I must advise you all that this conference is being recorded today, Thursday the 23rd of July, 2020. Without any further delay, I would like to hand the conference over to our first speaker for today, Mr. Jonathan Curtain. Sir, please go ahead.
Thanks, Gino. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended June 30th, 2020. Also on the call today, we have our CEO, Dr. Steve Cutler, and our CFO, Mr. Brendan Brennan. I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business and listeners are cautioned that forward-looking statements are not guarantees of future performance.
Forward-looking statements are only as of the date that they are made, and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events, or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in the SEC reports filed by the company. This presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement headed Condensed Consolidated Statements of Operations, US GAAP, unaudited. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.
We'll be limiting the call today to one hour and would therefore ask participants to keep their questions to one each, with an opportunity to ask one related follow-up question. I would now like to hand the call over to our CFO, Mr. Brendan Brennan.
Thank you, Jonathan. In quarter 2, we achieved gross business wins of $1,018 million and recorded $117 million worth of cancellations. Consequently, net awards in the quarter were $910 million, resulting in a net book-to-bill of 1.47 x. With the addition of these new awards, our backlog grew to $9.1 billion. This represents a year-on-year increase of 11%. Revenue in quarter 2 was $620.2 million. This represented a year-on-year decrease of 10.8% or 10.3% on a constant currency basis. Our top customer represented 12.1% of revenue for the quarter, compared to 12.9% in quarter 2 2019. Our top five customers represented 40.9% of quarter 2 revenue, compared to 36.9% of last year's. Our top 10 represented 54.9% compared to 49.5% last year. While our top 25 represented 71.2% compared to 69.5% last year.
Gross margin for the quarter was 28.1% compared to 29.3% in quarter one and 29.4% in the comparable quarter last year. Our SG&A was 13.5% of revenue in quarter two, which compared to 12.2% last quarter and 12% in the comparable period last year. Operating income for quarter two was $75 million, a margin of 12.1%. This compared to 14.9% last quarter and 15.3% in the comparable quarter last year. Net interest expense was $2.8 million for the quarter, and the effective tax rate was 12%. Net income attributable to the group for the quarter was $63.6 million, a margin of 10.3%, equating to diluted earnings per share of $1.20. This compares to earnings per share of $1.70 in quarter one and $1.69 in the comparable quarter last year. Net accounts receivable were $490.2 million at 30th of June 2020.
This compares with a net accounts receivable balance of $585.9 million at March 31, 2020. This reduction was in part driven by positive movements in days sales outstanding. On a comparative basis, days sales outstanding were 53 days at June 30, 2020. This compares with 55 days at the end of March 2020 and 61 days at the end of June 2019. Cash generation from operating activities in the quarter was $117.9 million. At June 30, 2020, the company had a gross cash balance of $594 million and debt of $350 million, leaving a net cash balance of $244 million. This compared to a net cash of $134.4 million at March 31, 2020, and net cash of $81.8 million at June 30, 2019. Capital expenditure during the quarter was $9.9 million and no shares were repurchased during the quarter.
In addition to the significant cash profile, we currently have an undrawn revolving credit facility of $150 million available to use. Our robust cash generation and strong access to liquidity puts us in a very resilient position as we work through the challenges that 2020 brings. During the quarter, we took a restructuring charge of $18 million as we continue to improve the efficiency of our operating model. This restructuring plan reflected rationalization across the business to improve resource utilization and our office footprint. As a result of this, our GAAP earnings per share were $0.09 compared to $1.20 on a non-GAAP basis. With all of that said, I'd now like to hand over the call to Steve.
Thanks, Brendan, and good morning to you all. During the quarter, we continued to see strong RFP flow and robust levels of demand in the market as customers across all market segments continued to outsource more of their development work to ICON. In particular, the biotech funding environment remains buoyant, and the strong focus on COVID-19 work across our sponsor base is providing ICON with a solid foundation of fast burn or faster burn projects as we transition through this pandemic. As a result, we booked strong levels of gross and net awards of $1.08 billion and $910 million, representing book-to-bills of 1.74 and 1.47, respectively. In doing so, we grew our backlog year-over-year by 11% to $9.1 billion. As we predicted on our Quarter One call, Quarter Two results were significantly influenced by the impact of the coronavirus pandemic on ICON's clinical operations.
During the quarter, we delivered revenue of $620.2 million at a solid gross margin of 28.1%, while our well-executed cost optimization plan enabled SG&A expenses to be reduced from Quarter 1 and held steady over the year, allowing us to deliver earnings per share of $1.20. Over the course of the quarter, we have been dealing with a challenging clinical environment, which continued to evolve rapidly. Our phase II to IV business remained the service lines most impacted. From the second half of March, we saw new trials starting to be put on hold, patient enrollment slowing, and our sites restricting or stopping access for our CRAs. As the virus continued to spread, the effect worsened with well over 70% of all sites impacted at its peak in late April and early May.
