IQVIA Holdings, Inc. (NYSE: IQV) Q4 2021 earnings call dated Feb. 15, 2022
Corporate Participants:
Nicholas 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
Analysts:
Jack Meehan — Nephron Research — Analyst
Eric Coldwell — Baird — Analyst
Tycho Peterson — J.P. Morgan — Analyst
John Kreger — William Blair — Analyst
Shlomo Rosenbaum — Stifel Nicolaus — Analyst
Patrick Donnelly — Citi — Analyst
Presentation:
Operator
Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Thank you.
I would 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.
Nicholas Childs — Senior Vice President, Investor Relations and Corporate Communications
Thank you, and good morning, everyone. Thank you for joining our fourth quarter 2021 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 Brian 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 will 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 as 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 today for our fourth quarter results. It was great to see many of you in person at our Analyst and Investor Conference in November. And as you will recall, we shared our expectations that we would meet or exceed our three-year vision ’22 targets. We also laid out our plans to make 2022 yet another inflection point in our growth trajectory and further accelerate the company’s growth rate in the next three Phase — three-year phase of our journey to 2025.
The team highlighted the power of connected intelligence, which brings together IQVIA differentiated capabilities and drives our leadership position in the clinical and commercial markets. This underpins our new ’20 by ’25 strategy, which alludes to our plans to achieve at least $20 million of revenue by 2025. We are excited about this next phase of growth for IQVIA and we are busy refining our strategies and action plans, and you will hear more value as the year progresses.
Two years — two weeks ago, IQVIA was named to Fortune’s list of the world’s most admired companies for the fifth consecutive year. Importantly, we earned a first place ranking within the healthcare pharmacy and other services category for the first time. We ranked number one in the categories of innovation, capital deployments, global competitiveness, quality of product and services and longer-term investment value. I want to thank our nearly 80,000 employees worldwide for this recognition is a tribute to their innovation and drive.
Turning now to our results. We ended 2021 on a high note despite COVID-19s continued impact on many parts of the world. We delivered robust top and bottom line growth in the quarter, which as you know was against a much tougher year-over-year comparison than earlier in the year. These results reinforce our confidence that we will achieve our 2022 guidance, and Of course, it sets us up well to meet our ambitious 20 by 25 target.
Let’s review the fourth quarter. Revenue for the fourth quarter grew 10.2% on a reported basis and 11.6% at constant currency. The $62 million beat above the mid point of our guidance range was driven by stronger operational performance across all three segments, as well as higher pass-throughs, partially offset by FX headwinds. Compared to prior year and excluding COVID related work, our core businesses, meaning R&DS grew mid-teens at constant currency on an organic basis. Ron will provide a lot more detail in his remarks, including additional COVID adjusted numbers for each segment.
Fourth quarter adjusted EBITDA grew 12.7%, reflecting our revenue growth as well as ongoing productivity initiatives. The $27 million beat above the midpoint of our guidance range was entirely due to our operational performance. Fourth quarter adjusted diluted EPS of $2.55 grew 20.9%, that was $0.13 above the midpoint of our guidance with the majority of the beat coming from the adjusted EBITDA drop through.
Let me now provide an update on the business. On the commercial side of the business, it was a strong year for new molecules and launches, as the industry continues its recovery from the COVID-19 pandemic disruption. This year, 50 new molecules were approved by the FDA and 72 new commercial launches took place. IQVIA supported nearly 80% of launches by top 20 pharma, and approximately 60% of all launches. These highlights our scale globally and across all customer segments in applying advanced technology and analytics capabilities to enhance launch planning engagements and measurement.
Overall, we’ve seen significant momentum and continued demand for our technology solutions. There are now over 3,000 clients who are — who have adopted one or more of our technology platforms, including human data science cloud, orchestrated analytics, E360, omnichannel navigator engage, and of course, orchestrated customer engagement or OCE. In fact, the footprint of our OCE platform itself has continued to grow with over 350 clients having adopted one or more modules on the platform since launch.
Early in 2021, we launched IQVIA Next Best Action, which is an AI-driven omnichannel customer engagement decision engine. Two top 20 pharma clients have successfully rolled out this intelligence engine to orchestrate customer engagements in over 30 countries and across more than 40 brands each. Two other top 20 pharma are currently in the implementation phase. Another highlight in our TAS business has been the success of DMD marketing solutions, a leading provider of data and digital marketing solutions that help brands deliver personalized digital content to healthcare professionals.
In the quarter, we entered into an enterprise agreement with a top 10 pharma clients to utilize DMDs advanced analytic capabilities to power omnichannel engagements across all eight of their brand franchises. To date, 18 of the top 20 have adopted at least one of DMD solutions. We are very excited for the future growth of this business within IQVIA.
