Participants

Kerri Joseph; Senior Vice President, Investor Relations & Treasury; IQVIA Holdings Inc

Ari Bousbib; Chairman of the Board, Chief Executive Officer; IQVIA Holdings Inc

Ronald Bruehlman; Chief Financial Officer, Executive Vice President; IQVIA Holdings Inc

Shlomo Rosenbaum; Analyst; Stifel, Nicolaus & Company, Inc.

Elizabeth Anderson; Analyst; Evercore ISI

Ann Hynes; Analyst; Mizuho Securities USA Inc.

David Windley; Analyst; Jefferies LLC

Charles Rhyee; Analyst; TD Cowen

Jack Meehan; Analyst; Nephron Research

Michael Ryskin; Analyst; BofA Securities

Presentation

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the IQVIA fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the call over to Kerri Joseph, Senior Vice President, Investor Relations and Treasury. Mr. Joseph, you may now begin your conference.

Kerri Joseph

Thank you, operator. Good morning, everyone. Thank you for joining our fourth quarter 2024 earnings call. With me today are Ari Bousbib, Chairman and Chief Executive Officer; Ron pBruehlman, Executive Vice President and Chief Financial Officer; Eric Sherbet, Executive Vice President and General Counsel; Mike Fedock, Senior Vice President, Financial Planning and Analysis; and Gustavo Perrone, 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'd 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.