Since that time, we have seen a recovery of between 2% and 4% per week in the number of sites reopening, with approximately 60% of sites currently impacted to some degree. We remain alert to the threat of a second wave in the fall or indeed to a continuation and escalation of the first wave, as appears to be the case in the United States, where we have seen the pace of site reopening slow from 4% per week to 2% currently. Nevertheless, although a full recovery is likely to be delayed until early next year, it has not reversed the positive trends so far, and consequently, the number of sites declining or delaying these studies due to COVID-19 is significantly reduced compared to what we saw during the peak.
Encouragingly, site initiations have been particularly strong in recent weeks, mainly due to the large amount of COVID-related work we have won in recent months and the backlog of sites which were closed during the peak of the lockdown. In addition to those ongoing site dynamics, patient recruitment also remains a leading indicator of the pace at which clinical trials are recovering. At the peak of the pandemic in April, we saw an 80%-90% reduction in patient enrollment compared to pre-COVID-19 levels. This was due to the combination of global site closures as well as patients avoiding hospitals and complying with travel restrictions and lockdowns. Since then, however, we have seen a steady improvement in patient accrual to the point where enrollment levels are now closer to 40% of pre-COVID levels. With some large trials starting, we expect this upward trend to continue.
This improvement has been helped by our ability to leverage our at-home patient services delivered through our Symphony Clinical Research Group, which has seen an unprecedented surge in demand over the past four months. In addition, through Accellacare, our global site network, we are able to provide a proven method to engage physicians and patients in clinical research programs. Our embedded staff have direct access to the site's database, which helps evaluate the patient population during the study feasibility phase, increasing enrollment and making clinical trial participation a much more efficient and enjoyable process for the physician. In the meantime, we continue to proactively review and implement alternative trial monitoring approaches with customers on a study-by-study basis, including remote and risk-based monitoring.
This pandemic has driven an accelerated need for remote monitoring, and we've adapted quickly, increasing remote monitoring from only 5% of our visits in Quarter One to almost 60% in Quarter Two. However, significant impediments to remote monitoring as a total replacement of on-site monitoring can exist in some regions, particularly Europe. In these cases, we have seen a steady return to on-site monitoring as sites reopen. Nevertheless, there is little doubt the pandemic will continue to be a significant catalyst for change in this space, and it is unlikely we will ever return to the pre-COVID days of exclusively on-site monitoring visits for some projects.
With respect to our other service lines, in our central laboratories, sample volumes received into our facilities have improved, with the current reduction in activity at around 25% of normal levels relative to the 40% drop we saw in Quarter One. With continued progress expected as the COVID work ramps up. Further, our DOCS functional solutions business continues to perform very well, and we are expecting strong year-over-year revenue growth in that unit. As we outlined on our Quarter One call, we made the difficult decision to implement immediate and proactive cost reduction measures to protect jobs, maintain our business performance, ensure that we were ready to move quickly when business conditions improved later in the year. These ongoing initiatives included hiring freezes in certain business units, the removal of some contract staff, the reduction of non-labor variable spend in discretionary areas, and a temporary salary reduction for employees.
These decisions were not taken lightly at the time and have since been under continuous review as part of our operational and financial forecasting process. In response to both the gradual improvement of global clinical trial activity and better visibility of the impact of COVID-19 on ICON's business for the remainder of 2020, we are pleased to announce that the measures related to staff salaries will be concluded at the end of August. I'd like to thank all of our employees for their resilience, flexibility, and understanding over the last three to four months. Our industry-leading balance sheet goes from strength to strength. We continue to make excellent progress, and this quarter we further reduced our DSO to 53 days, down from 61 days in the corresponding quarter last year.
Consequently, at the end of quarter two, we had a net positive cash balance of $244 million, which leaves us well-placed to face any short-term pandemic challenges whilst positioning ourselves well for future M&A opportunities that may present. As we look forward, although the impact of the pandemic continues to evolve, I want to take this opportunity to reinstate our full year guidance. We expect 2020 revenues to be in the range of $2.65 billion-$2.75 billion, and earnings per share to be in the range of $6-$6.50. Before moving to Q&A, I'd like to thank the entire ICON team. Our focus remains protecting the safety and wellbeing of our employees and patients as we continue to deliver the important work we undertake on behalf of our customers.
We feel we are fulfilling our vision and mission through the role we're playing in the search for vaccines and other treatments against COVID-19. I'm incredibly proud of our entire workforce. I'd like to thank them for their tireless efforts and ongoing resilience during this unprecedented period. Thank you, everyone. We're now ready for questions.
