01—Abstract
Summary
Summary of the 10-K filed February 19, 2019. Cited figures are marked; the original filing is the authoritative source.
IQVIA Holdings Inc. (NYSE: IQV) reported 2018 revenues of $10.41 billiona, up $710 million or 7.3% from $9.70 billion in 2017, with constant currency growth of approximately $664 million (6.8%).
Net income attributable to IQVIA Holdings was $1.28 billionb in 2018 (diluted EPS $1.24), compared with $1.28 billion in 2017 and diluted EPS of $5.74 that year, a figure inflated by a $966 million deferred tax benefit from the Tax Act. Income from operations is not stated as a single figure in the extracted text, but segment profit totaled $2.21 billion, with Technology & Analytics Solutions at $1.02 billion and Research & Development Solutions at $1.13 billion. Research & Development Solutions backlog reached $17.13 billion at December 31, 2018, with about $4.8 billion expected to convert to revenue in the next 12 months.
The balance sheet carried $11.06 billionc of total debt against $891 million of cash and cash equivalents at year end. The company repurchased $1.40 billion of common stock in 2018 under its $5.725 billion Repurchase Program, and the Board authorized an additional $2.0 billion on February 13, 2019, leaving approximately $2.3 billion of remaining authorization.
Operating cash flow was $1.25 billiond. Key risks disclosed include client contract termination on 30 to 90 days notice, data protection and privacy regulation (including the pending Korean privacy litigation and indictments), a $200 million-plus counterclaim by Veeva Systems, and a GSA contract noncompliance matter whose outcome the company cannot yet determine.
02—Key points
Key Highlights
- Revenues rose 7.3% to $10.41 billion in 2018, with constant currency growth of approximately $664 million (6.8%) and a $46 million positive foreign currency effect.
- Technology & Analytics Solutions revenue reached $4.14 billion (up 12.4%), and Research & Development Solutions revenue reached $5.47 billion (up 7.1%); Contract Sales & Medical Solutions declined 11.5% to $810 million.
- Research & Development Solutions contracted backlog was $17.13 billion at December 31, 2018, up from $14.84 billion a year earlier, with about $4.8 billion expected to convert to revenue within 12 months.
- Diluted EPS was $1.24 in 2018 versus $5.74 in 2017; 2017 results included a $966 million provisional deferred tax benefit from the Tax Act.
- The company repurchased 12.6 million shares for $1.40 billion in 2018, and the Board added $2.0 billion to the post-merger repurchase authorization on February 13, 2019, for roughly $2.3 billion remaining.
- Total indebtedness was $11.1 billion at December 31, 2018, with $880 million available under revolving credit facilities; the company was in compliance with financial covenants in all material respects.
- Legal matters include a GSA contract noncompliance investigation, Korean privacy litigation and indictments involving IMS Korea, and a lawsuit against Veeva Systems in which Veeva claims damages in excess of $200 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 19, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $10.41B$9.70B | +7.3% |
| SG&A Expenses | $1.72B$1.62B | +5.8% |
| Operating Income | $741.00M$665.00M | +11.4% |
| Interest Expense | $414.00M$346.00M | +19.7% |
| Net Income | $259.00M$1.28B | −79.7% |
| EPS (Basic) | $1.27$5.86 | −78.3% |
| EPS (Diluted) | $1.24$5.74 | −78.4% |
| Shares Outstanding (Basic) | 203.70M217.80M | −6.5% |
| Shares Outstanding (Diluted) | 208.20M222.60M | −6.5% |
05—Questions
Frequently Asked Questions
How did IQVIA's revenue and profitability change in 2018?
Revenues increased $710 million, or 7.3%, to $10.41 billion. Net income attributable to IQVIA Holdings Inc. was $1.28 billion, with basic EPS of $1.27 and diluted EPS of $1.24. Costs of revenue were 64.8% of revenues, flat compared with 2017, and selling, general and administrative expenses were $1.72 billion, or 16.5% of revenues.
Which segments drove growth in 2018?
Technology & Analytics Solutions revenue rose $455 million, or 12.4%, to $4.14 billion, and Research & Development Solutions revenue rose $360 million, or 7.1%, to $5.47 billion. Contract Sales & Medical Solutions revenue fell $105 million, or 11.5%, to $810 million, largely due to 2017 cancellations in the Americas and reduced volume in Asia-Pacific.
How much debt does IQVIA carry and how is it managed?
Total debt principal was $11.06 billion at December 31, 2018, including $6.08 billion of senior secured credit facility debt outstanding and senior notes. The company had $880 million of available borrowing capacity under its $1.5 billion revolving credit facility, and it used interest rate caps and swaps to hedge part of its variable rate exposure.
What are the main risks investors should monitor?
The filing highlights that most Research & Development Solutions clients can terminate contracts on 30 to 90 days notice, that data protection and privacy laws in many jurisdictions could restrict data use, and that competition is intense. Specific legal matters include a GSA contract noncompliance investigation whose ultimate liability could exceed current reserves, the Korean privacy proceedings, and Veeva's counterclaims seeking damages in excess of $200 million.
How much has IQVIA returned to shareholders through buybacks?
In 2018 the company repurchased 12.6 million shares for $1.40 billion, including 6.0 million shares bought directly from underwriters in secondary offerings for $659 million. Since the merger, it has repurchased 56.4 million shares for $5.03 billion. The company does not currently intend to pay regular dividends, and no dividends were declared or paid in 2018 or 2017.
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