Categories Earnings Call Transcripts, Health Care

IQVIA Holdings Inc. (IQV) Q2 2022 Earnings Call Transcript

IQV Earnings Call - Final Transcript

IQVIA Holdings Inc.  (NYSE: IQV) Q2 2022 earnings call dated Jul. 21, 2022

Corporate Participants:

Nick Childs — Senior Vice President, Investor Relations and Corporate Communications

Ari Bousbib — Chairman and Chief Executive Officer

Ron Bruehlman — Executive Vice President and Chief Financial Officer

Mike Fedock — Senior Vice President, Financial Planning and Analysis

Analysts:

Sandy Draper — Guggenheim Securities — Analyst

Eric Coldwell — Baird — Analyst

Elizabeth Anderson — Evercore — Analyst

Derik De Bruin — Bank of America — Analyst

David Windley — Jefferies — Analyst

Jack Meehan — Nephron Research — Analyst

Analyst — — Analyst

Tejas Savant — Morgan Stanley — Analyst

John Sourbeer — UBS — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Second Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. Thank you.

I’d now like to turn the call over to Nick Childs, Senior Vice President, Investor Relations and Corporate Communications. Mr. Childs, you may begin your conference.

Nick Childs — Senior Vice President, Investor Relations and Corporate Communications

Thank you. Good morning, everyone. Thank you for joining our second quarter 2022 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer. Ron Bruehlman, Executive Vice President and Chief Financial Officer. Eric Sherbet, Executive Vice President and General Counsel. Mike Fedock, Senior Vice President, Financial Planning and Analysis and Bryan Stengel, Associate Director Investor Relations.

Today we will be referencing a presentation that will be visible during this call for those of you on our webcast. This presentation will also be available following this call in the Events and Presentations section of our IQVIA Investor Relations website at ir.iqvia.com. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements. Actual results could differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company’s business, which are discussed in the company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and subsequent SEC filings.

In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation.

I would now like to turn the call over to our Chairman and CEO, Ari Bousbib.

Ari Bousbib — Chairman and Chief Executive Officer

Thank you, Nick and good morning everyone. Thank you for joining us today to discuss our second quarter results. IQVIA delivered strong financial results this quarter despite in the dynamics of the broader macro environments and the various global geopolitical issues. Let me address a few of the key ones. Some of you have continued to ask about the impact of biotech funding on the CRO industry. As we have said on several occasions, the recent decline in biotech funding has not had any significant impact on our business. Our exposure to pre-commercial EBP remains to adjust over 10% of our backlog. We have not seen any impact on bookings or RFPs nor any increase in cancellations or delays in clinical trial work from the slowdown in biotech funding. Actually, RFP dollars from the overall EBP client segment continued to grow double-digits in the quarter. In China, the government-imposed COVID lockdowns had a modest impact on our second quarter results mostly from disruptions to our clinical and laboratory operations. Our commercial business was virtually unaffected. Our experience in managing through prior lockdowns during the pandemic has been helpful in minimizing the operational impacts on site closures. Our guidance assumes that modest impacts from COVID-related lockdown in China will continue through the end of the third quarter. In Ukraine, we continue to work with sites and sponsors to ensure the safety of our employees and patients while working to mitigate trial disruptions caused by the ongoing crisis. In Russia, we continue to conduct trials currently underway to ensure the safety of patients already enrolled in clinical trials but we are moving recruitment on new trials to other countries. The financial impact of the Russian grain crisis are tracking in line with the expectations we communicated back in April. More generally, we are of course monitoring as are you the possibility of a recession. I would just note that over the past 20 years IQVIA along with the broader CRO industry has shown resilience to economic downturns. During recessionary times over the past two decades annual S&P 500 revenue contracted by as much as 10%, while IQVIA’s clinical business and the CRO industry as a whole, never experienced a year of revenue decline. The resilience of the CRO industry likely reflects the long cycle nature of our business as well as of course the mission-critical importance of clinical research and more generally the defensive nature of healthcare.

With that as background, let’s review the second quarter. Revenue for the second quarter grew 3% on a reported basis and 7.1% at constant currency. The $46 million beat above the midpoint of our guidance range was primarily driven by the timing of pass-through revenues versus our expectations as well as some operational upside. Compared to last year and excluding COVID-related work from both periods, our these businesses grew 16% at constant currency on an organic basis. Ron will provide additional detail in his remarks, including COVID-adjusted numbers for each of our segments. Second quarter adjusted EBITDA increased 10.8% reflecting our strong revenue growth and ongoing cost management discipline. Second quarter adjusted diluted EPS of $2.44 grew 14.6%, driven entirely by our adjusted EBITDA growth. Let me provide some more updates and color on the business in the quarter. The continued strong performance at IQVIA is driven by our highly differentiated capability. As you know the key differentiator for us in the clinical and commercial spaces is IQVIA’s Connected Intelligence. Let me give you a few examples of how IQVIA’s applications here help our clients solve their most complex problems.