Real world evidence, another highlight of the year, IQVIA continues to play a leading role in the use of secondary data to answer key questions for life science customers. In the fourth quarter, we won two launch post authorization safety studies in an autoimmune area with the top 10 pharma. These studies using existing healthcare data to observe patients over a period of 10 years to better understand long-term effects of the treatment. We were also recently awarded a disease registry project for an upcoming novel gene therapy. Here, we will recruit a broad population of patients with a specific disease to understand how they are currently managing clinical practice. This information is vital to our life science sponsors to inform the design of subsequent clinical trials so they can target patient groups with the highest unmet need.
Moving to critical technology, we saw increased adoption of our orchestrated clinical trial, OCT platform, which supports trial planning, site management, patient engagement, trial management and clinical data analytics. During the year, we added 90 new OCT clients, bringing the total to over 350 clients who have adopted one or more modules within our clinical technology suite since launch, including all of the top 10 and 18 of the top 20.
Within OCT’s digital patient suite, this year we secured three preferred provider partnerships with top 30 pharmaceutical clients to provide our interactive response technology, IRT capabilities, to support site operations across our entire clinical trial portfolios. These technology facilitates patient randomization to ensure protocol adherence and streamlines site supply chain management to reduce drug wastage and to drive significant cost reductions. Our solution was awarded top ranking by industry leaders in a recent ISR report for randomization and trial supply management capabilities.
We also saw increased demand for our industry-leading decentralized clinical trial offering. Approximately one-third of our active full service clinical trials incorporates one or more of our DCT technology or services capabilities and we expect these to continue to grow as the need for these capabilities in complex studies becomes more evident. For example, we are currently executing a full service trial for treatment of multiple system atrophy, a severe degenerative neurological disorder affecting the body’s involuntary functions. We are deploying our full suite of capabilities, including up eCOA, eConsent and home research nurses on this study to significantly reduce the travel burden on these patients who have significant mobility challenges.
Finally, our overall R&DS business continues to build on its strong momentum with over $2.4 billion of net new business, including pass-throughs, and it set a record for quarterly service bookings, achieving over $1.9 billion of service bookings for the first time ever. This resulted in a fourth quarter contracted net book-to-bill ratio of 1.36 [Phonetic] excluding pass-throughs and 124 [Phonetic] including pass-throughs.
For the calendar year, we delivered over $10 billion of total net new bookings for the first time ever, an increase of 14.6% compared to 2020. This led to an LTM contracted net book-to-bill ratio of 1.35, excluding pass-throughs and 1.34 including pass-throughs. Our contracted backlog in R&DS including pass-throughs grew 10.2% year-over-year to a record $24.8 billion as of December 31, 2021.
And now, I will 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. Fourth quarter revenue of $3,636 million grew 10.2% on a reported basis and 11.6% at constant currency. You’ll recall that last year’s fourth quarter was a much tougher comparison than earlier quarters as we picked up incremental demand for mega vaccine studies in R&DS in government-related COVID work within TAS. Also, the core business began to rebound from the effects of COVID-19.
In this year’s fourth quarter, COVID-related revenues were approximately $325 million, down about 25% versus the fourth quarter of 2020. In our base business, that is excluding all COVID-related work from both 2021 and 2020, organic growth at constant currency was mid-teens. Technology and Analytics Solutions revenue for the fourth quarter was $1, 496 million, up 5% reported and 6.6% at constant currency. Year-over-year, TAS experienced just over 400 basis points of headwind due to a step down in COVID-related work. Excluding all COVID-related work, organic growth at constant currency in TAS was high-single digits.
R&D Solutions fourth quarter revenue of $1,944 million was up 15.4% at actual FX rates and 16.3% at constant currency. Excluding all COVID-related work, organic growth at constant currency and R&DS was approximately 25%. Contract Sales and Medical Solutions or CSMS fourth quarter revenue of $196 million grew 3.7% reported and 7.4% at constant currency. Excluding all COVID-related work, organic growth at constant currency and CSMS was low single digit.
For the full year, revenue was $13, 874 million, growing at 22.1% reported and 21.1% at constant currency. COVID-related revenues in 2021 were approximately $1.8 billion, with just under 80% of that attributable to R&DS, about 20% due to TAS and the remainder in CSMS. The incremental COVID-related revenues in 2021 versus 2020 accounted for approximately half of our growth in 2021.
Full year Technology and Analytics Solutions revenue was $5, 534 million, up 13.9% reported and 12.4% at constant currency. Excluding COVID-related work, organic growth at constant currency and TAS was high single-digit. Full year revenue in R&D Solutions with $7, 556 million, growing at 312% reported and 30.4% at constant currency. Excluding COVID-related work, R&DS organic growth at constant currency for both total revenue and services revenue was low double-digit. Full year CSMS revenue was $784 million, representing 5.8% growth on a reported basis and 5.7% at constant currency and excluding COVID-related work, organic growth at constant currency and CSMS was low single digit.
