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  • Writer's pictureJoel White

Clinical Research Focus: Q3 Earnings Review

Here are the most important themes I took away from Q3 earnings reports across publicly traded CRO and eClinical companies:

  • While book-to-bills are still hovering around the 1.20-1.25 range on average, this quarter presented a few significant variances from that range that point to changes in market share (IQVIA on the upside; Syneos on the downside).

  • Most companies mentioned biotech funding challenges as a key factor leading to longer sales cycles, project delays, and possibly lower average contract sizing. I say “most” because the largest of the bunch said the situation was markedly improving (that same company sported a 1.39 book to bill…)

  • Neither cancellation rates nor bad debt levels are increasing.

  • Syneos’ performance was very concerning- revenue declined, clinical segment book to bill (ex-reimbursables) was 0.3x, commercial book to bill was 0.8x, and it appears Q4 will also show poorly. Fortunately, management did not hide from it or make excuses.

  • Conversely, I was blown away by IQVIA’s performance. If you read one thing, read or listen to IQVIA’s earnings call transcript. Not just the numbers- look at what technologies they're building and delivering directly, and compare to what most others are partnering out to third parties or ignoring altogether.

  • Labor attrition continues to be the top cited operational challenge facing the sector.

  • Backlog conversion remains challenged as oncology and rare disease work further replaces COVID as a proportion of backlog.

  • “Decentralized trials” (DCT) were mentioned (and asked about) far less frequently than normal. Perhaps this is due to increasing recognition among the industry and investment community that DCT is not a type of trial, DCT is more about what parts of trials are being digitized (or not).

  • DCT is increasingly becoming a misnomer- ironically, the mission of the company you’d most associate as DCT is to “centralize the clinical trial industry”!

We need more publicly traded standalone CROs, site networks, and eClinical companies! We will soon get one more when LabCorp spins out its drug development business. If and when the general market conditions improve, I expect to see a number of companies to IPO. Until then, we'll work with what we have.


Note- I am often asked to write about individual company performance. This costs extra. I field 3-5 calls per month with investment and private equity firms about general industry dynamics as well as specific company situations. Write me at joel@marketcapconsulting to set this up.

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