Thank you, ladies and gentlemen. We will now begin the question and answer session. As a reminder, should you wish to ask a question, you're going to press star and the number one on your telephone and wait for your name to be announced. Should you wish to cancel it, you may press the pound or hash key. Once again, it's star and one for question. Our first question comes from the line of Luke Sergott from Evercore. Sir, please go ahead. Line is now open.
Thanks. Good morning, and good afternoon, guys. I guess this is more of an industry question. With all the vaccine trials, all the COVID-19 work that you've been talking about, and patient recruitment has always been a major bottleneck within the industry. All of that COVID-19 work that's going, do you guys think that there's enough patients out there for us to get a vaccine in the next, like, by early 2021?
Yeah, Luke, it's a good question. I'd split the trials into two parts. Treatment trials are one and prophylactic vaccine trials are the other. I think in the treatment trials, there is going to be a lot of competition within there. We tend to be within hospitals, and there'll be trials that will be competing for patients who actually have the infection and are needed to be treated. On the other side of it, on more the vaccine side of things, we're looking for relatively healthy people who obviously are potentially going to be exposed to the virus, and looking to track those. They're large scale, many thousands of patients. We're obviously monitoring them. I think those trials will be easier to recruit. They won't be easy, but they'll be easier to recruit. Whereas the treatment trials, I think, will have a significant amount of competition.
I'd split it into two areas. The large scale ones, probably easier, the treatment ones are a bit more difficult. There is a lot of focus obviously on this area in terms of regulatory startup and moving things along. I do think these trials will burn faster than our normal sort of studies.
Okay. I guess more specific to you guys, where you're thinking about how growth will trend throughout the rest of the year. It looks like by your guidance, it's almost getting back to flat by the end of the fourth quarter. Then you look at the work that's being pushed out, all the COVID work that you're doing now, plus all the RFP and the contract work that you're signing to date that might start up in 2021. Is there enough capacity for you guys to really make up all of the lost ground from 2020?
Yeah, we certainly see our work ramping up in the second part of the year. As you mentioned, there's a fair bit of COVID work, and as the sites come back online, we see our studies coming back to normal. We're already seeing a significant uptick in our site initiation stuff. Some of that is COVID, but it's not all COVID. Site initiations and getting studies moving again are starting randomizations, as I mentioned still down, enrollment is still down. We do see that coming back to a more normal level, probably realistically early in the year, early Q1 next year. We believe we can ramp up our resources appropriately.
We haven't had any major reductions in force, so we have people ready to move, and we do believe we're going to be able to move that on and do the appropriate recruiting that we'll need to do in order to drive, as I said, to complete that work and to do those sort of numbers.
Great. Thanks.
Thank you. The next question comes from the line of Bob Jones from Goldman Sachs. Please go ahead, Bob. The line is now open.
Great. Thank you. I guess, just to follow up on the COVID questions, obviously a lot of focus there. Would you guys be willing to share what portion of the $910 million of bookings came from COVID-related work? As we think about what's in the pipeline, you guys obviously mentioned a very robust pipeline, as we think about 3Q, any context you could add as far as just how much incremental COVID work you're seeing that could potentially show up in awards for 3Q?
Yeah, Bob, we don't talk about sort of specific percentages. It's reasonably substantial, certainly above the 20% mark, in terms of the work from the current quarter in COVID. The pipeline is strong. The work has been coming in. We feel vaccine work is one of our core competencies. We feel we've won the awards for the best CRO in the vaccine space a number of times. We have some very good people in that area. We feel we're competitively advantaged in the vaccine space, and that, I think, seems to be playing through in some of these awards. I think going forward, we're still seeing a number of opportunities, both in the treatment and the vaccine and the prophylactic area coming through. We expect that sort of level to continue in the short to medium term.
Obviously, as the vaccines and the trials come to fruition and decisions are made, there'll probably be less work. I don't think it's going to go away completely. I do expect to see work in this area continue for probably several years as the vaccines continue and they look to improve the various vaccines. I have no doubt we'll come through over the next 12 months or so.
No, that's helpful. I guess maybe Brendan, just one on the margins. I noticed you mentioned excluding $18 million from restructuring charges. Curious about what the maybe gross dollar cost savings was related to that. More importantly, how much cost savings is there assumed in the guidance? It does seem like the margins are implied to improve slightly throughout the back half relative to the first half.
Yeah. Bob, there's probably for the remainder of this year or the way we're looking at over the course of this year, you're probably looking at something in the ballpark of the mid-single digits in terms of millions of dollars for cost savings from those initiatives as we see them coming through. I think your second part of your question was around the margin profile of the pickup in the back half, is that correct?
That's right. Yeah, it seems like it's implied to improve a bit. I was just curious how much of that was just leverage versus potential cost savings from these programs.