Ari Bousbib

Thank you Kerri and good morning everyone. Thank you for joining us today to discuss our fourth quarter and full year 2024 results. It was great to see many of you in-person at our December Investor Day at Innovation Park headquarters. I hope this helps you appreciate the depth and breadth of our offerings as we showcased product demos and tour some of our industry leading laboratories.
In fact, a number of you commented to me afterwards that they left with a deeper understanding of the breadth and depth of our capabilities and how our strategy to improve patient outcomes is being executed. As we closed 2024 we delivered solid full year results with revenue growth of 5.5% at constant currency excluding the COVID revenue step down, adjusted diluted earnings per share growing over 9% and free cash flow of $2.1 billion, which represents growth of 41% versus last year, as well as 104% of adjusted net income.
I'm very proud of the results the IQVIA team was able to deliver in an industry that faced significant challenges in 2024. We saw the consequences of the Inflation Reduction Act, which led to delayed customer decision making, reduced discretionary spend and portfolio reprioritizations. Additionally, we had a challenging macro environment that persisted with geopolitical unrest, continued high interest rates and inflation, foreign currency headwinds and questions about the impact of political elections in the US and around the world, all of which created tremendous amount of noise and incremental uncertainty. In fact, very few companies in our broader industry sector achieved positive growth and IQVIA really stood out as an outperformer.
More specifically, in the fourth quarter you saw that we had strong operational results. Revenue came in above the high end of our guidance range representing about 4.5% growth excluding the impact of foreign exchange and COVID-related work. We delivered just under 10% growth in adjusted diluted earnings per share and we achieved a record quarter of free cash flow. On the clinical side, net new bookings for the quarter were over $2.5 billion and this all highlights the great work that was done by our R&DS team in securing new business contracts. This helped mitigate the outsized level of cancellations that did materialize in the quarter, just as we had anticipated.
Now, despite the tough macro environment, the R&DS business had some significant achievements in 2024. We successfully renewed all of our large pharma strategic partnerships this past year, even as many clients reevaluated and consolidated their alliances. In addition, we established new relationships, displaced incumbents and expanded the scope of work in several partnerships, positively positioning our business for future growth. IQVIA has partnerships with 22 of the top 25 pharma companies. We made significant advancements in our global health business.
For example, we helped the World Health Organization control Poliovirus outbreaks in Africa. We collaborated with the Coalition for Epidemic Preparedness Innovations, CEPI, in Rwanda, so we were able to respond swiftly to a Marburg virus disease outbreak. Finally, we were selected by a large biotech client to expedite a vaccine trial for mpox in Sub-Saharan Africa, addressing a critical outbreak and unmet medical needs. These all comes to show that whenever there is a crisis, IQVIA is a company public health officials turn to.
Now moving to TAS. The growth trajectory materialized just the way we said it would. Low single digit growth in the first half and gradually ramping up each quarter. In fact, growth exceeded our expectations in the second half. Obviously, this was helped by easier compares versus the second half of 2023. But we also had stronger organic demand than expected across all sub-segments with real world actually returning to double digit growth. We finished the year with constant currency growth of 5.7% and about 6.5% excluding the COVID step down, which was at the high end of our guidance. We expect to sustain these favorable trends into 2025.
Reflecting on 2024, we're proud of what we achieved in TAS. A couple of business highlights. We introduced 60 innovations this past year, including 39 AI-enabled applications. For example, we introduced IQVIA AI Assistant, our first ever gen AI interface. It allows customers to interact with a growing number of our products and get answers to their questions almost instantly.
We launched a number of AI enabled patient offerings, including our Patient Relationship Manager, which has already been deployed at eight clients including three top 10 pharma. Our digital business, which up to now was largely in the US, has begun expanding into Europe where we've doubled the number of websites, publishers and partners that are now integrated into our digital network.
Now looking at 2025, we are reaffirming the guidance we provided to you at the December Investor Day. On the TAS side, things have continued to recover as we anticipated. On the R&DS side, we still have some volatility, so we might see another quarter or two of fluctuating demand and elevated cancellations, but we think the bulk of the portfolio reprioritizations at large pharma has been completed.
In fact, we feel good about the R&DS demand environment because leading indicators continue to be favorable. For example, our Q4 RFP flow was up mid single digits, little higher actually in the EBP segment. Our qualified pipeline is also up with positive growth across all segments. EBP funding, as you noted, was strong through 2024. Full year biotech funding was over $100 billion, which is 44% higher than it had been in 2023.
Now we did have much higher cancellations in 2024 than ever before, in fact nearly 50% higher in 2024 than the average of the previous three years. But our gross new bookings before cancellations for 2024 were even stronger and up mid single digits at constant currency versus 2023, which led to an end of year backlog of $31.1 billion, which is again at constant currency 5.5% higher than a year ago.
