Ladies and gentlemen, thank you for standing by, and welcome to the ICON plc Q1 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there'll be a question and answer session. To ask a question, please press star and one on your telephone keypad. I must advise you this conference is being recorded today on Thursday, the 23rd of April 2020. I would now like to turn the conference over to your speaker today, Jonathan Curtin. Please go ahead, sir.
Thanks, Tim. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter ended March 31st, 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 webcasted 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 the 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 related to these forward-looking statements may be found in 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 Consolidated Statements of Operations, U.S. 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 will 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 over the call to our CFO, Mr. Brendan Brennan.
Thank you, Jonathan. In February, on ICON's quarter four 2019 earnings call, we outlined our expectations that the COVID-19 impact to our quarter one 2020 revenue would be in the range of $4 million-$7 million. The majority of which was associated with our Chinese operations. Following that call, we have seen a very rapid escalation into a global pandemic. Accordingly, whilst we are pleased with the operational and financial momentum we brought into 2020, the significant disruption and uncertainty caused by COVID-19 means that we have taken the decision to withdraw our full year 2020 financial guidance. My following comments will focus on our quarter one performance, and Steve will then outline further details in relation to our current and future operational challenges. As well as the various measures we are putting in place to mitigate these risks.
In quarter one, we achieved gross business wins of $1 billion and $27 million and recorded $160 million worth of cancellations. Consequently, net awards in quarter one were $867 million, resulting in a net book-to-bill of 1.21. With the addition of these new awards, our backlog grew to $8.7 billion. This represented a year-on-year increase of 10.4%. Revenue in quarter one was $715.1 million. This represented year-on-year growth of 6% or 6.5% on a constant currency basis. On a constant dollar organic basis, revenue growth was 5%. Our top customer represented 11.4% of revenue for the quarter, compared with 14.8% in quarter one, 2019. Our top five customers represented 39.9% of quarter one revenue, compared to 39.9% last year. Our top 10 represented 52.2% compared to 53.1% last year. While our top 25 represented 69.6% compared to 71.6% last year.
Gross margin for the quarter was 29.3% compared to 29.9% in our quarter four and 29.5% in the comparable quarter last year. Our SG&A was 12.2% of revenue in quarter one, which compared to 11.9% last quarter and 12.1% in the comparable period last year. Operating income for the quarter was $106.3 million, a margin of 14.9%. This compared to 15.9% last quarter and 15.1% in the comparable quarter last year. The net interest expense was $1.4 million for the quarter, and the effective tax rate was 12% for the quarter. Net income attributable to the group for the quarter was $91.7 million, a margin of 12.8%, equating to diluted earnings per share of $1.70. This compares to earnings per share of $1.83 in quarter four and $1.63 in the comparable quarter last year, an increase of 4.3%.
On a comparative basis, days sales outstanding were 55 days at March 31, 2020. This compares with 54 days at the end of December 2019 and 59 days at the end of March 2019. Cash generation from operating activities in the quarter was strong at $142.8 million. Capital expenditure was $11.3 million in quarter one. In addition, $175 million worth of stock was repurchased in quarter one at an average price of $141.68. This equated to over 1,235,000 shares, which is in excess of our stated goal of repurchasing 1 million shares over the course of a full year. We do not have any immediate plans to repurchase any further shares. At March 31st, 2020, the company had gross cash balances of $484 million and debt of $350 million, leaving a net cash balance of $134.4 million.
This compared to net cash of $220 million at December 31st, 2019, and net cash of $128.6 million at March 31, 2019. In addition to this significant cash profile, we currently have 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. With all of that said, I'd now like to hand the call over to Steve.
Thank you, Brendan, and good morning to all of you. As we entered 2020, the key industry drivers of a positive outsourcing landscape, growth in R&D budgets, and a continued strong biotech environment remained in place. In quarter one, we booked strong levels of gross and net awards of $1.027 billion and $867 million, representing book-to-bills of 1.44 and 1.21, respectively. Consequently, we grew our backlog year-over-year by 10.4% to $8.7 billion, with revenues expanding to $715.1 million or 6.5% on a constant currency basis. We achieved a gross margin of 29.3%, and we continued our strong SG&A performance with SG&A at 12.2% of revenue. This delivered earnings per share growth year-over-year of 4.3% to $1.70. In addition, in April, we were very pleased to announce the continuation of our long-term relationship with our top customer with the signing of a new multi-year services agreement.
However, while the impact of COVID-19 was relatively modest in quarter one this year, it is our expectation that we will experience a more severe downturn in our business in quarters two and three, and possibly beyond. It is clear that 2020 is going to be a difficult year for the CRO industry as we face the extraordinary challenges brought about by the sudden onset of the coronavirus pandemic. Our core phase II- III business is the service line most impacted. New trials are being put on hold, patient enrollment has slowed, and approximately two-thirds of our sites have either restricted or stopped access altogether for our CRAs, resulting in significantly fewer monitoring visits. Furthermore, although a smaller part of our business in our Central Laboratories, sample volumes received into our facilities have been reduced by approximately 40% due to the drop-off in site activity levels.
The consequences of these challenges will curtail our ability to execute in the quarters ahead. Despite the obvious issues, we are proactively reviewing and implementing alternative trial monitoring approaches with customers on a study-by-study basis, including remote and risk-based management, and we are seeing significant demand for our at-home services delivered through our recently acquired Symphony Clinical Research Group. The active push to develop a treatment for COVID-19 is also resulting in a large number of RFPs and some significant success with projects that we anticipate will start quickly. Since mid-March, we are seeing conditions gradually improving in China, with over 70% of our sites now reopened and monitoring activities recommencing. Our hope is that other regions will follow suit in quick order as they stabilize and recover.
Furthermore, I want to point out that the impact to our business is not uniform, and indeed, in certain areas, such as our functional solutions business, we remain positive in our outlook for 2020 and are expecting year-over-year revenue growth. While access to third-party sites is currently significantly reduced, we are realizing the benefits of previous investments and acquisitions, which are in part helping to offset this impact. Through our site network model, we are able to provide a proven method to engage physicians and patients into clinical research programs. Our embedded staff also have direct access to the site's patient database, which helps evaluate the patient population during the study feasibility phase, increasing enrollment and making clinical trial participation a much more efficient process for the physician.
As country restrictions ease and enrollment restarts, this network will play a crucial part in accelerating the recruitment process for new and ongoing trials. Our acquisition of Symphony Clinical Research has also positioned ICON as the leading global provider of at-home and alternative site visits, with over 300 clinical trials completed across five continents. Since the outbreak of the COVID-19 pandemic, we have experienced tremendous interest in this service, with serious inquiries from over 60 sponsors. We have been ramping up the scale of this delivery method, with staff being transferred from other areas of our clinical research services in order to enable delivery of trials using this approach across more studies. Furthermore, whilst all CROs and sponsors, including ICON, will be placing emphasis on remote and risk-based monitoring, ICON is also differentiated by its ICONIK platform and FIRECREST technology.