IQVIA’s AI-driven Next Best Action platform helps our clients integrate multiple data sources, transforming raw data into personalized recommendations to sales, marketing and medical personnel which of course leads to deeper relationships with healthcare providers. In the quarter as top 10 pharma clients show IQVIA solution to completely transform their omnichannel commercial engagement model and to improve their go-to-market efficiency across multiple brands in eight countries by up to 30%. Another example in the quarter, we were selected by a top 20 pharma clients to optimize the delivery on brand content directly to healthcare providers for one of their respiratory brands. Our solution here connects digital and field sales channels to deliver highly personalized content that results in a high-quality seamless brand experience for healthcare providers. This will improve these clients’ digital engagement metrics by 3.5 times.

Another area where demand has been growing is pharmacovigilance. Our platform here combines a unique catalog of over 500,000 safety-specific terms and patterns with natural language processing to mine vast amounts of online data and to identify potential adverse events. In the quarter another top 10 pharma client selected our solution to reduce the risk of non-compliance and to increase data accuracy ultimately improving their efficiency by up to 75%. We are large pharma, our Commercial Solutions are also resonating with EBP clients, especially when they decide to commercialize their assets on their own following approval. For example, in the quarter we contracted with a leading EBP client to implement and manage their entire end-to-end commercial information management and to support their patient engagement and access programs. This includes data provisioning, master data management and data modeling. Our ability to offer these services on a fully integrated platform will allow for more streamlined implementation generating savings of up to 20% versus multi-vendor solutions. As you know IQVIA continues to be the global leader in real-world evidence. In the quarter a top 10 pharma awarded IQVIA a major project in medical affairs. The project leverages our AI and ML capabilities to provide near real-time disease insights across five different therapeutic areas. These insights will help identify new diagnoses and suboptimal treatments which will also improve patient outcomes. As you know our eCOA or electronic Clinical Outcome Assessment platform has won multiple awards for its breakthrough patient engagement innovations. The project includes a library of over 1,500 prebuilt clinical outcome assessments, which enables sponsors to deploy assessments to patients up to 14 weeks sooner than competitors’ offerings. This efficiency reduces the risks to study startup timelines and allows our clients to capture more feedback from patients ultimately amplifying the patient’s voice in real-time. The top five sponsors recently engaged IQVIA to couple this eCOA platform with our patient randomization tool, so that we eliminate redundant workflows, improve data accuracy and patient compliance thereby reducing site onboarding activities by an estimated 50%.

Finally, in the overall R&DS business, we continued our strong momentum delivering over $2.6 billion of total net new business in the quarter, including pass-throughs. The services bookings also remained at the historic high we have seen recently of over $1.9 billion. This resulted in the second quarter contracted net book to bill ratio of 1.34 including pass-throughs and 1.32 excluding pass-throughs. Over the last 12 months, our contracted net book to bill ratio was 1.32 both including and excluding pass-throughs. As you can see there continues to be strong positive momentum across the business and an unprecedented level of engagement with our clients across our portfolio of commercial and clinical businesses despite the broader environment.

I will now turn it over to Ron for more details on our financial performance.

Ron Bruehlman — Executive Vice President and Chief Financial Officer

Thanks, Ari, and good morning everyone. Let’s start by reviewing revenue. The second quarter revenue of $3,541 million grew 3% on a reported basis and 7.1% at constant currency. In the quarter COVID, related revenues were approximately $250 million, which was down about $300 million versus in the second quarter of 2021. In our base business that is excluding all COVID-related work from both this year and last organic growth at constant currency was 16%. Technology and Analytics Solutions revenue for the second quarter was $1,408 million, up 4.1% reported and 9.4% in constant currency. Now, excluding all COVID, related work organic growth at constant currency in Tech was 10%. Research and Development Solution’s second-quarter revenue of $1,950 million was up 3.1% reported and 6% at constant currency, and excluding all COVID-related work organic growth at constant currency and R&DS was 22%. Contract Sales and Medical Solutions or CSMS’s second-quarter revenue of $183 million declined 5.7% reported but grew 2.1% at constant currency. Excluding all COVID-related work, organic growth at constant currency in CSMS was 7%.

