PRA Health Sciences, Inc.
Q1 2018 Earnings Call Transcript

Published: 26 Apr 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the PRA Health Sciences First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Mike Bonello, Senior Vice President and Corporate Controller. Sir, you may begin.

[Mike Bonello:]

Good morning and thank you for joining us for the PRA Health Sciences first quarter of 2018 earnings teleconference. Today Colin Shannon, our Chief Executive Officer; and [technical difficulty] Financial Officer, will discuss our first quarter financial results. Following our prepared remarks, we'll be available for questions. In addition to our press release, an investor supplement with additional financial information is available in the Investor Relations portion of our website. Before we begin, I'd like to remind you that our remarks and responses during this teleconference may include forward-looking statements. Actual results may differ materially from the stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factors section of our Form 10-K filed with the SEC on February 22, 2018. Our risk factors may be updated from time-to-time in our filings with SEC. Please note that we assume no obligation to update any forward-looking statements. Certain financial measures we will discuss on this call are non-GAAP financial measures. We believe that providing these measures helps investors gain a more helpful and complete understanding of our results and is consistent with how management views our financial results. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure calculated and presented in accordance with GAAP are available in the earnings press release and investor supplement included in the Investor Relation portion of our website. I would now like to turn the call over to our CEO, Colin Shannon.

[Colin Shannon:]

Thank you, Mike. Good morning. I'd like to thank you all, for joining the PRA Health Sciences conference call covering our first quarter of 2018 financial results. We're off to solid start and our first quarter results are in line with our expectations as we produce double-digit growth or revenue, adjusted net income and net new business. Revenue is approximately $702 million for the quarter which represents an increase of approximately 44% year-over-year at actual foreign exchange rates and 41% on a constant currency basis. Organic revenue growth which excludes the impact of the adoption of ASC 606 and our 2017 acquisitions was approximately 18% year-over-year at actual foreign exchange rates and 15% on a constant currency basis. Adjusted net income for the quarter was approximately $56 million, an increase of approximately 39% versus the first quarter of 2017. Adjusted net income per diluted share was $0.85, a 37% increase versus first quarter of 2017. Net new business increased approximately 15% when compared to the first quarter of 2017 with a record level of $650 million of net new business awards representing in a book-to-bill of 1.29 times. Our new business awards and calculation of net book-to-bill ratio excludes the revenue impact of adopting ASC 606 excludes reimbursed revenue and consistent with prior quarter excludes revenue from our Data Solutions segment. The addition of new awards is resulted in a backlog increasing approximately 8% on a sequential basis and 23% year-over-year finishing at approximately $3.8 billion. As we previously disclosed our backlog does not include our Data Solution segment. In addition, we're not including pass through our investigator revenue in backlog. The mix of our new business awards continues to be consistent with previous quarter with approximately 60% of new awards coming from the pharmaceutical sector and approximately 40% coming from the biotechnology sector. In addition, our client base also continues to be well diversified with our top five clients representing approximately 40% of revenue for the quarter with our largest clients representing approximately 9% of revenue. Book metrics exclude the impact of adopting ASC 606. [Indiscernible] Symphony Health. As mentioned on our fourth quarter call, this is a cyclical business and the first quarter in particular tends to be softer. However, we remain very optimistic about the full year 2018 forecast. In addition, during the quarter we formalized our integration plan and on the position to have the integration completed by the end of 2018. As stated on our last call, our primary goal this year for Symphony to achieve its 2018 plan, while senior leadership develops a key strategic initiatives of product expansion and new product offerings. As many of you are aware, we filed an 8-K yesterday afternoon announcing the retirement of Linda Baddour and the promotion of Mike Bonello effective May 1, 2018. Linda will be assisting me in an advisory capacity and assisting with transition through September 30, 2018. I would like to take this opportunity to thank Linda for her many years of service to PRA Health Sciences'. She'll be solely missed by me and the Company. I would also like to congratulate Mike on his promotion. I'm looking forward to working with him in this new role as Chief Financial Officer. I'm confident Mike is well positioned to take over these responsibilities. In closing, I would like to thank our entire staff and our clients for their continued commitment to PRA Health Sciences. We're delighted with our strong financial results and believe we're well positioned for strong growth in 2018. I would now like to hand over call to Linda Baddour, our Chief Financial Officer. Who will go through quarterly financial results in more details?