I think those cost-saving programs were just more as we look at the flexibility in optimizing and utilization of our headcounts and our office footprint. As we look to the back end of the year, and you've seen it in the guidance that we've reissued now, there obviously is implied revenue ramp. That's really what will push the margin in the right direction as we maintain our good cost control in Q3 and Q4, certainly. I think the biggest predominant piece will be seeing the continuing progress that we have done at site levels in terms of reopening and in terms of randomization of patients continuing in Q3 and Q4. If we can see that, I think the revenue should be there to be able to drive the margin profile significantly.
Okay. Makes a lot of sense. Thank you.
Thank you. Next question comes from the line of John Kostman. Please go ahead. The line is now open.
Hi, good afternoon. Thank you very much for the questions. If you guys take a look at your awards outside of the COVID-19 work, have you sensed any differences in approach amongst large pharma versus mid-size customers and small biotech? In particular, we have heard inklings of large pharma delaying decision-making on starting new programs, but wondering if you've seen any of that in practice.
The short answer, I think is no on that. We've certainly seen a strong biotech environment. I referenced that in my comments. The funding environment remains buoyant. As I said, continuing what we've seen over the last few years, and that's reflected in our wins. We still maintain a large component in our backlog of large pharma. I'd hesitate to say we've seen any sort of significant delays in those awards at this point, John.
Okay. That's good to hear. Then can you just talk, I guess, higher level here. Can you talk about the mindset of your large pharma customers in terms of whether the pandemic is causing them to rethink the outsourcing paradigm? In other words, are the conversations that you're having with customers who would typically lean more towards preferring in-house or FSP different today than they were before the pandemic? Are you seeing FSP customers use more of your functional services? Recognizing that we're nowhere near the point of being done with the pandemic, but coming out of it, do you think this period kind of moves the needle in terms of outsourcing penetration?
I think it's probably a little early to answer that question. We've certainly seen a strong performance from our functional services group. It's been significantly less impacted. I mentioned year-over-year growth, strong year-over-year growth in that area. We were able to secure a couple of very significant partnerships in that area, and those have continued to play out. It's been less impacted, and I guess that's a decision customers have made. It's a business obviously based more on FTEs and resources than it is on activities, and hence, for reasons best known to customers, but likely related to continuation of those resources, they've continued that work. That's been a positive for us in our business. I think that'll continue as we work through the pandemic.
I think it's too early to sort of answer the question as to whether our larger pharma customers particularly are rethinking outsourcing approaches. I think it's probably too early to think that they're pushing towards an FSP type of situation, really. As I say, I can answer that question, probably going to take another year, I think, before that question can really be answered. We're in the middle of this at the moment, and everybody's trying to get done what we had planned and what we started and trying to re-accelerate the study. It's a bit early, I think, to answer that.
Okay. That's fair enough. Thank you.
Okay.
Thank you. The next question comes from the line of David Windley from Jefferies. Sir, please go ahead. The line is now open. Can you check if you're on mute, David? Hello, David, are you on mute?
David Windley's not saying anything. That's a new one.
Okay, let's take the question of Jack Meehan from Nephron. Please go ahead, Jack. The line is now open.
Thank you, and I appreciate the Irish pronunciation of Meehan. Steve, I was hoping you could just provide a little bit more color on the economics first, just a little bit more color on some of the work you might be doing related to COVID vaccines and what the economics might look like as some of these trials go from phase II to phase III. We've heard some of this work might be discounted, but I was also curious why that might be the case if we're trying to solve a global pandemic. Don't you want to put all the resources toward this that you would want to?
Sure, Jack. I don't think I would call out any specific difference around the economics of the work. If anything, our customers have been pretty clear to us that they need these studies resourced and backup resourced. We've been asked to have contingency plans in place that they're happy to pay for. I would certainly contest any assertion that things are being discounted. If anything, we've been asked, as I say, to have contingency resources in place and have backup plans so that if anything happens in terms of our staff or the site staff, that we are able there to step in and make sure these trials run on time and the data gets delivered. Our customers are very serious about solving this crisis and about getting these vaccines to market. I've been around this industry now for 20 or 30 years.
I don't think I've ever seen the sort of urgency that I've seen over the last three or four months in terms of getting these sites up. That includes regulators, sponsors, all of us, site staff. Everyone's very much pulling. No real thought about discounts or anything like that. It's do whatever it takes to get it done is the attitude.
Great, I was also hoping you could provide a little bit of color around the central lab business, just relative to the total company performance in the quarter. How did that do, and does the shape of the recovery look a little bit different here? Any color there would be great.
Yeah. The central lab, and Brendan can jump in on this one. The central lab is a relatively small part of our business, well under 10%, but it's an important part of our business and a business that's been growing nicely over the last few years. We acquired, as you probably remember, MolecularMD, and they've been a very successful acquisition. Given us some extra horsepower in terms of the oncology side of things, histopathology, et cetera. That's been an excellent acquisition and one that's really contributed very well to the growth of our central lab. We've been able to, I think we've alluded to in the past, bring on some new significant customers and some relatively large partnerships in the lab side of things. The COVID opportunity, I'll put it that way, has also afforded us opportunities for growth.