Now turning to the results for the quarter. Revenue for the fourth quarter grew 2.3% on a reported basis and 3% at constant currency. Compared to last year and excluding COVID related work from both periods, we grew the top line about 4.5% on a constant currency basis and that included in the quarter about 2 points of contribution from acquisitions, mostly on the TAS side.
Fourth quarter adjusted EBITDA increased 3.1% driven by revenue growth and ongoing cost management discipline which resulted in 20 bps of margin expansion. Fourth quarter adjusted diluted EPS of $3.12 increased 9.9% year-over-year.
Let me now give you some color on business activity. IQVIA success is achieved by continuing to raise the bar in innovation every year and investing in highly differentiated capabilities. You saw the recent announcement of our collaboration with NVIDIA to transform healthcare and life sciences through advanced agentic AI solutions. AI has the potential to transform our industry, for example by addressing lengthy and complex processes in clinical trials or on the commercial side by helping expedite diagnosis and improve treatment adherence by patients. Our collaboration with NVIDIA will help accelerate the introduction of AI agents within our workflows, with AI agents essentially becoming digital companions to researchers, HCPs and patients.
Let me give you some more examples of what was achieved in the quarter and let me start with TAS. The business is rapidly evolving as we see increasing demand for integrated solutions that combine information, analytics and services. This is enabling us to win much larger longer term deals with our clients because of our unique ability to deliver these combined offerings. Let me give you a few examples. IQVIA was awarded a strategic partnership to deliver omnichannel marketing solutions to promote a top ten pharma clients established portfolio.
IQVIA here we utilize analytics, information technology and commercial outsourcing capabilities. IQVIA is also partnering with a biotech company to launch a new treatment for ovarian cancer which will be our client's first product in market. This large deal leverages IQV’s comprehensive commercial capabilities and expertise to execute regulatory process, launch and commercial activities. Another EBP client asked IQVIA to support them in launching a new cell therapy for a severe pediatric condition by providing the full, comprehensive, commercial infrastructure and that includes field sales, medical and commercial communications, compliance and OCE.
A large pharma client engaged IQVIA to simplify data management by integrating diverse sources from all over -- 30 countries, reducing complexity and enhancing efficiency. IQVIA will support the client’s information strategy to streamline operations and centralize its global information into a single, standardized system that we will be operating.
Moving now to real-world, IQVIA is using advanced AI to support a top ten pharma client to demonstrate efficacy for gastric cancer treatment and gain approval in new markets. A top 10, 15 pharma clients chose IQVIA to help track disease and treatment efficacy in support of various regulatory submissions in Europe.
Let me move now to RDS. I earlier noted the success of our RDS team and want to highlight some notable wins that represent our capabilities across segments, therapeutic areas and operational dynamics. Let me start with large pharma. The top five pharma clients selected IQVIA to conduct a complex, full service Phase 3 study addressing asthma and COPD patients. We won another full service global Phase 3 breast cancer study for a top 30 pharma. Another top 10 pharma client awarded IQVIA a large FSP contract. This award is notable, because we displaced two large, long-time, incumbent CROs.
MedTech, IQVIA was awarded a study to evaluate a novel medical device specifically targeting a cardiovascular condition. Biotech, few notable awards include a critical Phase 3 oncology study based on our strong data-driven approach and ability to manage global complex trials efficiently. Another global study full service study for another biotech client for progressive pulmonary fibrosis disease which involves nearly 1,000 patients in 26 countries. And again, we are able to win this based on our global footprint and therapeutic expertise, a Phase 2 trial for rare CNS conditions with limited previous research. Lots of success in the marketplace with large pharma, MedTech and EBP.
Now, before passing the call over to Ron for a more detailed review of our financial results, I'd like to take a minute to acknowledge and congratulate our employees around the world for their extraordinary work this past year. It was challenging, but we delivered, a great team. We also received amazing recognitions throughout the year. I just want to highlight a few. Frost & Sullivan awarded IQVIA at the 2024 Global Customer Value Leadership Award for excellence in AI quality and regulatory solutions in healthcare.
IQVIA’s SmartSolve Enterprise QMS was recognized for Best Use of AI in Healthcare by the MedTech Breakthrough Awards. My Green Lab awarded IQVIA Laboratories the 2024 Race to Zero Leadership Award for certifying 100% of our laboratory. We received recognition as a leader in Forbes World's Best Healthcare and Life Sciences Management. And lastly, for the eighth year in a row, IQVIA was named one of the World's Most Admired Companies in Fortune's annual survey and importantly for the fourth year in a row, IQVIA was named the number one most admired company in our category of healthcare, pharmacy and other services. In addition, IQVIA earned number one ranking in the categories of Innovation, Global Competitiveness, People Management and use of Corporate Assets.
Now Ron will give you more details on our financial performance.

