IQVIA Holdings Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; this is an annual report, not a standalone Q4 report. IQVIA provides analytics, healthcare data and technology, clinical research, and contract sales and medical services, primarily to life sciences customers.
Financial performance
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $14.410 billion | $13.874 billion | +3.9% reported; +7.8% constant currency |
| Income from operations | $1.799 billion | $1.393 billion | +29.1% |
| Operating margin | 12.5% | 10.0% | +2.5 percentage points |
| Net income attributable to IQVIA | $1.091 billion | $966 million | +12.9% |
| Diluted EPS | $5.72 | $4.95 | +15.6% |
| Net cash from operating activities | $2.260 billion | $2.942 billion | −23.2% |
Cost of revenues, excluding depreciation and amortization, was 65.1% of revenue versus 66.5% in 2021. SG&A was 14.4% of revenue versus 14.2%. Interest expense rose to $416 million from $375 million, primarily due to higher floating-rate borrowing costs and increased net debt. The effective tax rate increased to 19.1% from 14.5%.
Segments
| Segment | Revenue | Revenue change | Segment profit | Profit change |
|---|---|---|---|---|
| Technology & Analytics Solutions | $5.746 billion | +3.8% reported; +8.7% constant currency | $1.550 billion | +6.3% |
| Research & Development Solutions | $7.921 billion | +4.8% reported; +7.7% constant currency | $1.695 billion | +14.8% |
| Contract Sales & Medical Solutions | $743 million | −5.2% reported; +2.7% constant currency | $42 million | −44.0% |
Segment profit is a company-defined measure before certain corporate costs, depreciation and amortization, and restructuring costs; it is not consolidated operating income.
Balance sheet and liquidity
- Cash and cash equivalents were $1.216 billion, down from $1.366 billion. Total debt principal was $12.797 billion, versus $12.185 billion; debt less cash was approximately $11.6 billion.
- Of the $1.5 billion revolving credit facility, $425 million was drawn and approximately $1.07 billion was available at year-end. No additional revolving commitments were available under the receivables financing facility.
- Current assets were $4.981 billion and current liabilities $5.578 billion. The company reported compliance in all material respects with debt covenants and said available liquidity and expected operating cash flows should cover requirements for at least 12 months.
- Operating cash flow fell by $682 million, mainly reflecting lower cash from unearned income and accounts receivable/unbilled services. Investing cash use was $2.006 billion, including $1.315 billion for acquisitions and $674 million for property, equipment and software. Financing cash use was $329 million.
- IQVIA repurchased 5.5 million shares for approximately $1.168 billion in 2022; $1.36 billion of authorization remained at year-end. No regular cash dividend was declared or paid.
Changes, outlook and risks
- Management reported broad demand and $29.2 billion of remaining performance obligations at year-end; approximately 30% was expected to be recognized over the next 12 months. Research & Development Solutions backlog was $27.2 billion, with approximately $7.3 billion expected to convert to revenue in the next 12 months. Backlog and performance obligations are not guaranteed revenue and may be affected by delays, scope changes or cancellations.
- Reported revenue growth was materially below constant-currency growth, reflecting foreign-exchange effects. Approximately 30% of 2022 revenue was denominated in currencies other than the U.S. dollar.
- COVID-19-related work declined in 2022; management expected a further decline in 2023 if pandemic trends continued. Management also cited wage inflation, employee attrition, investigator-site staffing shortages and a slow recovery in patient visits, and said it was accelerating targeted productivity initiatives. The filing provides no numerical company earnings or revenue guidance.
- Restructuring costs were $28 million, with remaining actions expected through 2023. The company completed several individually immaterial acquisitions; acquisition-related goodwill increased by approximately $1.026 billion. No goodwill impairment was recorded.
- Key exposures include short-notice client contract termination, clinical trial delays or cancellations, contract cost-estimate risk, reliance on third-party data suppliers, privacy and cybersecurity regulation, competition, foreign exchange, inflation and variable-rate debt. The company had approximately $7.1 billion of variable-rate debt and used interest-rate swaps to hedge only part of its exposure.
- Legal matters include ongoing appeals in South Korea and litigation with Veeva, whose counterclaims seek damages exceeding $200 million. IQVIA disputes the claims and says it intends to defend itself. The company also reported a settlement with MedImpact for an immaterial payment and stated that pending proceedings are not expected to have a material adverse effect; outcomes remain uncertain.
Most important facts for investors to verify
- Whether constant-currency growth and remaining performance obligations convert into reported revenue and cash flow, particularly as COVID-related work declines.
- Drivers of the $682 million operating-cash-flow decrease, including working-capital movements, and whether receivables and unbilled services collect on schedule.
- Debt maturities, refinancing needs, floating-rate exposure, available revolver capacity and continued covenant compliance.
- Progress and costs of 2023 productivity and restructuring actions, and whether labor and investigator-site constraints ease.
- Developments in the Veeva and South Korean matters, as well as data-privacy, cybersecurity and third-party data-supply risks.
Financial statements were audited by PricewaterhouseCoopers LLP, which gave unqualified opinions on the consolidated financial statements and internal control over financial reporting.