That's not to say that, as I've said, we were down 40% in sample accessions early in the year. That's now back to more like 20%-25%. We do think the second half of the year is going to be significantly stronger for our lab group, and I think they'll come back, maybe not to year-on-year growth. We certainly believe they're going to be a large part of the growth story in the second half of the year and beyond that. I'm really pleased with the way the lab has performed, and it continues to perform, particularly with, as I say, the acquisitions we've done there and the new partnerships they've brought on. Brendan, did you want to add anything on that one?
I think you summed it up well, Steve. Maybe just to say, Jack, what I mean, if you're looking at that business, as Steve said, it's less than 10% of the overall business. Its trend in terms of Q2 wasn't significantly out of line with the rest of the organization. We called out that the group was down about 10%. They weren't significantly out of line with that. We again, like the rest of the business, we do see them ramping back up significantly in Q3 and four.
Great. Thank you, guys.
Thank you. The next question comes from the line of Juan Avendano from Bank of America. Please go ahead. The line is now open, sir.
Thank you. Good morning. I apologize if this was asked before, as I had to be on another call, but my first question is on the gross margin. Your performance there was better than expected. Can you remind us what are some of the cost containment measures that you've implemented, and how prepared do you think you are from a capacity and employee morale perspective for when things rebound in the fourth quarter or early next year?
Yeah. Thanks, Juan. I'm going to start off on this one anyway, in terms of gross margin. Obviously, we did about 28.1% gross margin in the quarter. As we've talked about on the last call, back in Q1, where we're talking in April, we obviously brought a range of different cost containment measures to the organization at that point, including obviously, there's no travel. We were looking very closely at our recruitment. We were really looking at contractor costs and other discretional cost items, as well as some amendments to salaries, and we spoke about that on the last call. I think the proportionality there, all of those measures helped to some degree during the course of the quarter.
I think as we look to Q3 and Q4, I think I made the point earlier on, it is much more around now kind of normalizing where we are as an organization from a cost perspective, but still maintaining a fairly solid amount of cost control. Of course, our huge focus is on ensuring ramping the business and ramping that top line, the revenue lines over the next two quarters. We feel we're in a good place to be able to achieve that, and still maintain and increase that margin profile as we go back to something that looks more like the cadence of normal margin profile that you would expect from us from a gross margin perspective. Something closer to 30% as we get towards the back end of the year. Steve, if you wanted to comment on the other pieces there.
Yeah. I'll jump in on the employee morale question, Juan. We actually seen our retention tick up a little bit in the second quarter. It's obviously, there's probably a COVID influence there in terms of the economy, et cetera. We were pleased to see that. We see our people, on an anecdotal level, being highly engaged, certainly the ones who are doing the COVID work, but the others as well. We don't just work in the COVID space. We're across a number of obviously programs around our portfolio. Our employees have, to a man or to a woman, stepped up extremely well. I'm very proud of what they've done, and I expect that we'll come out of this nicely and go well into next year. I think we're ready for the growth to restart and to continue well into next year and beyond.
Thank you. My second question, I guess, within the strength that you're seeing in FSP, how much of it is due to the sticky nature of the business, given that employees are embedded in the biopharma customer's organization and this type of business, and how much of that growth could be from share gains?
I think it's probably a bit of both. One, as I alluded to, we won some significant programs and partnerships late last year, which we've delivered on extremely well. I believe our customers are very happy with what we've been doing there. I think that's an important component of it. I do think there's some stickiness in that area. As I say, it's more an FTE business. The people build relationships with the customers, with the sites, and I think our customers are less willing to sort of let that go, even if there is a little bit of a downtime with sites being less accessible, et cetera. I think we're benefiting on both fronts from an FSP point of view.
Thank you.
Thank you. The next question comes from the line of Patrick Donnelly from Citigroup. Patrick, please go ahead. The line is now open.
Thanks, guys. Maybe just one on the remote monitoring virtual trial side. Clearly sounds like this is going to be a larger part of the market going forward. Know it's early, but are you seeing any increased interest in any particular areas for this type of work? Also just wanted to confirm the profitability there, I believe is a decent amount higher, but just wanted to confirm that and any commentary there would be helpful.
Yeah. I'll take the therapeutic side of things, and maybe Brendan can talk about the profitability line. In terms of remote monitoring, as I said, we were something like 5% before the pandemic, went to 60%. Now it's kind of, I would say, normalized a little bit. Back to around the 30% of our visits being on-site. Sorry, being remote, 30% being remote. It's moved around quite a bit. In terms of the areas, we've typically seen this sort of work being in the more late-phase areas. I think the pandemic's really challenged us to work right across the therapeutic spectrum and right across the geographies. It gives us a significant amount of flexibility in terms of the whereabouts of the people who are doing that.