The first half revenue of $7,109 million grew 3.8% on a reported basis and 6.9% at constant currency. In our base business that is excluding all COVID-related work. Organic growth at constant currency for the first half was 14%. Technology and Analytics Solutions revenue for the first half was $2,847 million, up 5.4% reported and 9.6% at constant currency. Excluding all COVID-related work, organic growth at constant currency in Tech was 10% for the first half. R&D Solution’s first half revenue of $3,884 million was up 3.3% at actual FX rates and 5.3% at constant currency. Excluding all COVID-related work, organic growth at constant currency in R&DS was 19%. Finally, our Contract Sales and Medical Solutions or CSMS first half revenue of $378 million declined 2.3% reported and grew 3.9% at constant currency. Excluding all COVID-related work, organic growth at constant currency in CSMS was 6%.

Now let’s move down the P&L. Our adjusted EBITDA in the quarter was $800 million, representing a growth of 10.8% while the first-half adjusted EBITDA was $1,612 million, up 10% year-over-year. Second quarter GAAP net income was $256 million and GAAP diluted earnings per share were $1.34. For the first half, we had a GAAP net income of $581 million or $3.02 of earnings per diluted share. Adjusted net income was $466 million for the second quarter and adjusted diluted earnings per share grew 14.6% to $2.44. For the first half adjusted net income was $943 million or $4.91 per share. Now as Ari highlighted R&D Solutions delivered yet another strong quarter of new business. This graph that we’re showing here shows the growth of our backlog over the past few years at the actual currency rate and it demonstrates the sustained strength of our clinical business through the COVID pandemic.

Now you’ll recall that as our bookings reached record levels during the pandemic, many of you expressed concern about a looming so-called COVID clear and we told you then that our COVID-related bookings would be replaced by new programs that expand the breadth of our therapeutic area of expertise and in fact, that’s what happened. As of June 30, our contracted backlog stands at a record $25.6 billion, including pass-throughs that’s a 50% increase over about three years. The COVID contribution to our backlog, which peaked at 11% growing in 2021, it’s now approximately 6%.

Okay, let’s turn to the balance sheet as of June 30 cash and cash equivalents totaled $1,428 million and gross debt was $12,767 million resulting in net debt of $11,339 million. Our net leverage ratio, as of June 30 was 3.58 times the trailing 12-month adjusted EBITDA. Second quarter cash flow from operations was $329 million and capex was $161 million, resulting in a free cash flow of $168 million for the quarter. Now, this was somewhat lower than prior quarter mainly reflected the timing of cash collections, which we expect to normalize in the second half. You saw in the quarter that we are quite active in the market, repurchasing $590 million of our shares in this puts our year-to-date share repurchase activity just shy of $1 billion this leaves us with slightly over $1.5 billion of share repurchase authorization remaining under the current program.

Okay, moving to guidance. Our full-year 2022 revenue expectation at constant currency remains unchanged. On a reported basis the strengthening of the dollar since April is causing an incremental full-year revenue headwind from foreign currency translation of approximately $125 million based on rates as of this Monday, July 18, we’re updating our revenue guidance to reflect this. For the full year we now expect revenue to be between $14,400 million and $14,550 million which represents year-over-year growth of 7.4% to 8.5% at constant currency and 3.8% to 4.9% at actual FX rates. As a reminder, this equates the low to mid-teens organic growth at constant currency excluding COVID-related work.

Our projected revenue growth includes just over 150 basis points of contribution from M&A. Since FX fluctuations had a minimal impact on our profit our adjusted EBITDA guidance remains unchanged. We are tightening the guidance range here to between $3,345 million and $3,395 million which represents year-over-year growth of 10.7% to 12.3% and our adjusted diluted EPS guidance also remains unchanged. We are tightening the range here to between $10 and $10.20 which translates the year-over-year growth at 10.7% to 13%.

Our full-year 2022 guidance assumes that foreign currency rates as of July 18 continue for the balance of the year. Since issuing our initial guidance at our analyst and investor conference in November FX fluctuations have caused a full-year revenue headwind of over $400 million. Moving to our third quarter guidance, we expect revenue to be between $3,515 million and $3,565 million a growth of 8.4% to 9.8% on a constant currency basis and 3.7% to 5.1% on a reported basis. Excluding COVID-related work, we expect organic revenue growth at constant currency to be in the low to mid-teens in the third quarter. Adjusted EBITDA is expected to be between $805 million and $820 million, up 10.6% to 12.6% and adjusted diluted EPS is expected to be between $2.34 and $2.42 growing 7.8% to 11.5%.

So to summarize, we delivered a very strong second quarter. Our base business delivered mid-teens organic growth at constant currency excluding COVID-related work. Our R&DS business had another strong bookings quarter with over $2.6 billion of net new business. Contracted backlog at the end of the quarter is at a new record of $25.6 billion, up over 7% year-over-year. We repurchased nearly $600 million of our shares while maintaining our net leverage ratio of approximately 3.6 times trailing 12-month adjusted EBITDA and finally, we adjusted our revenue guidance to reflect changes in foreign exchange that held our earnings guidance unchanged.

