thinking about both the R&DS piece and the TAS piece.
Yep.
We can kind of dive in from there.
Sure. Well, you know, you know that the TAS business went through a period of softening revenue last year, and Q4, I think, was our softest quarter of all. What we're looking for in the TAS business, as we go into 2024, through 2024, is kind of almost a mirror image in terms of growth from what we saw in 2023, which is to say 2023 started out strong and the growth rate trailed off as we saw pharma clients cut back on discretionary spending. We see demand coming back, but gradually, towards the back half of the year. So, you know, you had the downward trend last year in growth, and we expect the revenue to bounce back, growth as we go through the year.
You know, you might ask what gives us confidence in that, and really, we get that question frequently. It's hard to call a short cycle business. On the other hand, we know that there were 55 new molecules approved last year, and typically, promotional spending associated with a new molecule, 50% of that'll happen in the first two years. So there's work that just has to get done in terms of market access and pricing and segmentation, targeting, and so forth, even if it can be delayed some. Certainly. And the tone with our customers looks, sounds better, too. We even saw in Q4 a little bit where the analytics and consulting business, which had actually, which is the most discretionary part of TAS, which had actually declined year over year in Q3, showed a small amount of growth in Q4.
Real world evidence lagging some behind there because it's a longer cycle business. Now, in the R&DS business, looking out to 2024, we feel very comfortable. You saw we've had strong bookings continually for the last few years. Our backlog's in very good shape. We actually even had record bookings, our second to record. It was fourth quarter of 2022 was a little bit stronger, but very strong bookings. We would expect R&DS to be a fairly steady growth rate as we go through the year. The only caveat I would say on that is we're still burning down COVID-related revenues. We expect them overall for the corporation to decline by about $300 million year over year, and most of that is in the R&DS segment.
There's a little bit in Q1 in TAS because we still had some work last year, Q1. But overall, we expect R&DS growth to be very solid as we go through the year and be fairly consistent. So none, you know, none of the quarterly fluctuations that we expect to see in the TAS business.
Yep. Okay. Yeah, maybe we can start on the TAS piece. You know, you touched on analytics and consulting a little bit there. Obviously, you have the real-world piece as well. Maybe just talk about the different segments of TAS and what you're seeing in each and, you know, the expectations. Because you're right, you know, certainly a question we get a lot as well, is just the visibility into that recovery. So yeah, maybe we can start and just parse it out a little bit.
Well, TAS is a more complicated business. A lot of it is the legacy IMS Health business. And, you know, depending upon how you look at it, it's 3 or 4 major parts. About a third of the business, give or take, is our information business, our data business. It's a core business. It tends to be high margin, good cash flow, strong, you know, backlog going into any given year, but not high growth. It's a low growth, typically low single-digit kind of grower. That's about a third of the business. You have the analytics and consulting, which, call it give or take, is, you know, 20%-25% of the business, depending upon the particular year.
It's the shorter cycle business, tends to be pretty good margin business, but also is more discretionary in nature. So there are elements of that that are certainly deferrable or cancelable by the client. And then the balance of the business, what represents a little bit less than 50% is the combination of the Real World business and the tech business, and it's probably, like, two-thirds Real World, one-third tech. And what we expect, going back to analytics and consulting, we expect that to come back as we go through the year, the growth rates. Real World Evidence is gonna lag a little bit.
What we saw was the bookings activity soften as we went through last year, and it's a little longer cycle, takes a little longer to burn, and therefore, we're gonna see more persistent slow, you know, flattish, call it kind of flattish sort of business into this year. And you know, it will come back. We're seeing the bookings start to improve there, but it takes a while for that to flow through in revenues. And the technology business is fairly steady there. So you add it all up, we do expect the TAS business to improve as we go through the year, as some of the more discretionary parts of the business begin to come back. And in real world...
