advanced analytics and technology for smarter clinical trial design and execution. Now, our combined assets are deeply embedded within our operational delivery models and deployed in a business-as-usual modality. We are leveraging Connected Intelligence on nearly 1,500 trials with over 350 customers across 44,000 sites and touching nearly 300,000 patients across 100 countries. Now the proof is truly in the pudding, and we've had 5 years to prove IQVIA's value to deliver on smarter trials. So how did we do? Let's take a look. We have measured and delivered what matters most to our customers, increase speed, predictability and productivity. We're positively influencing 90% of our protocol designs that are evaluated by our data informed protocol assessments, thus decreasing the risk of trial delays and costs associated with avoidable protocol amendments. We are identifying the right sites that are accessing the right patients, in fact, 33% faster, yielding a median start-up time line savings of about 1.8 months versus our historical benchmarks. But most importantly, we're driving 34% faster patient recruitment across the portfolio. To continue to develop and transform the clinical development arena, we're accelerating our investments in key synergistic areas such as the patient engagement solution. Our direct-to-patient digital solutions are orchestrated, automated and scalable to reduce the burden on patients and sites. And importantly, these very solutions enabled our readiness to robustly respond to the COVID-19 environment. These unique solutions are anchored on our global database of 1 billion-plus health care records. And in fact, we've also included and created proprietary machine learning algorithms that are very protocol-specific to pinpoint the protocol-eligible patients of these diverse populations inclusive that are trial matched real time with nearby investigators. We're expanding on the digital clinical trial access of hundreds of millions of patients across 50 countries through our diverse and proprietary health care network of partners. In fact, over 250 health care partners all orchestrated on a single platform. We are managing the operational integration of laboratories, social media companies, pharmacies, patient advocacy groups, specialty biomarker and genomic companies, among others, and all of which that are enabled by precision data analytics to find the right patients during their health care journey and to accelerate patient recruitment and diversity requirements on behalf of our sponsors. This is truly Connected Intelligence in action, pressure tested by COVID, and in fact, we delivered over 400,000 qualified referrals, recruited over 105,000 patients and unprecedented time lines while delivering 1.7x more diverse populations as compared to our peers across our COVID vaccine portfolio. These differentiated patient engagement solutions, which were all further optimized during COVID-19, continue to drive significant growth. One such example is in the large complex trial arena. Earlier this year, we were awarded a 40,000 patient full service Phase III program, and it's to be conducted in multiple patient care settings across 28 countries. In fact, this is the largest awarded program in IQVIA's history. The trial will leverage IQVIA's end-to-end integrated and differentiated patient engagement solution to access and recruit patients right at the very point of their health care journey, whether it's in the community care, our hospital settings or via our large global network. We actually will recruit these patients and retain them in the trial as they flow through an orchestrated technology solution. The benefits of IQVIA Connected Intelligence approach will accelerate benchmark trial time lines, reduce costs and minimize the burden on patients and sites alike. Brian will now share with us how Connected Intelligence is transforming our lab business. Brian?

Thank you, Cyndi. In April of this year, IQVIA acquired full ownership of Q2 Solutions, which has enabled us to unlock the real potential which exists in the laboratory business. We are experiencing something of a scientific renaissance in the clinical trial laboratory industry given the increasing importance of biomarkers in clinical development programs. As Richard has highlighted, the addressable industry size of approximately $4.6 billion is growing at mid-single digits in the testing areas in which IQVIA's lab business is operating. Our continuous expansion and the breadth of our testing offerings in key strategic areas has driven our growth rates to far exceed those industry averages. It is essential to our sponsors that we can support them across all geographies globally, and we continue to expand our testing menu across the world in line with evolving regulations, science and needs of the industry. Science is our DNA. We have differentiated ourselves in the industry through our relentless commitment to scientific leadership in the sector, developing in excess of 3,000 new laboratory tests over the last 5 years. We've built industry-leading expertise in core specialty disciplines across key therapeutic areas, notably oncology, infectious disease, CNS, which is reflected in our therapeutic testing mix. Significant investments in areas such as anatomic pathology, flow cytometry, genomics and a broad range of molecular and immunoassay biomarkers have helped propel that growth, position us well for continued expansion in these key areas of therapeutic development. To support the range and breadth of our testing capabilities, we deliver outstanding supply chain logistics and service expertise, managing the range of complexities in laboratory sample collection and testing. This best-in-class service delivery has enabled us to differentiate ourselves throughout the pandemic as we navigated the many supply chain and logistical challenges to ensure that patients were able to stay on their treatments despite the disruptions endured. The laboratory business is a key focus of our 20 by '25 plan, and we have already committed approaching $1.5 billion in support of our growth strategy. We evaluate investment strategies for the lab business across 3 paradigms: number one, expanding our capabilities; number two, enhancing the agility of delivery to our clients; and number three, building our offerings in anticipation of the evolving patient-centric focus of clinical trials. In recent years, investments in the lab business have ramped up. The acquisition of BioFortis in 2018 brought virtual biobanking and sample and consent tracking to the company. We made investments in the expansions of our labs in Singapore and China over 2019 and 2020 and strategically invested in cutting-edge technologies across many of our core testing areas, including genomics, bioanalytical and biomarkers. At the outset of the pandemic, we entered into strategic partnerships with the University of Texas Medical Branch and other leading academic institutions to develop key lab tests for the development of COVID-19 vaccines and therapies. We joined the global SEPI consortium in the U.S. and were recently selected as their prime laboratory partner in China. Turning to the decentralized clinical trial space, which Costa has highlighted, but specifically focusing on the sample collection and logistics requirements for patients in their home. We built on the BioFortis software platforms to provide operational and logistical management of sample capture of those patients in their homes through our partnership with Tasso devices, industry logistic partners and with various point-of-care device manufacturers. Under IQVIA's full ownership in 2021, we announced some key organic and inorganic investments, most notably the acquisition of Rules-Based Medicine from the Myriad group, and most recently, the announcement of our launch of our 160,000 square foot Innovation Lab campus in RTP, North Carolina, including our new Translational Science Laboratory. This investment extends our reach into human biomarker discovery research, which pulls us closer to the researchers in pharma and academia. We also have invested to continue to expand our global laboratory network with key investments in our facilities in Scotland and Japan, and we will continue to invest in these facilities in the years ahead. The outlook for our lab business at IQVIA is very strong. We continue to advance our science and service offering. We will continue to invest in technology that advanced genomic patient profiling for study participation, broaden our capabilities to support the growing areas of cell and gene therapy and continue our pursuit of organic and inorganic opportunities to expand our penetration in this growing segment of the clinical trial industry. [indiscernible]?

