昆泰 (IQV) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA Third Quarter 2020 Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

At this time, I would like to turn the call over to Andrew Markwick, Senior Vice President, Investor Relations and Treasury. Mr. Markwick, please begin your conference.

Thank you. Good morning, everyone. Thank you for joining our third quarter 2020 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; Nick Childs, Senior Vice President, Financial Planning and Analysis; and Jen Halchak, Senior 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 on 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.

Thank you, Andrew, and good morning, everyone. Thank you for joining our third quarter 2020 earnings call. The third quarter marked a nice sequential improvement in our financial performance with results coming in above the high end of our expectations.

You will recall that based on early signs of recovery at the end of the second quarter, we raised our guidance for the year. Based on stronger-than-expected performance in the third quarter, we are again raising our full year guidance ranges for revenue, adjusted EBITDA and adjusted diluted EPS.

We're expecting a continuation of these recovery trends in the fourth quarter. This, of course, sets us up well for next year. As we promised back in April at the onset of the pandemic, we will talk to you today about our outlook for 2021.

Based on what we currently see, we think the most significant COVID impact to our business are behind us, and our outlook for 2021 indicates strong performance next year and a return to our growth trajectory. Ron will discuss 2020 and 2021 guidance in more detail later.

Before we review the quarter, a quick operational update. We continue to experience a gradual improvement in the accessibility of clinical research sites in the R&D Solutions business, even with the localized flare-ups we've seen around the world. We are seeing a return to on-site monitoring visits. And similar to last quarter, on-site visits exceeded the number of remote visits.

In instances where sites remain physically inaccessible for clinical monitoring, remote monitoring and virtual solutions are proving to be effective workarounds. The pace of start-up activity picked up significantly during the third quarter, and we are pretty much back to baseline levels for site initiation visits. Of course, patient recruitment trends have started to follow as well.

Moving to technology and analytics. As expected, TAS has remained resilient throughout this crisis in almost every area. We've had very little interruption in data supply or demand. Our information services continue to be mission-critical to our clients and are, therefore, very insulated from the impacts of the pandemic.

The analytics and consulting businesses have performed remarkably well despite business development being hampered by the lack of in-person interactions. One area we discussed before that has experienced significant disruption is the event management business, which relies almost entirely on face-to-face interaction. And of course, as you know, that business is essentially on pause for now.

Demand for our technology offerings remains strong. We've added 45 OCE clients this year, bringing our total number of clients to 125. During the quarter, we successfully rolled out OCE Optimizer, a real-time map-based territory and sales rep alignment solution. This tool will save management team significant amounts of time previously spent planning and assessing sale of data to ensure resources are effectively focused on the appropriate client base and product.

Finally, our CSMS business, demand for field reps continues to be soft, which, of course, impacts revenue. But as we said before, while business development has also slowed due to the lack of in-person interactions, so far, the business has performed modestly better than we would have expected as existing clients have largely retained field reps and have been continuing their engagements with us.

Now against that backdrop, let's now review our third quarter results. Revenue for the third quarter came in at $2.786 billion, which was $11 million above the high end of our guidance range. This revenue beat came from strong organic operational performance. Third quarter adjusted EBITDA was $604 million, with a $22 million beat versus the high end of our guidance range. The EBITDA beat was due to better operational performance and productivity.

Third quarter adjusted diluted EPS was $1.63, reflecting the EBITDA drop-through because the below-the-line items essentially netted out to 0. Third quarter R&DS contracted backlog, including pass-throughs, grew 18.5% year-over-year to $21.7 billion as of September 30, 2020. We had broad-based booking strength, but full-service clinical and lab were particularly strong.

The contracted net book-to-bill ratio, including pass-throughs, was 1.71 for the third quarter of 2020 and 1.42, excluding pass-throughs. The LTM contracted book-to-bill ratio at September 30 was 1.55, including pass-throughs, and 1.45, excluding pass-throughs.

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

Thank you, Ari, and good morning, everyone. Let's turn first to revenue. Third quarter revenue of $2.786 billion grew 0.6% reported and was flat at constant currency. Revenue for the first 9 months of the year was $8.061 billion, which was down 1.6% reported and 1.2% at constant currency.

Technology & Analytics Solutions revenue of $1.207 billion grew 10.2% reported and 9.2% at constant currency. Year-to-date, Tech & Analytics Solutions revenue was $3.433 billion, up 4.9% reported and 5.6% at constant currency.