A lot of times, you think of that as being Phase IV sort of trials that are, some of which are required, under regulation, but, over half of that business is discretionary in nature. Our pharma clients use it to help them, prove the efficacy of the drugs in real world use, help them in terms of marketing and getting onto formulary and so forth. So there's definitely or to use a drug for additional indications or whatever, and there's definitely a discretionary component to that that slows down when spending slows down in the industry, as we've seen recently.
Okay. Yeah, and I guess in terms of kind of the recovery, you mentioned, you know, the visibility is not quite obviously, you know, the R&DS is a, is a different level of visibility given the backlog there. But when you look back to last year, you guys thought it was gonna be a little, maybe more of an improvement-
Right.
than we actually saw. So I guess, how do you think about the visibility today versus what we saw last year? And what are the signs you're looking for in terms of particularly the analytics and consulting piece, for that to start to pick up?
Well, yeah, we did expect it to come back sooner last year, and there's typically a cycle in this business where when it turns down, it could be as short as 6 months, or it could be as long as 18 months for it to start coming back. We expected it to come back sooner than it did, based on drug approvals and the size of the pipeline that we saw out there. But we saw, you know, continued reluctance on the part of our clients to spend. It started to loosen up in Q4. So some of that loosening is the reason that we're encouraged. Discussions we're having with customers are reasons that we're encouraged. The number of new drugs coming to market is another reason, 'cause ultimately, they have to be supported.
And just looking at historical trends, you tend to find that these things don't last forever, that there's pent-up demand, and eventually, it opens back up. So there's a bit of art in predicting when the market's gonna come back, but, you know, you have to piece all of those elements together. And looking at that, we're saying, being cautious in saying, "It's probably not a first half phenomenon, but we do expect it in the second half.
Yep. And then maybe just quickly on the margin profile inside TAS, you mentioned analytics and consulting tends to be higher margin. Can you just talk about the margin profiles there, and again, I guess the impact as that recovery plays out on them?
Well, it should help. Overall, as TAS recovers, it should help some on margins, because TAS, in general, tends to be a higher margin business than our R&DS. Not terribly so, but somewhat higher margin. You have to be a little bit careful about ascribing margin expansion overall in the company to any one factor, 'cause there are a lot of things that can underlie that. You know, the pace at which we roll in cost reductions, even foreign currency translation, for instance, because foreign currency tends to impact our top line to a much greater degree than the bottom line. You can have fluctuations in margin just based on foreign currency, in addition to, you know, the sales mix items we talked about.
We, right now, are targeting in our guidance at the midpoint, I think it's about 40 basis points of margin expansion year-over-year, with a range from 20-50 basis points. So that's what we expect. Somewhere in that range for the full year, we'll have some continued margin expansion. And that's on top of, I believe it was 60 basis points last year, so, you know, good momentum there. And, you know, when we talk about our medium-term guide, we typically aren't forecasting quite that much margin expansion. 20-30 basis points in a normal year would be, would, would be more like it.
But, you know, we're not far from that range this year, and we have pretty good visibility into it, given what's going on and what we expect to go on in the mix of businesses that we have.
Yep. And I guess when you think about the margin cadence this year, since you touched on it there, I think Q1 is more flat-
Yes.
maybe slightly down, and then it picks up. What are the dynamics there? Is it-- 'cause COVID should be more in Q1 right, which is-
Yeah, well, the COVID impact is gradually declining through the year-
Yep
... but it's more in Q1. There are a couple of things there. One, you just have the volume leverage. As you go through the year and volumes pick up, that helps because SG&A doesn't stay, you know, doesn't rise in concert with volume. We also have the TAS business gradually coming back, which should be helpful. And then lastly, we continue to be pretty aggressive around cost reduction actions, and as those, we get the full impact of those as we go through the year, that should help as well. So I would attribute the improvement as we go through the year to those three factors.
Sure. Yep. No, that's fair. And then maybe we can flip to R&DS, you know, coming off, I think it was a 1.3, 1.31 on the book-to-bill side in 4Q. Maybe just talk about the backdrop. I'm sure we can get into to things like biotech, and mid-large pharma, but just what you're seeing broadly on the order trends and how you're feeling about kind of the 1Q go forward here.