So we're fortunate to have a robust $55 billion target opportunity in front of us for 2022, growing at about 6% annually, culminating in a $67 billion outsourced spend by 2025. Through our differentiation and further investments in the solutions that Costa, Cyndi and Brian talked about, we'll continue our double-digit growth. The large and the mid pharma sector continues to be foundational to our business model, and we continue to expand our share of wallet within those customers. But we're also really energized by the success that we're having in the biotech sector, where we expect to see north of 20% growth through 2025. We've spoken quite a bit about Connected Intelligence and R&DS. That comes to life when you take our people, their industry-leading, therapeutic, scientific, regulatory and operational expertise, and you combine that with our unmatched data analytics and technology capabilities. That combination is what positions us to transform clinical development in support of patients' needs. And then finally, as you've seen, we continue to innovate ahead of our peer group to help drive this industry forward. We're rapidly approaching the next wave of clinical development, which is a patient-driven model, and this is all about bringing the trial to the patient and empowering them to make the best health care decisions for themselves. So next, Rob Kotchie will take us through the exciting work that he and his team are doing to advance human health. Rob?

Thank you, Richard. The market for real-world solutions remains exceptionally favorable. As real-world evidence plays an increasingly prominent role in informing health care decision-making at a regulatory, payer and individual patient level. We observed an explosion in the amount of data available for research, including from novel sources such as genomics testing, sensors, wearable devices and social determinants of health. These data, when appropriately curated and combined with advanced scientific methods and enabling technologies, are pushing the frontiers of research in health care. I challenge you to find another company able to combine deep domain expertise, operational processes, advanced analytics and technology to fully serve the needs of life sciences, med tech, biotech, payers, providers and governments on a global scale. Simply put, IQVIA's capabilities in this field are unrivaled. So how does this come together for a customer? In this example, we're working with a patient advocacy group in the United States to improve patient diagnosis. In clinical practice, patients with type 1 diabetes diagnosed in later life can often be misclassified as type 2, leading to mismanagement of their disease and increased risk of serious complications, such as diabetic ketoacidosis. By analyzing patterns in a patient's longitudinal health record, we're able to help physicians identify patients that may have been initially misdiagnosed. More broadly, we anticipate that artificial intelligence and machine learning will play an ever-increasing role in identifying patients who are potentially misdiagnosed and in assisting health care professionals to identify undiagnosed patients, especially in the field of rare diseases, where the health care professionals have less familiarity with the clinical presentation of the disease. And with that, I will hand to Dr. Nancy Dreyer, who quite literally wrote the textbook on observational research. Nancy?

Thanks, Rob. Actually I wrote 2 books that are cited by regulators in the U.S., Europe and China. It's exciting to see how regulators and payers around the world are looking to real-world evidence, both to guide more realistic clinical trial design and also as a means to understand how well medical products work for people not studying formal clinical trials. This also helps lay the groundwork for label expansion by identifying new and effective treatments or combinations of treatments, including things like second- and third-line treatments for cancer. The guidance documents that you see here show the ascendance of real-world evidence that is a full-fledged complement to randomized controlled trials. Not a replacement or a substitute, a complement. It's gratifying to be playing a leading role in developing these standards to guide broader use of real-world evidence. Let me show you some industry-leading tools that support how real-world evidence can drive value. In this oncology example, our technology automatically extracts relevant data from the electronic health records so that investigators only need to enter that data that's not already in the record. We're conducting this study in 16 countries for 1,200 patients with data transfers every 2 weeks for a year. Reducing that burden of data entry and query resolution makes it easier for sites. It results in higher-quality data and reduces loss to follow up over time, a winning combination. Similarly, our award-winning electronic clinical outcome assessment platform continues to experience strong demand because of the high-quality data generated by intelligently enabling robust collection of reliable, validated outcome measures from clinicians, patients and their caregivers. We've successfully deployed more than 150 projects in 35 therapeutic areas and have processed more than 10 million unique patient responses in 65 countries and 28 languages. This next technology is an essential underpinning required to drive evidence-based innovation and drug development. Now we've been honing our de-identification and anonymization services for 15 years. We've assessed and anonymized thousands of data sets, including complex data types like medical image files and clinical text. Unlike the traditional approach of data sheltering, data sharing requires constant attention to data acquisition, integration, refreshing and compliance. Sustainable, large-scale innovation requires a trusted automation process to assure that data privacy and security are maintained. In this example of the work for Novartis, we've accelerated enterprise-wide access to more than 2 million patient years of data. Also, Novartis recently conducted a motivated intruder test. Now that's a test of the strength of our privacy protection, and we passed with flying colors with no likely matches. Now I'd like to pass the presentation on to my colleague, Dr. Christina Mack, an excellent epidemiologist, data scientist and long time [indiscernible].

Thank you, Nancy. IQVIA works with over 70 medical specialist societies and patient groups around the world. In this example, working with the American College of Surgeons, we were able to help drive national improvement in quality of care for colorectal resections. The ACS National Surgical Quality Improvement Program is the leading nationally validated outcomes-based program to measure and improve the quality of surgical care in North American hospitals. The underpinning of this quality improvement program lies on 4 principles: set the standards, build the right infrastructure, use the right data and verify with outside experts. IQVIA's technology platform is the foundation of the data capture and all of the analytics. Resections also often involve intensive surgical procedures to remove portions of the bowel. IQVIA's data system shines a light on the full surgical process and patient experience. And by putting a functional, highly utilized registry in place, physicians can better understand what works for patients across demographics and subgroups and ultimately achieve better patient outcomes. The need for Connected Intelligence extends across diseases across populations and this past year, extended to protect thousands of elite athletes. When COVID halted business and life, as we all know it, IQVIA was approached not only by pharmaceutical companies developing vaccines and therapies, but by professional sports and the International Olympic Committee. From the start of the pandemic, as my team and I traveled down to the NBA bubble in Orlando, to the moment over a year later when we landed in Tokyo to run and help with their COVID work in the Olympics, our IQVIA team has ingested, analyzed and interpreted constant streams of data all in real time. We brought together wearable devices, genomics, millions of PCR and point-of-care tests, contact tracing and clinical information in a curated readily usable way, which has formed unique data sets. These are evidence hubs with unparalleled ability to guide COVID-19 prevention efforts and population safety, recognized here by The Wall Street Journal among the other stakeholders in this area. What we have learned has changed the landscape and it has moved the needle on COVID, giving the scientific and medical community a better understanding of if and how these newly approved diagnostic devices work, if people who test positive after recovery can pass the virus and infect the bubble, what COVID looks like as variants evolve, the question that I'm asking every single day right now, and how to effectively prevent transmission. Working with professional sports leagues to reduce injury is not new to IQVIA. We have been working with them and collaborating with them for over a decade. When the pandemic hit, IQVIA was the ideal partner to manage COVID and help them get back to sports. We created on-the-ground surveillance systems. There's scientific insights that were eventually and still are relied on by the CDC, by the FDA and by scientists across the globe. It was our privilege to help in the fight against COVID and to deliver successful seasons and athletic competition. IQVIA was built for this moment. Technology plus science plus operations brings a power that naturally underpins the COVID response. And this Connected Intelligence continues to carry broader relevance to the business of health.

