Q3 2026 IQVIA Earnings Conference Call - IQVIA HOLDINGS INC

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA third quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like a question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one again. As a reminder, this call is being recorded. Thank you. I would now like to turn the call over to Kerry Joseph, Senior Vice President, Investor Relations. Mr. Joseph, please begin your conference. Thank You, Altaria. Good morning, everyone. Thank for joining our third quarter 2026 earnings call with me today are re boosby chairman and chief executive officer mike feedoff executive vice president and chief financial officer eric sherbert executive vice and general counsel clarissa willett the senior vice president financial client analysis and katie ward vice president 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 presentation section of our IQVIA investor relationship website at ir.iqvia.com before we begin i'd like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements after results could differ materially from those stated or implied by forward-lookings statements due to risk and uncertainties associated with the company's business which are discussed in the company following the securities and exchange commission including our annual report on form 10k and subsequent sec violence in addition we will discuss certain non-gap financial measures on this call which should be considered a supplement to and not a substitute for financial measures prepared in accordance with gap a reconciliation of these non-gap measures to the comparable gap measures is included in the press release and conference call presentation as previously disclosed we implemented a new segment reporting structure effective january 1 2026 in conjunction with this change prior period amounts have been recast to conform to this reporting structure i would now like to turn the call over to our chairman and ceo ari busi thank you gary and uh good morning everyone thank you for joining us today to discuss our third quarter results the team delivered great numbers the market environment has continued to improve but our performance improved even more our organic growth rates year-over-year accelerated meaningfully 2x for commercial and nearly 3x for clinical our margins expanded and free cash flow was very strong our win rates were higher in the quarter which led to our strongest clinical bookings in four years our differentiated ai offerings are increasingly contributing to that momentum with continuing adoption of our agentic solutions. In fact, Acuvia has now deployed 415 agents to date. Earlier this month, we brought together more than 400 attendees at TechIQ to share our latest clinical and commercial AI capabilities. This event is our annual customer event focused on technology which this year took place in boston and included our technology partners nvidia microsoft aws snowflake and viva our ai leadership continues to earn industry recognition including multiple industry awards for ai and technology innovation across life sciences and healthcare while we continue seeing more adoption of these capabilities across our customer base let me spend a couple of minutes on the results for the quarter total revenue for the quarter exceeded the high end of our guidance race representing year-over-year growth of eight percent on a reported basis at constant currency growth was even stronger at 8.6 percent organic revenue growth was approximately 6% year-over-year, well over two times the rate we delivered a year ago. Third quarter adjusted EBITDA was above the high end of our guidance as well, representing year- over-year growth of 8.7%. Adjusted EBITD margin as a result expanded by 20 basis points, the second consecutive quarter with margin expansion this year. Third quarter adjusted diluted EPS also exceeded the high end of our guidance range and increased 11.3% year-over-year. The beat was driven entirely by the stronger operational performance. Now onto segment performance. On the clinical side, revenue grew 8.7% reported of which almost seven percent was organic year over year which is nearly three times last year's organic growth rate we delivered 3.2 billion dollars of net new bookings our highest in four years and 15 above last year with notable strength in full service and yes the book to build was 1.2 in the quarter but more importantly this is a long cycle business and i'd like to highlight that our last 12 month net new bookings have now increased for five consecutive quarters reaching 11.7 billion dollars which is up 14 year over year we think this metric is one of the best forward looking indicators we have in support of long-term growth looking ahead demand indicators are encouraging the ebp funding environment continues to be very strong funding has reached 90 billion dollars year to date up more than 85 percent year over year and already above the total for all of last year according to BioWorld. Similarly, clinical trials starts year to date are up high single digits. RSP flow continued to grow at a healthy rate at high single digits as well compared to last year. Our strong