In R&D Solutions, third quarter revenue of $1.400 billion was down 4.5% at actual FX rates and 5.1% at constant currency. Excluding the impact of pass-throughs, R&D Solutions third quarter revenue grew 2.6%. Year-to-date revenue of $4.076 billion was down 5.6% at actual FX rates and 5.4% at constant currency.

Contract Sales & Medical Solutions revenue of $179 million was down 13.9% year-over-year reported and 14.4% on a constant currency basis in the third quarter. Year-to-date, revenue was $552 million, down 8.6% at actual FX rates and 8.3% at constant currency.

Now moving down to P&L. Adjusted EBITDA was $604 million for the third quarter, which represented growth of 1.9%. Year-to-date, adjusted EBITDA was $1.649 billion. Third quarter GAAP net income was $101 million, and GAAP diluted earnings per share was $0.52. Year-to-date GAAP net income was $160 million, and GAAP diluted earnings per share was $0.82.

Adjusted net income was $318 million for the quarter and $841 million year-to-date. Our adjusted diluted earnings per share grew 1.9% in the third quarter to $1.63. Year-to-date, adjusted diluted earnings per share was $4.32.

Now turning to the R&D Solutions backlog. As Ari mentioned, R&DS new business activity remains quite strong. Consequent on the robust booking activity that Ari talked about, our backlog grew 18.5% year-over-year at a close at $21.7 billion. And we expect $5.8 billion of this backlog to convert to revenue over the next 12 months, which is an increase of over $400 million versus where we were at June 30.

And I would add that the outlook remains quite positive as RFPs are growing low double digits in both volume and dollars.

Moving to the balance sheet now. At September 30, cash and cash equivalents totaled $1.5 billion and debt was $12.3 billion, resulting in net debt of $10.9 billion. Now due to our strong EBITDA and cash flow in the quarter, our net leverage ratio at September 30 was 4.7x trailing 12-month adjusted EBITDA, which was down a tick from where we were at June 30.

Cash flow was a bright spot as it was last quarter. Cash flow from operations was $574 million in the third quarter, up 74% over last year. Capital expenditures were $157 million, and that resulted in free cash flow of $417 million. M&A spending, as you saw, was negligible in the quarter.

For the first 9 months of the year, free cash flow was $769 million, which is about double the same period last year. Now as you know, when the COVID-19 outbreak became the pandemic in March, we temporarily suspended our share repurchase program. We did not repurchase any shares in the second or third quarter. But the business is recovering well from COVID-19 disruptions, underlying demand is robust. And cash flow is as well and we have a very solid liquidity position, closing the quarter with an undrawn revolver of almost -- undrawn revolver and almost $1.5 billion of cash on the balance sheet. And as a result of all of this, we've lifted our suspension on share repurchase program, and we're expecting to opportunistically resume share repurchase activity. And as a reminder, we currently have about $1 billion of share repurchase authorization remaining under the program.

Now let's turn to guidance. Given the continuing momentum in the business, we're raising our full year guidance range for revenue, adjusted EBITDA, adjusted diluted EPS. Our guidance for the fourth quarter and full year of 2020 assumes that business conditions will continue to improve during the fourth quarter. And specifically, we assume that localized flare-ups of COVID-19 will not have a material impact on fourth quarter results. We now expect 2020 revenue for the full year to be between $11.100 billion and $11.250 billion, which is an increase of $125 million over our prior guidance at the midpoint of the range.

For profit, we now expect full year adjusted EBITDA to be between $2.335 billion and $2.360 billion, which represents a $27 million increase over our prior guidance at the midpoint of the range. And adjusted diluted EPS, we are expecting to be between $6.25 and $6.35, which is an increase of $0.10 over our prior guidance, again, at the midpoint of the range.

This full year guidance implies fourth quarter revenue of $3.040 billion to $3.190 billion, representing growth of 5.0% to 10.2%. Now this is a wider range than we would normally guide to at this point in the year due to the uncertain timing of pass-through revenues associated with the COVID trials that we're working on.

From a segment perspective, we expect Technology & Analytics Solutions revenue would be in the high single digits at the midpoint of our guidance range. R&D Solutions revenue growth to reach double digits, with the caveat that this growth rate could move up or down based on the timing of pass-through revenue and CSMS revenue growth to be similar to what we saw in the third quarter.