[Audio Gap] continue to have a leadership position in an attractive, expanding market with a unique combination of technical, operational and scientific capabilities, coupled with an unwavering desire to push the frontiers of health care and ensure we stay ahead of the competition. With that, I will hand to Jon Resnick on how IQVIA is enabling customers to commercialize innovative therapies and provide patients with access to medicines. Thank you.

Thank you, Rob. IQVIA is uniquely positioned to support the industry from molecule to market, from clinical development to evidence generation and in the commercial space. The commercial segment represents a robust $64 billion opportunity. The segment is growing in mid-single digits, really driven by 3 things: first, new entrants. Today, there's 24% more pharmaceutical and life science companies than there were just 5 years ago; second, as both Ari and Richard highlighted, we've seen unprecedented levels of health care funding; and third, a robust product pipeline. IQVIA is forecasting that there'll be 20% more launches in the next 5 years relative to the prior window. Commercializing a product is a dynamic mix of portfolio, brand strategy, requires a sophisticated understanding how to engage with multiple stakeholders, physicians, payers, patients. But when it's done well, it means ensuring that the right treatment gets to the right patient at the right time. IQVIA has led this segment for decades, literally. Our solutions are embedded in more than 8,000 clients around the world. And I would say that our capabilities have never been more relevant than they are today. You heard earlier a story about a technology and it's disruptive element from the clinical trial space. Well, the very same phenomenon is happening within the commercial segment. Despite rapid growth in technologies and digital channels that we've all experienced over the last few decades, health care and life sciences specifically has been slow to change. As a result, the pace of adoption has lagged. The pandemic was a remarkably powerful catalyst. In just 9 months, we saw the dynamics between physician and patient engagement completely transform. We witnessed an explosion in the use of telemedicine, remote detailing, digital health apps. In fact, in a recent survey of pharma professionals, it was notable that all of them believe that they saw an acceleration in the industry's digital transformation. But it was remarkable that 40% of them believe it was fast forwarded by 5 years. And at the center of all of this change is IQVIA. From the beginning of the pandemic, the industry turned to us for insights and we were ready. We immediately set up weekly webinars across the globe, gave realtime updates on the virus, the impact of lockdowns. We set a new pace for engaging, reached nearly 10,000 executives in a very short window of time. And we helped our customers navigate changes in physician preferences and patient care. But we did more than advise. We implemented. We deployed technology and analytics they needed to act to allow them to make the intelligent connections that will power a completely new community. Let's think about what that new model looks like. First, technology is shifting and improving the way that pharma engages with physicians. The traditional rep-based model is really not enough anymore. It's not as effective as it used to be. In fact, 60% of all physicians tell us that they prefer newer digital channels. Pharma needs to be much smarter about engaging them in an omnichannel approach. Second, as medicines get much more specialized and the use of digital health apps proliferate, pharma needs to close the gap between health care and patient experience, especially now. Due to COVID, there are 1.5 billion patient diagnoses that didn't happen. 1.5 billion, a staggering number. Pharma needs to help, needs to step up to develop smarter tech-enabled patient engagement platforms that can do things like provide disease education through access to medications and ensure adherence. And finally, underpinning all of this, an accelerated investment in data and technology and infrastructure. No longer acceptable to spend 80% of your time cleaning data or wait a year to measure the return of the marketing campaign. Companies need better, faster insights to enable agile decisions. This is a complete transformation. To get there, the industry will need a connected stack of information, analytics and technology. But building and operating the right stack is complex. Most companies are not built to manage transitions of this size and scale. IQVIA was built for this. We are literally investing billions of dollars creating the leading health care information cloud. We're doing so our customers, they don't have to. Some say that CRM is the foundation for the new commercial model. But here at IQVIA, we believe that intelligence is at its core. Susan, can you tell us more about that?

Thanks, Jon. The breadth and depth of our global data networks continue to be the gold standard throughout the life sciences industry. Partnering with over 150,000 data suppliers, we're not stopping there. We're continuing to expand these data sets because we need to keep up with the speed of science, genomics, digital health, biomarkers, social determinants and social media. But it's not just about the volume of data. It's also our understanding of how health care works around the world. Access to health data globally is vastly different. Data structures and data models are different. Privacy, medical, legal and regulatory requirements are different around the world. And IQVIA understands all of this. No other company has all of these capabilities under one roof. But having the right data is just the beginning. We have to be able to use it. And as we referenced earlier, our customers are really challenged in this area. They're upside down, spending way too much time trying to clean up raw data rather than generate insights from it. This is where we believe data science meets human science and information is transformed into intelligence, faster, more precise and actionable insights, reducing both time and subjectivity. AJ referenced earlier that the origins of our Human Data Science Cloud parallel that of Amazon Web Services, originally built to support internal operations but later offered to clients. Recently, a top 20 global pharmaceutical company approached us to help them overhaul their commercial operations. The company had historically left operations to local teams, which utilize very manual processes with no centralized or common way to source, ingest or analyze data across countries or brands. Within months, we were able to deploy our Human Data Science Cloud across their top 7 global markets, enabling them to easily access, digitize, transform and deliver information and analytics at scale. Our solution empowered them not only to reduce the time to ingest the data by 80%, but also generate insights 2x faster, enabling their commercial teams to make decisions in a more agile and efficient manner and all of this at 50% of the cost if they had done it themselves. This represents the breadth of capabilities customers come to IQVIA for. Built on the Human Data Science Cloud, IQVIA's technology and analytic platforms deploy the full power of Connected Intelligence to meet our customers' commercial needs. Much like our data delivers unparalleled scale and our information management delivers access and scalability, these platforms transform decision-making, powerful tools that were purpose-built for today's commercial challenges. In order of magnitude, hundreds of applications, over 3,000 customers, hundreds of thousands of users, millions of product installs and OCE continuing rapid growth with well over 160 customers. But this is just the beginning. So now I'm going to pass it to Alistair, who's going to show us how our customers have put these solutions to work.