We feel broadly very good about the industry. We just haven't seen any decline in spending and demand on the clinical trial side. We had a very strong Q4. I think our book-to-bill for all last year was 1.28. Our backlog is at record levels. It's up 9% year-over-year. And of course, we're always on the lookout for what's coming down the road. And if you looked, our RFP flow was double-digit in the fourth quarter, and it was strong in both the large pharma and EBP segment. Our qualified pipeline was up high teens at the end of the year, so that's even looking a little bit further back.
EBP funding, and EBP is a big growth area for us and others, has been strong. It was up double-digit year-over-year, and I know there's been a lot of concern around the EBP funding because a lot of people were comparing to the 2021 years, which were big, outsized years in terms of funding. Probably where more funding got done than was really justified by the science. But if you were to exclude those years and just look at, you know, pre-COVID and beyond, we've seen very nice, steady growth there. And we're seeing it in our RFP flow, and we're seeing it in what's happening in the pipeline, that at least the EBP clients that we engage with are well-funded and continuing to do work.
Yeah. Yeah, maybe we can touch on EBP. You know, obviously, there's been a lot of deals even in the past couple weeks in terms of fundraising on the biotech side. Maybe just remind people, I think it's about 15% of R&DS, but what the exposure is on EBP, and just what those trends look like, and again, how quickly something like what's happening now with the capital markets window seemingly open, you know, how quickly that can, you can kind of see that improvement for you guys?
Well, we have about -- actually, it's low 20% of our revenue is EBP related. And we tend to, over time, see stronger growth out of EBP than out of large pharma. So that is growing as a percentage of our total business. Now, we're still, you know, 60% large pharma, 60+% large pharma in terms of revenue, and then you have mid and EBP. But we're feeling broadly good about what's going on in that sector, in the EBP sector, and just don't see any any letup there. Our clients in EBP tend to be a little bit later stage than some others. And they are, for the most part, well-funded.
I'd say if you look at our backlog, about 10% of our backlog is in pre-commercial, that is pre-revenue EBP clients. So the exposure there isn't great. And we do a pretty careful job even screening those to make sure when we take an order, first off, that we're getting paid well upfront, so we don't have an exposure there. And secondarily, that the clients we have are in a position to get good funding. I mean, yeah, like any business, you're gonna lose some clients 'cause they don't get funding or the science doesn't work out, but on the whole, we think we have a pretty good base of clients.
Yep, okay. And maybe just in terms of kind of the mix of different studies in terms of therapeutic types, I know there's been some shift. Obviously, COVID was one.
Right.
But even things like oncology, how do you think about the mix today and what that means for some of the conversion burn rate? I know some studies are a little slower than others.
Yeah.
Maybe just talk about-
Well, that's important, too, because we've what we're seeing is we do a lot of work in oncology, in rare diseases, neurology, I mean, immunology, certainly. But in general, the studies that we're now contracting tend to be fairly slow burn, 4-6-year sort of studies. So, they're complicated trials. One of the reasons we do well there is because we have the ability to find the patients, which is more difficult in those kinds of trials than it is in primary care studies, like cardiology or whatever.
Yes, our bookings are very strong there, but I wouldn't look at the EBP bookings and say, "Oh, wow, that has an outsized impact on 2024, what we did in 2023." It's gonna take 2-3 years to get the full momentum of that into our revenue growth.
Mm-hmm. Okay. And then, you know, another thing that comes up a lot with you guys and other large CROs is just this FSP shift.
Right.
Maybe talk a little bit about what that makes up currently for you guys and what you're seeing there. I know it's always a question about margins-
Right
... which we can get to, but just generally with FSP, maybe let folks know where you are.
Yeah, well, FSP work right now makes up about 15% of the R&DS segment's overall revenues. That is including pass-through revenues. If you were to exclude pass-through revenues and just look at service revenues, it's about 20% or so. And it's true that FSP has been growing in importance. There has been, over the past, number of years here, a shift, among large pharma clients to do more work on an FSP basis rather than a full service basis. Although, to be honest, what you end up getting a lot of times is hybrid trials, too. They'll come to us and say, "Well, we wanna do FSP work, but we want, you know, you also to do X, Y, and Z on top of it," that's leaning more towards a full service area. So you get a fair amount of hybrid work as well.