Ronald Bruehlman

Thanks, Ari, and good morning, everyone. Let's start with revenue. Fourth quarter revenue of $3.958 billion grew 2.3% on a reported basis and 3% at constant currency. In the quarter, COVID-related revenues were approximately $10 million, which is down about $50 million versus the fourth quarter of 2023. Excluding all COVID-related work, both from this year and from last, constant currency growth was about 4.5%. And as Ari mentioned, acquisitions contributed approximately 2 points of this growth.
Technology & Analytics Solutions revenue for the fourth quarter was $1.658 billion, which was up 8.3% reported and 9.5% in constant currency. R&D Solutions fourth quarter revenue of $2.123 billion was down 1.3% reported and 1% at constant currency. But excluding all COVID-related work, R&DS revenue grew over 1% at constant currency. And finally, Contract Sales and Medical Solutions fourth quarter revenue of $177 million declined 4.8% reported and 3.2% at constant currency. Now for the full year, revenue was $15.405 billion.
That's up 2.8% reported and 3.4% at constant currency. COVID-related revenue totaled approximately $110 million for the year. Excluding all COVID-related work from this year and last, constant currency growth in revenue was 5.5% for the year. Full year Technology & Analytics Solutions revenue was $6.160 billion. That was up 5.1% reported, 5.7% at constant currency and 6.5% excluding all COVID-related work at constant currency. Full year revenue in R&D Solutions was $8.527 billion, up 1.6% on a reported basis, 2% at constant currency. Excluding all COVID-related work, growth in constant currency in R&DS was over 5%. And finally, our full year CSMS revenue was $718 million, down 1.2% reported, but up 1.4% at constant currency.
As Ari mentioned in his opening remarks, the 2024 growth trajectory in TAS played out as we anticipated with improvements every quarter. Now we had -- if we experienced a softening in growth rates throughout 2023 due to cautious customer discretionary spending, and we predicted that 2024 would be a turnaround year based on our forward-looking indicators in recent history. In fact, that's what happened. In 2024, TAS growth picked up significantly, finishing the second half with high single-digit growth driven by strong mid-single-digit organic growth. As you know, TAS is a short-cycle part of our business.
And as we've seen, 2023 gave us early insight into customer spend behavior during the downturn. By the same token, we expect that the 2024 turnaround in TAS serves as a good leading indicator of the industry's recovery for 2025. Let's move down the P&L. Adjusted EBITDA in the quarter was $996 million, representing growth of 3.1%. Full year adjusted EBITDA was $3.684 billion, that's up 3.2% year-over-year. Fourth quarter GAAP net income was $437 million and GAAP diluted earnings per share was $2.42. For the full year, GAAP net income was $1.373 billion or $7.49 of earnings per diluted share. Adjusted net income was $564 million for the fourth quarter and adjusted diluted earnings per share was $3.12.
That for the full year brought adjusted net income to $2.42 billion and adjusted diluted earnings per share to $11.13. R&DS backlog at December 31 was $31.1 billion, an increase of 4.4% year-over-year and 5.5% at constant currency. And to anticipate the question that I think we'll get about why backlog was flat sequentially versus Q3, recall that the dollar strengthened considerably during the fourth quarter, and we have to retranslate the backlog at the end of each quarter for reporting to you and that knocked about $0.5 billion off the backlog, that retranslation alone.
As of December 31, cash and cash equivalents totaled $1.702 billion and gross debt was $13.983 billion, resulting in net debt of $12.281 billion. Our net leverage ratio ended the year at 3.33 times trailing 12-month adjusted EBITDA. Fourth quarter cash flow from operations was $885 million and CapEx was $164 million, resulting in free cash flow of $721 million for the quarter, a record for quarterly free cash flow. For the full year, free cash flow was $2.114 billion, as Ari said, up 41% year-over-year. Now you note that in the quarter, we repurchased $1.150 billion of our shares, bringing our full year share repurchase to $1.350 billion.
And just yesterday, actually, the IQVIA Board of Directors replenished the share repurchase authorization by $2 billion, which increases the total remaining authorization to approximately $3 billion. Now let's turn to guidance. For the full year, we're reaffirming our 2025 outlook, which is for revenue growth at constant currency ex COVID of 4% to 7%, adjusted EBITDA margin expansion of up to 20 basis points and adjusted diluted earnings per share growth of 5% to 9%. This translates into total revenue between $15.725 billion and $16.125 billion which includes just over a $100 million step down in COVID-related work, which is entirely in R&DS and of which 75% will be in the first half and 25% in the second half.
We expect 100 to 150 basis points of contribution from M&A activity and an FX headwind should rates continue of approximately 150 basis points versus 2024. Our adjusted EBITDA guidance is $3.765 billion to $3.885 billion and adjusted diluted EPS guidance is $11.70 to $12.10. This includes about $675 million of net interest expense, approximately $575 million of operational D&A, an effective income tax rate of about 18.5% and an average diluted share count of approximately 178 million shares. The guidance also assumes $2 billion of cash deployment split between acquisitions and share repurchase.
And finally, the guidance assumes that foreign currency rates as of February 5, continue for the balance of the year. Now at the segment level, guidance is also unchanged for TAS, R&DS and CSMS. No changes in any of the segments. We expect TAS revenue to grow 5% to 7% at constant currency, which translates into $6.3 billion to $6.5 billion. I note we'll have easier comps in the first half than the second half. R&DS revenue is expected to grow 4% to 6% at constant currency ex COVID, which translates into $8.7 billion to $8.9 billion of revenue. This guidance includes over $100 million of step-down in COVID-related revenue.
That represents about 100 basis points of headwind to R&DS growth rate. We anticipate that R&DS growth rates will be lower in the first half and improve sequentially thereafter. Our finally CSMS revenue is expected to be approximately $700 million and flattish year-over-year. Now let's look at first quarter guidance. For the first quarter, we expect revenue to be between $3.740 billion and $3.790 billion.
Note that Q1 has the largest impact in the year for both foreign exchange and COVID revenue step down for a total of approximately 300 basis points of headwind. Adjusted EBITDA is expected to be between $870 million and $890 million in the quarter and adjusted diluted EPS is expected to be between $2.60 and $2.70.
And as mentioned, our guidance assumes that foreign currency rates of February 5 continue for the balance of the year. So let's summarize. We delivered an excellent fourth quarter, which closed out a strong year. For the full year, revenue grew 5.5% at constant currency, excluding COVID-related work. Adjusted EBITDA margin continued to expand and adjusted diluted EPS was up 9.1% Free cash flow was a record in the quarter at $721 million, bringing the full year to over $2.1 billion, up 41%. In the quarter, we repurchased $1.150 billion of our shares. For the full year, share repurchase was $1.350 billion.
Our Board of Directors increased our share repurchase authorization by $2 billion, which brings the remaining authorization to approximately $3 billion. During the year, we introduced 60 innovations, including 39 AI-enabled applications and the momentum continues to build with our recently announced collaboration with NVIDIA. IQVIA was named the Fortune's list of World's most Admired Companies for the eighth consecutive year and earned first place ranking in our industry group for the fourth consecutive year.
And lastly, we reaffirmed our full year 2025 revenue growth guidance at constant currency of 4% to 7% adjusted EBITDA margin expansion of up to 20 basis points and adjusted diluted earnings per share growth of 5% to 9%. And that concludes our formal remarks. Let me hand it back over to the operator to open up the call for Q&A.