Thank you, Susan. Good morning. We work with commercial teams across the industry, and they ask consistently the same question, namely, how to optimize my marketing mix to maximize my commercial return on investment? Clearly, that's the same question in many industries. The complexity in life sciences is amplified through the pandemic. There are now a multitude of digital and non-digital ways to go to market. And our clients are finding it increasingly difficult to cut through the noise. [Audio Gap] ask 3 critical questions, namely: how to put the right information, the right health care professionals at the right time. Here with IQVIA, we bring our leading industry data, analytics and technology to answer these questions. A top 10 life sciences company approached us to help optimize their brand performance ahead of competitive launch. Leveraging our proprietary data and technology as well as their own internal insights, we were able to identify inefficiencies in how they were interacting with health care professionals. In addition to that, we applied our artificial intelligence and machine learning capabilities to predict the future outcome of promotional campaigns. Using these insights, the marketing teams and the client were able to pivot their spend and tactics appropriately to see the output that you can see on this chart. Now you've heard all through the presentations today just how ubiquitous digital is becoming in life sciences. But in specialty medicines, the role of the rep still matters. In fact, physicians tell us they want and still need to see these reps to understand the complexity. We were approached recently, again, another top 10 pharma after they've done an internal assessment that showed over 80% of their in-person physician visits were ineffective. The reps were not following up with the HCPs quickly enough or with the pertinent information. What the company needed was an intelligent solution to guide reps more thoughtfully with their interactions with HCPs. With IQVIA's Next Best action algorithms and alerts, we had just what that client needed, a solution that could be scaled really quickly, could be tailored to the demands of different geographies, different brand teams and different rep teams and perhaps most importantly, was extremely intuitive. In just over 4 months, we scaled over 4,500 reps from 69 brand teams from 14 different international locations. Now again, you can see the outputs here. But what I'm most proud of and I quote you here is after we delivered this project, the client who commissioned it said the following, "IQVIA was the only company she trusted with the global scale, technology, analytics to deliver on this critical program." Now we don't just help clients improve their interactions with HCPs and themselves, we also improve patient engagement. You've heard again all through the presentation today just how increasingly sophisticated health care is becoming and patients can feel left behind how to find the right doctors to diagnose the symptoms, how to find and start treatment, how to maintain dosing frequency. This is particularly prevalent in specialty medicines where the complexity of treatment can be really challenging. A world leader in immunology approached us. They had a super complex treatment process. And as you can see, patients were not keeping up with the medication. We designed a tailor-made patient support program, which leveraged our proprietary data in order to triage eligible patients. We created a digital patient education program and surrounded that program with in-person nurse ambassadors. What that meant for patients was that they could use and manage their treatment more effectively through a really intuitive self-service portal and, as and when required, have in-person nurse assistance. And you can see the improvement here in the adherence. This is not just great news to clients, but it's fantastic use for the patients too. Now I'll give you 3 examples today of specific stakeholder engagements. But of course, our uniqueness as a company and what makes us different than any other company is that we integrate our marketing optimization programs, our sales programs, our adherence programs into a powerful ecosystem. Simply put, we're the only global company who can ensure that the technology that we have can track all through the life cycle of the engagement with HCPs to enable our clients to make the right decisions at the right time and maximize the return on investment. No other company has that depth. In Ari's section, he talked about the buoyancy of VC funding in biotech. How that manifests itself in the commercial arena is increasingly, biotechs want to commercialize their own assets. Traditionally, they would partner up with a large pharma company. And we're seeing a huge amount of biotechs come to us to help commercialize their assets. Recently, we worked with a U.S.-based biotech who wanted to launch in Europe first, but they didn't have the capabilities, the infrastructure and perhaps most importantly, the experience to navigate 26 countries for the launch process. We opened up our breadth of data, technology, analytics and human capital in these markets. We provided our ecosystem, which meant that they were able to launch 3x faster than they would otherwise do themselves. Now why does this matter? When launching medicines in life sciences, speed is absolutely vital. First to market with a 3-month window in this franchise area gets you around $150 million revenue uplift. Secondly, cost. By using our plug-and-play ecosystem, the client was able to launch with around 50% less cost than they had otherwise budgeted for building their own infrastructure. In summary, given our Connected Intelligence capabilities across data, analytics and technology, but also the global scale and in-market knowledge that we bring, I passionately believe that we are the natural home for biotechs that commercialize. And with that, I'll hand back to my friend, John, who's going to conclude the commercial section. Thank you.

Thank you, Alistair. IQVIA shaped and led the commercial segment for decades. Our solutions are embedded in just about every life science company around the globe. Moving forward, we're going to continue to be at the center of commercial transformation. Our unrivaled intelligence, technology applications will power the industry, enabling efficient, personalized and digital-forward engagement. So with that, I think that concludes the undercard for today. And I think you all have been very patient waiting for the main event. So the man who you all have been waiting to see, our CFO, Ron Bruehlman. Thank you.