I can have people sitting in Europe doing remote monitoring for sites in the U.S. and vice versa, even in other parts of the world. It does give us some real geographic flexibility. We've pushed ourselves, and I think the industry's pushing ourselves in terms of the access to sites. Obviously, you do need to have access to the electronic medical records, and there are various, as you all know, privacy and HIPAA-related regulations, GDPR, that we have to fulfill there. That's a very important part of it. There's more work to do in that area. I think I'd hesitate to say that's all completely sorted out. There's a little bit of, we've seen in Europe, that's a little bit harder to organize and to arrange than it has been in the United States.
There are some various geographical constraints, but I think, as I say, the pandemic has really challenged us all to think a bit more differently, think outside the box, as they say. That's been, I think, a positive thing. Brendan might comment on the sort of potential margins in this area, but we certainly see more flexibility and more ability to adjust our resources there.
Thanks, Steve. Patrick, it's an interesting model because obviously, the element of cost that goes back to the sponsor, be it that in relation to, for example, travel of CRAs is not there. It is a more cost-efficient manner of doing those visits, if you like, than the traditional methodology. No one trial, to Steve's point, will be completely remote. There will always be some element of proportionality of possibly both elements of physical and remote. The margins, I suppose, when we look at them, aren't dissimilar when we carve out just the remote elements of those trials versus the actual when you're going to site. Albeit that I suppose proportionally, there is less cost going back to the customer overall. The margin profiles are not dissimilar. As I said, each trial will have a mix of those on them.
We very much manage the margins on a by project basis. We are seeing it there being a cost efficiency, and not really impacting on our margin profile.
Okay. No, appreciate that. Maybe just a quick one on the guidance side. Certainly encouraging to see you guys put that back on, and sounds like delays are down and cancellations are down. Patient recruitment seems like it's stabilizing, and good to hear the upward trend is going to continue. I was just curious on your visibility, kind of sitting here today, how comfortable you are with putting that guidance range back out there. Obviously, again, continues to be a lot of variables between the COVID recruitments and the potential second waves. I was just wondering, again, on your level of visibility compared to past quarters and how comfortable you are with that range.
Well, certainly we don't have as much visibility or certainty as we had in past quarters. I think that's clear. However, we've certainly got a lot more visibility than we had two or three months ago. We do believe it's the right thing to do. We can see definite progress happening within our operational groups around the, as I say, site accessibility, site initiation starting to really ramp up back, get back almost to normal levels. Recruitment enrollment starting to certainly moving in the right direction on a week-by-week basis. On that basis, and we obviously look at these metrics pretty assiduously on a week-to-week, even day-to-day basis. It's not just a one or two-week pattern. We've seen a consistent pattern of increased availability of sites over the last 10 or so, certainly eight weeks or so, from a pretty low base.
On that basis, we do believe that we're able to offer guidance in the spirit. It's a relatively broad range, I suppose, but we do recognize that there's potential for some volatility in the market and in the clinical environment, given potential shutdowns. Even allowing for that, we believe we're able to offer in that range and for it to be a realistic and a forthright set of figures there. Brendan, do you want to add in there?
No, just to say, Patrick, of course, we have given a broad range, as he says, over the space of two quarters, much broader than we would normally think about during that. I suppose that gives you some idea that there is still risk in the rest of the range or the rest of the year and the profile of how that might come to pass.
Yeah. Makes sense. Appreciate it, guys.
Thank you. The next question comes from the line of Tycho Peterson from JP Morgan. Please go ahead, sir. Your line is now open.
Thanks. I'll start with backlog burn went down to 7%. Commentary about lab samples improving and the faster burn on COVID work. Do you see backlog burn getting north of 8% here in the third and fourth quarter? Then on the operating margin question, to Bob's question earlier, I didn't hear you quantify it, but previously you talked about operating margin compression of 2% over the coming quarters. In the context of that, can you just give us a sense of the magnitude that you're talking about on operating margins in the back half of the year?
I might take that one, Tycho. I think it was a little hard to hear you at the beginning, but I think your question related to burn rates over the back half of the year, given that we have the COVID mix of trial work coming in. I suppose if you look at the midpoint of our guidance range, and you do the math quickly, it indicates that we'll be coming back up towards that 8% range by the back end of the year, but probably not in excess of it. Our idea at the moment is that we get through seven up to eight by the end of the year. Just on the margin profile as we go through the back two quarters, you're quite right, we did make that reference of a 2% range.