Question and Answer Session

Operator

(Operator Instructions)
Shlomo Rosenbaum, Stifel.

Shlomo Rosenbaum

Hi, thank you very much. Ari, I wanted to just ask you to dig back in a little bit more on how the operating environment progressed through the quarter and relative to what you were expecting in 4Q? We had some discussion about reassessing of vendor relationships kind of ending or the expectation it would end in the fourth quarter and some of that reprioritizing work ending. We're still talking about some potential volatility for the next one to two quarters. Is that kind of the way you were expecting it coming into the fourth quarter? Or is there any change into about that? And as part of that, maybe you could talk about is there any change in your expectation in those divided contracts that you discussed last quarter? Thank you.

Ari Bousbib

Okay, thank you, Shlomo. Well, no, look, we spoke not that long ago in December in a rally, and we shared there our sentiment with respect to the operating environment. Not much has changed versus what we told you then. That is, it was a difficult operating environment for all the reasons we mentioned then, and I reiterated in my introductory remarks the macro environment consequences of the IRA, a bunch of unexpected large cancellations due to futility reasons we had last year. And then the two large fast burning trials that we had just started that for reasons in the panel of IQVIA were just delayed and because of the nature of these projects they basically pushed back to the back end of 2025.
Nothing's changed here. We think the bulk of the cancellations and reprioritizations has occurred. We said then, I repeat now, we're still going to have one to two quarters of some volatility. And I sitting here, I can't tell you what it's going to be, first quarter or second quarter in December, we were closer to the end of the quarter, so I had more visibility, frankly after one month in a quarter, you can never tell. What are we going to book? What are we going to sell? Which deals are going to come in this quarter, are going to be pushed up to the next quarter, which cancellations may or may not occur this quarter? We have no idea. I'm just always shocked when people are able to predict what their bookings, the net bookings will be in a given quarter. I have no idea. As I stand here one month into the quarter, especially first month of the year, January, not much happens.
So yes, I mean, I would say, what is it two-thirds maybe 70%, 75% of the somewhere there, almost two-thirds, 75% of the reprioritization that we know of at large pharma essentially is our own. So there may still be a little bit of fluctuation here in the next quarter or two, but I can't tell for certain what may or may not happen. And with respect to these two trials that were delayed, which was your second question, nothing changed. They're still on. The clients very much want to do them. It causes us to have to maintain some costs, through the year, and that's kind of affecting a little bit our gross margin because we have this shredded cost. But that's okay. We will manage that and we feel good about that. And those will happen. As we said, no change back end of the year.

Kerri Joseph

Thank you.

Operator

Elizabeth Anderson, Evercore ISI.

Elizabeth Anderson

Hi, Ari. Hi, Ron. Thanks so much for the question. I was wondering if you could give a little bit more color on two things. I think you've been given some nice pharma color. I was wondering if you could talk a little bit more about the biotech environment, how that's going, how you're sort of seeing RFP flow? Are you seeing any kind of unlocking of some of the funds that were raised last year but not spent? And then also talk a little bit more about what you think the drivers on the real world evidence acceleration are? Thank you.

Ari Bousbib

All right. So look, the biotech funding, which is sort of a leading indicator of what is going to happen in terms of the booking environment for that segment has been strong, okay? We consistently use the same stats -- and according to those stats, it's over $100 billion for 2024. There's been fluctuation quarter in, quarter out, but that's the number. And that's a huge number. That's a record number ever if you exclude the two years of '20 and '21, which were, I think, $130 million and $120 million, respectively. But I mean, last year, what was the number last year, guys, for -- it was like $70 million. $70 million. $71 billion last year, okay. So significant growth in funding.
Now as we said before, just because biotech gets funding today, it doesn't mean that it translates into a clinical trial award the next day, okay? It takes time. And take 6 months, take a year, but it's a good strong leading indicator. And we saw funding start to pick up already a year ago. And therefore, we're starting to see this. RFP flow, as I said, was up mid-single digit for us across the portfolio, which, again, in the current environment is very, very good. And EBP was higher than that, okay, higher than the 5%. And yes, so that's about the environment. So I think we feel good about the EBP segment, lots of opportunity, and we're chasing all of that.

Operator

Ann Hynes, Mizuho.

Ann Hynes

Hi, good morning. Just on cancellations, I know going into Q4, you thought it would be a $1 billion. Did it come into that $1 billion or was it higher? And then I know you said that you successfully renewed all your RFP activity. Can you just talk about pricing on those renewals and how that's playing out from a competitive landscape? Thanks.