And with that let me turn it back over to our operator for Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Sandy Draper from Guggenheim. Please go ahead, your line is open.

Sandy Draper — Guggenheim Securities — Analyst

Thanks very much and congratulations on a solid quarter in a tough environment, I guess I’m actually going to let other people ask about R&D Solutions, I’m sure there will be a lot of questions there. But my question Ari and Ron is on the TAS side is we’re not out of COVID, but certainly getting further past it and sort of trying to act in a more normal way. Either buying patterns or what people are focused on, changed it also was there sort of a certain focus during COVID as these are short-term tech solutions we need because trials are being shut down or whatever. We can’t get salespeople into doctor’s offices that is we’re coming out, if that’s the general trends persisting or are you seeing any shift and refocus on new areas on the tech side? Thanks.

Ari Bousbib — Chairman and Chief Executive Officer

Yeah. Thank you, Sandy and good morning to you. I’m going to stop answering your question by simply saying that absolutely none of those concerns, we haven’t seen any of that. We are very pleased with the continued growth of our TAS business, really across the board and you know that we like to think of our business in three buckets. The high-growth ones which is real world and technology and that represents, Mike we’re going to say what about 40%, only 5% of the total and that’s experiencing continued growth has been better during COVID at all and continue to sell us through, to sell-through at the same pace then we have the kind of labor based consulting primary market research analytics business which grows mid to high-single digits and that’s been very strong through COVID and continues to be strong, essentially at the same pace and that’s about…

Mike Fedock — Senior Vice President, Financial Planning and Analysis

25% or so.

Ari Bousbib — Chairman and Chief Executive Officer

25% approximately. So the last balance the 30% is basically our historic IMS data business, and that’s kind of flattish to up 1% or 2% quarter-in quarter-out, and it also has been essentially flat in terms of its growth and through the COVID crisis. So as Ron mentioned organic constant currency revenue growth for TAS excluding COVID was 10% in the quarter and also 10% for the first half. So again, really we’re not seeing anything at all that’s changed versus the pandemic peak or before the pandemic peak, continued strong momentum. Thank you, Sandy.

Operator

Our next question comes from Eric Coldwell from Baird. Please go ahead, your line is open.

Eric Coldwell — Baird — Analyst

Thank you. Good morning. I wanted to hit on capital structure with the obvious comments about looking at the potential for a recession, rising interest rates, et cetera. A number of companies have changed their capital allocation and capital structure strategies. I’m curious if you could talk about what you’re doing on those fronts. Maybe discuss any terms maturities or issues with the various fixation instruments you have on your variable rate debt because I do believe the majority of your debt is effectively fixed at this point and then what is embedded in your interest rate assumptions for the year and how much has ’22 guidance in total been impacted from your first guidance to current guidance in relation to the interest rate increases that we’ve seen so far. I know that’s a lot, but…

Ari Bousbib — Chairman and Chief Executive Officer

No, you know. I wouldn’t expect less from you, Eric. You asked one question and you managed to pack 10 questions in one. So I think it’s obviously of timing…

Eric Coldwell — Baird — Analyst

These comments, right.

Ari Bousbib — Chairman and Chief Executive Officer

It’s a topical good question obviously and you can imagine, we are looking at the broader environment, the rate. You saw the ECB bumped up 50 basis points this morning and we do have some euro debt, as you know. Obviously, look there is a point at which those changes cross certain thresholds and it does have an impact on our capital structure and we are modeling all of those and making different scenarios, as to how we will change or not our capital allocation strategy. For now, it remains what it was. I’m going to ask Ron to give you more detail and address the specifics of your question. Ron?

Ron Bruehlman — Executive Vice President and Chief Financial Officer

Yeah, Eric. To your specific question, I think you would ask about our, in absence about whether our debt and how much of our debt is fixed rate versus variable rate, so how much is affected going forward and I know this is of interest to their group in any event, about 45% of our debt is fixed rate just shy 60% is fixed with swaps. We did have a euro for that if fixed even more of our debt up until recently that we’re about at the floor now with the recent ECB decision.

Ari Bousbib — Chairman and Chief Executive Officer

Up to today, it was like…

Ron Bruehlman — Executive Vice President and Chief Financial Officer

75% fixed, but going forward, it will be more like just shy of 60% fixed and you would ask about what our guidance assumes and we pretty much followed with the market consensus there in the U.S. about assuming a couple of 75 basis point increases in the U.S. in July and September and 25 basis point increases in the fourth quarter two times and for the euro, we have a series of increases, smaller increases assumed out through the balance of the year totaling just slightly over 100 basis points baked into our numbers, and that’s pretty much in line with the market consensus right now. Now you asked also about how much as interest expense. The increase in rates affected our interest expense assumptions since November I guess when we put our initial guidance out or I’ll have to go back and look at that. It’s obviously had an impact, not so much in the first half of the year, but more in the second half of the year. Obviously, as the rate increases or the pace of rate increase have been kind of back-end loaded in the year, but we’ll have to come back with an answer to that unless net, as handy.