For fourth quarter profit, we expect adjusted EBITDA to be between $685 million and $710 million, representing growth of 6.7% to 10.6%, and adjusted diluted EPS to be between $1.93 and $2.03, a growth of 10.9% to 16.7%. This guidance assumes that foreign exchange rates at September 30, 2020 remain in effect for the rest of the year.

As we indicated at the start of the pandemic, we've decided to advance our planning process versus prior years. And as a result, we're now in a position to provide our 2021 outlook. And this is much earlier than we would have done in the ordinary course.

For the full year 2021, we expect revenue in the range of $12.300 billion to $12.600 billion. This represents growth of 10.1% to 12.8% versus the midpoint of our 2020 guide. We expect adjusted EBITDA to be in the range of $2.725 billion to $2.800 billion, representing growth of 16.1% to 19.3% compared to the midpoint of our 2020 guidance.

And finally, we expect adjusted EPS to be in the range of $7.65, $7.95, which would represent growth of 21.4% to 26.2% compared to the midpoint of our 2020 guidance.

A little bit more detail for you. The adjusted diluted EPS guidance assumes interest expense of approximately $420 million, operational depreciation and amortization of about $400 million and other below-the-line expense items such as minority interest of approximately $50 million and also the continuation of our share repurchase activity.

The effective tax rate we're assuming will remain largely in line with 2020. Our 2021 guidance is predicated on the assumption that business conditions will continue to improve in the fourth quarter and the majority of our business will return to normal during 2021. Our outlook for 2021 also incorporates our view that there will be some tail of COVID work, but growth in R&DS will come primarily from our base business.

So in summary, we're pleased with our team's ability to navigate the challenges that COVID has presented throughout the year, and we're proud to be a critical contributor to the solution to this public health crisis. Our R&DS business has adapted well, returning to growth in services revenue and achieving another record quarter of bookings. Our Technology & Analytics Solutions business improved sequentially and has returned to pre-COVID growth rates despite the headwinds of the event management business.

Our solid year-to-date overall company performance has enabled us to raise our guidance for the full year for revenue, adjusted EBITDA and adjusted diluted EPS. Now this performance, combined with our strong free cash flow and liquidity position, has enabled us to lift the suspension of our share repurchase program. And finally, we are expecting a continued recovery in the fourth quarter and a very strong 2021.

So with that, let me hand it back over to the operator for Q&A.

(Operator Instructions) First question comes from Eric Coldwell with Baird.

I was curious if you could share with us the percent of your bookings this quarter that came from COVID-related trials. You did give us the metric last quarter, as did, I think, virtually all of your peers.

I think looking at the contracted services bookings in the quarter, it was about 20%.

And Ari, I assume higher on a pass-through basis, given the nature of those large vaccine studies?

Yes. I mean the -- it's very hard. The timing of pass-throughs and the volume of pass-throughs is different. Look, we have a lot of COVID awards since the start of the pandemic. Many of them -- small from protocol reviews. I mean, I think we are like close to 200 different awards around the world. So it gives you a sense. Some of them very tiny from protocol reviews, we have lab work. The range from the nominal fees to -- of course, we are on several of the large vaccine trials, not necessarily doing the entire work, but we, for example, have been awarded work, I think, on 4 of the 5 trials that are part of Operation Warp Speed that are in Phase III. So sometimes, we've got, in a couple of cases, we've got the full-service work. And of course, there we've got big pass-through numbers. Other cases, we've got the lab work, the pharmacovigilance work. So we are very involved. Some of that work does not include pass-throughs. Some of that, it does include pass-throughs.

The last trial, we have full clinical work to have big pass-through numbers, which have not been yet into -- in our revenue numbers, given that, as you probably know, we are -- our full-service vaccine work is in at a later stage than perhaps some of our competitors, which have -- who have already seen that revenue -- a very strong revenue flow through in prior quarter or we'll see it in this quarter, in the Q3, mostly from pass-through revenue.

That's very helpful. And if I could get you to just follow on to that. A number of investors are focused on how the COVID work plays out over the next several quarters. When do you expect the peak in bookings and/or revenue from COVID-related trials? At which point, we would obviously need the quarter to be back fully to offset any year-over-year comparisons that might be developing?