Ari Bousbib

Right. Well, first of all, I never said the word $1 billion. I said that historically, the average quarterly cancellation is about $0.5 billion a quarter -- quarter in, quarter out. I mean, I find anyone to predict what the cancellations will be in a given quarter ever. That's -- it's a flow. And there were quarters where we had $300 million, where there were quarters where we had $600 million.
But on average, that's kind of the number, okay? And if you take a look at the past so what I said was given the amount of work that large pharma is doing and the scrutiny that they are placing on those programs and the increased level of cancels we saw through the years, I was suggesting that we would be surprised if the fourth quarter was double that.
And basically was that it wasn't $1 billion, but it was way above the higher end of what we could have imagined. So it was somewhere around -- not far from $1 billion, but not quite $1 billion. So it was very high. In fact, for the year, and I think that's an interesting -- I think I mentioned it in my introductory remarks, if you look at the average cancellations in a given year, let's take the last three years, for example, it's just somewhere close to a couple of billion, a little bit under $2 billion, right, for the year, okay, consistent with what we experienced.
This year, it was almost 50% higher, meaning this year, 2024 was 50% higher than that. And despite that, we grew -- our backlog grew, and that's because we were able on the gross level to book even more business than last year, offsetting -- more than offsetting the higher level of cancellations. So on the demand side, things are good. The cancellations were very elevated -- surprises there. It came in essentially as we expected. And as I sit here, I just don't know what they are going to be next quarter or two, but we are going to navigate that environment. We feel good that the bulk of that is behind us. You asked about the pricing environment, right? yes.
I mean, yes, I mean, look, in the current environment, you would expect and anticipate that pricing is going to be more difficult because it's tough competition. There are lots of CROs out there. I mean people tend to forget there are 4,000 CROs out there, okay? So they don't all participate in every single bid, but it's not unusual that when EVPs they go around and shop their deal around, they talk to a lot of people.
And on the large pharma side, as we mentioned, they decided last year to reopen all their partnerships. And thankfully, we won. We resigned with all these partners and in fact, expanded our portfolio. Large pharma wanted to consolidate the spend, and we were on the winning side of that exercise, that was very good, and it bodes well for the future.

Ann Hynes

Great thanks.

Operator

David Windley, Jefferies.

David Windley

Hi, good morning. Thanks for taking my questions, and a good segue from the last. Ari, you talked a fair amount about the push toward FSP. You've talked about pricing pressure as you just kind of highlighted generally, but that pricing pressure also in FSP with these partnership re-procurements. And then you've also talked about carrying costs for these mega trials. I was actually surprised at the Investor Day that you could expand margin at all.
And so my question is, what are the cost levers that you're pulling to be able to eke up your margin just a little bit in the face of all those pressures. And then just more simply, in the navigation on gross margin versus SG&A and EBITDA, are we seeing some of that business mix shift toward FSP in the P&L already like in the fourth quarter? Thank you.

Ari Bousbib

Thank you, Dave. Well, as always, you're right on the mark and you are highlighting essentially the tasks that we have day in and day out. How do we offset all of those headwinds? Yes, you are absolutely correct. We expressed surprise how we're able to still grow margins. I mean, bear in mind, since the merger end of '16, we've grown our margins. I mean we ended the quarter with over 25% adjusted EBITDA margins. In those days, you might recall, we were more in the 20% kind of range. So we expanded margins.
Now in the early years, we expanded margins a lot more. Now obviously, it's harder. But that is what we do here. We try our best to grow our margins and try to grow our profits faster than our revenue. That's how our operating mode here.
How do we do that? Yes, you're right. The mix influences can influence the gross margin. I don't think that, that was the case in Q4. Yeah, I think we see -- you can see our gross margin was a little depressed in Q4, but I don't think it is a reflection of the higher FSP mix. The higher FSP mix is in the bookings. It's going to take time, okay? It's not yet in the P&L to be precise and answer your question.
It's more quarter in, quarter out, if you look at Q3, for example, of last year, we had gross margin expansion. So it's really the given mix of revenue that you recognize in a quarter, plus, obviously, the TAS business also influences that. For example, within TAS, I can tell you that real world is a little lower margin than the rest, right? It is lower margin than data, lower margin than analytics and lower margin than tech. And in the fourth quarter, real world was very strong, really strong. I mentioned it was back to double digits. And so that, of course, affects the mix.
And then I'll remind you that from the fourth quarter, we had this high level of stranded costs on those two mega trials that also affected our gross margin. But we pull the usual levers. And you've been covering us for a while, you know what we do. We constantly evaluate how to optimize the average labor rate across all of our geographies. We constantly explore opportunities to increase our economies of scope that is restructure, flatten the organization. We constantly lever IT infrastructure.
And for the past year, we've accelerated the deployment of AI tools within our own processes. I mentioned before that the next big thing, certainly operationally within our own workflows is to leverage AI tools as much as it can be, and we start to see some impact of that, and we plan to continue use and deployment of those. And that these are the levers that help us mitigate all the cost pressures that you just highlighted. So it's a day in, day out deep in the trenches, strong operational discipline and a relentless focus on continuing to optimize our costs.