performance of course reflects an improving market environment But we also had good operational execution with win rates that continued to tick up two, three points. In commercial solutions, revenue grew 6.9%, of which 4% was organic, which is double last year's organic growth rate. we had good growth across our three sub-segments. Information offerings which helps our clients understand the market, analytics and consulting offerings which help our clients plan their go-to-market strategies, and our other commercial solutions that help them engage with patients, healthcare providers, payers, and channels. We've now delivered four consecutive quarters of strong revenue growth in commercial, and our pipelines remain at record levels. Looking forward, the demand outlook remains favorable with new drug launches up more than 40% percent here today our own pipeline showing healthy growth and decision timelines continuing to shorten now i usually give you some cover on the business activity in the quarter and today i'd like to do that but focus on examples where ai was a clear differentiator let's start with clinical. Our predictive clinical development capabilities utilize AI to help sponsors design better studies, identify risks earlier, and bring new therapies to patients faster. Here are a few examples of how this is playing out in some recent awards. A large pharma client needed to deliver multiple phase three studies in the same autoimmune indication across nearly 50 countries. Here, our AI-enabled country and site modeling solution optimizes patient identification and enrollment, shortening the overall program timeline by nine months. In another example, an EVP selected IQVIA for a Phase III oncology program. Critical to winning this award was our AI-enabled protocol and site optimization tools, which accelerate timelines and reduce operational risk. Finally, IQVIA was selected by an EVP for a Phase III cardiovascular outcomes study. This is exactly where our scale and integrated AI capabilities make a big difference. We are layering AI agents to bring together clinical delivery, laboratory services, and electronic patient assessments under one model to identify issues earlier, reduce handoffs, and proactively mitigate execution risks. Switching to examples in commercial. We continue to evolve the way we partner with clients. Successful adoption of our AI offerings in commercial organizations within our clients is deepening client trust in IQVIA. And as that trust grows, clients are increasingly looking to us to bring more of our A.I.-enabled capabilities to their organizations. For example, a top five pharma client selected IQVIA to build and maintain an agentic platform that provides on-demand insights from complex real-world healthcare data. This will help the client make faster market access decisions and adjust commercial models nearly real-time as prescribing patterns and patient outcomes evolve. We are also seeing AI help expand our role in patient services. The top 10 pharma companies selected IQVIA to deliver an integrated support program for its rare disease portfolio. Our AI-powered solutions adapt and shape interactions by factoring in patient mood and sentiments. That allows, in turn, the client to automate tasks such as benefits verifications and case management. The program allows patients to gain access to the therapy, start treatment sooner, and better adhere to the treatment over time. Another example. A large pharma client deployed a recently launched IQVIA Explorer solution. uses agentic AI workflows that integrate disparate data sources to answer complex questions spanning areas such as which cohorts of patients are taking the therapy, how therapies are being utilized in patient treatment, and help measure adherence by patient segment. The client can now execute commercial activities in minutes, compared with weeks or months previously. Let me now turn it over to Mike for more detail on our financial performance. Mike? Thank you, Ari, and good morning, everyone. As a reminder, we implemented a new segment reporting structure effective January 1, 2026. In conjunction with this change, prior period segment amounts have been recast to conform to this reporting structure. Now let's start by reviewing revenue. Third quarter revenue of $4,428,000,000 grew 8% on a reported basis and 8.6% at constant currency. Organic revenue growth within the quarter was strong at approximately 6%. Total solutions revenue for the third quarter was $1,789,000,000 up 6.9% on a reported basis and 7.9 percent at constant currency. R&D solutions third quarter revenue was $2,639,000 of 8.7% on reported basis and 9.1% at constant currency. Year-to-date, total company revenue was $12,947,000,000 of 8.4% on a reported basis and 7.7% at constant currency. Organic revenue growth was strong at over 5%. Commercial solutions revenue was 5,336,000.000 of 9% reported and 8.3% at constantly currency. And R&D Solutions revenue was $7,611,000,000 of 8% on the recorded basis and 7.4% at constant currency. Now moving down to P&L. Third quarter adjusted EBITDA was $1,032,000.000 representing growth of 8.7% year over year, while