Yes. Well, look, I mean, in developing -- I'm assuming you're talking about 2021, obviously...

Yes, yes, of course. Yes.

Yes. So I mean, look, Eric, we have spent a lot of time, and I mentioned back in April we wanted to try to give you a sense for how 2021 would shape up. And we've spent a lot of time bottom-up reviewing what would happen. And as you know, we affect every single piece of work across our business segments with probabilities and an assessment of what revenue will be derived in subsequent periods. So the same applies to the COVID trial.

Most of the revenue on the large full-service COVID trials is pass-through, okay? So it has no impact to profit. That's just a fact. When you're a full-service work on a vaccine trial, you have to remember, there are cases I've seen -- I don't know if that's the case with us. But where the pass-through revenue is a ratio of 10:1. Now it was $10 of pass-through versus $1 of service revenue. Whereas in normal traditional trials, we will see $1 pass-through to each $2 or $3 of service revenue. And once again, pass-through is totally irrelevant to our profits. It has no impact whatsoever. So it makes it very difficult to predict. So that's one element of the COVID trial.

The second one is, of course, we've taken into account the possibility that vaccine trials get canceled. There could be a vaccine that gets approved or 2 or 3. And the other one feels that it's not economically worthwhile for the sponsor to continue the vaccine trial. So in fact, historically, well before COVID, we know from experience that the vaccine work carries a high -- an unusually high risk of cancellation versus traditional other drug developments.

So with all of that in mind, so we know all of that. We've factored all of that into our guidance. And we feel good, and we've anticipated many possibilities and many such scenarios, and we feel good about that. Now you bear in mind that a lot of the work that was supposed to come online, new projects have been put on hold by our clients because many clients have diverted their attention, resources to COVID, whether it's for therapeutics or for vaccine work. And we do expect, in fact, our clients have told us that when that phase goes away, they go back to the projects they were supposed to have been working on in 2020. So we have no concern that all of a sudden, if that's what you're alluding to, there will be a kind of a drop in either bookings or revenue. We do not expect that. And we factored a lot of that potential variability into our guidance. That's the benefit of having such a wide diversified portfolio, as we do have at IQVIA, both within our R&DS business and our TAS business.

You should also realize that we are getting a lot of interest from our public health authorities, but also a lot from sponsors for pharmacovigilance that was tracking COVID patients. Our real-world business is experiencing strong double-digit growth, and we expect continued interest in pandemic-related work in general. We all hope this will be the last time that it'd ever, but we also all know and understand that such crisis will happen in the future. And perhaps the magnitude of the COVID crisis has put all of us a lot of interesting things that we are going to put in place going forward in terms of preparedness, in terms of patient tracking, in terms of monitoring what exactly you've seen in our press release on the CARE Project with the FDA, where we are looking at patients who have potentially been exposed to COVID. We are connecting all the dots between their medical history and the identified patient records, understanding what types of vitamins they've been taking, what other drug regimens they've been under and trying to determine a map of at-risk populations with a lot more precision than what's been done today.

So all of those projects are in the pipe, and I expect those to continue irrespective of whether the COVID crisis ends or not. So again, everything has been factored into our guidance.

Next question comes from John Kreger with William Blair.

Ari, just to kind of continue on that. I think you mentioned to Eric that about 20% of your bookings were COVID related. For the other 80%, are you able to start those studies up and enroll in a fairly reasonable basis? Or would you say that's still broadly impaired?

Thank you. Well, okay, as I said in my introductory remarks, with respect to site initiation visits, which in a site start-up activity, that's the area of our business that has seen the strongest improvement. In fact, the site initiation visits are back to baseline levels and recruitment of patients obviously starting to follow. So I think, actually, very good news on that front.

The accessibility to sites for trials that are in flight hasn't quite recovered. We are currently at about -- I'm going to say, I look at my things, about 70%, right? We are currently for global -- if we look globally, at our sites, we are back to about 70% normal accessibility. That's a bit below what we would have expected. But interestingly, it's critical size because a site is not a site is not a site. There are sites that are very tiny and the relative incremental value of opening that site doesn't need as much. So we are focused on the ones that are most significant. So that's for in-flight trials, and we're returning gradually to normal activity there. For new trials, again, site start-up activities has resumed. Site initiation has essentially -- the visits are where they should be normally pre-COVID levels, normally patient recruitment lives, but that has increased significantly throughout the quarter.