ICONIK helps analyze operational, clinical, and real world data, enhancing the design and delivery of our projects, as well as strengthening our engagement with investigators and customers. FIRECREST enables remote management of aspects of clinical trials such as investigator and staff training on protocol and patient education through portal and video deliveries. FIRECREST is used by all of the top 20 global pharma companies with almost half a million registered users. Nevertheless, as we are not immune to the impact of COVID-19, we are taking immediate and proactive cost reduction measures to protect jobs, maintain our business performance, and ensure that we are ready to move quickly when business conditions improve later in the year. To address the challenges brought on by the pandemic, we have developed a comprehensive cost optimization strategy.
It includes an immediate freeze on hiring in certain business units, the removal of contract staff where permanent employees can assume responsibilities, and a reduction of our non-labor variable spend in discretionary areas such as travel and facilities. As a people business, the majority of our costs are employee-related, which also means that a major part of our cost optimization strategy is the implementation of a temporary salary reduction for all employees. Since the middle of April, the board and senior leadership have taken a 30% reduction in fees and salary, respectively, and our chairman, Ciaran Murray, and I have taken a 40% reduction. For the remainder of the company, we are adopting a progressive approach, with the vast majority of employees taking a single-digit salary reduction.
Whilst these measures are designed to protect jobs, I realize that these actions are difficult, and I would like to thank all of our staff for their flexibility and understanding. Taking these cost containment plans into account, and in conjunction with our current revenue forecast, our quarter two outlook is for revenue to be in the range of $575 million-$625 million, and earnings per share to be in the range of $0.90-$1.30. Our balance sheet remains resilient and industry leading. At the end of quarter one, we had a gross cash balance of $484 million, $350 million of debt, and thus a net positive cash balance of $134 million.
In closing, I want to make it clear that we see the significant disruption caused by this pandemic as relatively short-term, and as we move beyond 2020, we expect global conditions to improve and the core fundamentals that have driven growth in the CRO space to reemerge. In the medium to long term, we see increased opportunities to deploy capital more cost effectively and build our global franchise. For the time being, we are well-placed to weather the challenges of the pandemic and position ourselves for the growth opportunities that lie ahead. Before moving to Q&A, I'd like to thank the entire ICON team for all their hard work and commitment during this challenging time. Your safety and wellbeing are the company's priority.
At ICON, our mission is to help our customers to accelerate the development of innovative medicines and devices that save lives and improve the quality of life. Over the years, we have helped to bring many such treatments, vaccines, and medical devices to market, positively impacting the lives of millions of patients. This ethos will remain during the current crisis as we work on a number of important COVID-19 trials on behalf of customers, as well as much-needed treatments for other illnesses and diseases.
Thank you, everyone, and we're now ready for questions.
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question today, please press star and one on your telephone keypad. If you'd like to cancel your request, press the hash key.
Your first question today comes the line of Erin Wright. Please go ahead.
Great. Thanks. This guidance that you just gave for the second quarter, did it assume any sort of improvement throughout the quarter, or are you just extrapolating what you're currently seeing? I'm just curious how you're thinking about things progressing throughout the second quarter. Thanks.
Well, first of all, Erin, I wouldn't call it guidance. We specifically call it our outlook. It's what we can foresee at the moment, given we haven't even had one full calendar month of the significant impact. March was a sort of a month where the second half of it was much more significant than the first half. I would call it more of an outlook of what we're seeing going forward. In terms of improvement during the quarter, we haven't modeled any of that at the moment. We're seeing a challenging quarter. We believe we're at the bottom of the challenges or at the max of the challenges during the quarter. We don't see a particular phased approach during the quarter.
At the moment, we're literally just starting to come through April and starting to get some initial indications. It's very early days, but we believe that the quarter will be relatively flat and will be relatively stable in terms of being the bottom of the curve.
Okay, great. Are you seeing any sort of abnormal cancellations or are you viewing this more of a timing delay? Or do you think of this as also being a [bolus] or an acceleration in the back half of the year if the environment normalizes?
Couple of points there. One is, no, we're not seeing any significant cancellations. You saw our cancellation rate in Q1 was on par, and certainly as we've gone through April, we've not seen any further cancellations above the normal run-of-the-mill approach there. We do see this being a relatively short-term issue. We do see us moving forward as we get into quarter three and particularly quarter four and into next year, that will come through. That, of course, assumes some sort of therapeutic will be developed fairly quickly and possibly a vaccine will be available within the next 12 months or so. There are some assumptions with that. We do see that this is going to be a relatively short-term issue that we need to deal with and we need to work through. That in the longer term, we're going to be in a very good position.
Great. Thank you.
Thank you. Your next question comes from the line of Jack Meehan. Please go ahead.
Thanks. Good morning. Good afternoon. I wanted to drill in a little bit more on the commentary related to what you're seeing in terms of the sites open versus closed. It's been roughly two-thirds of your sites have been impacted at some point.
If you went from beginning of March to beginning of April to where you are today, how has that trended at any given point? Just to confirm what Erin was going after, you're assuming it stays where it is through the end of the second quarter. That's what your outlook assumes?
Yeah. Jack, this came upon us incredibly quickly. Really, we talk about two-thirds of the sites being impacted. When I say impacted, that's a number of things. CRAs not able to get access to, recruitment on hold or paused. The inability to do visits, get on-site and do visits. There's a variety of different things there that come into that two-thirds of sites. Really, I don't want to say it happened overnight, but certainly within, I'd say three to four weeks, that happened. To be honest, we're not seeing, at least in the last couple of weeks, any further challenges there, any further diminution of our ability to access sites. About a third of them remain open to us. We've been doing remote monitoring visits on many of the sites that we can't actually go to physically.
That number came down very quickly, and it hasn't, at this stage anyway, further diminished. We're hopeful. Quite frankly, we expect that that's going to be around the number, and from here, it should start to improve, and it should start to come back on. I think it'll be in a fairly staged and fragmented manner, the sites start to open up as their countries open up and as the states that they're in open up. Some will happen relatively quickly. Others, it'll be much slower. Others will have priorities on either doing COVID trials or doing other things. It's not just whether the states open up or whether the countries open up, it's the priorities within the sites on what those clinical trials are.
We are highly involved in oncology trials, and we believe oncology trials are likely to be a priority as they reengage and as the sites reengage. That's to some extent an advantage. The bottom line is, we believe we've hit the bottom pretty quickly, and it's a slow uptick from here over the next six to nine months.