Mike Fedock — Senior Vice President, Financial Planning and Analysis

Yeah, I mean right now, we’re thinking it’s somewhere between $50 million to $75 million of that same interest but you have seen that we’ve been able to hold the EPS numbers. So we’ve had some, some favorability in terms of our assumptions on share count and all of that below the line that it’s kind of help us manage that a little bit better.

Operator

Our next question comes from Elizabeth Anderson from Evercore. Please go ahead, your line is open.

Elizabeth Anderson — Evercore — Analyst

Hi guys, thanks so much for the question. One sort of two, maybe I’ll take Eric’s and have a combined combo. One if you could talk about the assumptions regarding China specifically embedded in your 3Q guidance and then for looking at the guidance that you gave for 3Q, it implies a nice EBITDA step up in the fourth quarter, you guys obviously did a nice job managing the SG&A line, in particular, this quarter. So I just wanted to understand there if there was something specific to call out that was driving sort of that step-up in EBITDA there or what the explanation there? Thanks.

Ari Bousbib — Chairman and Chief Executive Officer

Yeah well, thanks Elizabeth these are two very distinct questions, so let me start with the second one, the fourth quarter. Look the fourth quarter there is some level of seasonality in our business historically has always been the case both on the commercial side and on the clinical side and the fourth quarter traditionally is always the strongest one. You’re specifically alluding to EBITDA and I would point that if you go back and look in general, our margins in the fourth quarter are higher than let’s say, sequentially in the third quarter for example, and in general, it’s a lot of points higher, maybe a little less than that and maybe a little bit more than that depending on the years and that is because on the commercial side, it’s the end of the year, a lot of the budget tends to be spends and a lot of purchases get done last minute and obviously, both our clients want to do that before they close the year and our sales force pushes as always you know to make the quarter and so on so forth for more sales at the end of the quarter and at the end of the year. So it is that kind of momentum on the commercial side, whether it’s data or analytics or just across the board on our commercial portfolio. So that’s always the case year-in year-out and this year is truly a little bit stronger than might have been the case in prior years, but not inconsistent. On the clinical side, it’s all driven by the execution of the backlog and when and how it converts. So that’s three, we will roll up project by project of when we anticipate the work will be done and cost incurred, and revenue recognized and we do that bottom up and that’s where it comes out again in general, fourth quarter tends to be stronger in the clinical side as well historically, and that is probably because people want to try to do it before the end of the year. So that’s again not unusual. I agree that sequentially a bit more than prior years, again not inconsistent. Ron do you want to say something?

Ron Bruehlman — Executive Vice President and Chief Financial Officer

Yeah. Just to answer your question on China and the impact there. The modest impact in Q2, we’re assuming continued modest impact in Q3, mainly around our lab business and clinical trials as not all the sites are open in areas where they’re shutdowns or restrictions. The only caution I would say there, it’s just that none of us knows exactly what’s going to happen in China where future lockdowns might happen and so forth. But right now we’re not expecting a big impact.

Ari Bousbib — Chairman and Chief Executive Officer

Yeah, I mean it was a mark on China’s very mark [Phonetic] less than 3% of our total revenue. We have a strong presence there relative to our competitors we are doing very well. On the clinical side is where the impact is, remember, on the commercial side, we have exactly zero impact from the lockdowns that was the case during the pandemic at the peak of it and it continues to be the case today. On the clinical side, obviously, we issued accessing sites and when it’s close it’s close but we have learned during the pandemic, how to work with that and to remote visits et cetera and so far, it is the impact from the China lockdown, which have been extensive as you know in Shanghai and Nanjing and some other areas. We have been able to manage through that and whatever financial impact was essentially absorbed in our numbers. Thank you, Elizabeth.

Operator

Our next question comes from Derik De Bruin from Bank of America. Please go ahead, your line is open.

Derik De Bruin — Bank of America — Analyst

Hi, good morning and thank you for taking my question. I’ve gotten a bunch of questions from investors and all along the lines of, I think people appreciate that our D&S business is very resilient during the past recessions. But you’re absolutely right, I mean having done the Quintiles IPO, I remember the growth rates back then. But I think the question I’ve gotten some on the TAS business and just like how that goes particularly on the consulting side of the business and any sort of potential impacts from recession there. Thank you.