Patient recruitment was fundamentally disrupted, okay, because essentially everything was put on hold. And we are gradually going back. We have good momentum, and we don't think we will recover to baseline level until sometime in 2021. But again, all of that is factor issuing our guidance.

Great. One quick follow-up. Can you give us a sense about where your focus is on sort of new technology development? I think in the past, you've talked about an OCT suite launch by year-end. Is that still on the table?

Yes. Absolutely. As you know, we've had great success with OCE coming from behind. And we had -- we, therefore, along with our partner sales force, we expanded the relationship to clinical tech. Platforming tools on the health cloud. We have certain technologies available today for digital sites and patient suites. The digital patient suite includes products such as eConsent, eCOA and also patient portal. We will, by the end of the year, have the digital trial management suite go live probably by the end -- before the end of the year. And the products will include CTMS, risk-based monitoring and the mobile CRA platform. So again, the fully orchestrated solution, OCT that you're referring to, will be available by the end of this year. Again, we are also coming from behind in this area, but we will be claiming our fair share as we are doing in OCE, on the commercial side. Thank you.

Next question comes from Bob Jones with Goldman Sachs.

Great. I guess, Ari, maybe just to follow up there. You're saying that site activations are getting back to normal and patient recruitment, obviously, catching up. You saw x pass-through growth in R&DS, I think, of around 2.6%. I guess what needs to happen to see the double-digit R&DS growth in 4Q? And more importantly, what has to happen between now and over the course of '21 to kind of get to that guidance range? Is there a lot that needs to improve? Or is it just kind of a normal course of what you're already seeing that needs to play out in order to get to these 4Q and 2021 R&DS targets?

Well, look, we've said that we should be seeing or reaching double-digit R&DS growth in Q4, okay? And we do expect mid-teens in 2021. So that's -- what needs to happen is normal course of business based on the work that we've done that I described earlier in my reply to Eric's question. Our guidance has been bottom-up, as we always do, project by project, and we make an assumption of -- look, I mean, what needs to happen is things are going to happen, okay? The elections are going to be behind us. There will be more clarity on environment. There will be at least 2 or 3 vaccines out there. People have room to live with this. People are moving on. And all of that will happen sometime in 2021 during the year.

Obviously, this assumes when we say "normal business conditions," it means that what we are seeing today, the trends that we are seeing today, the improvements that we are seeing today continue with a bit more stability in 2021 due to all of these factors being at play again, election behind, more clarity on the environment, vaccines, learning to live with this thing. All of this assumes -- when we say stable business conditions, I mean there's no new pandemic, God forbid, or anything like that and it's a new normal, if you will. And that's what we're assuming. Nothing extraordinary, nothing needs to happen. I should point out that we haven't done any acquisitions of significance, as you know, really for the past 2 years. I mean, we haven't spent at the rate that we used to. This is all organic for the most part. And so again, we feel very good about this time.

No. That's fair. And I guess maybe just one follow-up. We haven't spent a lot of time on TAS. You described it as resilient, but I think the growth rate is the highest we've seen in years. Can you maybe just spend a little bit more time there talking about what's driving the performance in TAS? I know you mentioned real-world evidence, but just wanted to get a little bit more clarity behind the record growth you're seeing in that segment?

Look, the performance is the reflection of sales. I can say a different way on the resilience of the business. A lot of what we do is mission-critical to our clients with or without a pandemic. Certainly, the data business hasn't moved. If anything, there was -- it proved how mission-critical it was. We were really -- we probably had the best visibility. I mean, you guys and a lot of people out there felt we were insane back at the beginning of the pandemic for giving relatively precise guidance for the balance of the year. And now here we are, and it looks like, more or less, we were on target and that it's not because we were geniuses. It's because we have visibility. We've got businesses that allow us to have that visibility. And we are global. So there are different stages of the pandemic in different parts of the world so we can model this out. We have our internal database deep analytics, predictive analytics modeling capability.

The TAS business is very, very critical. And our clients have seen that we've had extremely strong and positive feedback from our clients. So again, there is a part of the business that face-to-face, which is why we had headwinds. I think it's not a huge business. I don't know if you have the -- if you have disclosed the numbers in the past, not a huge business. But even if it's a -- I don't know what the business size is, to be honest with you, but even if it's $50 million and the $50 million disappear, it's a big headwind. If it's $100 million, it's again -- so we had some headwinds when this thing happened.