year-to-date adjusted EBITA was $2,958,000.,000. and in the quarter adjusted EBITDA margins expanded by 20 basis points. Third quarter GAAP net income was $350 million and GAAP diluted earnings per share was $2.10. Year-to-date GAAP net income is $880 million or $5.24 of earnings per diluted share. Third-quarter adjusted net net income was $557 million, and adjusted diluted earnings per share was $3.34, representing growth of 11.3% year-over-year. Near-to-date adjusted net income is $1,576,000, or $9.38 per diluted share, up 10.4%. Now, looking at RDS bookings, the R&D Solutions net new bookings in the quarter were $3,200,000 a 15% increase year over year, resulting in a 1.2 book to bill. I should also note that cancellations remained in the historical range. And as we noted during the last earnings call, the company conducted a detailed review of inactive trials in our backlog, resulting in an adjustment to backlog for approximately $2.1 billion. This backlog adjustment has no impact on historical financial results, 2026 guidance, net new bookings, or next 12 months revenue from backlog testing. Obviously, should any of these same trials resume, the value will be added back to backlog and will not be included in future bookings or book-to-bill metrics. As of September 30, 2026, R&DS contracted backlog with $32.6 billion, and the next 12 months of revenue from this backlog is $9.4 billion, which is up 10% versus prior year. And as discussed, given the long cycle nature of the business, it is more meaningful to focus on the longer-term booking trends. For the quarter, the last 12 months net new bookings were $11.7 billion, an increase of 14% year-over-year. And importantly, this metric has been steadily increasing each of the past five quarters and points to continued momentum in our business now 30 for the balance sheet as of september 30th cash and cash equivalents was 2 billion 249 million dollars in gross debt with 16 billion 67 million dollars resulting in net debt of 13 billion 818 million dollars our net leverage ratio ended the quarter at 3.45 times trailing 12-month adjusted EBITDA. Third quarter cash flow from operations was $825 million and capital expenditures were $168 million, resulting in free cash flow of $667 million, representing 120% of adjusted net income. Let's now turn to guidance. We are raising our full year 26 guidance for revenue for adjusted EBITDA and for adjusted diluted earnings per share. We now expect revenue to be between 17 billion 350 million dollars and 17 billion 500 million dollars representing year-over-year growth of 6.4 to 7.3 percent and reflects over one point constant currency organic revenue growth acceleration versus prior year. This revenue guidance now assumes approximately 200 basis 250 basis points of contribution from acquisitions based on acquisitions completed to date and acquisitions we expect to have completed by the end of the year the guidance also assumes approximately 20 basis points of tailwind from foreign exchange which is unchanged from our previous guidance and by the way this implies that there is an approximately 70 basis point headwind from foreign exchange to q4 rent we are also raising adjusted ebitda to be between 4 billion 25 million dollars and 4 billion 55 million dollars growing 6.3 to 7 percent year over year reaffirming flat margins year over a year at approximately 23.2 percent given the mathematical distortion pass-through revenues have reported margins i would also want to take this opportunity to remind everyone to focus more on the EBITDA dollars as it is a more meaningful measure of operational performance. We are confident in our EBITD dollar guidance, irrespective of the pass-through contributions to our reported revenue. And finally, we are also raising adjusted diluted EPS to be between $12.90 and $13, up 8.2 to 9.1 percent versus prior year, or 8.6 percent at the midpoint and as we close out 26 we're sure we want some insight into 27 expectations so i want to take this opportunity to formally invite you to our upcoming investor day on december 1st whereas we normally do we will share a broad framework of what we see shaping up for next year and as always we will provide detailed guidance for 2027 concurrent with the release of our full year 2026 and fourth quarter earnings in february 2027 but in the meantime to help you with your models i want to share the run rate assumptions we see exiting the fourth quarter for below the line items we expect net interest expense for the fourth quarter to be around 210 million dollars we expect just over 160 million dollars in depreciation and amortization for the quarter and we are expecting our weighted average diluted share count to be approximately 169 million shares and just as a reminder q4 compares are very difficult so the implied growth rates should not be interpreted as a deceleration in our business and we were confident in the momentum that the metrics that we highlighted previously would apply for the future and both This guidance assumes that foreign currency rates as of October 26 continue for the balance. So to summarize, IQVIA delivered an outstanding financial results with