Now moving down to P&L, adjusted EBITDA was $828 million for the fourth quarter, which was 12.7% growth on a reported basis. Full year adjusted EBITDA was $3,022 million, up 26.8% year-over-year on a reported basis. Fourth quarter GAAP net income was $318 million and GAAP diluted earnings per share was $1.63. Full year GAAP net income was $966 million or $4.95 of earnings per diluted share. Adjusted net income was $496 million for the fourth quarter, up 20.7% year-over-year and adjusted diluted earnings per share grew 20.9% to $2.55. For the full year, adjusted net income was $1, 760 million or $9.03 per share, up 41%.
Now, as already reviewed, R&D Solutions delivered another outstanding quarter of net new business, R&DS backlog now stands at a record $24.8 billion, an increase of 10.2% year-over-year. Full year 2021 net new bookings including pass-throughs road over 10 — rose to over $10 billion for the first time, that’s 14.6% growth compared to 2020.
Okay, lets now move to the balance sheet now. Our cash flow was again quite strong in the quarter. Cash flow from operations was $692 million and capex was $184 million, which resulted in free cash flow of $508 million. This brought our free cash flow for the full year to a record $2.3 billion, up 17% [Phonetic] versus the prior year. At December 31, cash and cash equivalents totaled $1, 366 million and gross debt was $12,125 million, resulting in net debt of $10, 759 million. Our net leverage ratio at December 31 was 3.5 6 times trailing 12 month adjusted EBITDA.
Now it’s worth highlighting that our improved free cash flow over the last two years allowed us to deploy approximately $4.5 billion of capital to internal investments, acquisitions and share repurchase, while at the same time, we were able to reduce our net leverage ratio from a high of 4.8 times in Q2 2020, which you’ll recall was the height of the pandemic to nearly 3.5 times. And in doing this, we achieved our vision ’22 net leverage ratio target of 3.5 times to 4 times a full year early.
In the quarter, we repurchased $174 million of our shares, which resulted in full year share repurchase of $395 million, and we ended the year with 195 [Phonetic] million fully diluted shares outstanding and $523 million of share repurchase authorization remaining under our existing program. Now, last week, our Board of Directors approved a $2 billion increase to our share repurchase authorization, which increases our remaining authorization to just over $2.5 billion.
Now let’s turn to the guidance. As you saw, we are reaffirming the full year 2022 revenue guidance that we issued at our Analyst and Investor Conference in November and in maintaining this guidance, we actually absorbed a $70 million revenue headwind from FX, since we initially guided in November. Now additionally, we’re raising our full year 2022 profit guidance versus what — versus what we provided to you in November. So, to summarize, the overall guidance for the full year we expect revenue to be between $14, 700 million and $15 billion, which represents year-over-year growth of 7.1% to 9.2% at constant currency and 6% to 8.1% on a reported basis compared to 2020. Now, we now expect adjusted EBITDA to be between $3,330 million and $3, 405 million, representing year-over-year growth of 10.2% to 12.7%. And we also now expect adjusted diluted EPS to be between $9.95 and $10.25, which represents year-over-year growth of 10.2% to 13.5%.
Now our full year 2022 guidance assumes that December 31, 2021 foreign currency exchange rates will remain in effect for the balance of the year. Now compared to the prior year, I should mention that FX is now a headwind of 110 basis points to our full year revenue growth. And our projected revenue growth includes a little bit over 100 basis points of contribution from M&A activity.
Now in our Analyst and Investor Conference in November we told you to anticipate that our COVID-related revenue will step down by approximately $1 billion in 2022, but we’ll more than compensate for that headwind with strong growth in our base business and let me give you some additional detail around this and I think will be helpful. Excluding COVID-related revenue, the FX headwind and the contribution of acquisitions, our total company revenue guidance implies organic growth at constant currency in the low-to-mid-teens. At the segment level, we anticipate full year Technology and Analytics Solutions revenue growth of between 5% and 7%. Excluding COVID-related work, we expect organic revenue growth at constant currency in TAS’s to be in the high single digits.
Research and Development Solutions revenue growth is expected to be between 8% and 10%. Excluding COVID-related work, we expect organic revenue growth at constant currency in R&DS to be in the upper teens. And finally, Contract Sales and Medical Solutions revenue was anticipated to be down about 2%, but excluding COVID-related work, we expect organic revenue growth at constant currency and CSMS to be in the low single digits.
Let’s move to the first quarter now. As you all know, the first quarter of last year marked a continued rebound in our base business after the 2020 pandemic-related decline. In addition, Q1 and Q2 of last year represented our peak COVID-related revenues. And as a result of this, the first half of the year will have the most challenging year-over-year compares. For the first quarter, our revenue was expected to be between $3,515 million and $3, 575 million, representing growth of 4.8% to 6.6% on a constant currency basis and 3.1% to 4.9% or a reported basis. Now excluding COVID-related work, we expect organic revenue growth at constant currency to be in the mid teens. Adjusted EBITDA is expected to be between $800 million and $815 million, up 7.5% to 9.5%. And finally, adjusted diluted EPS is expected to be between $2.40 and $2 2.46, growing 10.1% to 12.8%.