Listen, as we get to the fourth quarter, obviously we want to try to, again, come back to something that looks like a normal quarter for ICON. Obviously that would be more like what you've seen historically from us in terms of that kind of margin range, certainly in the 15s. Obviously that's a couple of percent from where we are today. That's exactly what we're trying to get to as we exit the year, certainly. It may not be the average for the full year, but it's certainly where we're trying to get to for the exit.
Steve, I'm wondering if you can talk on share dynamics? One of your competitors yesterday was adamant that they're taking share in this environment. As we think about the recovery, can you just talk to the extent you think you're picking up share here, and any commentary you can make around approaching this environment as well?
Yeah. I referenced our competence and expertise in the vaccines space, Tycho. I think that's certainly playing well with our customers. From that point of view, that's helping us. Oncology remains an important part of our business as well. We've been successful in that space, notwithstanding some of the delays. I think my perception is we are picking up shares, particularly from the more midsize companies, CROs. As I say, it's early days, and we're in the middle of this pandemic at the moment, so perhaps a little early to declare victory on that one if we ever declare victory on market share. My perception is certainly in the vaccine space, we're a leading player, and we're playing those cards very well.
All right. Thank you.
Thank you. The next question comes from the line of Sandy Draper from SunTrust. Please go ahead. The line is now open.
Thank you very much. A lot of the questions have been asked, but maybe just putting a pencil to the expense line, Brendan. I think actually Steve had mentioned in the prepared remarks that basically expected expenses to stay flat-ish for the year. I'm not sure if that was for the rest of the year, but then obviously in August, you're going to push the compensation back up, which I'm sure is positively received by your employees. Maybe the offset of that is expenses. I'm just trying to reconcile those two statements, or I may have misunderstood something between those two comments.
No, I think, Sandy, you're quite right in Steve's comments, the prepared remarks, he said certainly about the end of August. We do expect the absolute cost base in dollar terms probably to inflate as we go through the back two quarters. Of course, it's in the context of a decent ramp on that revenue line and margins returning to something like, as I said in my previous answer, something as normal as we exit the year. Certainly in that range of back up towards the 15s. I think it is one has to follow the other, and we've been watching closely on cost base. I think the dollars will increase, but that will be very much offset by the ramp in revenue that we're expecting over the next couple of quarters.
Okay. That's really helpful. My hopefully quick and very unrelated follow-up. Brendan, I didn't hear that you gave an acquisition contribution. I know it's not particularly meaningful, or I don't think so. Was there any material contribution from the acquisitions this quarter?
Sandy, the numbers were we were 10.8% down year-on-year in absolute terms, 10.3% in constant currency, and 11.4% on a constant dollar organic basis.
Okay, great. Thanks so much.
Thank you. The next question comes from the line from Donald Hooker from KeyBanc. Please go ahead, Donald. The line is now open.
Great. Hello, everyone. You all referenced in your prepared remarks success with the site network business, and maybe you can elaborate on that reference. Has the site network actually proved to be helpful in this environment? I assume it's been open the whole time. Has that been helpful getting projects moved forward versus having to rely on independent sites?
Donald, Steve. Yeah, I would say the site network has been helpful, but I don't want to overstate it. It's certainly been impacted, and several of them have had to be closed. They've been in geographies and regions where we have had to close them down. It hasn't quite had the impact that I was hoping overall. Generally, it continues to contribute disproportionately, and we're pleased with the progress we're making in that space.
In these sorts of pandemics, having more opportunity to drive and to work with the sites because we have our people embedded has certainly been, I believe, an advantage, particularly for ongoing trials and for seeing patients who we want to keep moving along in those trials and making sure that the trials that we had, even if we weren't able always to initiate and start as quickly as we'd like, the ongoing trials have been kept in good shape, and that's been a very important component, I think, of what we've done. Overall positive, but they've certainly been impacted, no question about that.
Okay. Thank you. Maybe just a real quick follow-up. You guys referenced, obviously, working on COVID-19 projects several times. Is it possible to roughly quantify the mix of your bookings this quarter from COVID-19?
I think I referenced to a previous question, was it John or Bob? That it was above 20% of our wins this quarter. It's a good proportion of our wins. Again, it reflects, I believe, the expertise and competence we have in that space.
Okay, thank you. Sorry, I missed that. Thank you.
No.
Again, the next question comes from the line of Dan Brennan.
Was that Dan Brennan or no? I couldn't hear.
Yeah, Dan Brennan. Please go ahead.
Great. Thank you. Hey, Steve and Brendan. Thanks. Steve, I think you made a mention at the beginning of your prepared remarks about pace of openings, and I know you've given some metrics throughout the call. Did any assumptions change from your first quarter call? I think you, back then, had felt 80%-90% of the sites would be up and running by year-end. I know you're at 60% are impacted today. Maybe just speak through the pace of opening that's assumed. I know you also mentioned enrollment is at 40%. Maybe if you can give us how we think about the progression of those metrics in the year-end.