Great. It does seem like the biggest impact is on the monitoring and recruitment, but there's obviously other aspects of clinical trials as well. I was just curious if you could talk a little bit about any success you're having at maybe reallocating where you're focusing the resources of your CRAs, as some of these sites are closed. Just what are some of the things you're working on?
Sure. You're right. The monitoring of our studies is the major impact on this at the moment. That's significant. I think one of the benefits we have as a business with our different service areas is the ability to transfer resources across. For instance, our Symphony Clinical Research Group, the people who visit patients in an at-home environment. The people within our clinical business who have nursing qualifications and are qualified to do that work, are able to potentially transfer and we have been looking at doing that as we've seen, as I say, a lot of inquiries, a lot of interest coming in on that business. The other part of our business is our FSP, which hasn't, at this stage, been impacted in any significant way.
We have, in fact, a requirement for people in that business, hence, we're able to transfer a number of people from our phase II, phase III business in the clinical space across to our DOCS, our FSP business. The ability and the collaboration and the flexibility of resource management and deployment is certainly an advantage that we have, and we're actively looking at how we do that so that we can minimize our lack of or maximize utilization of our resources right across the business.
Thank you, Steve.
Thank you. Your next question comes to the line of Elizabeth Anderson. Please go ahead.
Hi, guys. Good morning. Thanks for the update. I had a question about how sponsors are reacting to more digital solutions. You mentioned some, and I'm sure some of it's early conversations, but are people looking at it more in terms of forward-going trials? Is it things that they can convert? Are there particular areas that you're seeing more interest in? Any details you could provide there would be helpful.
Yeah, Elizabeth, it's Steve. It's early days for that. We're all just running around trying to make sure that we're getting the basic stuff done. I think there's a lot of talk around how the pandemic will impact the clinical trial process in the longer term. I think we could all see certainly more remote monitoring. Remote monitoring's been going for a while now. There's nothing terribly new about that. I think it'll certainly help to accelerate that within some customers. We certainly see some more interest on the virtual trials, but this is not the time to be setting up virtual trials or hybrid trials. It's more a discussion, there's a lot of talk about it, but we need a more stable environment, I think, in order to actually move that forward.
I do think there's no doubt that that's going to happen going forward, and we'll see more digital opportunities and virtual hybrid-type trials. It'll accelerate the conversation, I think, and I certainly see that happening. However, I've been around this industry long enough to know that things don't happen always as fast as perhaps we'd like or we think they will happen. At the moment, everyone's telling you how things are never going to be the same, and it's all going to be different. That will inevitably, to some extent, be true. As we get through this, I think those conversations will increase. People will be more ready to pilot and to move forward. I don't see a dramatic change in the digitalization of clinical trials at this point, at least not in the immediate future.
Okay, that's helpful. If we think about the RFPs that you guys have seen in the last few weeks, I know, obviously, the funding market for biotech is largely closed, but they've raised a lot of money. Are you seeing any significant mix shift? Obviously, I'm sure, after COVID, RFPs are way up, but in terms of the rest of your book of business?
I'm talking about quarter one, and remember, quarter one was moderately normal until the last two to three weeks, I suppose. In terms of quarter one, our RFP dollars were up in high single-digit numbers. I was very pleased with our dollars availability. It was across the spectrum, large pharma, smaller pharma. We're seeing plenty of opportunity, and that's continued, at least in the last few weeks. We haven't seen a significant drop-off in opportunities. There was a little bit of a slowdown in decision-making towards the end of the quarter with everybody taking stock of what they were doing. I think that may well be the case in quarter two as well. Overall, opportunities on a year-over-year basis were actually following the trend that they have over the last few years.
Okay, perfect. That's helpful. Thank you.
Thank you. Your next question comes from the line of Dave Windley. Please go ahead.
Hi. Good afternoon, gentlemen. Thank you for taking my questions. Hope you're healthy and safe. Sounds like you are. I wanted to try to get a little more precision. So Steve, in your comments about sites impacted, you said two-thirds. When you call a site impacted, does that mean that it's basically totally inaccessible, or is there a way to think about partial accessibility and an ability to move forward? Just wondering definitionally around that.
Then, in terms of your ability to pivot to digital, remote, risk-based type solutions, are you able to put a percentage on that, like the number of visits that you've been able to switch to some type of digital remote access that mitigates the overall downside to visit activity?
Yeah. Thanks, Dave. Hope you're all well as well. I know it's a challenging time for everyone, but I think we're all trying to stay safe. The way I'm looking at that number is that we talked about the 65%, the two-thirds are impacted in some way. That is certainly not totally inaccessible. That is not the case. What that means is either the CRAs can't visit on-site, or we're not able to do risk-based or remote monitoring, or they've paused recruitment, or they're not starting studies. I recognize that there's a whole bunch of different sort of issues and items there, but that's the figure really. About two-thirds of sites are impacted in some way rather than being totally. There are very few sites that are totally inaccessible in any way.
There are two-thirds of them that have, and I would say, a significant impact on our business. In terms of the risk-based monitoring, as we look at those sites that can't do the physical on-site visits, it's about a third of those. About a third of sites have an ability to be monitored from a remote basis. Sorry, I beg your pardon. I misspoke. About two-thirds of those sites can be monitored on a risk-based basis. About two-thirds of them. There's about a third, so about half of those, that's actually happening. There's an element of, yeah, we can do it, but we can't implement it all, at least not in the short term. We're working with a number of those sites to actually be able to implement that.
As I say, about a third of them can actually do it, and two-thirds of them can actually do it, but then a third we can actually implement. It's, again, a moving picture, and not entirely easy. This is not the focus of many sites at the moment. Actually implementing the remote monitoring does have its challenges, but it is something we're actively working on, and trying to get as many visits as possible. I would say that, about half the time we're able to move that forward, and we're certainly being able to implement the remote monitoring in those sites.
Got it. Thank you. Many questions to ask, only one more left to do. Appreciate your comments about the environment. Sounds like any impact was pretty late in the quarter, albeit usually, I think the third month of the quarter is a little bit, say, seasonally, if you want to call it, more important to closing bookings. I guess what I'm trying to gauge is your gross and net bookings are comparable gross dollars year over year, a little bit down from last year. It would seem that if the environment is holding up, as you said, similar to what it has been the last couple of years from an RFP opportunity standpoint, that maybe your close rate was impacted by COVID.
Wanted to make sure I understood that, and if you're able to put a number on that'd be appreciated. Just trying to understand maybe what bookings would've looked like had you closed what you thought you were going to close by the end of the quarter, if not for COVID? Thank you.