So, to summarize, we delivered very strong fourth quarter results on both the top and bottom line against what was also a very strong fourth quarter of 2020. R&DS recorded its largest-ever quarter of service bookings and for the first time had over $10 billion of total net new bookings in a year. Our contracted backlog improved to a record of nearly $25 billion, up over 10% year-over-year, and we delivered another strong quarter of free cash flow, bringing the full year to a record $2.3 billion. We closed 2021 with net leverage of 3.6 times trailing 12-month adjusted EBITDA. Our Board approved a $2 billion increase to our share repurchase authorization. And finally, we are reaffirming the full year 2022 guidance that we provided in November to revenue and we’re raising our adjusted EBITDA and adjusted diluted EPS guidance.
And with that, let me turn it back over to the operator for questions-and-answers.
Questions and Answers:
Operator
[Operator Instructions] Your first question is from Jack Meehan with Nephron Research.
Jack Meehan — Nephron Research — Analyst
Thank you, and good morning. Wanted to talk a little bit more about COVID and appreciate all the color you gave, Ron, during the prepared remarks on this. So at the Analyst Day, you talked about $1billion of COVID tapering this year, there was 1.8 [Phonetic] in 2021. Can you talk about the balance of the COVID work and just how you feel about the duration of COVID kind of over the next few years? Do you think there is some aspect that might proved stickier in TAS or some ongoing work in R&DS? Just any color there would be great.
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Yeah, look, we don’t have a balance of COVID work obviously, that’s going to continue to burn off over the next two years. I think it will be a gradual decline during the course of 2022, but it’s going to continue on into 2023. Yeah, it’s hard to foresee, Jack, how much additional COVID work there might be. We’ve all been surprised by the ups and downs of the pandemic and so forth. So it’s certainly possible there could be more right now. We’re basing our projections on what we currently have in the backlog and we’ll see where it goes from there and see what other work might come along.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, Jack, I mean this is exactly right. And I, what — all we can do is look at the situation today, if anything — if we’ve learned anything by this pandemic is we just can’t predict the evolution. So we do have in our RFP pipeline, especially on the R&DS side request for proposals to assist in new therapies to address COVID are even large top 10 pharmas that we are talking to about potential therapeutics. So, so I do anticipate there will be some residual amount of COVID work ongoing. But unless things change dramatically based on the picture today, it’s just going to gradually taper down. That’s what we have here through ’23 and maybe the beginning of ’24. Unless something else happens, which no one here hopes for. But that’s, that’s what we have. It’s all largely based on burning off the word, both commercial and clinical.
Jack Meehan — Nephron Research — Analyst
Great. And then just as a follow-up, would be great to get your latest thinking on labor and maybe wage inflation. What is — how has your view changed at all related to when you initially gave guidance around just wage inflation and the impact that might have on the forecast for 2022?
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, I mean, look, that’s a good question. That’s the single most important operational challenge we have is people management. I mean, look, it’s wonderful to be the leader in this space and to have such — a $25 billion backlog to execute and strong commercial demand as well and the result of that is we need all our people, even though technology is gradually taking over more and more of the work that we deliver, but we still need all our people. And at 80,000 people, we know we have to recruit many thousands more this coming year. We have attrition, which is an issue really for everybody. The great, the great resignation is affecting that as well, post pandemic. We are, we’ll become and that’s the price of our success, its a — we have become an academy company. A lot of people recruit talents from IQVIA. But look, we are adjusting to this. We are creating all kinds of flexible work arrangements, compensation arrangements, loyalty building programs, training programs, back to work, the future of work, which is an initiative that we have to redefine roles and what’s expected from our employees. So we’ve have — we’ve been very innovative in terms of our workspace, reworking on a lot of multiple fronts.
With respect to the number is and how it affects our numbers, obviously is challenging when you have to raise compensation costs and generally people management costs. However, I would point to you that our margins, our adjusted EBITDA margins has continued to grow. I mean, in fact they have been growing more than and they are expected to grow more than in — than ever before. And the reason for that is we are finally getting the leverage on the massive restructuring and cost improvement initiatives that we launched immediately post merger, but we now getting the benefit of that leverage and that’s offsetting, more than offsetting the wage inflation headwinds. Again, I point to the growth of our profit numbers relative to the growth of our revenue numbers and you see that we significantly materially raise — grow our profits higher than, materially higher than our revenue growth, which implies significant margin growth. Ron?
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Yeah, and also would say, Jack, we do have the ability in a lot of instances to raise prices to adjust prices. We have some provisions for improvement in our MSA agreements. We also have some short-cycle businesses. So wherever we have the ability to adjust prices we are doing so and we’re getting some offset there as well.
Jack Meehan — Nephron Research — Analyst
Great. Thank you, guys.
Operator
Your next question is from Eric Coldwell with Baird.