David Windley

Good for you for that. Thank you very much. It was very helpful.

Operator

Charles Rhyee, TD Cowen.

Charles Rhyee

Yeah, thanks for taking the question. I just wanted to go back maybe then to the TAS segment. I think earlier, you just mentioned obviously, real-world evidence had sounded like you said double-digit growth in the quarter. Maybe can you give us a sense for sort of the trends you're seeing across between both RWE, analytics and consulting and maybe technology platforms or give us a sense for within the '25 outlook, how you see those kind of separate parts of it kind of the outlook for each of those relative as we think about the mix going forward?

Ari Bousbib

Yeah, well, thank you for the question. Yeah. I mean, look, the TAS business should be -- should have been and should remain a very resilient business with very consistent type of growth. So info, as you know, is a low single digit, right? It's about a 1% lower that did not change through the period. That's a very sticky subscription-based repetitive business. The analytics and consulting is where we had seen a dramatic impact of the cautionary spending trends we saw end of '23 and early '24 because some of that, a significant part of that is discretionary spend, and that essentially got shut down. So we had negative quarters in analytics and consulting earlier in the year.
And as we evolved through the year, it went back towards this mid-single-digit kind of mark towards the end of the quarter. And the higher growth businesses, which had been higher growth, real-world and tech, basically for the full year, essentially went back to high single digits. And in the quarter, back into double digits. So that's what we saw. Now because we anticipated this, why did this happen and why were we confident in the recovery is because a lot of the work in real-world tech and also some in analytics and consulting are must do activities for our clients.
When our clients get the drug approved, and as you know, in 2023 was a record year. I think we had 55 approvals in 2023. By the way, '24 was also good. I think it was about 50 approvals. These are very high numbers, if you look back historically. These approvals typically within six to nine months, you've got to launch the product, and that's where we come in.
This is where our services play. in launching the drug, promoting the drug, commercializing the drug, pricing the drug, et cetera, et cetera, supporting the efficacy demonstrations and safety demonstrations and supporting pricing for the drugs. All of that is what we put in our analytics business and in our real-world business. And so those needed to be done and clients delayed that. But eventually, they had to do it, and that's why we saw a strong return of the business in the second.

Charles Rhyee

Great, thank you. I appreciate.

Operator

Jack Meehan, Nephron Research.

Jack Meehan

Thank you and good morning. I had a couple of questions for Ron, just on the income statement. First was the gross margins in the fourth quarter. I was wondering if you could just walk us through the dynamics there. So they were down a little over 100 bps year-over-year, but you have lower pass-throughs. So was this the trapped costs related to those two trials? Or just any color would be great.

Ronald Bruehlman

Well, the first thing I would caution is when you're looking at gross margins, you're looking at reported and not adjusted. So if you're trying to tie the gross margins and SG&A on our income statement back to our adjusted EBITDA, there's a difference right there because those are reported and not adjusted numbers. But having said that, Ari did already give you some insight into that. We have stranded costs associated with those trials that got delayed.
Certain of our businesses that have strong growth like the real-world business tend to be lower margin businesses for us. So there's a mix impact in there, certainly. But again, any time you're looking at the reported numbers, remember that things like restructuring or other adjustments that get added back can affect the percentages that you're calculating straight off the income statement.

Jack Meehan

Got it. Okay. That makes sense. And one for Ari. Just on the policy front, we're in a couple of weeks in the new administration here. Just any thoughts on how -- just implications for pharma biotech customers? And then second, one question we get is just any exposure to NIH funding or anything related to that would be great.