[Linda Baddour:]

Thank you, Colin. Good morning, everyone. For the first quarter of 2018 our consolidated revenues grew 43.9% at actual foreign exchange rates and 40.7% on a constant currency basis. We reported $701.8 million of revenue for the quarter compared to $487.8 million for the same quarter last year. As Colin mentioned earlier, revenue excluding the impacts of the adoptions of the ASC 606 and the acquisition of Symphony Health increased 17.8% year-over-year at actual foreign exchange rate and 15.2% on a constant currency basis. Revenue by segment for the first quarter of 2018 was $645.1 million for the clinical research segment and $56.8 million for the Data Solutions segment. Revenue concentration in the first quarter excluding our Data Solutions segment revenue the impact of the adoption of ASC 606 and reimbursement revenue was consistent with prior quarters. We derived approximately 55% of our revenue from large pharmaceutical companies approximately 12% from small to mid-sized pharmaceutical company. Approximately 18% from large biotech companies and approximately 15% from all other biotech companies. Total direct costs were $381.4 million in the first quarter of 2018 compared to $287.5 million in the same quarter last year. The increase in direct costs was primarily related to an increase in the labor-related costs in our Clinical Research segment as we continue to hire billable staff to support our growth. The increase in direct costs also included an unfavorable foreign currency effect of $14 million when compared to actual for last year. On a constant currency basis, total direct costs increased by $80 million year-over-year. Our Data Solutions segment reported $40.6 million of direct cost in the first quarter of 2018 which also contributed to the increase when comparing against the first quarter of 2017. Excluding the impact of the adoption of ASC 606 and reimbursable revenue total direct cost were 68.1% of revenue in the first quarter of 2018 compared to 67.3% in the same quarter last year. This slight increase in direct cost as a percentage of service revenue is primarily due to increased salary and benefit cost as I mentioned earlier. SG&A expenses were $91.7 million or 16.4% of revenue excluding the impact of the adoption ASC 606 and reimbursable revenue for the first quarter of 2018 compared to 17.4% for the same quarter last year. The decrease in SG&A as the percentage of service revenue is related to our continued efforts to effectively leverage our selling and administrative functions. During the first quarter of 2018, we reported an $11.6 million reduction in the fair value of the earn-out liability associated with the acquisition of Symphony. This reduction to the earn-out liability reflects our current estimate of what is expected to be paid and is included in the transaction related cost in our consolidated Statement of Operations. While this adjustment was required by GAAP in no way reflects our sentiment around the full year earnings potential with Symphony during 2018. Adjusted net income, which excludes certain items which fluctuation from period to period does not necessarily correspond the changes in our operating results, increased 39.1% year-over-year to $56.2 million in the first quarter of 2018. Adjusted net income per diluted share grew at 37.1% to $0.85 per share in the first quarter of 2018, compared to $0.62 per share in the same quarter last year. Cash provided for operations was $34.6 million with three months ended March 31, 2018 compared to cash used in operations of $10.8 million for the same period of 2017. The increase in operating cash flow was a result of an increase in our operational performance and the optimization of our working capital. Our net day's sales outstanding was 20 days at March 31, 2018. Capital expenditures were $13.8 million for the first quarter compared to $8 million during the same period of 2017. The increase in our capital expenditures reflects our continued investments in Information Technology enhancing our facility and expanding our infrastructure to support our growth. Our cash balance with $129.9 million at the end of the first quarter of which $59.7 million was held by our foreign subs [ph]. Net debt outstanding, defined as total debt less cash and cash equivalents at March 31, 2018, was $1.2 billion compared to $705.2 million at March 31, 2017. The overall increase in our net debt is attributable to borrowings related to our acquisitions. At March 31, 2018 excluding the impact of the adoption of ASC 606 and reimbursement revenue 82% of our revenue was denominated in US Dollars and 60% of our total expenses were denominated in US Dollar which is consistent with 2017. Our Euro exposure continues to be naturally hedged. As we referenced last quarter, we currently have exposure to movements in the GBP is less than 1% of our revenue is dominated in GBP while 6% of our expenses are denominated in GBP. As discussed, we're working on ways to reduce this exposure. As discussed in our press release, we're maintaining our 2018 guidance. We're estimating service revenues by $2.84 billion and $2.95 billion. GAAP earnings per diluted share between $2.80 per share and $2.95 per share and adjusted earnings per diluted between $4 per share and $4.15 per share. I want to remind everyone that three months ended March 31, 2018 was the first quarter we implemented the guidance of ASC 606. The adoption of ASC 606 requires the inclusion of reimbursable out of pocket and investigator fees in the calculation of revenue and may create a timing difference between the amount we're entitled to receive from our customers and the amount we recognize as revenue in our financial statement. The variability and magnitude of this timing difference compared to previous accounting is dependent on the progress of the service portion of our project compared to the progress of the investigator fees and reimbursable out of pocket cost relative to the respective forecasted cost over the life of the project. In the first quarter of 2018, we had an immaterial impact from the adoption of ASC 606 and as we discussed previously we do not expect the adoption of ASC 606 to have a material impact on our full year GAAP net income, adjusted net income or related earnings per share. Should actual results differ from our expectations we will update our future guidance. We're also anticipating our annual effective income tax rate will be approximately 24%, which incorporates the changes from the Tax Cuts and Jobs Act which was enacted in the fourth quarter of 2017. Our effective tax rate may differ from this estimate, if the geographic distribution of our pre-tax earnings changes what we've estimated or if there are changes in the interpretation analysis or if additional guidance is issued related to the Tax Cuts and Jobs Act. Our guidance assumes a Euro exchange rate of 1.25 and British Pound exchange rate of 1.37. All other foreign currency exchange rates are as January 31, 2018. Finally, I would like to take this opportunity to take Colin and the board for their support over the past 11 years. I've enjoyed being part of world class management team and it has been so exciting to experience the growth in our company since I joined in 2007. I'm confident the PRA will have many successes in the future. I would also like to congratulate Mike on his promotion. 10 years ago when I hired Mike I knew this day would come and we've been preparing for this together. I'm confident you'll be a valuable additions to Colin's executive team. At this time I would like to turn it back to the operator, so we can take your questions.