Eric Coldwell — Baird — Analyst
Thank you. Good morning. So, probably the number one topic here recently has been the biotech funding environment and any potential knock on impacts to the Group. Your competitor who also reported at the same time this morning and is very exposed to pre-commercial biotechs that their RFP volumes were down 10% in the fourth quarter. down 25% in January, but that they haven’t seen any cancellations or delays so far, no business impact so far. I’m curious if you could help us by; one, talking about your mix of pre-commercial biotech as a percent of R&D backlog or bookings? And two, talk about what you’re seeing in real time in terms of business demand, bookings, other related activity in that pre-commercial biotech space, that be very helpful. Thank you.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah. Thanks, Eric. Well, as you could imagine, we track these numbers pretty tightly and as you know, many definitions of what’s biotech funding and so on. We are not seeing in the actual RFP pipeline any changes versus what has been, as you know, a very strong demand environment for EBP segment in general. In terms of percent of our bookings, what do we give here. We don’t have the backlog, but we have the bookings, like, let me see. I’ve got a few a numbers here for you.
I think look, in terms of — of the actual bookings, large pharma still represents the majority, right, a little bit over half. Is that correct? And then we, don’t, maybe the mid-size is perhaps about somewhere around 10-ish percent of our bookings and the rest. So again, I would say 35% plus is EBP and that has been the, again it fluctuates as you can imagine these things — these numbers go up and down. Now, if you compare where we are here in terms of the, of the pipe of RFP flow, okay, it still continues to grow double-digits in dollars and volume, I mean it’s really, really high, more than double digits. I don’t know if we can give you the numbers, but the pipeline is very, very strong. I mean, has actually, it’s about — our pipeline is about equal to our backlog as we speak right now, okay. And — and again as I said before, COVID is basically gone more or less. It’s very, very tiny percentage of the total pipeline here. A lot of it is oncology, which is up more than 20%, the CNS, more than 33% up. Across therapy category we are seeing very good EBP growth in the pipeline. I’m talking now. Okay. Now the book is something in the pipeline to your question, what do we see going forward, okay, which would be normally like a lagging indicator of the funding, and we see that EBP in the pipeline actually represents a majority of our pipeline right now.
So again, we don’t see any significant changes. Look, I wouldn’t — yes, it’s true. For example, January was a lower — the month of January was lower than the EBP funding, but I wouldn’t extrapolate from one month and or from one quarter for that matter. As you know, generally the levels of EBP funding are very, very high. I mean, we are, we must be in the top three years ever in terms of the — of funding. So it may be that this year will be a little lower than last year, which again, these were record years. We’re talking about the orders of magnitude greater in terms of multiples of the funding if you just go back three, four, five, six years. So yeah, I mean, a step down in funding would — doesn’t concern as we continue to see very, very good, both bookings and even higher the numbers in the pipeline.
Eric Coldwell — Baird — Analyst
Hey, Ari, if I could just do one follow-up. The, could you remind everyone what your definition of EBP, the emerging biopharma, what your technical definition is? What it takes for a client to fit into that category?
Ari Bousbib — Chairman and Chief Executive Officer
When we look at, we look at how much we spend in terms of the clinical development of R&D spend, okay [Speech Overlap]
Eric Coldwell — Baird — Analyst
I was just going to say some of that client base would actually be companies that have a commercial pipeline?
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, yeah, that’s correct.
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Yeah, that encompasses what you might call small pharma as well that has a commercialized product. In addition, [Speech Overlap]
Ari Bousbib — Chairman and Chief Executive Officer
If a company spends less than a couple of hundred million, I don’t know exactly the number and how we segment it. We have tons of analytics and segmentation definitions, but broadly speaking, a company that spend less than a couple of hundred million dollars in a given year in its R&D budget, for us is an EBP, that’s just one definition. We’ve got others also. We triangulate as you can imagine. But that’s one reason that I happen to like.
Eric Coldwell — Baird — Analyst
All right, last one. If you had to guess and maybe you’re not willing to do, but if you had to guess just off the cuff, not holding your feet to the fire. Would 10% of your backlog be pre-commercial biotech? 20%?
Ari Bousbib — Chairman and Chief Executive Officer
You know, I — I don’t know if I can give you the numbers, but you know what, why don’t we do this, why don’t we give us on follow-up questions. We’ll try to give you a little more clarity or range on what’s in the backdrop. We will try to give. I’ll ask the finance team here to — I’ll try to prevail and use my executive privilege to to prepare all these guys. But I don’t know at this point, you’re putting me on the spot here. I don’t know exactly what I’m going to give you but I will give you something.
Eric Coldwell — Baird — Analyst
Ari, it’s helpful.
Ron Bruehlman — Executive Vice President and Chief Financial Officer
And to give you a partial answer to that and say, the last two years large pharma orders have been, bookings have been slightly over 50% of our bookings. So that gives you at least to a start at what you’re looking at anyway.