Thank you, Jon, and good morning, everyone. We've shared with you today the power of IQVIA and how we're differentiated in our markets. But I know based on the conversations I had before the event got going that what you're really interested in is how does this translate into our financials for the next few years. But before we get to the next few years, let's talk about 2021. We're reaffirming our guidance today that we shared on our third quarter earnings call. And that guidance is, at the midpoint, we expect revenue of around $13.8 billion, adjusted EBITDA of just under $3 billion and adjusted diluted earnings per share of $8.90. Now this guidance assumes that September 30 foreign currency exchange rates remain in effect for the fourth quarter. Now let's look a little bit further into the future. The path to achieving our Vision 2022 goals has been anything but a straight line. In 2020, our revenues were basically flat due to the pandemic. Now we bounced back very strongly in 2021 as we've executed against the work that was delayed from 2020 and, of course, due to the tailwind we've had from COVID-related business. Now in 2022, our revenue growth will be slower and somewhat below the 3-year trend line as COVID-related work tapers down. However, for the 3-year period, we expect to exceed our V22 goals and we'll exit '22 on a strong growth trajectory. And let me be more specific. We anticipate that in 2022, COVID-related revenue will step down by more than $1 billion versus 2021. That's over 7 points of drag to our revenue growth rate. But the good news is that we will more than compensate for that as the base business is projected to grow by more than $2 billion. So overall, we expect to deliver just under $15 billion of revenue in 2022 at the midpoint of our guidance. And with that in mind, let's talk in a little bit more detail about that guidance. We expect total revenue to be between $14.7 billion to $15 billion. This revenue growth includes about 100 basis points of contribution from M&A activity, and going the other direction, an FX headwind of about 70 basis points versus the prior year. Now adjusting for the COVID impact that I mentioned, which again exceeds $1 billion; the contribution of acquisitions, about 100 basis points; and the FX headwind, about 70 basis points; our guidance implies underlying organic revenue growth in the low to mid-teens. Our adjusted EBITDA guidance is $3.320 billion to $3.395 billion or growth of about 10.9% to 13.4%. Adjusted diluted EPS will be between $9.90 and $10.20. That represents year-over-year growth of 11.2% to 14.6%. Now this EPS guidance is based on our effective tax rate remaining consistent with the prior year, that is 2021, at about 20% as we've assumed no significant changes to the U.S. tax law. 2022 guidance also assumes FX rates prevailing on September 30, 2021, continue. At the segment level in 2022, we expect TAS revenue growth, Tech and Analytics Solutions, to be in the mid-single digits. This reflects a year-over-year step-down in government COVID-related work and also the year-over-year FX headwind that I mentioned. However, underlying organic revenue growth for TAS, that is adjusting for the tapering in the COVID work, FX and the acquisition impact, will continue to be in the high single digits. R&DS revenue will grow high single digits to low double digits, obviously, a lower rate than the 30% growth we're experiencing this year. However, underlying organic growth for R&DS, again adjusting for the step-down in COVID-related work, FX and acquisition impact, will be in the high teens. Finally, CSMS revenue, which includes several percentage points of drag due to lower COVID-related work, should be flattish compared to the prior year. Now we're tracking ahead of our V22 financial targets to date. And the '22 guidance that I just gave you confirms that we'll exceed these targets. At the midpoint of our 2022 guidance, our implied 3-year CAGRs are 10.2% for revenue, 11.8% for adjusted EBITDA, and both of those exceed the high end of our V22 guidance ranges. Our implied adjusted diluted EPS at the 2022 midpoint is 16.3%, which is well into the double-digit range that we forecast in 2019. Now turning to the balance sheet. Cash flow is a very high priority for us. In the years directly following the merger, our free cash flow suffered somewhat. We incurred a fair amount of post-merger integration spend. And frankly, we took our eye off the ball on accounts receivable management. As you've seen, we've made real progress here. And we did this by refocusing on cash flow generation and specifically improving our internal processes around receivables, billings and collections. This, along with our strong earnings growth, has enabled us to nearly triple our free cash flow since 2017, which, of course, was the first full year post merger. Now improving cash flow has allowed us to invest more in the business while still returning a significant amount of cash to share owners. Since the merger, we deployed over $14 billion of capital, both in growth investments and share repurchase. Our growth investment has included $4.3 billion spent on M&A. Another $3.3 billion has gone towards internal investments, software development, building out our data science and AI/ML capabilities, upgrading our technology infrastructure and expanding our lab facilities and capabilities. Now in addition to our growth investment, we spent $6.6 billion on share repurchase at an average price of just over $99 per share. Money well spent. Now even after deploying all this capital, we've been able to strengthen our balance sheet. You'll recall that we set a net leverage target of 3.5 to 4x trailing 12-month adjusted EBITDA exiting 2022. Thanks to our strong earnings growth and free cash flow, we achieved this target more than a year early as you know. Now I'd like to shift gears and talk about our medium-term guidance. And based on our strong financial results to date, our favorable outlook for 2022 and, in particular, the many growth opportunities that my colleagues have highlighted today, our team has developed our initial 3-year plan for 2022 through 2025. Our 20 by 25 targets, which span 2022 to 2025, represent a meaningful acceleration in the next phase of IQVIA's growth compared to the 2019 to 2022 period. Between 2022 and 2025, we're targeting compound annual growth rate of 10% to 12% in revenue, 11% to 13% in adjusted EBITDA and also delivering continued double-digit growth in adjusted diluted EPS. Now during this period, we expect capital expenditures in addition to deferred software to average about 4.5% of revenue. We anticipate spending between $2 billion and $3 billion per year on a combination of acquisitions and share repurchase. Now, of course, the exact split is going to be dependent on the availability of acquisition opportunities. But that said, our revenue guidance that I just showed you assumes about 200 basis points per year of M&A contribution. Although we're very comfortable with our net leverage ratio in the 3.5 to 4x range that it is now, we see this ratio gradually and naturally declining to about 3x adjusted EBITDA as we exit 2025. And finally, we anticipate maintaining our adjusted book tax rate in the low 20s. This again contemplates no significant changes to current tax laws. Now at the segment level, to provide a little bit more detail, we anticipate 2022 to 2025 organic revenue growth to average -- and it's, again, organic revenue growth to average in the high single digits for TAS, in the low double digits for R&DS and be flattish to low single digits for CSMS. And I guess with that, we're ready for Q&A.

Okay. Lose the music for the questions. Yes.

Dave Windley. You're -- in one of the last slides, Ron, your 10% to 12% growth rate, I think kind of sets your 20 by 25 as the minimum. I mean I think if you do 10% growth, you'll get to above $20 billion. So maybe talk about the longer-term drivers, particularly on RDS, that give you the comfort to get into the low double digits sustainably.

Yes. So look, on R&DS, we've got a backlog of -- Richard, is it $24-plus billion?

Yes.

There are cancellations from time to time. There's a little bit of COVID still trailing there, but we modeled this pretty tightly. And that gives us the confidence that, organically, we should grow organically to low double digits on R&DS, do the math, and then high single digits on TAS. We do some acquisitions. We always say a couple of points. Who knows what it will be? And I think the range is really depending on really on our M&A deployment. But you're right, it's a little bit over $20 billion. And who knows? I'm not going to say, yes, it would be great to say 25 by 25. 20 by 25 sounded [ good ] in 2025. But I think we -- the bottom line, more seriously, is that we feel very good about this. Actually, I would say -- I think I can say, I don't know, Ron and others can comment, but I feel stronger and more confident today about this '25 objectives even though it's a year early than I did in '19 about my '22 objective. Yes? There's a mic here.