But now we are returning to strong growth. And we told you back in June of '19, where we gave long-term guidance in our Vision 22 goals, that we did expect this business to solidify high single-digit trajectory and gradually continue to grow driven again by our analytics, our real-world evidence, and of course, our technology offerings. Remember, the real-world business has not wavered practically. I mean we had some -- in Phase IV work, we've had some site accessibility issues and so on. And -- but which is, in a way, it's a bit similar to the clinical trial business. But at the end of the day, it has continued to perform solid double digits unabated. Ron, do you want to...

Yes. Just one thing I would emphasize, Bob. If there was a surprise versus where we were expecting early in the year, it's -- our analytics and consulting business has continued to be very strong. And I think Ari highlighted that in his prepared remarks that we were expecting some disruption due to business development activity, face-to-face selling being affected, and in fact, it hasn't. Our analytics and consulting business has been quite strong.

Next question comes from Tycho Peterson with JPMorgan.

Ari, starting with R&D. Does the 4Q guidance assume resumption of any of the trials that have been halted with J&J and AstraZeneca? And then what gives you the confidence that COVID flare-up won't impact results? I know you talked about site initiation visits back to baseline levels. But I guess what I'm really asking is, have you taken steps to try to kind of mitigate any impact of flare-ups? And then as we look ahead to 2021 in R&D, can you just give us a sense of how much [COVID] will contribute to that mid-teens growth you talked about?

Yes. I mean, you're asking about the impact of the delays in the vaccine work. Yes, I mean, first of all, interruptions in trials, in general, are a common occurrence. There are adverse events. In the case of vaccine trials, where we have the number, which is, by the way, one of the reasons why pass-throughs are so big is because the number of patients enrolled in vaccine trials is huge. We're talking about massive amounts: 30,000, 40,000, 50,000, 60,000 people in a trial. You're going to have adverse events and those adverse events will cause an interruption of the trial.

But again, we've factored that in. It's all in our guidance, and we don't expect -- and by the way, as I mentioned before, that there are also cancellations in vaccine trials that are more likely. So look, we -- again, we factored that in. We put probabilities on all of our vaccine work. And bear in mind, cancellations don't result in a 100% lost revenue. There's a wind-down and so on.

And finally, frankly, since -- for the full-service trial, the one that you talked about, we -- most of the revenue is pass-through. So -- and this is COVID work. So it's not like they are -- even on the service, the small portion of the revenue that's service, it's not like we're making a margin or a margin at all, right, because this is part of our contribution to the effort. So that's for the vaccine. Any -- what was the other question you had?

Tycho, can you repeat the second question?

Yes. I mean it was whether you've taken proactive steps to mitigate any impact from COVID flare-ups. You talked about site initiation visits have gone back to baseline levels. But what gives you confidence in no impact? And then on the 2021 outlook, you talked about COVID being 20% of awards, but how much do you think it contributes to growth, that mid-teens growth next year?

Yes. I don't know if I can give you the exact contribution to growth, but it's not -- it is not what's creating the very strong double-digit growth that we expect.

We have solid growth next year in revenue and R&DS, even excluding the COVID work. That's the short answer.

Right. By the way, we would have had growth this year, underlying growth without the COVID work also. Not that great growth, but we would have that growth.

And Q4 also.

Yes, and Q4 also. Yes. By the flare-ups, I mean, look, it's -- if it continues in the same proportion and occurrence and frequency as we see now, that's what's factored in our guidance. But again, eventually, with the advance of vaccines by the end of the year or early next year, we think all of that will -- and people will learn how to work with this and it's already happening.

If you look at -- again, China is a good -- things are back to normal in China, I'd say entirely. I mean sites, it's not 100%, it's 95%-plus accessible. There are flare-ups, by the way, in China. But people just work with this.

So also, again, we have to do some catch-up work, bear in mind, that's also factored into our guidance. We did a lot of remote monitoring this year when we couldn't access the site. And I think people forget that we're not going to move to 100% remote monitoring, okay? We -- there's still a requirement by all regulatory authorities around the world that source document verification has to occur on site. FDA, other regulators explicitly require that the source documents should not be shared remotely. So again, obviously, what has changed is the number of data points that might be looked at remotely, that key safety and efficacy data, for example. And so there is reduced requirements on less critical data. But in general, we still have to do that work that we were not able to do. So all of that is "pent-up demand" that needs to be addressed in the coming quarters, catch-up work, if you will.