[Operator:]

[Operator Instructions] our first question comes from the line of John Kreger of William Blair. Your line is now open.

[John Kreger:]

Colin can you just talk a little bit about customer consolidation historically as you've experienced this I know many times. How is it impacted the business and if you think about the transactions that have been discussed in the news recently. Are you seeing any of that impacting the business or does it change your thoughts about 2018? Thank you.

[Colin Shannon:]

Thank you, John. No, some of these fluctuations are obviously - you can be a winner or loser. I can't react to the news every time because I don't want to get in that situation. It takes a while for things to feed through. If you're setting through the potential one of our referred partners Takeda in this potential acquisition, our business with Shire is really very minimal, we still have these very tiny little backlog but it's very minimal as I said. We knew that when we had the partnership with Takeda, that they had a goal of building the pipeline and growing at asset base, if they need our help we will do whatever we can to help them, that's what we intend to do. At this point, I don't know any more than anybody and this is confidential within Takeda. So I mean John, obviously things will happen and we just start to continue to maintain a well-diversified client base, so that we're poised to take advantage of any of these opportunities.

[John Kreger:]

Got it. Thank you. And then a separate question, you've been in kind of an aggressive hiring mode for the last couple of years. Can you just give us an update on how that's going? Are you starting to see any signs of maybe difficulty finding quality people or having to just spend more to get them and keep them? Thank you.

[Colin Shannon:]

We're seeing a little bit more inflationary pressures in some of our job families. It depends in some country. We noticed for example, senior leadership and at Asia has become very, very expensive and it's one of our areas of expansion. So the sockets in various other job - is as well, something we watch closely and because we've got to think about retention as well. It's not balanced, but we've got except opportunities we're seeing things our - a number of years ago we talked about our predictive platform and we're starting to really get some traction and implementing some of these tools that we're preparing for that over this next year. So there's a lot of excitement so lot of hard work and it's just a lot of good times, so that tends to attract a lot of people and plus we continue to remain agile and innovative and we try not to be buying people to reclaim [ph] in here, we try to create a good atmosphere that's collegiate [ph] people want to work here.

[John Kreger:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from the line of David Windley with Jefferies. Your line is now open. David Windley, your line is now open. Please check your mute button. Our next question comes from the line of Donald Hooker of KeyBanc. Your line is now open.