Elizabeth Anderson, Evercore. You talked a lot about today about the revenue opportunity. I was wondering if you could dive a little bit more into the [indiscernible] portion. Talk about -- obviously, you have the revenue contribution, but what else do you see as driving the revenue growth?

So on the bad news front, and [indiscernible] correct me if I'm wrong here or if anyone wants to add commentary, on the bad news front for margins, we've got inflation, inflation, inflation in wages, right? That has a lot of issues there. Just the cost of recruiting and retaining the people, we need to deliver all that work and even though the proportion of technology, as you saw, hopefully, today, in the work that we do is increasing at a dramatic pace, we still need the people. And just like every other industry, we're experiencing a lot of turnover, the consequences of the pandemic. The fact that the industry itself, not just us, is craving for talent and where do they go? Right here. So we have that headwind, right? That's the wage inflation. Number two, there's a mix issue as well, right? There are and that's a negative and a positive. A lot of the COVID work that you see here and perhaps, that explains the disconnect between the tapering down of the deceleration of the growth rate a little bit in '22. But the EBITDA continues to grow faster, and I think that's a bit of a mix issue. The COVID work is more than that profitable. It was exciting, motivating, meaningful, moving. We did a lot of great work. It wasn't that profitable, so as that work tapers down, then we've got a beneficial mix effect. On the positive side, you know that built into our DNA is constantly working on productivity initiatives. This is -- we deploy our technology and digital solutions for our clients, but we start with ourselves. We introduce technology in our processes constantly. We take advantage of that opportunity to optimize those processes. We create efficiency. We have very large hubs offshore. And we continue to seek opportunities to reduce our costs already. If you look at our SG&A percentage of sales, it's been declining dramatically. We have great leverage. And we intend to continue to do that to more than offset the headwinds that I just talked.

Yes. We have, Elizabeth, we have about 30 basis points of margin expansion annually baked into that 2025 guidance, if you do the math. So that's pretty consistent with what we had for V22. We can do better. We will, but we are targeting margins.

We would do a lot better without those headwinds. Yes.

Jack Meehan with Nephron Research. I had 2 questions on the revenue targets out to 2025. First, I think during the presentation, you set out 6% to 7% growth in the markets that you serve. And you're talking about 10% to 12% growth. Maybe just bridge us, is this primarily share gain? You also talked about, I think, building the case for a premium offering. Can you talk about just any price? Do you think [Audio Gap]

So the simple answer is -- I know it was a long time ago, but I spoke about our strategy, which is actually gaining share within the existing spend of our customers. So the simple answer, yes, the overall market grows 6%, 7%. We want to grow at least 10%. That's share gains. That's a simple answer. Pricing flexibility, I don't know. I haven't been ever in a pricing increase environment. Maybe we are in that phase now. But we are in a long-cycle business. A lot of what's in our backlog is already sold. Yes, there are escalation mechanisms within many of our contracts, but there is a lag. We're paying people this cost, which is higher than yesterday. We are delivering at yesterday's price, lower than today. So that's the disconnect. And that's why margins really require a lot of work to offset that. So pricing, again, hopefully, we won't persist in an inflationary environment. But right, over time, yes, next 2, 3 years, I don't know that we'll see that just [indiscernible]

Ari, Tejas Savant from Morgan Stanley. Just a couple of follow-ups to your comments in response to Jack's question. Does this mean that fixed-price contracts as a mechanism for you will be less utilized on a go-forward basis? And to your comments on share gains, how much of that do you think is driven by consolidation or future consolidation among your peers?

Okay. How about somebody else answer? The first question...

The first question was on increased -- are we going to use that to...

Yes, fixed-price contracts. Pricing doesn't mean that it's not adjustable for inflation or cost of people, right? I mean, should you want to speak with -- fixed pricing means that it's not hours dependent. But many portions of the trials are priced on a deliverable basis as opposed to sort of -- so it's a little nuanced. Did you want to add something, Richard?

So I would just say that when we think about fixed-price contracting, certainly, we're seeing that is continuing across our customers. It's one that we think actually we're differentiated in terms of everything that we [indiscernible] Connected Intelligence that drives better patient or efficient trial design. But to Ari's point, it is fixed price for fixed scope. And what we also know about clinical research is that scope rarely remains, so we have the ability to go back and like change orders and revenue for the order. So we're not concerned with that. We certainly see robust pricing out in the marketplace for these types of opportunities with a slight premium for the additional risk that we're taking on. And again, our track record shows that towards these types of studies, we actually deliver at margins above what we originally bid based on the efficiency of our business model.

To answer your second question on the consolidation, I don't think we're counting on that. Our share gains are predicated on simply the differentiation of our offerings, which hopefully you've seen today. It truly is an extraordinary company and solid set of capabilities. Our challenges simply -- this is a long-cycle industry, and it takes time to go to market to displacing comp and so on and so forth. That's been my biggest frustration. But it eventually will happen. So that's our game plan. With respect to the mergers, I don't know. Now with your other question -- you only had a question on market share. Anything else, anyone? Yes?

Great. It's Patrick Donnelly from Citi. Maybe one for you, Ron, just on the COVID piece in terms of pacing in '22. You're hopeful that -- know that billions coming out. Can you just talk about -- should we expect the beginning of the year to be lower growth, a big chunk of that $1 billion coming out and then kind of ramping? And then as we go down the P&L, to Ari's point about profitability, obviously, COVID is not particularly profitable so the EBITDA growth could be pretty linear throughout the year. And then maybe just a flavor in terms of what percentage COVID is of revenue kind of exiting 4Q or at this current time would be helpful.

Yes. Look, you're, in a way, asking me to lay out some quarterly guidance. And typically, we don't do that at this time. Usually, we'll do it quarter-by-quarter as we go along. I can make a few general observations that the compares will likely be tougher due to the COVID-related work in the first half of the year than they will be in the second half of the year. And we'll provide more guidance around that and, obviously, our EBITDA margins and all of that as we go along through the year. I'm going to try to stay away from being too detailed about the quarterly guidance. Now I think your second question is where do we exit the year in terms of COVID revenue. And look, we will continue to have some COVID-related work in 2022. And we see that tapering down further during 2023 in our V25 -- or excuse me, 20 by 25 period. We see that COVID work going away altogether by the end of the period. Now who knows? Nobody has a crystal ball. We can't forecast what's going to happen in the pandemic. But the biggest impact we're going to have from tapering COVID work is that $1 billion we talked about in 2022, and then it will continue to decline in 2023. But that's all factored into the 20 by 25 guidance we gave you. So shouldn't be a concern. I know there was a lot of concern earlier in the year about the COVID cliff. Hopefully, that puts this to rest. There is no COVID cliff. There is a COVID tapering, no COVID cliff.