Okay. And then our last quick one. On CSMS, can that return to, call it, low single-digit growth next year?

I don't know about that because I'm not going to venture to make prediction on CSMS. I've been wrong in both directions. I've assumed they would go down and they went up. And I assume it will go up and it went down. So look, what's factored into our guidance is kind of flattish 5 growth, okay? If it's plus 1%, plus 2%, I don't know, but flattish growth, flattish for next year.

More detail on the segments when we provide guidance in the ordinary course at the beginning of '21, when we share full year results and Q4 results as we traditionally do, and we'll give more detail on segments there. Look, I'm sure you can derive based on the comments we made and on the overall guidance that the momentum we see in our 3 business segments will continue.

Next question comes from Erin Wright with Crédit Suisse.

In terms of capital deployment here, that share repurchase activity, what's embedded overall on your guidance for 2020, 2021, and in terms of the share repurchase activity? And have you been active in the fourth quarter to date? And I guess, on that topic as well, you mentioned it was largely organic growth that you're pointing to. I just want to clarify, is -- does the guidance assume any acquisition, I guess, activity consistent with your past practices?

You mean in the fourth quarter?

Fourth quarter and 2021.

Yes. So first of all, congratulations to you, Erin. Nice to have you back. And secondly, look, we have not done any share repurchase since we suspended our program. So other than the shares that we repurchased in the first quarter, when the last primary sponsor shares were sold that we participated into that secondary, and you know about that, that was in the first quarter, pre-pandemic, we haven't done anything since then. I wish we had bought all the shares, by the way, at $85 a share, but we didn't. And so we are going to start now opportunistically after next release, and there will be probably the market to -- we don't have lots of time since we have to stop before the end of the year anyway.

And with respect to acquisitions, no, I mean, there's nothing here for the balance of the year that would be materially different than what we've seen this year. That is relatively negligible M&A activity. But in 2021, what's the assumption, Ron?

Well, you can expect in 2021, we'll spend some on acquisition. Share repurchase together will trade-off between the 2. And our normal assumption there, which is valid in 2021, is about $1.5 billion between the 2 during the course of the year.

And that's what we have for -- before pandemic, right? That's what we had in '18, '19.

That's right, consistent with past practice.

Okay. Great. And then just cost mitigation efforts and further flexibility, I guess, if you do continue to see things get a little bit worse in terms of these COVID flare-ups, there are ample levers you can pull here from a cost mitigation standpoint, correct?

Yes. I mean, Erin, you make a very good point. As you know, we made a deliberate decision, not -- by and large, not to do any restructuring of our workforce. We have maintained employment, and I might add base compensation as well. First of all, the crisis situation dictated that, that was the right thing to do to focus on our people and take care of our people.

And number two, we anticipated a strong V-shaped recovery, Q4 and 2021. And obviously, we wanted to preserve our talent and resources. And so we have not done anything. Now obviously, we had a sustained situation that in a systemic way would force us to look at a totally different environment for the long term, then we would change that and we do have levers. We are -- and the only thing that I can tell you is that we've had strong productivity despite not reducing our workforce or our base compensation.

We've learned, like most companies, to work remotely. We have a very important study going on called the future of work internally, and we are trying to determine which roles -- I mean, as you know, we have about 70,000 people. So we have a lot of different roles in the company. And we are detailing which roles can actually work from home, what we've learned during this pandemic, what office space do we really need. If you're going to be behind your workstation all day, not interacting with other people, what's the need for having a physical presence at an office? Again, it depends on the geographies. There are countries where that's just required like in Japan, for example, others not. What do we do with home office and so on and so forth.

There are a lot of questions depending on the roles. And so there will be changes to our real estate footprint, no question, like most companies. But IT investments that we are making in order to solidify the remote for more capabilities even further, et cetera. But again, we've got very significant levers that we have, by and large, not touched.

Next question comes from Patrick Donnelly with Citi Group.