Ari Bousbib — Chairman and Chief Executive Officer

Yeah. Well, thank you for the question. Look, the resilience that’s obvious on the clinical side and it’s aboard by the history, our long-term history as I mentioned in my introductory remarks. On the commercial side, you are correct. I mean I guess you pointed to consulting because consulting is usually the most discretionary type of spending that our clients, so far, not one I would say not one, not one nothing we are looking, I am asking every day. What is going on in the business in areas like I mean and I think the regional indication whatsoever that somehow people are protecting [Phonetic] their budgets on the commercial side. Bear in mind the last big recession we had, along with the housing prices in the year-end of 2008, 2009, and 2010, the commercial business was affected really by different factors that were very large pharma consolidations and on the commercial side, when you have a large pharma merger, but you go from two clients to one client so automatically affects your revenues. Not so much on the clinical side, generally, if you are in the two pharma companies that merge all in the same therapy, you know the authorities won’t let you merge and generally when pharma merge they have complementary therapies and the clinical trials continue. So, yes, those labs that pharma consolidation wave that took place at the time, a lot of were driven by tax considerations affected our commercial business. We are not seeing any of that so far. Secondly, there was a unique phenomenon then, which was there was a bit unusual large number of patent expiry and those LOEs were sort of accelerating in the 2008 to 2012 timeframe and there was a so-called patent cliff and that it was coupled with an unusually low number of new product approvals. The pharma commercial business is largely driven by the net all new approvals versus a patent loss of exclusivity and usually, that’s a net positive and at that time there were these unusual circumstances, when we had the trough in approvals and peak in loss of exclusivity, and that was a reverse trend. But today we don’t see that, we know the pipeline. We know the molecules in the pipe that are supposed to be approved and the expiries and so on, and we see none of that anytime soon. So we are not concerned and we feel that the commercial business is fairly well insulated as well. Thank you.

Operator

Our next question comes from David Windley from Jefferies. Please go ahead, your line is open.

David Windley — Jefferies — Analyst

Hi, thanks. Good morning, thanks for taking my question. Ari, you’ve touched on China and Ukraine very effectively. The R&DS business seems to be navigating through that really, really well. Some of the things that we’ve heard are that in addition to those acute issues in certain parts of the world that we have kind of general staff burnout like we have in the broader healthcare system that sites are overwhelmed and site level turnover and things like that are affecting the capacity of the site network that you might be using. I wondered if, again, you guys seem to be navigating that really well, and so I wondered if you could talk about how you are supporting the sites to be able to continue to get your trials processed in an environment where the global capacity for sites somewhat affected?

Ari Bousbib — Chairman and Chief Executive Officer

Yeah and I assume you mean globally, not just Russia, Ukraine. I mean, look, Russia, Ukraine, the first part of your question we address that as you said, quite effectively, that doesn’t mean that it was easy or that we didn’t consume an enormous amount of management attention and work. But thankfully, we are able to reallocate resources and clinical work to other sites. Now this itself does not add incrementally to the existing burden of the existing sites. Your second point is more I think it’s extremely valid. It is true we have a lot of work to execute. I mentioned many times that this is our single most important operational challenge, and that is execution and that requires people and people recruiting retention and development is our single most important operational challenge in the current environment. I think I’ve mentioned before and I see the trend continuing the high attrition levels we’ve seen are somewhat plateauing and diminishing that may have something to do with perhaps a more recessionary environment and people are less likely to jump ship. Also, we have to do with the fact that we really have a strong book of business and we are hopefully, I want to have a possibly more exciting work environment and more exciting company to be part of. So we’re doing our part to try to retain our people. The sites themselves, I do, we’re not seeing I’m sure if you ask specifically to you, I would yes, I’m burnt out. We are asking people to work more and to be more productive and so on yes. But again that’s just with the nature of the type of work that we do, we are not seeing any execution difficulties as a result of people being ‘burned out,’ we’re not. When people are burned out they are adequate or they ask to be allocated to something else and that’s what we tried to do. We’ve always tried to prioritize the well-being of our employees and during the pandemic that has accelerated. I think I may or may not have mentioned it before but even from myself on down whereas we’ve got, we’ve had a dramatic change in tone and how we address issues with employees, work flexibility. We do live in a different environment where you know the consideration for employees and valued employees and skilled employees to remain a company involved more than just work and compensation. And so we are doing our part to address that. I mean, we will be 90,000 plus people by the end of the year and we continue to hire. I mean, this year we will have hired by the end of the year, more than 25,000 people just to replace attrition and to support the growth. We are really a hiring machine. We dramatically, dramatically improve the level of sophistication of our human resource management functions around the world and the type of analytics and artificial guidance tools we use to track our employee’s workload and are really very unprecedented. So it is an issue, we are managing it. You wanted to add something, Mike?