third quarter revenue, adjusted EBITDA, and adjusted diluted EPS exceeding the high end of our guidance. Organic revenue growth rates accelerated year over year across both commercial and clinical segments as demand continued to rise ai continued to be a tailwind to our business and our win rates continued to improve adjusted even the dollar through nine percent and we expanded adjusted even the margins 20 basis points in the quarter we had strong free cash flow performance representing 120 percent of adjusted net income rnds net new bookings for 3.2 billion dollars growing double digits year over year with another quarter of very strong full service bookings we raised our full year 2026 guidance for revenue adjusted EBITDA and adjusted looted earns per share and we look forward to seeing you in person on December 1st at our investor day now with all that let me hand it back to the operator for Q. Thank you at this time I would like to remind everyone in order to ask a question press star then the number one on your telephone keypad we request that you please limit yourself to just one question so that others in the queue may participate as well. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Shlomo Rosenbaum with Stiefel. Your line is open. Please go ahead. Hi. Thank you very much for the question here. So, Aria, I wanted to ask you if you could go into a little bit more about the uniqueness of IQVIA's ability to deploy data and technology in an agentic world. And, you know, you touched on some of the examples, but can you just talk about things that just other competitors just can't do because they don't have the data, whereas IQVia can do some of these things? and then also maybe discuss about how your clients view this and how you think about this in terms of being able to charge for this differentiation. Okay, well, look, this would be the subject of a very long conversation. But look, how can I put it? AI is not just another technology. it's from our point of view it's a new way of doing business it's changing the way customers engage with their own activities and how they engage with iqbf so stepping back to successfully deploy ai there's a pre in knowing the business if you understand ai simply as an opportunity to do business a different way. Meaning first, content is important. You need the proprietary information that powers AI. That means you need a globally sourced, de-identified, curated, fit for purpose, integrated, interoperable, compliant with regulatory privacy, et cetera, etc etc and ready for extraction data now we got all of that second in addition to content you need context i think people are realizing that you do before air effectively you need context you need deep expertise in life sciences to understand that information we've got that too And thirdly, importantly, I'm looking for, we're starting with content, context, what else here? Comprehend. You need to comprehend what you're looking at. That is, you need to interpret what the information is telling you and know how to apply it to make decisions faster and more accurately. So when you think about AI agents, you know, they're not just, it's not like you can use an AI tool, whether it comes from Entropic or OpenAI or anywhere. AI agents are constructs that operate a workflow in lieu of humans. We build them using all these tools. We don't have to invent the tools that are available. you know we spend money with all of these massive AI companies they just have generic tools that we utilize to construct agents depending on the use case obviously again the agent is only one part you obviously need the content you need the context and you need these interpretations insights that enable you to construct the agents and operate them and very often because of all the specific issues related to operating workforce in healthcare, the transparency, the traceability of the data, etc., etc., and the compliance aspect usually humans in the room as you do in many other industries, but in our industry in particular. So, that I think is, you know, what makes and by the way, we've been at this for a while, as you know. So it's not that we're trying to catch up we don't need headlines we're working with our clients um and it's slowly but surely changing the way we do business and changing the relationship with our clients and making us even more integrated within our clients workflows thank you your next question comes from the line of elizabeth anderson with evercore ici your line is open please go ahead hi guys um good morning and thanks so much for the question um i wanted to dig in a little bit to the gross margin improvement obviously that was a highlight particularly given the higher pass-through mix so can you talk to us maybe in a bit more detail about the pushes and pulls that you know how much is the pass-through mix sort of causing like degradation of that and sort of what are the levers on the upside so we make sure we understand that trajectory uh properly thank you yeah thank you for the question elizabeth yes uh you're absolutely right and thank you for pointing out the the improvement in gross margins um the pass throughs across the