Now, I would caveat that by saying that it's really large pharma, to a lesser extent, some mid pharmas that do the FSP work. EBP, almost by definition, is full service, because the EBP companies don't have the capabilities to run their own trial. And that's where you're getting growth rates in the industry that are double what they are for a large pharma. So on the one hand, you have large pharma gradually shifting towards more FSP, and on the other hand, you have EBP taking a larger share of the market and growing faster. So that's somewhat of an offset there.
I would also say that even for clients that are, you would think, typically, FSP clients, if they get into a trial where they feel they don't have the expertise or they don't have the marginal, you know, just the level of capabilities to do it, they'll still come to us. We've had clients that are largely FSP clients who come to us and give us full service trials, and that's one of the reasons. You go back to 2015, right before we did the merger, Quintiles had largely turned away from FSP work because it wanted to focus on the higher margin full service work.
When we came in, we, you know, as IMS and Quintiles merged and Ari took over, he looked at it and said, "No, we wanna participate in the whole market." It's more than just the revenue potential for FSP. It's also that for certain clients, you gotta play FSP to be in the full service game. They might have, you know, 60% or 75% FSP, 25%-40% full service, but to get the full service work, you have to be willing to do the FSP work, too. So we think that was obviously the right move over time to chase that work. You know, we can talk about the margins, but from a revenue standpoint and booking standpoint, we need to be there.
Yeah. Yeah, and I guess you kind of mentioned the margins. Always a question just in terms of, you know, that shift, FSP being a little lower margin. I guess, how do you think about, I guess, the pace of that shift in terms of, you mentioned 15% and 20% ex pass-throughs? I guess, how quickly would FSP move up, and what does that mean for the margins?
Well, look, let's talk about the margins first off. If you looked at margins on a service basis, that is, you excluded all of the pass-through revenues from full service, you would find that there's a pretty big difference. I mean, you could easily be 10 basis points difference in gross margin. That is full service being higher, of course, than FSP. If you factor in the pass-through revenues, and you look at margin as a percentage of total revenues, it narrows down to maybe 200 or 300 basis points difference. It isn't a huge difference, but there is still some difference, and over time, all else being equal, that will put some pressure on your margins.
Now, it's incumbent upon us to find ways to do things more efficiently, you know, to grow our lab business, to grow the tech business, clinical tech business, and all the things that can provide offsets for that. So, like, it's a very gradual shift overall. So when we're putting together the, for instance, the 2024 plan for R&DS, yeah, if you were to do a margin walk, you could see something for the increased contribution of FSP, but there are lots of puts and takes that go into that. So it isn't like it's driving a big margin degradation. It's just one more factor, environmental factor that we have to deal with.
Okay. No, understood. And then another one on the pricing side. I guess, what are you guys seeing in terms of the environment out there currently on R&DS in terms of pricing? Are you seeing any additional kind of competitive pressures on that front, on the pricing environment?
Well, you know, it's interesting. If you go back to our original thesis for the merger, which was to use our data to help inform clinical trials, run trials more quickly, it's definitely given us an advantage. It's helped us in the market share area. We were expecting we might get some price out of it, too. That's been tough to get. What we're getting is more volume at more or less the same prices, I would say. So we're not getting a big pricing advantage there. That being said, have we seen a lot of pricing pressure in the full service area? No, I don't think it's an unusual amount of pricing pressure.
A little bit more pricing pressure, I think, on FSP, and some of that I just attribute to there are clients, or excuse me, competitors out there who have struggled some to get bookings and are really keen to get bookings and are pricing tightly. So yeah, there's been a little bit more pressure, I think, on the FSP area, not so much on the full service area. We track those margins pretty carefully, the book margins. They've held up. And in fact, we always, we do book margins, and then we do realized margins.