Yeah. Dave, it's hard to say what we would've closed, if not for COVID. Certainly, COVID had a significant impact, I think, right across the business, and I do include bookings, in the last couple of weeks of the quarter. I think it is fair to say that the number would've been higher absent COVID. There were decisions that were delayed, and not made because of that. I'm not going to try to put a number on that. I do think it was a significant factor, put it that way. I do think that in quarter two, that will probably continue in terms of decisions being made by customers. The whole pandemic is causing them all to look hard at what they're doing, obviously. I wouldn't be surprised to see some impact there in terms of decision-making.
I think what I was trying to say in my comments is that overall, the environment is still pretty positive. The biotech funding might have come down a little bit, and we'll see where that goes. R&D spending, we can talk about. That's a more long-term thing. I think as long as this remains a fairly short-term issue, and that's our premise at the moment, that the overall environment will remain positive, albeit with some volatility and perhaps some short-term issues. I was encouraged to see the RFP number, albeit for the first quarter. It'll be interesting to see where it is in the second quarter. Overall, I think the environment remains solid. The fundamentals remain good. There's no doubt there's going to be some very short-term challenges, as we all know. They will play out, I think, in Q2 and Q3.
Thank you. Appreciate your perspective .
Thank you. Our next question comes to the line of Dan Leonard. Please go ahead.
Thank you. Thinking about what the rebound looks like post-COVID, do you anticipate any bottlenecks in the clinical trial system with a lot of molecules that have been delayed, all trying to get trials started and continued at the same time? How does your site network play into your opportunity there?
I think it's possible there'll be some challenges as everyone rushes back. I think as we look at it's unlikely that we're going to flick a switch and every site's going to be open from day one, and we're all rushing back in there. I think this is going to be a staged and phased process that's probably going to happen over at least, I think, a six to nine month period. Possibly starting in the next few weeks, even. I think as you look at it in those ways, I think it's a manageable process as we go back.
Clearly, we want to make sure that the studies that we have ongoing at the moment are brought back and have made sure we've collected as much of the data as we possibly can, and we've made up for any issues that have occurred, or we've rectified any issues. We're clearly trying to do that remotely at the moment. We want to start. We want to get studies started. No question about that. There will be an element of catch-up as well. There'll be some work that we can do that will catch up. There'll be some work, of course, that we won't be able to catch up on as well. It's not exclusively we're just delaying revenue. Some of it probably won't happen, or at least not in the short term. There's certainly a large component of work I think we'll be able to catch up as well.
We certainly see there's a huge amount of activity around the COVID space. I'm actually really encouraged about the speed at which these trials are getting up. I was talking to a customer the other day who'd submitted an IND, and three weeks later, we think we'll get a first patient in. This is three weeks after the submission of an IND, which is unheard of, in my experience anyway. We're probably testing a little bit some of the norms of the regulatory process. I'm not suggesting that we're going to get studies up in three weeks on a regular basis in the future. I do think we're looking hard at what we do as an industry to get studies started and perhaps challenging some of those accepted timelines. It may well be an opportunity. We talk about digital technology and virtual trials.
It may well be an opportunity, I think, to get things moving a little faster in a more normal setting, in the future. That I think is I have some optimism around it. I think we can handle the move back into the sites. I don't think that's going to cause us too much pain as we get back to it.
Okay. That's helpful. Just secondly, can you comment on the impact on your M&A pipeline from the COVID disruption?
Yeah. Thanks, Dan. Brendan here. I think obviously the focus of the organization is weathering the storm at the moment. We've done a lot of M&A, and we're very thankful for that. Obviously, businesses like Symphony have been a great bolus to us over the last couple of weeks. Certainly, we'll be looking at being a little more careful with our balance sheet over the next couple of months. We've done some significant buyback in the first quarter. I did mention in my prepared comments that we're also going to be holding on that for the moment. I think it'll be one where we will be focusing internally, and really making sure that our balance sheet remains in very good place over the next couple of months, say the next couple of quarters, and that's where the focus will be.
Okay. Thank you.
I would just add, I think Brendan's absolutely right. The focus at the moment is on cash conservation and making sure we get through these immediate challenges. In the longer term, as I said in my comments, we do think there'll be some opportunities, and we've got to make sure we're in a position to take advantage of those opportunities. Typically, crises provide opportunity. We're very aware of that, and we want to be able to benefit from that, but it's a more longer-term opportunity, I think.
Okay. Understood. Thanks.
Thank you. Your next question comes to the line of Stephen Baxter. Please go ahead.
Hey, thanks for all the information this morning. You touched on this a little bit, and obviously, the business is quite hard to model over the near term. When you look at Q2 revenue with the outlook that you guys gave for down somewhere between 10%-17% year-over-year, and off your previous trajectory, obviously by more than that. I think what a lot of people are trying to figure out is whether demand and the associated revenue over the next couple of quarters is being lost or replaced with lower cost services or kind of simply shifted out to the right
I'd love to get your perspective on that and anything you can say about the balance between what feels like is likely to be lost versus recoverable at this point would be really helpful. Thank you.
Thanks, Stephen. I might take that one as well. It's Brendan here. Certainly the effects that we are seeing at the moment is more on the delay side of things. The book of business and the backlog that we have, as we said, we haven't seen significant cancellations off the back of this. It really is about the accessibility of our sites, getting our CRAs back to those sites and really ramping up on the trials. None of the trials are going away. The activity levels are good. What we see coming through the door, from an RFP perspective, is pretty solid as well. We'd be hopeful that this is a delay because of that issue. That as time goes by, we'll burn through our backlog, and get back on course, certainly as we get back into the back end of the year.
We don't see any kind of diminution of our business. We don't see significant shift away from in terms of proper profile of our business either. As Steve said, our FSP business is doing well during the course of this year. There are certainly other parts of our businesses like the in-home monitoring and in-home nurse business that will be doing well during the course of this year. That may shift things a little bit, but overall, we don't see any long-term shifts in our profitability profile.
Thanks. Just as we think about at some point, we'll potentially be out of sort of this lockdown situation that we're in, and potentially the economy is going to be in what is more of a normal recessionary environment. I guess, what are the key metrics that you guys are watching demand side there? If there's anything that's different about your business this time versus the last recession that we had? Any changes you've been doing there to recession-proof your business would be great to hear about. Thank you.
Yeah. We look at our metrics assiduously on a very regular basis right across the operational group. There's all of the normal operational metrics where we're looking at randomization rates, CRA days on site, contacts with investigators. Obviously, the metric around the sites availability is going to be one that we're watching very closely. As I said, I think we've seen the bottom of that. Certainly over the last week or two, it hasn't got any worse. I'm not sure I want to call a victory on that just yet, but we're certainly seeing, I'd like to think, some hope, or at least experiencing some hope that that number is only going to get better going forward. There'll be fewer sites that are impacted, I suppose. Those are the sorts of things.