Mike Fedock — Senior Vice President, Financial Planning and Analysis

Yeah. I think Dave is just on the color on the site. I think one thing we’ve seen is sites engaging with our on-site support offering we have within R&DS so they’re reaching out to us to try to system, so I’m not going to comment there sites burned our or not. But clearly, they have a lot of work to do and we’re providing a service to help them execute that work, which is great.

Operator

Our next question comes from Jack Meehan from Nephron Research. Please go ahead, your line is open.

Jack Meehan — Nephron Research — Analyst

Thank you. Good morning. Ari, I was hoping you could share more perspectives on the R&D environment just given your RFP commentary. Just looking back we had two banner years of funding in 2020 and 2021. Things have obviously slowed down here in the public markets in 2022. As you look at the things you’re bidding on now, do you have a sense for when they were funded? I guess I’m just trying to get a sense of where do you think we are kind of in this funding cycle and it’s showing up for a late-stage work?

Ari Bousbib — Chairman and Chief Executive Officer

Okay, well thank you and good morning. This is obviously a good question. Again, as I mentioned before for the commercial side I do the same on the clinical side. I am almost daily asking a number of people to monitor activity again, I wouldn’t be saying this if, I have a level of confidence that so far as to late last night I can assure you there simply is no sign that the pipeline, very early indicator is slowing down. The RFP volume is slowing down, and it is across the board in every segment that the second quarter was another quarter of record bookings. I can tell you, I think the awards volumes was the second highest quarter ever. So we just not seeing it. I know there are concerns and it is true that the volume of funding has gone down. It’s just not translating into the slowdown in either the strength and growth of our pipeline has never been as large record growth and volume both dollars and numbers or the RFP volume or the awards or the bookings. Now you are asking, a very, very pertinent question which is the client whether EBP, midsize, large pharma, war the requesting proposals or in the pipeline, when did they get their funding and you are absolutely correct. It takes maybe three years, I want to say before the funding raised today is actually spent. So a lot of work is going to be disbursed by these companies that have booked, we’ve book business [Phonetic] this quarter. This cash that was raised in prior periods. So you want to try to say well following is low now and therefore two years, three years from now maybe booking should go down. Is that just not the experience historically again, our business is not dependent on secondary public offerings from pre-commercial EBP is just not and secondly, a lot of things are going to happen over the next few years, where that’s the benefit of scale, remember we are all over the world, we have the largest the volume of business, any CRO in the world we not exposed to one client, two clients, 10 clients segment and other segments and geography at any given point in time, we are working on well over 2,500 trials. I mean, we are a big ship and like every big ship its very hard. We are not going to see from us 50% growth in the quarter, but on the other hand, the converse is also never going to happen. I mean we are a very big ship and these disturbances in a long-cycle business do not affect the direction of our business and other comments you want to make.

Ron Bruehlman — Executive Vice President and Chief Financial Officer

No, you covered it. Good. Next question.

Operator

Our next question comes from Shlomo Rosenbaum from Stifel. Please go ahead, your line is open.

Analyst — — Analyst

Hi. This is Adam on for Shlomo. What was the difference in FX headwind for 2022 the company facing today versus what are expecting on the first quarter earnings call?

Mike Fedock — Senior Vice President, Financial Planning and Analysis

It was $145 million of the FX headwind on revenue on the full year versus what we guided in April.

Jack Meehan — Nephron Research — Analyst

The guidance, you mean the second half? What is the quotient?

Mike Fedock — Senior Vice President, Financial Planning and Analysis

Yeah towards the FX headwinds. So the FX headwind on our full-year guidance it was $125 million, 90 basis points worse than last quarter.

Jack Meehan — Nephron Research — Analyst

Thank you.

Operator

Our next question comes from Tejas Savant from Morgan Stanley. Please go ahead, your line is open.

Tejas Savant — Morgan Stanley — Analyst

Hey, good morning. Just a couple of quick follow-ups here and apologies for beating the R&D backlog to the SDR [Phonetic] again, but we heard some estimates of up to a sort of these pre-commercial companies possibly needing to raise capital at some point in 2023, does that sort of at the margin change your calculus at all in terms of who you choose to work with on a go-forward basis or do you have perhaps higher risk adjustment triggers to your backlog as some of these companies get closer to meeting a funding raise and then if you could also comment separately on the M&A landscape and how you’re sort of thinking about that. I know last quarter you had said, sort of repo’s being the near-term priority, but just curious as to your take on asset valuations?