I mean $1 billion is a pretty big cliff even for us at $15 billion.

But we have a lot of work behind it.

But fortunately, we've got the momentum in the rest of the therapies and the base business to more than offset that.

George Hill from DB. Ron, you guys have laid out kind of a doubling of the CapEx spend from the 2022 to 2025 period versus 2019 to 2022. I guess could you talk a little bit about how -- what do you think about where do you buy share versus where do you take share in the market? And I guess just talk about kind of what you see, like where is the white space that you guys would look to fill in with that...

You didn't mean CapEx. You meant M&A and share...

M&A.

In M&A, yes, I've been a tech...

From $1 billion to $1.5 billion to $2 billion to $3 billion.

Our CapEx, actually, as a percent of revenue, it's down a little bit. Look, in the M&A space, there are opportunities really across the board, both in our R&DS business and our TAS business. Even occasionally in the CSMS business, we see things come along that are attractive. And we're going to look to fill in capabilities where we feel we have holes in our capabilities. There are places where we can build scale. There are even places where we have -- we see some -- global as we are, there's some opportunities to expand our geographic reach or become more powerful in certain parts of the world. You saw what we've done to date. We bought out Quest's interest in the Q² joint venture. We bought Myriad's work-based medicine business in the lab space. So you know that, that's an area of focus. I think it likely will continue to be in the future. And it's all dependent on opportunities, of course. We may be working some things in the -- some opportunities in the adjacencies like the payer space where we think that there's an ability -- payer provider space to expand our capabilities. But there's still a lot in the core TAS business and R&DS business, so I wouldn't point to one area. It's going to depend upon availability.

Yes. I mean you're probably asking why is the number larger, and the fact is we're a larger company. And if you had asked me a year or 2 ago, even in '19, maybe you did ask the question, and I probably answered you, we're not seeing any acquisition that's larger than $100 million, $150 million per se. That would have been a large acquisition for us, $150 million, $200 million. I wouldn't have anticipated then that we would spend, $700-and-what-80 million just to buy 40%. But this was a no-brainer transaction. And all of a sudden, we kind of say, "Oh, wow. We can do a bigger deal." And then we bought the lab businesses, which are a hot commodity, and we paid quite a bit of money for that. We bought DMD.

DMD, yes.

A lot of -- many hundreds of millions of dollars for that. So we all of a sudden see that even though we are doing less acquisitions, we're doing more strategic, more meaningful and more impactful acquisitions. And we suspect, there's nothing on the table that I know of that I'm not speaking about. There's just nothing. But we know simply by looking at the universe of opportunities that there are companies that we think we can either manage better or integrate within the rest of what we do and provide us with more platform to grow. So that's why we're assuming that. But it's binary, as you know. We'd end up buying $2 billion of stock in the [Audio Gap] or spend less than what we say here.

Yes. And I would add, our cash flow has improved quite a bit since the prior period. So it gives us more capacity to be able to...

Yes. And the reality, if we don't do that, if we do not find those opportunities, we'd love to continue to invest internally. But we are kind of doing what we have to do and then what the leverage ratio will go down very quickly, which at current rates doesn't make any sense. So again, it's just going to be a -- we will see what the environment is. Yes?

John Kreger from William Blair. Ari, can you talk a little bit more about the DC [Audio Gap] laid out a pretty strong base there for a long time. What do you need to do to really execute? Trying to get a -- do you have to change your staffing model? Are you going to be in the business [Audio Gap] patients hub? Or can you really leverage the technology? I guess embedded in that question is, do you have a long-term sort of staffing growth plan that you can throw into the [Audio Gap]?

So I'm going to obviously ask the R&D team here to -- the R&DS team to answer that question. But look, DCT is not an either or. It's not all digital or are we envisioning selling people to patients' homes. We're already doing it, right? We do have an owner's model, a patient concierge type of model. Whether it's remote or through the home, there are many procedures that can be done at the home. We don't need to burden the patients with -- some of these things are logistics related. We know that a fairly large percentage of eligible patients do not enroll in trials or enroll and drop out because the burden, the logistics burden is too high. Remember the numbers, but the travel, the average travel for a patient to the site is just very prohibitive. Over time, it's a cause of patients dropping out of the trial. And so as Costa said, we used to bring the patients to the trial. We now bring the trial to the patient. That includes going to their home, either through telemedicine or through collecting data from patient devices or including visits for certain procedures that could be done at the home. And there are a lot of devices able to do EKGs and all kinds of other procedures at home, devices to be that can transmit real-time data, et cetera. So it's really a hybrid model. When we say DCT, you saw Costa's presentation, he was talking about the full suite as we put it together. But there are many trials. I would say the vast majority of trials are going to use one or several elements of the decentralized trial model, the suite of what we have to offer. Any more comments in terms of the model and the...

No, Ari, I think you're exactly right. To a couple of the questions, John, first of all, we are in patients' homes and have built out the nursing capabilities that doing it from a lab perspective, in terms of lab tests, directly to patients that they're [Audio Gap] So we have built out that capability. And I think the other important piece that Costa has highlighted is that within our operations team, we've built out a decentralized operational team. So they understand the nuances of working in this decentralized model and how to implement that successfully including trials. Now what we also know is that within that model, roles and responsibilities change. So CRAs are going to be less frequently going to sites because we're collecting so much of that data directly from patients. But decentralized monitoring is going to become a much larger percentage of how we look at that data and clean that data. And so it is about the evolution of the model. And then from a technology perspective and services perspective, again, as Costa has highlighted, for us, what we think is important is to have that expertise and that ability to deliver on both sides of that equation. Not enough just to be a tech company, not enough just to be a good operator, understanding the technology, understanding the integrations that have to occur with those technologies make it a fluid experience for that patient is critical. And so that's why we've chosen to maintain most of those capabilities within the 4 walls of IQVIA.

Right here.