enterprise for certainly headwinds on the gross margin line probably about 70 basis points so it really highlights the um underlying strength in our in our operational uh execution okay and then just in terms of that we should just think of that as broad elizabeth yeah i just want to give you some i mean i i have here in front of me the the detail of the adjusted EBITDA margin, which expanded 20 bps, what the non-operation items, which are the 70 bps that Mike highlighted, we also had, I guess, 10 bps of currency impact. So let's all say 60 or so bps of net non-operational headwind for our margins was more than offset by 80 bps operational improvement. So that's, again, the cost containment, the AI gentrification of our own processes, productivity programs, et cetera. Everything that we did there, that contributed, in aggregate, 80 bp of . So you see that underlying our margins, if you eliminate pass-throughs, and if you theoretically were looking at margins, you know, without the pass-thoughs, just on the old places, just on service revenues, you know that margin would have improved 80 bps. That adjusted margin would've improved 80 BPS. And obviously it's significantly higher than the delivered margin of the 20-point to 2% rise would be more in the high 20s, about 30%. Yeah, that's super helpful. Thank you for that context. Thank you. Your next question comes from the line of Jilandra Singh with Truist Securities. Your line is open. Please go ahead. Thank you, and thanks for taking my questions. congrats on a strong quarter i want to go back to bookings in the quarter very strong booking strength despite the normal seasonality you generally see in 3q was there anything unusual in the timing or mix of 3q awards and 3q i was just broad-based market strength or your win rate improving just trying to understand if we should expect a normal seasonal step up in q4 from bookings point of view yeah no uh thank you for the question it really was broad bait you know that earlier this year there were all these concerns that you guys all voiced about well that's it you know it's over full service is over everyone is going fsp people are insourcing and so on so forth we warned you that that is not the case and that the pendulum swings back and forth but long term the outsourcing trend is absolutely intact and this is again the second quarrying role that we see very very strong bookings in full service in fact year over year they were out by a lot i don't even want to give you the numbers because um it's so big um now the the flip side obviously uh from an optic standpoint is full service comes with fast news and so you know back to the elizabeth question we we then have a an impact on reported margins and i caution you to make sure you look under the covers and you understand the operational improvements there but yeah to your question really good strength across the board and really that was true for large pharma where we see uh continued attic and win rates and consequent on all these strategic partnerships that we have structured over the past two years, which we've talked about at length in prior calls. All of those are now starting to pay off as we continue to build on a growing stream of RFPs and continue to win more and more of those opportunities with large pharma and again with ebp similarly we talked about astrology there and i also um is continued to grow the bookings in ebps were very strong um again you know if you look at i would point you to our ltm net new bookings um which this uh at the end of this past quarter was 11.7 billion dollars and you look at that number, each of the past five quarters, that number has continued to grow consistently and it was up 14% year-over-year. We think this is an excellent metric to focus on in terms of understanding sustainability of long-term growth in the business. And again, broad source um broad strength in um fso fsp um strong outsourcing any other comments michael no no i think and just no other changes are expected in uh q4 seasonality yeah nothing unusual um you know therapeutically or otherwise really a good good It's an excellent quarter from a bookie standpoint. Thank you. Great. Thanks a lot. Your next question comes from the line of Eric Caldwell with Baird. Your line is open. Please go ahead. Thanks very much. Good morning. I think my only concern that I've had here recently is just the below-the-line items, and you gave us an insight into your view on the fourth quarter. Should we be taking that $210 million, I think you said, and just annualizing that into 2027 at this point, or are there other parameters or dynamics to consider as we think about interest expense modeling for next year? And then just one other quick one, I am curious if you can give us the parameters for the backlog scrub, what exactly made the cut or didn't make the cut in terms of your review when you looked at what to remove for now. If you could give us those details, it would be appreciated. Thanks very much. Well, I guess, yeah, maybe I'll give that to Mike, but just, you know, the review of the backlog, and Mike, you can add it in detail if you want, is basically trials that have