[Donald Hooker:]

Wanted to get a sense of, I guess one basic questions with your strong bookings again this quarter kind of some of the mix there between your FSP and full service I guess sort of the adjudicated the strong bookings with the reiteration of guidance. I assume a lot of its full service and has a longer burn rate. But maybe just hearing you say that will be helpful. Can you talk about the mix of bookings?

[Colin Shannon:]

Yes you're actually correct. We're finding that need full service business is still growing at a faster rate than our strategic solutions part of the business, that tends to be much more lumpy. Like there was smaller number of transactions compared when you do it can add a lot, and so and during you know a typical quarter there is no certain such a huge amount for Data Solutions. As I - it's going nicely, but it makes more lumpier type of business and on the business front. I mean, Q1 was very typical of the RFP volume coming through, but on a much more positive side we saw that the funnel started to really rise in April. So we're starting to see a substantial increase in the funnel compared to what we saw same time last year. So we're quite excited about the typical market, what's going on out there. So yes, we're very pleased where we're set at this moment.

[Donald Hooker:]

Last quarter you commented there were some large cancellations last quarter and I think you had commented that there was a sort of portfolio reprioritization in one client and that some of those studies might come back potentially as bookings. Any update there?

[Colin Shannon:]

Yes, typically they're looking to definitely coming back towards the end of the year. We may be able to get some revenue for it in the latter part of the year. It's been great to see, we just actually had a meeting with our particular client and getting to the reprioritization and so things have been walk through and it's actually quite [indiscernible]. It's just the ebbs and flow. There was just few things that happened that caught us by surprise, and we honestly have taken advantage of that to really knuckle down and look to how you can make sure that we keep in top of client the ebbs and flow and bringing in on new technologies and just accelerating on infrastructural changes. So we're quite excited what we're doing just now is preparing it nicely for the last half part of the year.

[Donald Hooker:]

Got you, so this quarter it sounds like the no sort of lag from last quarter, it sounds like, it's a clean bookings quarter.

[Colin Shannon:]

Yes, very clean.

[Donald Hooker:]

Thank you so much.

[Operator:]

Thank you. Our next question comes from Jack Meehan with Barclays. Your line is now open.

[Jack Meehan:]

I wanted to focus on Symphony Health and maybe just give us an update on how that's going versus expectations and then, if you could explain mechanically why there was a $12 million reduction in the fair value of the earn-out that would be helpful.

[Mike Bonello:]

If you go back and you look at the purchase agreement that we filed for 2018, it was kind of sliding scale on the possibility of outcomes with respect to the earn-out. So depending out on where the forecast set in that spectrum and running through the Monte Carlo simulation it gives you different answers and even, an immaterial change in the forecast of the import could cause you to have a difference on where you sit in that spectrum on that sliding scale. So when you run it through Monte Carlo, it will give you a higher probability of zero versus anything else just in a small movement so that's what really drove that $12 million difference.

[Colin Shannon:]

And regarding the product question. Obviously it's a new acquisition for us and when we thought it, it's kind of being late reasonably flattish compared to Q1 of 2017 which, so just a modest improvement. You know so we, we know there was a - there was always a bit softness in Q1. Part of the thing that we need to focus and those we got, a lot of our scientific expertise are now working closer with Symphony Health to capitalize and that, the opportunities arising in that segment. It was particularly weak following in Q1, so we're going to address that on a go forward basis.

[Jack Meehan:]

Great. Thank you and just wanted to stick with Symphony Health. As you continue to own the asset longer any updates around how you think about building it out and thoughts about integrating into the clinical offering?

[Colin Shannon:]

Well that's next phase. As we mention that we've letting the management focus on executing their plan this year because there is [indiscernible] attached to it. But they are very positive about wanting to contribute more and accelerate how we can start looking at next labels, next stages of revolution. So over the next couple of quarters will be definitely be slashing that our more detailed.

[Jack Meehan:]

Thanks Colin.

[Operator:]

Thank you. Our next question comes from Erin Wright of Credit Suisse. Your line is now open.

[Erin Wright:]

Can you comment on just broader RFP flows from your view and also just the broader pricing environment in what you're seeing currently in the market? Thanks.

