IQVIA sees record $772M free cash flow and reaffirms 2025 guidance while advancing AI and commercial outsourcing

Earnings Call Insights: IQVIA Holdings Inc. (IQV) Q3 2025

MANAGEMENT VIEW

* CEO Ari Bousbib reported that IQVIA delivered another strong quarter, with revenue and profit towards the high end of guidance and the highest quarterly free cash flow ever recorded by the company. Bousbib stated, "Free cash flow was particularly impressive this quarter. It was actually the highest quarterly free cash flow ever, even when you consider the large advances we got during the COVID era for vaccine trials."
* Net bookings in the quarter totaled $2.6 billion, resulting in a net book-to-bill ratio of 1.15x and representing a 5% sequential and 13% year-over-year increase. The company’s backlog reached a record $32.4 billion, up 4.1% compared to the prior year.
* The EBP segment showed strong funding momentum, with each quarter delivering steady sequential growth and reaching $18 billion in Q3, according to BioWorld. The qualified pipeline was up 6% year-over-year.
* Bousbib highlighted ongoing demand for AI-enabled solutions and commercial outsourcing, mentioning, "We are seeing a developing trend of large pharma clients increasingly looking to outsource commercial operations for established brands in specific markets."
* TAS continued to perform well, showing sequential revenue growth in a traditionally flat period. The CSMS segment saw growth, with about one-third of that expansion from an acquisition.
* The company announced a CFO transition: Mike Fedock will succeed Ron Bruehlman as CFO on February 28, 2026, with Bruehlman remaining as a senior adviser.
* CFO Ronald Bruehlman stated, "Our third quarter revenue of $4.1 billion grew 5.2% on a reported basis and 3.9% at constant currency. Now excluding COVID-related work from this year and last, revenue grew 4.5% at constant currency, and this included about 1.5 points of contribution from acquisitions."

OUTLOOK

* Senior Vice President Michael Fedock confirmed the full year 2025 guidance and narrowed ranges for revenue, adjusted EBITDA, and adjusted diluted EPS. Fedock stated, "We expect revenue to be between $16.150 billion and $16.250 billion, representing year-over-year growth of 4.8% to 5.5% or 5.2% at the midpoint."
* Adjusted EBITDA guidance is $3.775 billion to $3.8 billion and adjusted diluted EPS is expected to be between $11.85 and $11.95, up 6.5% to 7.4% versus prior year. Fourth quarter revenue guidance is $4.204 billion to $4.304 billion, with adjusted EBITDA of $1.33 billion to $1.58 billion and adjusted diluted EPS of $3.35 to $3.45.
* Guidance assumptions include $100 million of COVID-related revenue step down, approximately 100 basis points of FX tailwind, and 150 basis points of contribution from acquisitions.

FINANCIAL RESULTS

* Revenue for the third quarter was $4.1 billion, growing 5.2% year-over-year. Adjusted EBITDA for the quarter was $949 million, up 1.1%. Adjusted diluted EPS was $3, a 5.6% increase year-over-year.
* Year-to-date revenue was $11.946 billion, up 4.4% reported. Year-to-date adjusted EBITDA reached $2.742 billion, and adjusted net income was $1.48 billion or $8.50 per share.
* Cash and cash equivalents totaled $1.814 billion, with record free cash flow of $772 million in the quarter, and net debt of $13.143 billion. The net leverage ratio ended the quarter at 3.52x trailing 12-month adjusted EBITDA.
* CSMS quarterly revenue was $209 million, up 16.1% reported. Technology & Analytics Solutions revenue for the third quarter was $1.631 billion. R&D Solutions revenue was $2.26 billion.

Q&A

* David Windley, Jefferies: Asked about the "see more, win more" strategy and its impact on RFP flows, win rates, and pricing. CEO Bousbib responded, "The specifics of our see more, win more strategy... has borne fruit as well in the sense that we've been looking at markets that we previously hadn't been touching... The pricing conversation is a little bit overdone in my opinion... We don't see that trend continuing."
* Justin Bowers, Deutsche Bank: Asked about the sustainability of momentum in TAS and R&DS into 2026. CEO Bousbib explained, "I would be surprised if revenue growth in '26 is not at least the same or better than the growth that we are seeing this year."
* Elizabeth Anderson, Evercore ISI: Inquired about differences between pharma and biotech. CEO Bousbib described large pharma pipeline reprioritizations as "essentially... completed," with cancellations back to normal levels.
* Michael Cherny, Leerink Partners: Asked about inorganic growth in TAS and R&DS. CEO Bousbib and SVP Fedock outlined recent acquisitions, including NEXT Oncology, and their revenue contributions.
* Shlomo Rosenbaum, Stifel: Questioned TAS subcomponent performance. CEO Bousbib noted real-world evidence was "very, very strong" and consulting returned to positive growth.
* Eric Coldwell, Baird: Asked for TAS Q4 guidance and mega trial status. CEO Bousbib and CFO Bruehlman confirmed no change to TAS full year guidance and clarified mega trial revenue is not in Q4 guidance.
* Jeffrey Garro, Stephens: Asked about AI's impact on client business models and internal margin improvement. CEO Bousbib discussed progress on AI agents and long-term potential for margin gains.

SENTIMENT ANALYSIS

* Analysts pressed for clarity on sustainability of growth, guidance for future periods, TAS segment trends, and mega trial timing, reflecting a neutral to slightly positive sentiment as they sought confirmation and details.
* Management maintained a confident and constructive tone in both prepared remarks and Q&A, with Bousbib expressing, "I say that with a certain amount of confidence," and reiterating guidance and the normalization of industry dynamics. Compared to last quarter, management’s tone was more assured regarding industry stabilization and internal performance.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was reaffirmed for the full year, with ranges narrowed and the midpoint maintained, indicating continued confidence.
* Bookings momentum accelerated, with net bookings up 13% year-over-year and a higher net book-to-bill ratio versus Q2. Backlog reached $32.4 billion compared to over $32 billion previously.
* Free cash flow more than doubled quarter-over-quarter, reaching a record $772 million (Q2: $292 million).
* Management’s tone shifted from cautious optimism (amid an unsettled environment in Q2) to a more confident stance, citing improved industry dynamics and fully processed large pharma reprioritizations.
* Analysts’ focus shifted from environment-driven uncertainty to detailed questions on guidance execution and segment-specific performance.

RISKS AND CONCERNS

* CEO Bousbib noted that while pricing pressures earlier in the year led to some discounts, "We don't see that trend continuing" and pricing has "returned to normal levels."
* Management described margin headwinds from FX tailwind and mix, noting CSMS is lower margin and was stronger in Q3.
* Questions were raised regarding mega trial timing, but management confirmed none of this revenue is factored into Q4 guidance.
* No unusual cancellation activity was reported, and reprioritization-driven cancellations in large pharma are considered behind the company.

FINAL TAKEAWAY

IQVIA delivered strong Q3 results with record free cash flow and robust bookings, reaffirming full year guidance and highlighting continued momentum in AI adoption, commercial outsourcing, and large pharma normalization. Management emphasized improved industry conditions and confident execution, with a focus on sustaining growth and margin improvement through ongoing innovation and disciplined financial management.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/iqv/earnings/transcripts]

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