Ari Bousbib

I mean the short answer to that question is zero, zero impacts, zero NIH, nothing. The longer answer is, I think overall, it's going to be a more business-friendly environment. That's clear. The new administration apparently from what we've gathered is maybe open to adjust some of the aspects of the IRA, looking into differences between small and large molecules and a number of adjustments, and we are in dialogue at the appropriate levels. There could be some reforms that have been discussed on the PBM side, on the reimbursement side and so on. But I mean, again, all of that is net positive for us, frankly.
And yes, I mean, we don't -- I think there's a strong possibility the new administration will embrace life sciences innovation sector more positively relative to other competing economies like China or Europe and support more ongoing investments of US based research, manufacturing, et cetera. I think there are a lot of positives here. And I don't see any of the noise around the specific nominations affecting us at all, frankly. I think that that's just basically noise. What we see and our dialogue so far has been actually very constructive and very positive. We're very pleased with the nominations and head of FDA and head of NIH. All of those are very, very good, good relationships, and they all support strong evidence-based science, which is exactly the business we're in. The M&A environment will be more favorable. I think all of that are net positives.

Jack Meehan

That all sounds good. Thank you.

Operator

Michael Ryskin, Bank of America.

Michael Ryskin

Great. Ari, I want to go back to something you touched on earlier. You made some comments in the prepared remarks in terms of pharma reprioritization sort of working through it, still expect maybe all or a couple of quarters of some volatility going forward, be thinking you're mostly through it? I think you said something about 70% to 75% of the rate prioritization is done. Just wondering sort of how you're arriving at that number? I just put it all in. I mean, we've had some announcements just in the last 24 hours. And we just -- it seems like there's still -- you never know companies could come back and decide they're going to do more in a second card, and a third card and the fourth card. So just what are the conversations you're having with the pharma companies, especially your top 20.

Ari Bousbib

Thank you. Thanks for the question. when I said earlier, two-third, 70% maybe 75%. So I saw Kerri with his head in his hands because he told me if we don't give them a number because somebody is going to tell you what it 70%, 71%, maybe 65%, maybe 76%. So look, we're trying to give you a sense, okay, how do I know? Because we speak to our clients, okay? Day in and day out. And we know what they're looking at.
So if they're done, they're done, it's not like they're going to go back, okay? So we know that there are still few programs that are kind of where they haven't made a decision. And that's where I say maybe a fourth to a third of those more to go. But that's an estimate. Again, I repeat, I have no idea, get in given quarter or will get booked. I just don't know, okay?
I'm basing myself on conversations that we're having with clients at every level. We know what their pipe is. We know what the programs that they have are. We know what they're prioritizing and they tell us what they are looking at. In fact, in many cases, we help them review these programs and reanalyze them. So that's how we know.
But it's all based on this analysis, and that's my best guess for now. I mean I would caution you always not to focus on a given quarter, okay? I mean I see someone reports that -- you heard me before. I'm on another tangent here, but why about this obsessive focus on what's the -- what are the bookings in the quarter? What's the book-to-bill, that infamous number?
What is it? And then you derive implications for an entire industry from what one company reports. You just can't do that. It's a long-cycle business. One quarter is a window. There's been some volatility. There might be some volatility. I just don't know. Also, frankly, you have very little visibility on the sector. I said before, there are 4,000 CROs out there. You have no idea what their numbers are.
Actually, our next best largest competitor is part of a larger company, and they report nothing about this competitor of ours, nothing, no revenues, no margins, no bookings. no backlog, certainly no book-to-bill. So we have no idea. You have no idea, we have no idea. There are only four publicly traded CROs. Each and every one of them is extremely different from the others. You cannot derive what we report from what we report, what's going to happen to them. You cannot derive what they report, what's going to happen to us. I saw that before earlier in a few past quarters just because one of our competitors say something, all of a sudden, our stock goes up or down.
It's ridiculous, everyone is extremely different. You just cannot extrapolate. Plus, frankly, it's causing issues with our customers. Someone was asking before about customers and pricing. That obsessive quarterly focus on this book-to-bill ratio causes our clients know that, a large pharma. They look that. So at the end of the quarter, they haggle another $10 million here, another $12 million there. That affects pricing. It affects our bottom line long term and it's detrimental to investors. So there is a somewhat obsessive focus on the quarterly numbers in a long-cycle business that are not that great.
Plus again, I remind you, we are a large company. We're not just a CRO. The CRO business is just over half of our business. And to infer any thesis about what's going on in the industry from a quarter or two of cancellations or book-to-bills or what have you is intellectually flawed sorry if I can share on. I get my people here agitated. But okay, I'll end with that. I'm sorry. Do we have another question or we've done here? We've done.
Okay. All right. So we have another question or we're done here? We're done. Okay.

Kerri Joseph

Thank you, guys. Thanks for taking the time to join us today and look forward to speaking with you again on our first quarter of 2025 earnings call. The team will be available the rest of the day to take any follow-up questions you might have. Thank you.

Operator

This concludes today's conference call. You may now disconnect.