Brendan can talk obviously on a financial basis, but from an operational point of view. We measure a multitude of key metrics across our business, and all of those things will be relevant as we swing back into action. Brendan, you want to work on this, talk about the financial stuff?
Yeah. I think from the financial side, obviously, we've put in a number of cost containment measures that are going to act to help us focus very much on the balance sheet in the next couple of months to make sure that our cash collections are solid, to make sure our balance sheet position is very solid, as Steve said. In this relating balance sheet, we want to maintain that and make good use of it on the back end of this, hopefully, the passing of this pandemic. We'll be looking at those metrics every day, save every month, and making sure that when we can invest back in the organization, that we're ready to do that. It'll be careful management on a day-by-day basis, as Steve says.
Thank you. May I take this opportunity to remind all participants to just stick to one question at this time. If there is opportunity for further questions, this will be done at the end.
Your next question today comes from the line of Tycho Peterson. Please go ahead.
Hey, thanks. Steve, as we think about getting back up and running, can you talk to how much of a differentiated factor you think the site ownership is on your part, just competitively versus some of your peers?
As we think about the checklist that's going to be required to get some of the sites up and running, how do we think about things like FDA sign-off, in terms of changing protocols, kind of mid-trial and agreeing on supporting costs with sponsors? Can you talk to some of the other things beyond just having patients, having the freedom to travel that are required to get sites up and running?
Sure, Tycho. I do believe our site network is going to be a significant advantage for us as we get our projects back up and running as we come through this. These are sites that we have our own folks in, integrated sites embedded, and who we have very strong alliances with and who do recruit better and who start up better and faster, who recruit faster and who have ultimately a better quality in terms of protocol violators or fewer protocol violators and queries. I think it's going to be an important advantage for us, particularly early on as we get back to it. They're going to be ready to go and very much accessible as they are at the moment, where, of course, local guidelines allow them to be.
Having said that, I don't want to overstate that because they're still a relatively small part of our overall patient recruitment services. It'll have an important impact on our business, but I don't want to overstate it in terms of the materiality of it. In terms of the regulators, and the sign-off of protocol changes, et cetera. I've been very encouraged by the interactions we've seen with the FDA, certainly through our ACRO, the CRO association. We've got a lot of engagement from the EMA and the FDA in terms of how we document protocol changes, how we communicate that, and what those changes are. I think the regulators have put out some guidance and have also, I think we talked about sponsors moving on and in terms of their attitude towards digitalization of trials.
I think we'll see the regulators also seeing that this is going to be an important component of the trials going forward and adjusting their guidance and their outlook and their viewpoints to make sure that they are embracing that. Now that's, again, at the end of the day, you've got to do the trials, and they need to be rigorous, and the data needs to be. We have to have the auditing groups and all that, make sure we catch up with that. We don't want to be in a situation in a year or two where we're submitting these trials for approval, and there are questions around the data.
I don't think we'll be, because we're very assiduous about, I think our industry is about documenting the sorts of changes and making sure that we're very clear on what's been done and why it's been done and what were the circumstances, et cetera. I think the regulators have been extremely accommodating under the circumstances and also very fast-moving under the circumstances. In terms of our customers and costs and change order, again, we're having a number of discussions, clearly, on a range of all of our projects around the cost implications of the pandemic, what's happening. Clearly, we're trying to minimize their cost overruns, trying to work proactively with them to help to make sure that we don't blow their budgets out.
There are cost implications in a number of cases, and we have to reflect that, and we're having good discussions and negotiations around how that's being worked through. That's an ongoing process, and of course, every project's a little different, every customer's a little different. We are engaging with them on that, and they certainly understand the challenges we're all under to make that work.
Then for the follow-up, I appreciate you talking about the number of inbounds around COVID-related work. Can you just maybe help us put some context on how much you think COVID-related vaccine and therapy work could be a tailwind potentially this year? Then how should we think about Central Lab coming back in the context of the recovery, too? Thanks.
Yeah. I think the COVID work, such as we're seeing it will be a tailwind, but I think it'll be relatively modest. The benefit, of course, is that this is vaccine work, and the urgency that I see around getting these studies up and running is, quite frankly, incredible. Not surprising given the challenges we're facing, but it really is moving fast. I think it will be a tailwind for us. I hesitate, again, to be too bullish on it because it's still a relatively small component of our work, and the trials need to get going. What we've seen is really rapid startup and ability to recruit. Having said that, there are some trials that have recruited very quickly, and we're starting to see the lab samples come through. There's no doubt that they are going to help us.
The work there is going to be a positive. How much? I find it's hard for us at the moment to forecast the materiality of that or even put a number on that. It'll be certainly a wind going in the right direction, and we can certainly do with as many of those sort of winds as we can. In terms of Central Lab, I think I quoted to you about a 40% reduction from our run rate in February in samples. That will come back slowly. I don't think we're going to get much lower than that. It may be ± 5%, but I don't think we're going to go too much lower than that. As I've indicated, some of the COVID work, as it ramps, will start to ameliorate or attenuate some of that downturn.
We're engaged in some of those trials. There's some possible sort of attenuation or upside there. I think 40%-50% is probably the nadir, and we'll slowly move back up. I think it'll probably take most of the year to get back up to a normal run rate. I do think it'll get back. There will be, I believe, some catch-up there as well. Samples will have been taken that haven't been sent. There'll be some missed samples, of course, as well. It won't all be catch-up. There will be, I think, the opportunity for some catch-up revenue in the lab space, in addition.
Thank you.
Thank you. Your next question today comes to the line of Robert Jones. Please go ahead.
Thanks for the questions. I guess, Steve, clearly you've shared your view that you think this or the company thinks this could be somewhat short-lived recovery over the next six to nine months. I guess maybe just to dig in a little bit more on what informs that view as you sit here today appreciating, obviously, that's an extremely fluid situation?
Just related to that, as far as sites being able to come back online, just given the drop in patient visits that we've seen globally, how are you thinking about clinical trials being prioritized relative to just routine patient visits, which clearly will have a backlog as well?
Yeah. What informs our view that this is a relatively short term? I think there's a couple of things, Robert. I think there's no doubt the world's been a little bit surprised. There's been some governments, et cetera, have been caught out a little bit. Some two to three months ago, thought this was going to be a much less of an issue than it's turned out to be. I think that's one area. I think we are forewarned. Clearly there's a possibility that the virus comes back or returns in the fall in the northern hemisphere. If it does, there'll certainly be some further challenges. However, I don't think it'll be quite the impact that we've had over the last month and a half or so.
I think the preparedness or the understanding of what we need to do, I think will be much more available and much more in place for the fall. I think that's a positive. I do think from what I've seen around, not so much the vaccines, which I think might take a little longer, but around the therapeutics. I think we'll have made some progress in the next three to six months in terms of therapeutics that can be deployed, particularly obviously for higher risk patients and patients who are at a much more serious situation. I think that will help us. Then I think, as I said, the whole community willingness to address and to move probably a bit faster than we've moved as a global community this time will be there.