[Colin Shannon:]

Well I kind of said that earlier on, we've seen a nice spike up on RFPs beginning at Q2. Q1 was very much typical and but Q2 was - a healthier start to Q2 compared to this time last year and which we see the positives. And on the pricing side, clients don't get fooled by pricing. They know the value and they've got budgets they wonder work closely to it. Their most important thing getting things delivered on a timely fashion. And it's actually, it was a pretty healthy environment there's always the odd straight thing happens, but it's very rare.

[Erin Wright:]

Okay, great and then the update on Symphony was helpful, but what do you think kind of next steps are in data and analytics and whether that's internal or in organic kind of investments. Will data and analytics capabilities, is more of a focus for you, is that resonating with your customer base? Thanks.

[Colin Shannon:]

Yes, we continue to explore that revolving area, we've done for the last 10 years. We see it as a very strong area for us to focus on in the future. We're always looking at how we can build on what we've achieved and looking for new opportunities to help drive changes within the industry. We're trying many things and we've not come across the major piece yet, so it's all learning and targeting and working through it. But we love to position ourselves, that when we do see something we're best poised to take advantage of it and we'll continue to do that and we'll continue to keep abreast of all developments and work closely and as the technology changes are rapidly coming through.

[Erin Wright:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from Derik De Bruin of Bank of America. Your line is now open.

[Unidentified Analyst:]

This is [indiscernible] for Derik De Bruin. Linda congratulations on imminent retirement and Mike on your promotion. My question is, on the top line and so can you tell us why total reimbursable expenses, that is the sum of the out of pocket cost investigator fees, why are they increasing 60% based on our modeling 2018 in the year that the new revenue standard is being implemented and also can you provide some guidance on the total and quarterly pacing of these total reimbursable expenses for 2018.

[Mike Bonello:]

That increase. Are you comparing to this time last year?

[Unidentified Analyst:]

Yes.

[Mike Bonello:]

I think part of it, it's probably because under 606 we're including investigators. If you're coming it back to the number that we reported last year, so last year would have just been pass through, the investigators would have been net in our P&L and this year we're including both. The investigator piece and the pass through piece.

[Linda Baddour:]

And historically if you look at the footnote in the 10-Q or 10-K. you'll see that the investigators were only reported in the footnote. And I think it was the footnote around the.

[Mike Bonello:]

That's right and it was roughly numbers up time ahead. I think it was roughly $250 million for the full year last year, so if you kind of take the quarter of that and add it your - you should get, it should show last quarter.

[Unidentified Analyst:]

All right. Thank you for the clarification and that was my only question.

[Operator:]

Thank you. Our next question comes from Jason Twizell with MUFG Securities. Your line is now open.

[Jason Twizell:]

On the capital deployment side, your priorities for 2018, is the expectation that you're still going to delever while continuing to invest in the business. I know in the last quarter you called out Japan and China as possible areas of investments. Are there any updates related to those two countries?

[Colin Shannon:]

If there was something that we could acquire the fit needs it was something we would look at and obviously there is a lot going on, that's what cultural fit under a mechanism, but there was nothing there that we, that's active at the moment. And so we're building it organically and we're trying to move as fast as we can. We've had one leader identified that was hired was joining eminently and have got a couple there in the pipeline. So that's key components that will help drive and flash out the need that we have, actually need to [indiscernible] this minute. But we've got enough people we have to satisfy our client needs at the moment, but we've got to look at how we can actually expand and grow to meet the future needs and that's what we're working on. Regarding deployment of capital, yes that there is nothing else in pipeline, we'll continue to be down there.

[Jason Twizell:]

Okay, great. I appreciate the color. That's my one question. Thank you.

[Operator:]

Thank you. Our next question comes from Eric Coldwell with Baird. Your line is now open.

[Eric Coldwell:]

Linda I was trying to come up with all kinds of sappy things to say, but I'll keep it simple. You were a damn good CFO.

[Linda Baddour:]

Thank you.

[Eric Coldwell:]

We're going to miss you. So ASC 606 revenue, ASC 605 bookings. I'm struggling a little bit, with how we're going to model revenue going forward. If you don't give us the pass throughs, the reimbursables [ph] in terms of bookings basis. I'm curious, if you can make any comments on that and what are your thoughts are, as we move forward and then next year you're probably not going to be talking much about 605. Are we ever going to get the 606 bookings or maybe service bookings versus pass through booking something of that sort?