Eric Coldwell — Baird — Analyst
Yeah, correct. All right, look I appreciate it. I thought, I thought you had a great quarter. So, good job, keep it up, and look forward to the rest of the call. Thanks so much.
Ari Bousbib — Chairman and Chief Executive Officer
Well, thank you, Eric. Usually you tell this at the beginning of the question, so I was concerned, but thanks for saying it again.
Eric Coldwell — Baird — Analyst
So good.
Ari Bousbib — Chairman and Chief Executive Officer
All right. Next question.
Operator
Your next question is from Tycho Peterson with J.P. Morgan.
Tycho Peterson — J.P. Morgan — Analyst
Hey, thanks. Ari, given that most of the questions we’re getting are on RFPs and wage inflation, I want to go back to the wage inflation discussion and EBITDA margins because it is notable you’re guiding for expansion here. You talked about benefits from the original merger and integration plan. You talked about digitization and maybe some price increases, but can you maybe just give us a little bit more color on how you’re planning to drive margin expansion in this environment this year? Are you pulling forward any additional cost actions?
Eric Coldwell — Baird — Analyst
No, not at all, no at all. As I said before, usually makes us clear again. The, largely the main driver of our margin expansion is simply leveraging the benefit of all the cost actions that we took post merger, okay. You will recall, go back and look at the numbers, we had significant restructuring amounts every year, which obviously affected our cash flow. And we are now benefiting and leveraging those overhead optimization, outsourcing actions, consolidation of infrastructure, merging of IT systems, etc., etc. Now in addition to this, part of the reason you see margin expansion actually probably accelerate in 2022 versus 2021 in a quite significant way, I think some of it is what I just said and some of it is a mix benefit. I want to remind everyone that the COVID-related work, which was quite significant portion over the past year or two, was at a lower margin than we would otherwise have our base business at, okay?
Last of it was government work, whether it’s on the commercial side, very small margins or on the R&D side where we also contributed to the global effort to address the pandemic by pricing our COVID-related clinical trials not at the same level as we would otherwise have for traditional work. And so in terms of mix, as this COVID-related work gradually tapers down and the base business continues to grow as a proportion of the total, then of course, you’ve got a benefit on the margin side. I might add further that the amount of pass-throughs on COVID-related work was unusually high, vaccine trials and came also earlier on than it would under normal trial timelines. So the combination of lower margin service margins to start with, to us, a higher proportion — an unusually high proportion of pass-throughs, all of that are contributed to be to an adverse impact, mix impact on our margins. As this work gradually tapers down, then obviously the mix impact on margins is going to be more favorable. And that’s the other reason you see an acceleration of our margin growth.
Tycho Peterson — J.P. Morgan — Analyst
Okay. That’s helpful. And then a follow-up on APAC. Your long-term guidance is 11% to 13% growth through ’25. Obviously, within China, there’s been a lot of noise, biologics getting placed in the unverified list. They’re CDMO, you’re a CRO, so very different markets. But can you just talk on your view on China here in the near-term? And does any of this kind of noise potentially benefit you?
Ari Bousbib — Chairman and Chief Executive Officer
Well, I mean, I don’t know if we disclosed this, but we’ve got a couple of $100 million business in China. It’s been growing double-digits over the last few years. We have a fully owned CRO subsidiary in addition to IQVIA, that we have a core IQVIA business and we’ve got a fully owned CRO subsidiary that’s called [Indecipherable] which is designed for local Chinese regulatory requirements and largely caters to the local market, the local biotechs, whilst IQVIA parent deals with the work of multinational sponsors for their piece of the clinical trial in China, when it exists. It’s a unique setup, which in combination with our global CRO platform allows us to capture higher growth opportunities with China. Again, we feel good about our capabilities in this market and about our prospects to continue this growth trend. Look, there are local CROs that are emerging that are formidable competitors that are gaining share. There are hundreds literally of outfits in China. As you know, I want — I don’t need to be able to pull, but China is a complex market. There are lots of factors external to our industry that can affect how market dynamics play out. But I’m — we’re not worried, we’re not concerned. We are continuing to invest as required. We have a good market position and it’s a small piece of our total business.
Tycho Peterson — J.P. Morgan — Analyst
Okay. One last quick one before I hop off, on OCE on the retention. You talked about 350 clients using up one module. Your biggest competitor did, I think, talked about winning that Roche. So are you able to comment on that dynamic at all?
Ari Bousbib — Chairman and Chief Executive Officer
Anyone?
Ron Bruehlman — Executive Vice President and Chief Financial Officer
No. Look, we — we don’t comment on individual customers and dynamics with individual customers. And as the Roche win is a very big win and the large majority of that is outside of the U.S., I think about 90% or so.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, 90% of the world — of the project is outside the U.S. So I think the other is an independent subsidiary. Yeah, that has its own program. But yes, no — Roche has reaffirmed their commitment and is looking to accelerate the rollout actually after the successful implementations we had in several regions, plus they’ve also expressed interest in purchasing other modules. So we’re very pleased with our collaboration with this client. But beyond that, we’re not going to comment. Yeah.