Now, of course, you've got to overlay potential for the flu to be an issue in the fall as well. You add this and all the rest of it, whether there's a vaccine going to be available, I think that'll be challenging for the fall, but there'll be some, I think, some experiments or some phase III trials certainly ongoing out there, which will perhaps help a little bit as well. That's the sort of information that informs my view that I think we will be moving forward, we will be getting better. I don't think we're going to be back to normal in quarter four. I do think we're going to be certainly on the up and up. As we get into quarter one or the first part of next year, we will return, I think, to a much more normal cadence.
That's certainly my expectation. In terms of the priority for clinical trials for sites, as I see it, this may actually even help in some ways. The understanding that we need treatments for things like COVID-19 and many other diseases as well could push sites to be perhaps more involved in clinical trials. As I said, I think the regulators have moved very quickly to adjust protocols, and they've been very flexible on that. I think the timelines, I talked about the three weeks from IND to first patient. That won't happen on a regular basis, but I think we're challenging some of the norms there. I think the administrative processes around clinical trials could be challenged a little bit. I think that may well be a net positive in the more medium to long term in terms of trials within sites and the priority of trials.
Clinical research as a care option is something we've been pushing, particularly through our site network, for a long time now. I think there are a number of organizations who do the same thing. We see that as something that really is perhaps even going to get a tailwind or get a push along from this pandemic. I've never heard so much talk about clinical trials and new drugs and the development process. I think, in the end, the public's imagination, the public's understanding of what we do as an organization, as an industry, is going to be enhanced by this whole crisis. That, as I say, may well have some long-term benefits.
Okay, great. Thank you.
Thank you. Your next question today comes from the line of John Kreger. Please go ahead.
Hi. Thanks very much. Steve, congrats on the Pfizer renewal. Are you able to elaborate at all on any interesting sort of changes of scope or structure of that relationship? Or should we view it as pretty much kind of steady as she goes versus the old contract? Do you have any other kind of significant renewals that we should be thinking about for the remainder of the year?
Hey, John. There's nothing in particular that we changed in terms of the Pfizer. There were some areas of discussion, but really, it was a very collegial and very positive negotiation with Pfizer. No major changes to that. As I think about it, no, I don't think there are any significant alliance agreements that are up for discussion or negotiation specifically anyway, for the remainder of the year.
Excellent. That's good news. One quick follow-up. You mentioned China is showing at least some signs of opening up. Are there any lessons you can take away from that as you watch that play out as to what you might see later in the year in Western Europe or the U.S.?
Yeah. We look at how China is starting to open up, albeit relatively slowly, and some of the other Asian countries as well. We do take some solace from how that's moving forward, and we believe that it can be broadly applied. Obviously, China's a relatively small part of our business, so I hesitate to draw too much from one particular country. Given that it was the epicenter or the initiation, the start of the whole pandemic, and the fact that it does seem to be moving on now, it gives us, again, hope that this is a relatively short-term issue that we believe we can get through, as I say, by the end of the year. I want to be a little careful about lessons learned from China. John, just to go back to your previous question on the alliance.
I think the other area is in the labs where we've been seeing some opportunities, and certainly, we've been able to agree on a couple of significant opportunity alliance partnerships for our lab operations, our Central Lab, and our bioanalytical lab in the last six months. I tend to think about clinical, of course, as it's the largest part of our business, but our lab operations have been able to secure a couple of partnerships recently, and that, I think, puts them in a good position to really build that business.
Great. Thank you.
Thank you. Your next question today comes from the line of Patrick Donnelly. Please go ahead.
Great. Thanks. Steve, maybe just on the biotech funding environment, I know you mentioned a couple of times, obviously, there's been a bit of a pause here given the disruption. New raises have been pretty minimal. When you look out to the other side of this and even maybe the midterm view, 2021, years like that, has your opinion changed in terms of what the growth rate could be for the overall market given a little bit of pullback in that funding? Do you think things come back pretty quickly and we're in a pretty normalized market for next year?
Hey, Patrick. Its Brendan, [can you hear me?]
Yeah, go on. Sorry. Go. I'll let Brendan have a crack at that one, Pat.
Yeah. No. I think we've seen a pretty stable environment from a funding perspective, and the guys that we've seen there have been well-funded as they came into this year. There's some good science out there as well, which is always the underlying piece in terms of whether biotechs deserve to get funded or not. As we go out, and I think your question is a good one in terms of the longer term, we still think there's opportunity there. It's been a really strong part of our marketplace. I suppose the fundamentals of this pandemic that we're seeing don't really change the fundamentals of drug development. We do see that there is continued opportunity, particularly in the biotech space, where there has been a lot of innovation, a lot of creativity.
We'd expect that the good science and decent funding levels, as well as the fact that folks are still looking for decent returns on their cash and putting money out there to persist. I think it'll persist. It might take a bit of a pause as we think about this year as the entire global economy probably will. Certainly, as we think about 2021, we'd be very hopeful that we'll see that bounce back quite well.
Great. Brendan, maybe another quick one. Obviously, DSOs have been a big focus for you guys. I assume this external shock changes things a little bit, but what's your perspective on the focus there as we go through this pandemic?
Yeah, no. Certainly, listen, we'll be still very focused on it as an element of our business. We saw decent progress. We didn't see any great diminution to it as we came into the first quarter. Actually, even as we started off Q2, cash collections remained relatively solid. We're not seeing any particular issues there yet. That said, we're going to be keeping a close focus on it as we go through the months and quarters ahead. At the moment, it still looks like we're in a very solid position.
Okay. Thank you.
Thank you. Our next question today comes from the line of Sandy Draper. Please go ahead.
Thank you very much for squeezing me in at the end of the call. Glad to hear you guys are doing well over there, all things considered. My question is on the expense side. It's an area you guys have incredibly outperformed over years and done a great job there. Brendan, when you think about your near-term cost controls and what you're doing, as we start to come back to a more normalized environment, are there specific areas you think you may be able to take more of a look at and say, hey, you know what? We thought we really need to spend here, but we realize we can live without this, or we can do it differently.
Do you think this changes maybe longer term, how you think about the cost structure of the business? Or basically once things come back on, do all those costs that you're pulling out all have to ramp back up in line, if not faster than the revenue? Thanks.