[Mike Bonello:]

Eric, we're looking at that. Part of thing that we're struggling with now, is obviously the different types of studies. Therapeutics areas, clients, cause pass through and investigator number to move drastically. So I have my team looking back over at the last couple quarters to see if we can come up with some kind of ratio that will help solve that problem going forward and help us try to predict better what it's going to look like going forward. So we're working through that and I'll try to get you some information as soon as I have it.

[Linda Baddour:]

Alternatively what you could do [indiscernible] might be next year. But alternatively you could try to provide guidance around that number in February of next year just because really the bookings number could be so off that's why they should have never included investigator payments and revenue because it was not something that you do on every study. It's not something that you should really, you'd have to show bookings both ways.

[Colin Shannon:]

I mean Eric, sometimes you got to study that the investigator cost and the just as much as a core business and revenue that we would generate under our control and one client may want you to isolate good pass throughs and that's why we're booking it as revenue and other client may have sub party to it, which you don't see. So that erraticness [ph] and volatility means it's just unpredictable. I mean the core way what we've done is, is the way that actually gets to really understand the business and we feel 606 is actually taken away enough a lot of really good information and what we're trying to do is, get back so people can see really what we've done because we're actually happy with what we've done, what we need to understand the real growth before getting caught off in 606. It's actually not adding a decent amount of color and I don't know if you agree with that, but that's how we feel and we've been in the business for a long time.

[Eric Coldwell:]

I'm not a big fan of lot of the regulatory changes we're seeing and this is probably the worst. I just, I think these new accounting rules are absolutely ridiculous, but we live with what we live with. Last question foreign currency, given the cost structure and revenue structure bit of mismatch in the Pound at the moment. I'm just curious, are there any steps being taken to maybe get back to more of a natural hedge, are you focusing more given the curb volatility in currency. Are you focusing more on surf clauses or currency exchange rate fluctuation causes things of that sort of, just any color on how we could maybe gain a little comfort with foreign currency moves and hopefully not having too much of a headwind on EBIT this year.

[Linda Baddour:]

You're absolutely. It is a problem for us and that's why we're focusing on taking on contracts that are denominated in GBP. As we have in the past and that's how we built up our Euro natural hedge, we will give a bit of a discount just to get a program, that's denominated in Pounds and then also we're looking at as you say it, they're putting some clauses in the contracts that would protect us against future rises in that. So it might take away some of the upside later on, but should protect us in the short run.

[Eric Coldwell:]

Thanks. Linda when you buy that Island in the sun, please invite us all to come visit.

[Linda Baddour:]

I will absolutely, do that dear. Going to miss you too.

[Operator:]

Thank you. Our next question comes from David Windley of Jefferies. Your line is now open.

[David Windley:]

Good morning, thanks for taking my questions. I just had to jump on a little late, as you may have seen but echo Eric's comments Linda. Really enjoyed working with you for many, many years. So thank you.

[Linda Baddour:]

Thank you so much.

[David Windley:]

So Colin, I caught the end of Erin's question about Data. I'm curious some of the question I want to ask is, are you seeing Data kind of at a tactical level. Are you seeing data driven strategies, changed decisions among clients and at a higher level. Do you believe that your multi-year investment in data and kind of the lead time that you had on that that I think probably the market doesn't fully understand? Do you think that had a material influence or was kind of seminal influence on your wins with Takeda and the second strategic client?

[Colin Shannon:]

It was definitely a big factor. It's more - it was culture, it was lots of different factors that played into it. And I wouldn't say just that because we had to check a lot of other boxes as well. Our innovative approach, the data was definitely a factor. Just the way we work and these are all factors and we're trying to create the right mentality of very patient-centric with, we try to put ourselves and the possession of our, I see I'm more within our client companies and have that job development mindset and that approach, so that we're actually thinking and knowing, what is important for the client and meeting their needs. And so there's many other factors that go in, but they're just data. But we certainly feel that is a strong help to us and we will continue to expand it because it certainly helped us and prove our win rate over the years.

[David Windley:]

And do you find that, do you find that data in buying Symphony and Symphony is mostly US oriented data supplier. What importance does global data carry? How do you supplement or fill in data to give you the insights that you need ex-US that you can get from Symphony US?