Ari, maybe just on the remote monitoring virtual trial side, a lot of talk about that during the pandemic. I guess as you see general bookings and trials pick back up, are you seeing any notable shift in activity towards that or -- and then how are you guys positioned? Maybe just talk through that then.

In terms of my remote? Yes. Anybody wants to take this?

Well, yes. On the remote monitoring side, and stop me, Patrick, if I'm not answering your precise question here. But the remote monitoring side, we have largely been able to substitute for the work we would've otherwise be doing on site, but not 100%, because there's still the requirement to be on site to check source documentation at the site under FDA guidelines.

Now remote monitoring, we should say, is different than virtual trials. Virtual trials include patient televisits, home health nursing, phlebotomy services, use of patient diaries and things of that nature. So quite different in that regard. So I think sometimes these 2 terms are confused and people are saying that they're doing virtual trials when, in fact, what they're doing is remote monitoring.

Right. Remote monitoring of that which can be monitored remotely, which is not everything, right? Not all components of the trial may be monitored remotely. Virtual trial is a trial that has been designed to be virtual. And that doesn't mean that they won't be on-site monitoring this either. But it uses different technology that has been designed from the start, whereas remote monitoring is a component of a regular trial that just happens to be that some of the task are -- some of the activities are monitored remote.

Okay. That's helpful. Maybe just on the TAS business and following up on Bob's question. You guys have obviously long talked about the quality of resiliency there. So it's encouraging to see the high single-digit growth this quarter. Outlook certainly seems bullish for 4Q and '21. I guess when you think about '21, continuing this high single-digit growth, I guess, what are the 1 or 2 key drivers you see there? Customer conversations, I assume, certainly trending positively, but would love just a little more granularity on the outlook for next year on that side?

Look, we have developed our -- for our guidance on TAS, assuming what we see today continues, and there's no reason -- again, we see it in the worst of the pandemic performed very well. So certainly, when things return to more stable environment, we will continue our high single-digit growth trajectory where we are on now. And so they're not -- there aren't any specific parts of the business.

Remember, the data business is 0 to low single-digit growth, and that's kind of very stable. The analytics and services business, again, was mid- to high single digits and continue so on the high end of that range. The real-world business is just on fire, to be frank. I mean, it was before on fire, I mean, in a positive way in firing on all cylinders. And it was already in a very strong double-digit territory before the pandemic. It continued to be solid double-digit territory before the pandemic and is now expected to continue to grow at that same pace. Technology continues to pick up as the deployments mostly are well on their way, going very well, I might add. And all of that will start generating the license revenue we expect. Not a huge portion of our TAS business, but very nice revenue at nice margins.

So all of that will continue. And so these 4 segments of our business, and when you do the math and you look at the momentum, there's no reason to anticipate. There's no big -- there's no one big good guy that will affect this growth rate and there's no one big bad guy that would affect that forecast. Andrew, you have anything to say?

Oh, no. I was going to say, we're approaching the top of the hour. So I was wondering, do we want to squeeze -- we'll just squeeze in one more question quickly. Operator?

We have a question from Shlomo Rosenbaum with Stifel.

I just want to piggyback off the last question. Ari, maybe if you could talk a little bit about more just on the implementations. I think at one point in time, you mentioned there were like 50,000 seats to deploy. Just like where you are, how long do you think this is going to take? And is there anything changing in terms of competitively? Or is it really the same kind of win rates that you'd talked about in prior earnings calls?

Yes. Thank you, Shlomo. This OCS continued with exactly the same momentum, that is, we win about 2/3 of the time. As I mentioned in my introductory remarks, we have now, since the beginning of the year, won another 45 new clients, and that now is a total of 125 distinct clients. When we talk about the clients, we mean one company. There are competitors out there that count 5 different wins with the same client as 5, we count that as 1. You mentioned 50,000. I think we are now -- correct me if I'm wrong, we're at 63,000, 64,000?

I guess, maybe just over 63,000...

Yes. Yes, close to 65,000 users in deployment and we expect that to continue to grow. We've got a nice pipeline. Lots of conversations, continue to grow. So the momentum here is unabated. No changes. Thank you so much. Thank you, everyone.

Thanks very much. Thank you, everyone, and thanks for taking the time to join us today. We look forward to speaking with you again on our fourth quarter 2020 earnings call. And as always, Jen and I will be available to take any follow-up questions you might have throughout the day.

And this concludes today's conference call. You may now disconnect.