Tycho from JPMorgan. If I go back to the last Analyst Day, you kind of alluded to other ways to kind of monetize the data, and we heard about some of that today. But as you look at all the data you're sitting on now, are there other kind of revenue streams that you didn't talk about today that you're kind of considering whether maybe it's repackaging some of the data, selling it back to pharma for discovery efforts or otherwise? And then as we think about some of the suites you've introduced OCE, OCT is there a third leg to that story? Or is that kind of the complete offering as you think about it?

Yes. I mean on the data, the answer -- the full answer is yes. We are -- in fact, we are approached by a lot of people, all the logos, the big tech companies. And we are engaged in dialogues with all of them because they all want to have what we have. It's a difficult dialogue with -- we have -- it depends on the [Audio Gap] and much more about that. Yes, there are opportunities potentially to monetize more. But -- more importantly, I think what you saw today, the Human Data Science Cloud is really a monetization vehicle. It's the information management aspect of it that's a critical need for our clients. And that's what is creating a new revenue stream. The whole Connected Intelligence concept is being monetized because we're turning what we use to manage our business as a service to our clients in order to help them manage their data. That's the main incremental source of revenue. The second question was -- OCE, yes. Yes, I think there's a suite of commercial applications we call OCE, started with the CRM, and then that Next Best action and all kinds of other applications. And then there's OCT, which is the application on the clinical trial side, which -- most of which are deployed again in the decentralized clinical trial suite. Anyone else? Yes, that's it. Thank you. Question over here.

It's Shlomo Rosenbaum from Stifel. I had more of a specific question a little bit about the digital marketing capabilities and what you acquired with DMD. Kind of with the third-party cookies going away and the capabilities that you have there, how differentiated is your digital marketing capability right now with your assets? And how deep does it go across the business? How much of it is really kind of the CSMS business? And what else is out there? And how could you expand that? Because identity resolution is a really big deal, and it's becoming a bigger deal next few years.

And you're absolutely right. We feel that, that asset is very strategic. Without divulging a lot of the secret sauces here, but I'll pass the ball to you, Jon.

I'll try not to divulge too much of our secret sauces either. It's a great question. It's a very topical as well. We're thrilled with DMD. As Ron and Ari mentioned, it provides great capability. We talked about the trends. Both Alistair and I spoke to around the less effective core model of kind of rep-based engagements. And if you look at all the trends there, it's around how you optimize that secondary or that digital channel on top of it. DMD brings a great capability. It's going to allow us to do a number of things. E-mail is one thing, which is a huge trigger, but it's going to enter us also into the programmatic space in a significant way. I already said I don't want to divulge too much of the story here, but we are extremely excited about that opportunity and about how that's going to be able to complement the work we have on the CSMS side and on the channel analytics side.

We can say that it's game-changing. Is that correct? That's how you sold it to me.

Yes. Well, I needed a big check, Ari, so yes. No, I think it is. I don't want to get too far ahead of ourselves here.

Yes. You want to add something? I'll send you the roll. Jay, over here. There one goes. Mike?

Thanks, Ari. Yes, so I've worked with Jon and Ari on leading the DMD acquisition. So I think, Shlomo, for your questions, particularly around identity and deprecation of cookies, DMD does put us in a very good position to manage the market events. And so as we think about identity in the future, both HCP and DTC, we think DMD and some expanded capabilities are going to situate as well to be a player in that space. As they both alluded, there's certainly a lot of opportunity for us to grow. We think about that as a significant growth driver for us.

Yes. I mean it's omnichannel marketing strategy is basically the way of the future, so there's asset potential to help. Okay. Maybe one more question.

Mike Ryskin, Bank of America. 2 quick questions following up on topics you touched on earlier. First, Ari, I think you -- in your prepared remarks, you talked about the gradual shift from full service to FSP parts of the model. How does some of that mix shift impact margins even broader term, the 30 basis points annual expense? Obviously, that's -- a lot of that is boosting up the headwinds you called out in terms of inflation, labor costs, et cetera. What would margin expansion [Audio Gap] adjusted for that underlying one?

You're saying -- yes, the effect of the mix of increasing FSP. That was not my introductory remarks. That was Richard's. But you're absolutely right. That's another one of the headwinds. Within R&D, that is true. The market is shifting more, especially the mid and large. Again, I've only been in this business personally for 5 years. And I've already seen this pendulum move back and forth. So we speak to clients and well, we -- we're just going to shift everything to FSP. And 2 years later, no. When you look at what happened, they actually needed more full services than FSP. So it really largely depends on what happens within the client and who's responsible for what and depending on the study-specific. So mid-size pharma right now is shifting more to FSP at the moment.

We're seeing a little bit of that. Certainly, as I referenced that. But I think as we look at the business in its entirety, one of the other things that we know is that the EBP part of the marketplace is exploding. And so that is always or almost always, full-service work. It comes with full-service margin, so that's a natural hedge, some of what we're seeing happening in large and mid pharma. And then the other piece is we've been working hard to think about revenue diversification and margin, and we've got segments of our business that are very strong from a margin perspective. So we talked about patient engagement, feasibility, patient recruiting in some of Cyndi's presentations. Those all come with very strong margins. Think about the clinical tech that we're using to build out DCT and the other offerings, that's also a healthy margin business. So when we manage it in its totality, we feel pretty good about our margin profiles that we see out into the future.

I think that's an important point, which you just made. We really manage a portfolio of businesses. It's true within R&DS, it's true within TAS and it's certainly true at the level of IQVIA. So we manage the various pieces so that overall, our margin will continue to expand. That's where we are now. We wish we were expanding further, if not for those headwinds. But we feel good that it will expand there.

Yes. And your second question about the specific impact of -- I think, it was essentially what you asked, the specific impact of cost inflation. Look, we have a lot of different moving parts in our forecast out through 2025. And cost inflation has been significant this year, will be into 2022, and we'll see where it goes going forward. But we have mix, we have various productivity initiatives, we have all manner of moving parts in there. So we're not going to try to isolate one part and say, in the absence of this, it would be that. And frankly, for a plan out through '25 anyway, it would be false precision. Just suffice it to say that we believe committed to continuing to deliver margin expansion on top of the very strong revenue growth rates that we predict.

Thank you all for coming in. It takes a little bit of courage. We had, I think, double the attendance 3 years, 2.5 years ago. And I hope that next time we're together, it is triple the attendance. Thank you all. We'll be available for a few moments. There is lunch outside, I think. And certainly, the Investor Relations team will be available over the next few days for addressing any questions you have. Thank you.