been in the backlog for a long time. We reviewed that in detail and long time means over 18 months plus, I think that was kind of one of the criteria and in conversation with customers, there was no reason to assume that the work was going to resume in the near term. And so for clarity and cleanliness and more accuracy in visibility, we thought it was good idea similar to what the competitor has done to just simply remove it you know in the past we would have just left them there we know that they are inactive we wait for a resumption possibly of this but you know it cannot become stale and so it's better and as it might indicate in its introductory remarks if those trials come back which sometimes they do by the way even when they've been around inactive for a year plus they come back which is why when we extend we we look at way more than a year like 18 months two years type of inactivity but when they do come back if they do come back then we will simply add them back to the backlog directly we certainly take that back as a booking so that's the way we we decided to um to make the adjustments i hope that gives you more color and then the first question was on just about the below the line yeah so um yeah eric your team actually does a pretty good job at uh reviewing our debt stack and looking what's uh what's coming up for for next year with refinances and swaps and things like that so um i would focus mainly there there's nothing else below the line on depreciation or tax or or anything related to call out there right but i mean the question was that kind of that run rate more or less would be except for i said and the answer is about yes you know i don't know about yes and we have some we have something in here yes yeah it's a good number to start with and obviously we use just whatever the publicly available forward curves are um to do the projections thanks eric thanks guys appreciate it okay Your next question comes from the line of Luke Serget with Barclays. Your line is open. Please go ahead. Great. Thanks for the question, guys. Just two quick ones here, unrelated. On the commercial solutions you guys have been talking about, you've had record backlog and strong bookings there over the last couple of quarters. understand that it bounces around a little bit but saw a little bit of a decel in the 3Q just trying to figure out when the timing of this is the conversion still elongated and how that's shrinking and when we can start to see this accelerate growth and then the second one is on the backlog and the adjustments just to follow up on Eric's question I guess as you think about what's been in the backlog are you guys getting any more stringent on on what you're deciding to include there? Is it like a, you know, something that's going to start to progress within the next 12 months? Just be, you can avoid these adjustments. Okay, so now I guess everyone has two questions. Thank you, Eric, for setting the precedent. Okay, you just because we allow Eric for two questions, we're gonna allow everybody you know that's that okay um all right on commercial yeah i mean look uh we don't look at backlog for commercial as you know commercial is a is a more of a short term necessarily but it's a lot shorter cycle than rnds so i mean looking at backlog there that makes obviously we have uh performance obligations in some of the longer term contracts that we have on commercial execution for example commercial outsourcing um but you know even the data contracts are typically you know one year renewable evergreen type and so on so we don't put that in backlog you know most of the business in um in our uh commercial solution is not backlog so we do not refer to that as backlog no conversion none of that what we speak about is pipelines That means, you know, there are projects that request proposals and our pipelines, as I mentioned, are at record levels and our win rates are also up and the decision timelines are shortening, which these are the kind of the main demand indicators that we look at from a forward looking perspective. and we see those to be very strong. I also mentioned from a market standpoint that approvals are up 40%, we said, year over year. And again, drug approvals typically are followed within six months to a year or thereabouts by product launches. And product launches are the bread and butter of what we do this is where we are um you know spending a lot of time with our clients you know helping them uh you know they with their launch strategy their pricing with their interactions with the channels with their marketing to hcps um we have promotional programs multi-channel marketing programs with their interactions retailers providers country access market access all of those activities that are the bread and butter of our commercial business are really associated with launches so the fact that we have um product approvals that have up over 40 percent is a strong indicator the overall market is strong so that goes well for our commercial business uh yeah i mentioned the third quarter no the quarter is out um very nicely uh organically, it's double the rate that we had a year ago, the third quarter. I