Mm-hmm.
Our realized margins always end up being a few hundred basis points better than our book margins, 'cause you find a way to do the trial more efficiently. You have change orders, you have all those sorts of things. So yeah, a little bit of pricing pressure, but it's on, you know, this 15%-20% of our business.
Mm.
Not so much on the entire business. I think it's just, pricing's always an issue, but it hasn't changed dramatically from what it was before.
Yeah. And maybe on that point, just in terms of pricing and how you think about the contracts, you mentioned change orders. How do you think about just generally how these are structured? I know no two contracts are the same, I'm sure, but is the view that when things like, you know, COVID happen, and you have this massive inflation on the wage side, you guys are able to pass that through somewhat quickly? Or is it, you raise it in the backlog, and then it takes a couple of years to play through? How do you just think about the contracts?
Yeah, it's more in the backlog. The issue in the TAS business, you can pretty much pass it on very quickly because it's a short cycle business. In the R&DS business, you're locked into contracts. And the way our contracts typically work, it will have annual inflation escalators, mostly for labor, and they'll be tied to an index. But the index, it isn't something where you're gonna get a different escalator every year. You sign a contract in 2019, and you'll have annual inflation tied to whatever the inflation was in 2019. That's the way most of the contracts work, because our pharma customers, on the whole, like the certainty of knowing what the price increases are gonna be.
So you kind of-- you get stuck with a backlog that's got some old pricing in it, and that's something we've had to deal with. On the other hand, as soon as you had the labor pressure and the inflation, particularly the inflation we saw in CRAs and project leads and people like that, we're able to change our rate cards and start working that into the new contracts we're booking. So as we get further and further away from the COVID labor shortage peak, our pricing adjusts more and more towards where we want it to be.
And in fact, you could, over time, get some benefit, because the same thing that hurt you when you lock in at low inflation rates, pre-COVID, could help you going forward as wage inflation comes down and you have clauses that were based on higher rates of inflation. And we've seen that in the past, so it tends to equalize over time. But in any given year, you can have either a benefit or a detriment because of the way the contracts are structured, and recently it's been a detriment because of COVID.
Mm-hmm.
In the past, it's been a benefit, and I would imagine it'll be a modest benefit again in the future.
Okay, that's helpful. And obviously, we talked about, you know, the biotech piece, but maybe on the mid and large pharma, you know, we're getting a lot of questions on that, you know, even into year-end and coming into this year, everything from IRA to, you know, some other pharma companies talk about maybe insourcing. I guess, what are you hearing just broadly on that? To your point, it's been seemingly pretty stable and healthy for you guys, but what are you--how are you thinking about that mid and large pharma piece of the pie?
In terms of how they're gonna be investing for the future, given IRA?
Yeah. Sure.
Well, we haven't seen—we've heard a lot of anecdotes of individual customers looking at their portfolio and trying to understand how they can rearrange it to optimize, given what they expect out of IRA. But IRA is kind of an unknown right now, really, how it's gonna affect things. There are multiple components to it. It's very complicated, and we're even helping our customers work through some of those dynamics, and we haven't seen a big impact on investment yet. Like I say, anecdotally, you can look at a given client and say, "Yeah, there may be some impact there." But overall, the funding levels and the amount of money spent on R&D has continued to grow. So I'm not saying it couldn't happen, but we haven't really seen it yet.
It's been slow to work its way into the system. And, you know, we're mindful of that, of course, and, you know. We'll deal with whatever the environment is. The other thing you gotta remember, too, is that you have a, you know, potential for a change in the presidency or Congress. Things could change in the IRA going forward. We just don't know. There are a lot of unknowns about how it's gonna play out.
Yeah. And maybe broadly, mid and large pharma, just the tone from that customer base. Again, there were some pretty big headline, you know, R&D cuts from some COVID beneficiaries that seemed pretty isolated. But, you know, how do you think about just that customer base, how they're thinking about the spend going forward here?
