01—Abstract
Summary
Summary of the 10-K filed February 18, 2020. Cited figures are marked; the original filing is the authoritative source.
IQVIA Holdings Inc. reported 2019 revenues of $11.09 billiona, up 6.5% from $10.41 billion in 2018, with constant currency revenue growth of approximately $835 million, or 8.0%.
Net income attributable to IQVIA Holdings Inc. fell to $191 millionb from $259 million, and diluted EPS was $0.96 versus $1.24. Income from operations rose to $777 million from $741 million. Research & Development Solutions was the largest segment at $5.79 billion of revenue and $1.14 billion of segment profit, and contracted R&D backlog grew to $19.0 billion from $17.1 billion.
Technology & Analytics Solutions generated $4.49 billionc of revenue and $1.10 billion of segment profit. Cash generation and capital allocation were central to the year. Cash from operating activities was $1.42 billion, up from $1.25 billion, and capital expenditures were $582 million.
The company repurchased 6,605,804 shares for approximately $944.8 milliond under its Repurchase Program, leaving $1.3 billion of remaining authorization, and total debt stood at $11.7 billion at year-end. Cash and cash equivalents were $837 million. The company issued $1.1 billion of 5.00% senior notes due 2027 and €720 million of 2.25% senior notes due 2028, and used proceeds to redeem its 4.875% senior notes due 2023.
The filing highlights several risks for investors: most R&D Solutions contracts can be terminated on 30 to 90 days notice, the company has significant leverage, and it faces ongoing litigation, including a lawsuit from Veeva Systems Inc. claiming damages in excess of $200 million. The company does not plan to pay regular dividends. Its auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion on the financial statements and on internal control over financial reporting as of December 31, 2019.
02—Key points
Key Highlights
- Revenues rose to $11.09 billion in 2019 from $10.41 billion in 2018, a 6.5% increase, with constant currency growth of approximately 8.0%.
- Diluted EPS declined to $0.96 from $1.24, while net income attributable to IQVIA Holdings Inc. fell to $191 million from $259 million.
- Research & Development Solutions contracted backlog increased to $19.0 billion from $17.1 billion, with approximately $5.2 billion expected to convert to revenue in the next 12 months.
- Operating cash flow increased to $1.42 billion from $1.25 billion, and the company repurchased 6,605,804 shares for approximately $944.8 million.
- Total indebtedness was $11.7 billion at December 31, 2019, following the issuance of $1.1 billion of 5.00% senior notes due 2027 and €720 million of 2.25% senior notes due 2028.
- Technology & Analytics Solutions revenue grew 8.4% to $4.49 billion, and Research & Development Solutions revenue grew 5.9% to $5.79 billion.
- Remaining repurchase authorization was $1.3 billion, and the company has no current plans to pay regular cash dividends.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 18, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $11.09B$10.41B | +6.5% |
| SG&A Expenses | $1.73B$1.72B | +1.0% |
| Operating Income | $777.00M$741.00M | +4.9% |
| Interest Expense | $447.00M$414.00M | +8.0% |
| Net Income | $191.00M$259.00M | −26.3% |
| EPS (Basic) | $0.98$1.27 | −22.8% |
| EPS (Diluted) | $0.96$1.24 | −22.6% |
| Shares Outstanding (Basic) | 195.10M203.70M | −4.2% |
| Shares Outstanding (Diluted) | 199.60M208.20M | −4.1% |
05—Questions
Frequently Asked Questions
How did IQVIA's profitability trend in 2019?
Revenue grew 6.5% to $11.09 billion and income from operations rose to $777 million from $741 million. However, net income attributable to IQVIA Holdings Inc. declined to $191 million from $259 million, and diluted EPS fell to $0.96 from $1.24. Income tax expense rose to $116 million from $59 million, and interest expense increased to $447 million from $414 million.
What is the outlook signaled by the R&D backlog?
Contracted backlog for Research & Development Solutions increased to $19.0 billion at December 31, 2019, from $17.1 billion a year earlier, and the company expects approximately $5.2 billion to convert to revenue in the next 12 months. The filing cautions that backlog may not be a consistent indicator of future revenue because projects can be cancelled, delayed or re-scoped.
How is IQVIA managing its debt and capital returns?
Total debt was $11.7 billion at year-end 2019. The company issued $1.1 billion of 5.00% senior notes due 2027 and €720 million of 2.25% senior notes due 2028, and used proceeds to redeem its 4.875% senior notes due 2023. It repurchased $944.8 million of stock during 2019, with $1.3 billion of authorization remaining, and it does not currently intend to pay dividends.
What are the main legal and business risks disclosed?
The filing discloses litigation with Veeva Systems Inc., in which Veeva claims damages in excess of $200 million, and a South Korean privacy lawsuit whose appeal is pending before the Supreme Court. Most R&D Solutions contracts can be terminated on 30 to 90 days notice, and the company notes its significant indebtedness and covenant restrictions.
06—Continue