wouldn't look at sequential, especially third quarter, to be honest, third quarter is very volatile. It was like up and down a few points, sequentially always, if you go back many, many years, and that's just typical of the third-quarter, a very large business in Europe. Not that Americans won't take any vacation in august but the europeans do uh for a long time and it typically it's it's a just a slower thing you know in europe that creates a more volatility but i wouldn't read more into it the business again is doing very well uh you had a question yeah luke about about the backlog the short answer is is no we're very comfortable with what we put into our backlog and in fact you know being on an as contracted basis we feel that that's uh that's best in class practice so no change there yeah only contracted uh four and uh you know uh uh bookings are bookings otherwise we don't we wait for contracts to be signed and sometimes you'll be the timer a customer awards uh uh something to us uh that's in the rbs business then uh you You know, it could take a month, two months sometimes before, you know, all the dots and the NTs are crossed and so on and so forth. And the contract is actually signed and executed. And only at that time do we put it into our backlog. And there's nothing changed to that. Thank you. Great. Thanks for the question. Your next question comes from the line of David Windley with Jefferies. Your line is open. Please go ahead. Good morning. Thanks for taking my question. Ari, I wanted to ask a kind of a R&DS horizontal question, if I could. It seems like you've been through, you, the industry, has been through a couple years' worth, maybe 24 and 25, or 23 to 25, a heavy re-procurement cycle among your larger clients, and that brought on a lot of focus on FSP. And then biotech funding was low. And so the absence of them with FSO, you know, was also painful. And as we're coming back out of that, biotech funding is helping them to come back with FSA. And maybe between the re-procurements, the big pharmas are also, you Know, doing some FSA, I wonder if you agree with that? If, if biotec has been kind of the leader out of That trough, is pharma starting to catch up and are you still seeing re-procurement activity go on is there still opportunity wallet share opportunity for you and how is that playing out thanks apologize for the multi-parter yeah no i mean it's a it's great question but you know yeah i mean look the the uh the answers to your question are in your question you you know the industry uh you know you're one of the best observers of the industry. So you hit all the correct points. I mean, look, we're just coming out of a two to three-year period of multiple headwinds. First, we had the post-COVID bubble deceleration, both at large pharma and in terms of the EBP funding. Second, we We had the IRA, which introduced those concerns about drug pricing negotiations and so on and so forth, which kind of started slowing down large pharma for sure. And in terms of their discretionary stand first, which we observed in our commercial business immediately, and then sort of pausing large capital investments and new programs. And then we had the next administrations bringing up drug prices again through the MFN and we had the tariffs and we had all of that drama. All of that trauma created huge uncertainty. That uncertainty caused large pharma to pause their decision making. We saw decision timelines extend dramatically, okay, I mean, by a lot. And so, and that kind of, all of that caused significant demand constraints. Now, during that time period, pharma took the opportunity to step back and renegotiate their strategic partnerships, to re-open their strategic partnerships. We, that lasted a year, year and a half, maybe, and literally every single last pharma did that, and it was over not too long ago, we feel very good about that process and what happened. We came out ahead of where we were before in terms of the scope, the number of partnerships we are in, and the scope of what those partnerships include, even within the large farmers where we were in. So, you know, I said this before and I'll say it again, the largest, it has further segmented the CRO industry into essentially, let's say, three groups. the largest ones and then the small mid ones and then you have a long tail of little players that are not part of this conversation. But the largest one essentially emerged ahead. We believe we emerged more ahead than the others. On the back, I believe, of our broad spectrum of capabilities, AI, et cetera, and that's been proving it out in our win rates today. Second, the smaller tier of CRO surprises, I think, lost out overall, and that is going to become apparent over the next two or three years, even if it's not today, but I know that it's going to be apparent because we know who's out, and they're all out, basically, and and that's what has happened with large farmers. Now, on the EBP side, much more funding. Again, 85% growth funding year to date, year over year, 85% increase in funding. It's a wide number. Again, before COVID, the annual funding in EBP funding, and this is using consistently the