Well, we expect it to continue growing, but at a slower rate than EBP, probably half the rate of what. And that, but our view on that really hasn't changed that much. And look, on the one hand, you'll see cuts because companies are suffering from, you know, the COVID hangover, the COVID cliff, if you will. On the other hand, you see this explosion in now diabetes drugs and weight loss drugs and so forth, that are providing a lot of tailwind to some of our clients, too, like, you know, the Novos and Lillys and a number of biotechs are getting in the game now, too. So, the piece is moving in both directions.
Mm-hmm. Yep, okay. And obviously, again, we talked, we talked about the FSP. Can you talk a little bit about, you know, the move, how you think about decentralized trials as well? There seems to be a little bit of a shift there. Just, you know, in terms of your guys' capabilities, how you think about the market on that.
Sure. Well, look, decentralized trials have gotten a lot of attention, probably less recently, because people realize it's a gradual shift and not a step change. The whole idea behind decentralized trials are the real driving force, I think, was to make trials easier on participants in the trials, because the average person has to travel 60-80 miles to participate in a clinical trial. A lot of people are in rural settings, and investigators aren't necessarily your local primary care physician. Investigators can be quite a ways away. So, you know, we're actively involved in various means of helping more work happen on a decentralized basis that is away from the clinical trial sites.
It could be, you know, sending nurses to patients' homes, having the patients wear devices that can transmit data back. We do risk-based monitoring now, where you'll, for instance, instead of sending CRAs to the sites on a really rigid schedule, you'll be sending CRAs more sporadically to the investigator sites based on data that's popping out of the trials, where you're monitoring the data. And this is kind of the opposite of decentralization. You're monitoring the data centrally, and you're looking for where there are anomalies, and you're sending CRAs to the places where there are anomalies, so you have less of, you know, less travel time, less CRA involvement, and so forth. And, you know, almost all trials now have some element of decentralization in them.
I'd say it's probably about 80% if you include risk-based monitoring, and if you exclude that, it's over 50% that have an element, you know, like wearables or, you know, nurses that visit patients and things of that nature. It's been a gradual shift. It hasn't been what people originally envisioned it to be, which is you'd see a dramatic step change in how trials are run. It's just something that makes it easier to recruit patients, and in the long run, that's a good thing, particularly when you start getting into diseases where it's harder to find patients.
Mm-hmm. And any big margin differential in terms of decentralized trials versus-
No, really not, because you're charging for your decentralization services. It's very similar.
Okay.
Nothing. Nothing.
Yeah, and maybe just... I know we chatted a little bit about margins with the TAS piece, but just broadly for this year, you know, you talked about kind of 40-ish basis points or so-
Right
... this year. Can you just talk about the key levers? I mean, it feels like wage inflation is stable-
Right
I would say. We talked a little bit about pricing. You know, is TAS recovery kind of the big, the big driver? Maybe just talk about the-
Yeah, that would certainly be a driver. Cost reduction efforts, which are ongoing, the TAS recovery is certainly part of that. Those would be the biggest things. You know, it's tough to get margin expansion when you don't have volume expansion, and volume's coming back. We see that as being a good thing. So, yeah, a modest margin expansion this year, we're comfortable with that, and those would be the biggest drivers.
Yeah, and that's the right way to think about it. I think you touched on kind of modest-
Modest, modest, yeah.
In the out years as well.
Yeah, and I think you gotta be careful, or we wanna be careful not to over-rotate on the issue of margin expansion.
Mm-hmm.
Because I've seen it before in my career, you start focusing on maximizing a ratio rather than maximizing dollars, and you make poor choices. An example would be FSP. You want to take more. We want to take more FSP work. It isn't as profitable, but it is profitable. Now, it can hurt your overall margin, but who cares? I'm worried about growing the top line and the bottom line in dollar terms, and the margins are gonna fall out where they may. Now, we monitor margins because they're an indicator of how efficient we're being, and we always wanna kind of get a little bit of a boost there, but it's not the be all and end all.