Tycho Peterson — J.P. Morgan — Analyst
Okay.
Ari Bousbib — Chairman and Chief Executive Officer
Next question.
Operator
Your next question is from John Kreger with William Blair.
John Kreger — William Blair — Analyst
Hi, thanks very much. I wanted to come back to — you guys made the comment that you expect your R&DS revenue growth this year, I think to be in the upper teens if you ignore COVID work, which is a very impressive number. Just curious, what do you — what do you think that business can do longer term?
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Yeah, I think — look, I think that the double-digit growth was a marker that we have achieved and strive to achieve. If you remember at the beginning of the merger, the growth was very low in the single digits. So we think the continued acceleration will continue and certainly that double-digit sort of mark in the longer term is something that we’re looking forward to maintain that acceleration.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, I mean, look at our investor conference, we gave you even ’25 targets for our company as a whole. And we said that the company as a whole will grow 10% to 12% annually, which presumably from a $15 billion base. So R&DS has to be growing into double digits in order to achieve that. And so that’s kind of where we — you know we give guidance or so by segment for ’25? Do you have those numbers? While the team here is bringing this up. But again, I call your attention — I bring your attention what we gave as a longer-term growth trend just a couple of months ago in November in New York, when we were all together in-person, and we gave you long-term goals and growth trends and all of which represented a significant acceleration versus what we’ve had over the ’19 to ’22 timeframe.
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Strong double digits at the investor conference.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, strong double digits. Yeah, so, so that’s the long-term trend of the business. And again, I point to you that these are large scale businesses.
John Kreger — William Blair — Analyst
Yeah, absolutely. Very, very impressive, thanks. And a quick follow-up, Ron, I think this one is probably best for you. In the quarter, can you remind us what the acquisition contribution was to growth? And did you buy anything notable in the fourth quarter?
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Yeah, the acquisition contribution to the growth was relatively minimal. It was a little over 150 basis points. We made a couple of acquisitions in the quarter, the largest of which was a payer analytics company in Europe, but nothing terribly large.
John Kreger — William Blair — Analyst
Great. Thank you.
Operator
Your next question is from Shlomo Rosenbaum from Stifel.
Shlomo Rosenbaum — Stifel Nicolaus — Analyst
Hi. Good morning. Thank you. Ari, can you talk a little bit about the breakdown of the upper single-digit revenue growth in TAS when you exclude COVID? What’s driving the growth there? Is it real world evidence? Is it technology? And I know the information, part of the business doesn’t grow much at all. So maybe you can just help us with the composition and what are some of the really big drivers there.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, thank you, Shlomo. I — we’ve done this before. We’ve told you what it’s comprised of. And if you look at TAS, I mean, I’d like to look at it in terms of three tiers. You’ve got the basic core information solutions, which is the old IMS business, essentially the data. And that’s about, I’m going to say 30% of the business, give or take. And that’s a flattish growth rate business, okay. No — and that’s strategic. That’s the way we do it. We just sell the data with very little price increases. It’s a flattish business.
Then you’ve got the moderately growing piece of the business, which is, let’s call it another quarter at this point, maybe a-quarter of the business that’s analytics, consulting, various services. And that grows double digits now. It’s been growing strong double digits in the past two, three years, used to grow mid-to-high single digits. Now it’s growing low to mid-double digits the past few years.
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Low teens.
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, low teens, yeah. And then you’ve got the higher growth businesses and that’s the real world. And of course, the technology businesses, which will grow good mid-teens. And that’s about — when it was to the balance, was like at 45% of the business today. Obviously, we used to say it’s a third, a-third, a-third. Now, obviously, because real world, the fastest-growing piece of TAS, real world and technology are growing at a much faster rate. So they now represent already 45% of the total. And so if you do the math, that should get you to high single digits underlying growth for the segment.
Shlomo Rosenbaum — Stifel Nicolaus — Analyst
Okay, great. Thank you. And then, maybe just for Ron. How much is the incremental FX headwinds impacting EBITDA and EPS guidance for 2022? You talked about absorbing the $70 million of revenue. If I were to normalize, how much is that impacting the guidance and just maybe give us a little bit of color on that.
Ron Bruehlman — Executive Vice President and Chief Financial Officer
Well, we offset the entire $70 million in maintaining our revenue guidance. So, I mean, another way of looking at it, as we raised our constant currency revenue guidance by $70 million, I’m not sure I understand your question beyond that. Is it EBITDA?
Shlomo Rosenbaum — Stifel Nicolaus — Analyst
Yeah, EBITDA, and it went up like $10 million on each side and EPS of like $0.05 on each side [Speech Overlap]
Ari Bousbib — Chairman and Chief Executive Officer
Yeah, look EBITDA typically doesn’t have the big — FX typically doesn’t have a big impact on our EBITDA. We’ve had a little bit of negative drag from FX, not like we did with the revenue that we absorbed in our numbers. And we have more offsets on the EBITDA side than we do on the revenue side, so you don’t see as much impact there.