same source and the same exact parameters. Before COVID, the annual span was in the $50 billion range for between 2015 and 2020. It is this year, year to date, three quarters, $90 billion. So it's almost double what the annual rate was before COVID. This is funding an increasingly large and more opportunities. We think there are almost 17,000 EVPs around the world. It's a vast market, it's a great market, it's dynamic market. Certainly, as you said yourself in your question, EVP is growing at a much higher rate in terms of spending than large pharma. We believe the long-term growth rate of R&D spending large pharma is in the low single digits maybe two to three percent underlying growth long term uh EVP is more in the upper single digits right so i'm taking eight nine percent and that's clearly driving uh growth in our business and as you know we have multiple strategies to grow that part of the business including the expansion of our capabilities to early phase engagement and we've beefed up our capabilities there we've hired a large number of ex-sdaers to engage with biotech much earlier at the regulatory stage we have acquired the discovery capabilities we've acquired phase one capabilities and i can tell you we continue to progressively in that field to increase our engagement with EDPs with a set of capabilities that are required to further penetrate that customer base. Thank you for your question and the opportunity to lay out my view on what's going on in the industry. Your next question comes from the line of Michael Czerny with Learing Partners. your line is open please go ahead thank you okay um yeah maybe just a direct follow-up there to uh dave's question regarding the market contract in particular the role of ai as you have developed your own ai capabilities are you seeing the dynamics of contracting changes showing up i.e a push and pull relative to how your pharma sponsors want to charge for your work that encompasses AI. Are there any thoughts about value-based contracting and savings over time? What do you think the role is beyond just differentiating on winning share? AI will play in the way that you can essentially manage and contract to certain profit levels going forward. Thank you. Thank you, well, look, again, big question. On the commercial side, AI is essentially an incremental revenue opportunity, okay? We are providing our clients with new ways of doing business that enable them to automate and reduce the amount of labor that they themselves use in their operations to conduct business so it's a great opportunity for our clients to improve their productivity and improve their profit contributions uh and for us we essentially um providing additional services and uh subscriptions to our agents or or licenses so that's on the commercial side on the uh at least obviously you should be at good margins. On the R&D side, I would differentiate between large pharma and EVP. EVP, as you know, is fully outsourced and it really requires a lot more handholding from the beginning. So the relationship is different. We will be using AI here to optimize timelines to speed up um processes to ensure that clients get to market the product gets to market a lot faster and to patients a lot fast you know i mentioned an example was with the large pharma where we're going to cut nine months out of the trial nine months is huge in this business you you can just take a look at what one month of sales at a very, very high margin represent for a pharma company. And so nine months is huge. In comparison, the cost of the clinical trial is nothing. Now, that doesn't mean that large pharma is no longer negotiating a contract, But large pharma essentially has negotiated, in the process I described earlier, in reviewing and renewing partnerships, the rates, okay? So that is essentially done now, obviously, when we compete for a specific trial. So there always are negotiations at the end with procurement and so on and so forth. AI play a role? No, AI is essentially an enabler of faster timelines, more accuracy, better visibility and transparency in the process of conducting the trial. And really, this is what the conversations around AI are. Is it going to have an impact on our productivity for us in terms of yes we mentioned that we are deploying agents and our clients operations and we're also deploying agents at our operations there's no question about it from finance to hr to a variety of other overhead activities and automated tasks that we use to standardize and perform in offshore centers a lot of them you know whether it's software development whether it's software testing all of that yes so over time that will certainly help with our own margin expansion plans and productivity programs thank you thank you mr joseph i turn the call back over to you Thank you, operator. Thank you everyone for taking the time to join us today and we look forward to speaking with you again on our fourth quarter 2026 earnings call. The team will be available the rest of the day to take any follow-up questions you might have. Thank you and have a good day. This concludes today's call. Thank you for attending. You may now disconnect.