That's a good question, Sandy. As you know, we're pretty tight cost managers on a good day. This has obviously been a very challenging period. We are thinking about our cost base from that perspective and have looked at the leverage that we really how we take that down a step. A large chunk of that is around remuneration and salaries. That is something I think that will ramp back up. That said, however, I think, this whole environment and this kind of, this virtual work environment does give us pause for thought around what is absolutely necessary. We'll be looking at our cost base as it does ramp up. Some of it certainly will come back in, there's no question about that. We'd like to see that come in sooner rather than later, with hopefully a recovery in the general business environment.
Certainly, we'll be looking at all cost lines and actually, very honestly asking the question, can we do things more virtually? Do we need as much travel? I think they are questions that we constantly ask ourselves, and I suppose this environment has tested all businesses in the world, as to whether they can be more virtual in how they operate. That is certainly something we'll bear in mind as we go through this.
I appreciate that. That was really my only question. Everything else had been asked and answered. Thanks, guys.
Thanks, Sandy.
Thank you. Our next question today comes from the line of Juan Avendano. Please go ahead.
Hi. Thank you for fitting me in. I joined the call late, so I apologize if this has been asked. I'll try to ask a couple of questions from left field. Can you talk to us about how remote monitoring activities impact CRO revenue and profitability? In particular, I'm interested in how alternative site visits could impact pass-throughs. Based on some of my research and consultations, it seems like remote monitoring could be a positive mix for CROs. Was curious if you could confirm that.
Yeah. Juan, I think the potential for us to, if we do remote monitoring effectively and well, is actually a tailwind from a profitability point of view. There's a lot of time spent. I think it's also a boon for customers potentially too, in that they'll spend less money getting their data reviewed. We'll be able to do I would say that'd give us more opportunity to do more work. I think that it's a, dare I say it, a win-win. I'm sorry to use the term. From a profitability point of view, also from a customer point of view, going forward. In terms of pass-throughs, I don't think that's gonna make a huge difference. The pass-throughs in terms of monitoring are pretty modest. A major part of the pass-through costs are investigator fees.
While it may have a small impact, and Brendan maybe comment on that, I don't think that's gonna have a huge impact. I'm optimistic in terms of remote monitoring and how that's gonna go forward. However, at the end of the day, I don't think it's gonna happen, as I said, as fast as perhaps everybody thinks it is. It'll get the conversation going. We'll certainly be doing some more virtual trials and some more remote monitoring, but we're already doing quite a bit of remote monitoring anyway. I think it'll just move the conversation forward and accelerate the conversation rather than transform the whole industry. That's my assessment.
Okay. Got it. A follow-up, I guess, I understand that studies in the startup or activation phase could possibly be the most prone to delays and potential cancellations. Can you tell us what percentage of your studies are in the startup phase versus accrual and [past] database lock?
I can give you sort of high-level ballpark, Juan. We certainly haven't seen any evidence that the studies in startup are more likely to be canceled. We've had, I think, two cancellations, which is on par with where we'd normally be. We haven't seen an uptick in cancellations and certainly haven't seen anything related to the startup of studies in terms of cancellations. I would say probably 20%-25% of our studies are in the startup. About 50% are in, 50%-60%, are in sort of ongoing recruitment and enrollment, and data [plays].
There's probably 20% that are in sort of the final stages of database lock and report writing, et cetera. Very broad high-level figures, I think that's where it would be. As I say, we haven't seen any evidence that studies early on in their lifecycle are more prone to be canceled.
Okay. Thank you. SG&A as a percentage of revenue actually ticked up by 10 basis points on a year-over-year basis. This is the first time that I see this happening in many years. Can you talk about how perhaps the COVID-19 dynamic could be impacting, or would impact, if any at all, your ability to continue to offshore and drive SG&A leverage?
We'll continue to look at that one as time goes by. I don't think this is a block to any of the cost control pieces that we've done in the past. There's no real issue why one country or another country would be better or worse from that perspective. To be honest as well, Juan, to be honest, the dollar amount didn't change from Q4 to Q1 in terms of SG&A. Yeah, in percentage terms, you see a bit of a mix, but we'll continue to manage our cost base assiduously. Thanks.
All right. Thank you.
Thank you. Your next question comes to the line of Dan Brennan. Please go ahead.
Thanks for taking the questions. I guess I was hoping to get a little color on how you think about times, kind of gradual throughout the year, maybe Q4 we get back to, or maybe Q1, some normalcy. If we think about the 65% that are impacted in some way, shape, or form today, if we're sitting here like December 31st, is that down to 5% or 10%? Obviously, we don't have a crystal ball, but you're in a better position than we are to have a sense of how these sites may open up.
I missed the first part of your question, Dan, but I think what you're asking is, of the sites that are impacted, the 65% today, what's the logical sort of bring back or at what rate will they come back to being? Is that where I'm at?
Exactly. Yeah. Exactly.
Okay. As I said, I think the 65% is an idea. I don't think we're going to go much below that. Maybe it's 70%, but I think that is pretty much an idea. I think as we go back, we get deeper into the second quarter, third, fourth, I'd like to think that by December 31, that number's going to be much closer. I would just say under 20%, in that sort of range. I'd love to think it's zero. We're not expecting this to completely disappear in the immediate future. We do think there'll be some impact. I do think that those 20% of sites that are impacted, if it's that number, they'll be accessible in terms of remote monitoring. They may have some impact in terms of slower recruitment rates, et cetera.
I think it'll be the [audio distortion] of sites.
Still, a reasonable proportion that'll have some impact. I think as we get into next year, assuming that the virus doesn't reappear and we don't have all that further lockdowns, and that's a big assumption, but that's what we're saying. As we get into the first quarter, I think that'll get to zero.
Got it. That's a good lead into my follow-up question, which I think you mentioned earlier in the conversation, there'll be some ability to catch up on what's been delayed here. We've had several conversations with some experts, and I think investors alike, 2020 volatility is just extreme. A lot of people are trying to think about 2021, 2022, and how it looks on a normalized basis. We've heard mixed things about the ability to catch up next year, and you could see actually some overage. You can actually see some upside from where you might be pre-COVID in 2021 versus others have suggested maybe the capacity of the system just can't handle that, so it's really hard to catch up. I'm just wondering, as you look ahead further, could you comment a little bit on that?
As if we think about going beyond 2020 and the potential to catch up and see possibly some upside, is that fair? There's structural issues in the system and capacity issues and things like that that just will lead to more of a deferral and a push out?
I would hesitate to say that we would be able to catch up everything, every sort of reduction that we're going to see in the next couple of quarters. I think there'll be some catch up. I think the system is maybe part of the issue. At the end of the day, if data isn't collected or samples aren't taken because patients didn't visit or there's not much to catch up. You're just going to have to miss that piece of data, that sample. It certainly won't be anything like 100%. I'd be very careful about upside or tailwinds. I think it's more likely that the catch up will help us get back to a more normal cadence and then our normal growth curve will kick in. That's the way I'm thinking about it at the moment.