Shlomo Rosenbaum — Stifel Nicolaus — Analyst
Okay. Great. Thank you.
Operator
Your next question is from Patrick Donnelly with Citi.
Patrick Donnelly — Citi — Analyst
Hey, guys. Thanks for taking questions. Maybe just a follow-up on the M&A question earlier. Can you just talk a little bit about the outlook? Obviously, cash flow really strong, leverage is pretty reasonable at 3.6 times. Are you seeing more activity in the pipeline given some of the volatility in the public markets or does that take a little bit longer to play a role in kind of rattling out the potential sellers?
Ari Bousbib — Chairman and Chief Executive Officer
Well, that’s a good question. Look, we always — obviously, we’re always looking and even if you weren’t looking, people call us. There are lots of assets that are in the market. We haven’t been that active over the past couple of years in terms of numbers of acquisitions. We’ve done a little bit more in dollars this year, largely driven by our largest ever deal, which was simply the consolidation of our lab business.
We bought 40% that we didn’t own from Q square — I’m sorry, from Quest, that was our Q square lab joint venture, and we paid, I think, $760 million for that and we need a couple of more larger acquisitions. As you know, the multiple valuations in this space where we operate in the healthcare, technology, information space, the multiples that are really very high, and the reason for that is that private equity essentially is trading those assets from one private equity firm to another. And so they keep bumping up the valuations. And we look at these assets, but we are always going to continue to be very reasonable and conservative. If we see value that we can create, then we will certainly look at these assets. But no major changes versus what you have seen us do before. We will be opportunistic if there are things — assets that we would like to own, we will make a reasonable bids and we won’t get excited by what we’re told the market is. Plus I’ve got good balancing CFO here with saying that we have healthy discussions with the business heads.
And again, I hope that you could see from our history that our capital deployment has been prudent. We’ve been willing to have more debt and we may be willing to have more debt if necessary because we believe our business model is very different. Leverage for us at the peak of the pandemic was 4.8. And as a company or even if you go back the legacy companies, we believe with leverage ratios that were even six times. And the reasons for why we were willing to live with those leverage ratios is simply because our business profile, our cash flow generation model, our business visibility profile where a vast majority of our business is already booked early in the year, both commercial and clinical, all of that makes us comfortable that we can live with those, especially in an environment where I know there’s a lot of talk about rising rates. And I would remind you that the bulk of our debt is at essentially fixed rates, largely because of hedges and the alignment between our euro and debt and euro profits and dollars versus dollar profit. So all of that makes us comfortable, rates continue to be at historic lows.
So we will do what’s right for the business. We will allocate capital to first, internal investments; secondly, to acquisitions; and thirdly, to share repurchase, and you will see us go back and forth depending on opportunities. But again, we intend to try to continue to reduce debt as is prudent within the limits of what makes sense from a management standpoint, it doesn’t make sense to eliminate our debt at the current rates. I mean, we would view that as a negligence on our part. So that’s, I guess the best answer I can give to your question. Thank you very much. We’re done?
Patrick Donnelly — Citi — Analyst
Yeah, thanks, Ari. And if I could just squeeze in one follow-up, if you have a minute. I just want to follow-up on the funding backdrop. Obviously, you’ve talked a little bit about the R&DS strength going out multiple years, double-digit growth. I guess when you think about the funding, I mean, it seems like you were never underwriting the type of record strength we saw last year in order to hit those numbers. If we did see some prolonged softness in the funding environment relative to last year’s levels, it’s still more than sufficient to support that growth outlook, I guess. I just want to make sure that’s kind of the way you’re framing it.
Ari Bousbib — Chairman and Chief Executive Officer
I cannot be — I cannot overemphasize that we are not seeing that translate into our sales pipeline. I mean, again, I gave you some numbers earlier in biotech, I’m not giving you the numbers here because I don’t know if I should give them to you or not, but the vast — the majority, a big majority of the RFP dollar pipeline and numbers, volume and dollars is actually EBP. So we are not seeing any impact from potential slowdown of the funding into our pipeline, not at all. And the pipeline is at record high levels. So again, we — it won’t affect us one bit. And by the way, again I’m not seeing that happening. We talk to EBP all the time.
Patrick Donnelly — Citi — Analyst
Okay, encouraging to hear. Thanks.
Ari Bousbib — Chairman and Chief Executive Officer
Thank you.
Nicholas Childs — Senior Vice President, Investor Relations and Corporate Communications
Thank you. That’s going to be our last question. So thank you for taking the time to join us today. We look forward to speaking again next quarter. Myself and the team will be available for any follow-up questions you might have the rest of the day. Thanks.
Operator
[Operator Closing Remarks]