Dan, I think as I say, you're right. I called out on the, I think it was the first quarter call that we'd be 80% by year-end. I don't have any reason to think that's going to be dramatically different. I think I said we'd be going into next year, and I still believe we're going to be going well into next year by the time where all sites are back. That really assumes no significant shutdowns or lockdowns in the fall. We're on track with that. As you said, we still have 60% of sites impacted in some way. 40% pretty much are back to normal. The progress we're making would get us, I think, around the 80% by the fourth quarter. We're going to be well into first quarter next year and even perhaps into second quarter before we feel we're right back.
That's pretty much in line with, I think, what we've been planning and what we've been expecting. The enrollment, I think, is a bit more volatile or at least a bit more adjustable as the sites come back, the enrollment. I think there is a little bit of a pent-up demand there. With projects coming back online, I think we'll see enrollment start to ramp up even a little faster perhaps than the site availability. I still think we're going to be well into the first quarter before we're back on at 100% of pre-COVID enrollments.
Great.
Sorry. That's notwithstanding some bump we'll probably get from the vaccine enrollment. I think that will cover a multitude of sins, if that makes sense, in the next couple of months, because there will be some significant enrollment, I think, in the third and fourth quarter around vaccines. The underlying ongoing, I think, will take into the first quarter. Sorry to have dropped in there.
Got it. Great. Thank you for that. Maybe related to that, sounds like on the base business, that's when you get back to normal by the middle of next year, but obviously COVID on top. When you put those two together, is it possible by 2021 you could be back to where you were previously when you add COVID? Obviously, I don't know where that 20% of 20+ percent of backlog goes. It probably could go further higher as we go forward the next couple of quarters. I don't know, you're not going to give us 2021 numbers now, but I'm just wondering, is that feasible that whatever you were thinking prior for your 2021 revenues, could that still be on the table if things play out, or is that just unrealistic given how much catch-up there has to be?
I'll have a crack at that, and then Brendan might jump in. I think whatever we were thinking prior is perhaps a bit of a stretch, Dan. I'm thinking at the moment of 2020 being a little bit of a lost year kind of thing, is the way I'm thinking. I hope to be proven wrong, and I hope that we'll move on and 2021 will be better than what 2020 would've been, if that makes sense. I expect that probably will be the case, but I'm not ready to declare victory on that one yet. 2020's been a challenging year. I think we've still got some challenges to work through.
Although we certainly see some light at the end of the tunnel and some optimism in terms of a reawakening and a reopening of the sites, there's plenty of risk out there that we have to be cognizant of and planning for. The COVID work, I think, gives us some opportunity in the relatively short term to move things along. The underlying business also needs to move forward, and that can still be impacted, obviously, by this pandemic and further lockdowns. Brendan, did you want to jump in?
No, I don't think I'd add to that, Steve. I think that's spot on. Our focus is to get through the back end of this year and then deal with 2021 as we see it. The hope is that, yeah, it'll be back to.
Thank you. Next question comes from the line of George Hill from Deutsche Bank. Please go ahead, George. The line is now open.
George has done a dive, I think. Has he?
I think Dave might come back on.
Dave is there, Dan. George, if you're on mute, you better unmute yourself quickly. Operator, I don't think George is going to ask a question, so maybe we want to get to the next one.
Yep. One moment.
Operator? Operator, are you there?
Yes, one moment. I'm having trouble connecting my line. Please bear with me.
Okay. Operator, we're coming up to the top of the hour. Are there any other questions or can we connect those lines?
Yes, sir. I'll look for someone to queue your next question.
One of our analysts just suggested we sing an Irish folk song while we're waiting, Steve. Maybe that's in the absence of folks.
They wouldn't want to hear me sing an Irish folk song, that's for sure. You might be better at it than me, Brendan. All right. Okay.
I think we could follow up with the analyst afterwards, perhaps.
Yeah. That's probably the best thing to do. Operator, it doesn't sound like these questions are going to be able to be connected.
Okay. Well, in that case, on the basis we are having technical difficulties, apologies to those who are on the line. We might go to the closing comments at this stage.
Yeah. Yeah, apologies for everyone on the line for that. I'm not quite sure what's gone wrong. We'll certainly follow up with George and Dave on those questions. Just in concluding, I'd like to thank everyone for listening today. As the impact of the COVID-19 pandemic continues to evolve, I hope we've provided some good information on that. ICON is focused on protecting the safety and well-being of our employees and patients, and of course, continuing to service the important work we undertake on behalf of our customers and in turn, preserving the strength of our business. I want to take this opportunity again to recognize our entire workforce and to thank them for their tireless efforts and ongoing resilience during what's been an incredibly challenging period that we'll need to keep working through as well. Thank you, everyone, and have a good rest of the day.