I don't think there's a huge bolus of work out there that we're going to suddenly be able to get done in quarter four or quarter three that'll make up for the challenges we're going to see in Q2 and Q3. I think that would be overstating it. But I do think there is some work that will. And that uptick that I think we'll see in quarter four, part of that will be the catch-up work that we'll be able to do.
Great. Thank you.
Thank you. Our next question today comes to the line of Eric Coldwell. Please go ahead.
Hey. Thank you. First one, it was briefly addressed. I think I got the answer, but I want to be very specific. Pass through versus service level impacts both for bookings and revenue outlook, please.
Pass-through, Eric, just let me make sure I understand your question. You're looking for what, Eric?
Well, you've got revenue down 10%-17% in the second quarter. Is pass-through at the midpoint of that range, just like service or more or less?
I think given that most of the impact is in the clinical business where the pass-through happens, Eric, you can model it in the same lines, pass-through and direct equally.
Equally. Thank you. The second question here. Tons of cost actions, cost controls, all the rational, reasonable stuff. I don't think we ever got an actual number on the savings projected. Would be very helpful if we had that.
No, you didn't get an actual number, Eric, and I'm not sure you're going to get an actual number, unfortunately.
Oh, come on. I can't twist your arm?
No, I'm afraid not. We'll be looking at it. The reason being, Eric, listen, we're all here. We've given you guidance for Q2. We're very hopeful that we see a better recovery, and we're hoping for that in Q3 and Q4. That number might have to change if we don't see that pace of that recovery. It is a little fluid at the moment. Obviously, it's baked into the earnings guidance that we've given you for Q2. Beyond that, obviously, we'll give you more color when we get to Q3 and Q4.
Maybe I could ask it this way. It looks like based on the guidance given, if our quick math is accurate, that you're calling for basically a net 40% decremental margin in Q2. Would we be expecting that to improve, the decremental to improve as 3Q, 4Q unfold, as volumes come back and maybe some cost actions happening in the second quarter are fully recognized in the third and fourth? And if that decremental target is to improve, maybe some color on how much you think it could improve?
I think it's fair to say that our expectation is that it should improve in Q3 and Q4, as we see revenue coming back in. That being said, I think there are cost actions, depending on speed, that the revenue comes back, that we'll actually ease up on a little bit, which will probably keep the margin a little flatter. Probably the way to look at it, Eric, from your margin perspective, is not a massive amount of variance. You're probably in a 2% margin range as you go through the next couple of quarters with cost containment, managing that profile as revenue comes back.
That's very helpful. Last question. You have highlighted some businesses that have performed better, been more stable. The in-home nurse and the monitoring, the remote monitoring, of course, functional service provider. Are there any other businesses you would call out that have actually seen upside from pandemic response and implications? Thinking things like maybe biostats, but I'm not sure.
Conversely, would it be possible to get you to talk about which businesses have been most impacted on the negative side? Central Lab, obviously, bigger impact there than I was hoping for. Maybe thinking phase I and some other areas that possibly in the short term have been more severely impacted, but I was hoping you could go into a little more granularity on that.
Yeah. Let me hit with the upside. We sort of outlined, Eric, where we're seeing some in the Symphony, the at-home patient services. That's, again, a relatively small part of our business, but that's seen a lot of activity going forward. We do think the site business is poised for some opportunity as we get back into restarting studies. I think that's an area we're confident is going to move along nicely. In terms of the pharmacovigilance, medical monitoring, there's been certainly no diminution, I suppose, in those parts of our clinical business. Whether there's upside there, I think it's a little too early to tell. We're certainly not seeing a dramatic upside in those, but we're certainly seeing plenty of work still going on there. biostats and data management haven't been impacted too much at the moment, but again, I hesitate.
There's not too many areas where we're really seeing upside at the moment. Vaccine trials and nurse services, I think would probably be where we're seeing some opportunity. Those vaccine trials all play into, of course, our clinical group, which has been impacted. I think we've talked enough about that. Phase I, we've certainly seen some impact. Again, that's a very small part of our business, so it's not hugely material, but the CPU that we have, we have the one CPU in San Antonio, certainly has been doing a very limited amount of work and some of our other sites that we do early phase studies in have been fairly limited as well. I think those are the areas that we've seen most impact.
Back on the upside, I think the FSP businesses have certainly continued to expand based on some significant wins we had at the back end of last year. We're actively recruiting. Again, I think as I said, the ability for us as an organization to move and shift and redeploy resources, take significant resource costs out of one area and deploy them in another where we're actually earning solid revenues is, I think, a strength of our organization.
Thank you very much for all that. It's been the longest call in ICON history, I think three times your norm. I'll let it go there.
[audio distortion]
Thank you. Our final question today comes from the line of George Hill. Please go ahead.
Thanks, guys, for taking the question. I'm not going to let Eric Coldwell off the hook that easy. I guess one thing that hasn't been touched on is, could you guys talk about, I guess, engagement by client size? Should we think about the sites that are continuing to do business or the sites that you expect to come back first? I guess, is there any correlation between client size or client funding type? Is it more therapeutic area, where we should see the growth come back first or the business come back first?
George, it's a little early to be calling correlations in that. I hesitate to do that in terms of larger clients or smaller clients or mid-size clients doing things differently. Certainly, in terms of the larger pharma customers have taken a fairly conservative attitude, I would say, or approach in terms of their trials. Perhaps the biotech's a little less so in terms of specific instructions around how we should manage their trials. At the end of the day, the sites and the availability of the sites is the major determinant in terms of what we can do and what they ultimately are going to do in terms of our trials. I don't think it's necessarily there's a correlation between client size in that respect.
In terms of therapeutic areas, as I mentioned in my comments, we have a significant amount of oncology business, and I believe that will be less impacted than some of the other more, dare I say, less life-threatening type indications. Clearly, the vaccines and the COVID stuff is high priority, and that's moving forward very fast. I think oncology will, and those life-threatening trials, those life-threatening conditions, will come back faster than others and certainly will reignite in terms of recruitment, re-accelerate in terms of recruitment faster than the others. That's the way I'd look at it, and that's to our benefit. In fact, most of the industry's in oncology. I think those will be a priority, but we'll see the rest of them come back, I think in the medium to longer term.
Okay, thanks for squeezing me in.
Good.
We have no further questions, so I'll hand back to Steve Cutler for closing remarks.
Thanks Tim. Thank you everyone for listening in today. As the impact of the COVID pandemic continues to evolve, ICON is focused on protecting the safety and wellbeing of our employees and patients and 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 sincerely for the tireless efforts and the ongoing resilience they're showing during this very challenging period. Thank you, everyone.
Our thanks to each of our speakers. That does conclude today's conference. Thank you all for participating. You may all now disconnect.