Ari Bousbib — Chairman and Chief Executive Officer

Well, okay, Tejas thank you very much and good morning. Again, your question on the pre-commercial EBP needing more funding and having issues is a good theoretical question and correct one for the industry, we are just not exposed to those folks. We have very little of our backlog that’s with pre-commercial EBP. Those pre-commercial EBP have been fully invested because that’s our process wrong predating the current decline in biotech funding. We never take on a molecule that doesn’t have very solid science behind it that our scientific experts have vested and believe in that in of itself is a guarantee that the science will be developed and that the clinical trials will go on independently of the funding because worst case scenario that science will be purchased by large pharma, you are seeing it today. You’re seeing a number of large pharma companies buying out pre-commercial EBP because those pre-commercial EBPs that may be running into funding issues but the science is good. Therefore, the trial will continue, no matter what, so that’s number one. Number 2, we are not going to take into our backlog, a company that doesn’t have funding. It just doesn’t happen for us, we do a thorough financial wedding of the project before we put it into our backlog. So we don’t have that exposure, our business model is different than perhaps some other smaller CROs that essentially team up with pre-commercial EBP and go around to raise funding and if got a good backlog, we don’t do that. So this is the reason why we’re not seeing anything different to again neither the pipeline nor the RFP volume, nor the awards, nor the bookings. Again I mean, I’ve done a few [Phonetic] of numbers, I’m looking at a very fine level of granularity here. If you look at oncology if we look at our qualified pipeline we achieved which is that duty low with a very, very fine come to our oncology pipeline there are lots of pre-commercial EBP and that’s I am speaking about the qualified pipeline that’s really high probability. It up in the quarter 17% year-over-year. You look at internal medicine know where is a lot of way disease 14% up the qualified pipeline, you look at the pipeline in general for EBP. The pipeline is 18% up year-over-year in the quarter. I mean I’m looking at numbers that are all literally record numbers both in growth and in dollars and volume. So I wouldn’t be speaking confidently if I didn’t have any numbers and I could have woke up tomorrow and the world is falling apart, I don’t know that’s if I believe that I wouldn’t cross the street. I’m moving at numbers. The rest is noise. You have another question. What was the second question?

Tejas Savant — Morgan Stanley — Analyst

It was on M&A and just prioritizing vis-a-vis. Thank you, Ari.

Ari Bousbib — Chairman and Chief Executive Officer

Yeah. M&A. Well, as you saw we purchased almost $1 billion in the first half of the year of shares. We did very little M&A, not because we didn’t want to. At any given point in time, we’ve always had a lot, I mean a lot of hundreds of potential acquisitions, small need draws and that’s our job. We’ve got corporate development activities. We really execute on those whether it’s for strategic reasons or for financial reasons, sometimes as you said valuations have been a little bit out of whack. It always takes time for those valuation expectations to come down and adjust to public market valuations and the environment. I think we’re seeing a little bit more of that, so perhaps we will have more opportunities to execute in the second half. I just don’t know. Acquisitions are binary. But we don’t have, the acquisition makes sense, it fits in our strategy, and there is nothing big here or out of whack with anything that we’ve done in the past. You know what we do, we are very disciplined and if featuring our strategy on the commercial side, or clinical side then we’ll go ahead and do it if the valuation makes sense. Thank you for your question.

Operator

Our last question will come from John Sourbeer from UBS. Please go ahead, your line is open.

John Sourbeer — UBS — Analyst

Hi, can you hear me?

Ari Bousbib — Chairman and Chief Executive Officer

Yes, we can hear you.

John Sourbeer — UBS — Analyst

Great. So I know it’s a little early to comment on the ’23 guidance. But when you think about the headlines from biotech funding and then, on the other hand, the company has $1 billion in COVID RDS headwinds this year, potentially easing comps for next year. Do you think that the ’23 RDS growth is going to be in line with that long-term low double-digit guidance provided last year at the Investor Day?

Ari Bousbib — Chairman and Chief Executive Officer

Okay, let me give you ’23 guidance, I’m just kidding. I don’t know, you know, it’s a little bit early and as we discussed over the course of the past hour the lives and macro dynamics and so on so forth. We are not going to start eventually. There is basically nothing different today from what we told you at the end of last year in the underlying dynamics and fundamentals of our businesses. Strategically or operation what’s changed the financial environment and the dynamics of risk because of Russia and Ukraine. Because of the energy prices and so on and so forth but that doesn’t affect us as we said over and over again. The underlying dynamics and fundamentals of our business and as I see here today those are the same as they were when we gave you long-term guidance back in November. Thank you for your question.

Operator

We are out of time for questions today. Mr.Childs, I turn the call back over to you.

Nick Childs — Senior Vice President, Investor Relations and Corporate Communications

Okay, thank you everyone for joining us today. We look forward to talking to you after the call and on our next call at the end of the third quarter, so if anyone has any other follow-up questions, we’ll be happy to take them. Thank you all for joining. (Operator Closing Remarks)

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