[Colin Shannon:]

Well we did have some limited and patient-centric data from Europe that gives us a little bit of information but it's not complete by any manner of means. If it is, we're working on, as you know there is very different privacy and laws in Europe and things like happening with Facebook doesn't help that matter and so I'm kind of glad that we're watching some things coming out just now before we thread dutifully in there because at least we'll understand directionally where the privacy stuff is going, so that may help us, steer up another pathway for capturing the right data that we need.

[David Windley:]

Okay, my last question about yield is around strategic. I hate to even use that word, what's called large client opportunity pipeline. I believe there are probably at least a handful pharma and biotech companies that are looking at vendor refresh reviews for 2018 and I'm curious, what you think about your capacity to absorb something like that having won some big ones in last 18 months and you're positioning two win some of those opportunities.

[Colin Shannon:]

We've actually got ourselves nice big position. I mean - I've had a lot of good goods [ph] already this quarter but ideally try and wait until the end of next - the second quarter to talk about it. But you know, yes we're seeing what we're building is definitely reaping the fruits of what we've been doing. Sorry I can't put too much now because I really wanted to focus on rather than what's happening in Q2.

[David Windley:]

Right. So in other words, I need to ask you that question again in three months.

[Colin Shannon:]

Yes, that would be great.

[David Windley:]

All right. Okay. Thank you.

[Operator:]

Thank you. [Operator Instructions] our next question comes from the line of Justin Bowers [ph] of Lindberg [ph] Intelligence. Your line is now open.

[Unidentified Analyst:]

For what it's worth, I do appreciate how you guys have approached reporting 606 versus 605. But just want to follow-up on Dave's question on the strategic partnerships. Is there any way to speak maybe qualitatively how those are going not just Takeda, but the client when you had in late 2016 and then I have a follow-up.

[Colin Shannon:]

In any relationship it takes effort on both sides and there's lot of work to get done. I think we all get lessons learned. I think initially we're trying too much to focus on everything and with the client and jumping around too much, showing our over eagerness. We need to focus as well if in time, the whole thing is solid foundation of getting everything done and using all of our tools and so we're making sure that we bring that back into play. We've got it so run it as a business and why we're helping them that we don't forget that we've still got a core delivery and the mechanisms to do that. That's something we're always keeping a focus on, we take some people corrections to cheer the relationship is going well. We have lots of meetings. Things are strong, we continue to work well with all of our relationships. We have, we talk about couple of strategic partners, but we have number that we have got relationships with and we value them all and we've got best teams to support them. We're trying to make sure that we're getting more consistent across every team.

[David Windley:]

Got it. Thank you and then in terms of the funnel. You did mention that there was a nice spike in the beginning of the quarter, but in comparison of last year, are there any differences in terms of the mix, whether it's therapeutic area or the types of clients. There was a pretty robust funding environment in 1Q. And then just a follow-up to that, there is a ton going on over in Asia, China, specifically. You're making some of the investments there. Are you seeing any changes there? I know that you're focused more on the globals, but is there been any change in activity from the globals in terms of RFP's in China?

[Colin Shannon:]

We're not really seeing much there because we've not really been actively pursuing anything there active because we're so building out, what we need to meet our global needs for our other clients. And so I'm not seeing any dramatic change in the business mix or the client type. Our BD team is very active. Anytime they're building both immediate opportunities and for the longer term. So they work at both ways to make sure that we get the markets fully covered. Creating relationships ready for one clients or ready to actually start a new study. The spike that we saw was, it was a little unexpected but it's nice because we were hearing in the last couple of quarters people were concerned about the market and we were seeing robust pipelines. I'm not sure about the rest of it, this year or space, but we were just pleasantly surprised that we're seeing a nice volume, it certainly indicates to us there's a strong robust market out there.

[David Windley:]

Okay, thank you very much.

[Operator:]

Thank you. Our next question comes from the line of Derik De Bruin of Bank of America. Your line is now open. Derik De Bruin your line is now open. Please check your mute button. Thank you and I'm showing no further questions in queue at this time. I would like to turn the conference back over to Colin Shannon, CEO for closing remarks.

[Colin Shannon:]

Well once again, thanks everyone for participating in our call today. If you any additional questions please feel free to contact us. We hope you have a great rest of the day and thank you.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may now disconnect. Everyone have a great day.