Yep. No, that's fair. And I wanna spend some time on the balance sheet. You know, you guys, maybe we can start with the refi, which was nice to see, kind of late last year, cleaned up some of the debt. Maybe just talk a little bit about that. That was a nice impact, you know, interest expense. I think there was a worry that was gonna jump again.
Right
-this year. It's clearly not, but yeah, maybe just talk a little on the refi and the interest expense impact.
Yeah, yeah, look, we refinanced last year about $2.75 billion of debt. It had two benefits to it. One, it took some near-term maturities off the table, all of 2024 maturities and most of the 2025 maturities, and I know they were worrying some investors. It also, because we swapped these, swapped a large chunk of this back to euros, we were able to get an interest rate that was very favorable on this debt. And in the process, we were also able to get our percentage of debt that was fixed rate up over 80%. So I think we accomplished a number of things with that.
Where we were looking at interest expense growing year-over-year if we did nothing, now we see it flat to maybe slightly up. It depends kind of on how quickly we, you know, the Fed cuts rates. But what we do is we don't try to forecast that. We just bake in whatever the market consensus is on rate cuts and take it from there. So yeah, we feel good about that. Look, if, you know, as rates decline and we look out to additional maturities, we may have opportunity to do some more refinancing that's beneficial to us. We'll, you know, we're always looking at that, but right now, our leverage ratio is, well, was at the end of year 3.4 times. It's very comfortable for us.
You know, interest expense is stabilizing, and if rates come down over time, we should get some benefit there.
Yeah, yeah, and you, you touched on the leverage ratio, you know, 3.5, 3.4. You know, clearly, I know Ari is, is very comfortable. He's even said some people ask him to go higher. But how do you think about- Just the priorities with, you know, being comfortable on the leverage side.
Yeah.
You guys have bought back some stock recently. There's always a deal appetite. If you could just talk about the priorities there, and then we'll get into the M&A pipeline a little bit.
Well, yeah, like, on the share repurchase side, we repurchased, I think very opportunistically in Q4. It was over $200 million and an average price of about $195, which looks pretty good right now.
Yeah.
You know, our focus is kind of turning to M&A, and M&A is always hard to predict because you gotta be disciplined. You can't do deals for the sake of doing deals, but we have a pretty, pretty healthy pipeline out there, and we have, particularly in the TAS area, areas that we'd like to grow more in. You know, you have the, for instance, medical and scientific affairs area, you have digital marketing, you have patient support services, things where we think there's really good growth and maybe we aren't as heavily invested as we could be. So that would be number one.
Of course, if, you know, the shares are weak at any point in time, we'll always be opportunistic about share repurchase, and then we'll see how much cash we have left over. I'm not adverse to reducing debt if we end up with excess cash. I don't want it just to be sitting around doing nothing. On the other hand, that isn't a big priority for us. I mean, our leverage ratio should naturally decline over time as our earnings grow, and we're comfortable with our ability to service debt. So. And, you know, another thing I'd say about the M&A is, what we found is the companies we bought typically have higher organic growth rates than even our base business, so they enhance our overall organic growth.
Now, obviously, in year one, we'll back out whatever revenue contribution they make, and we'll give you, you know, organic versus reported revenue. But going forward from, you know, year one onward, these have been contributing to organic growth rates. So we're investing in areas that have relatively high growth potential for us, and it, it's—I think it's paid off well. We track very carefully how we do on our acquisitions versus business case, and as a CFO, I'm very attuned to that, and on the whole, we've done pretty well with that.
Yeah. So maybe, you know, it sounds like maybe a little preference for TAS in the near term. How do you think about the size, you know, in terms of, again, pretty comfortable leverage ratio-
I would say-
Bolt-ons?
... Generally bolt-ons. You find that when you start getting up into the larger stuff, a lot of times you're running into PE competition, and the price goes up, and the bolt-ons seem to be the best for us. That's not to say we wouldn't do a larger deal if the right thing came along, but for the most part, you're looking at bolt-on sort of deals that, you know, individually, none of them you're gonna say, "Wow, that's a huge deal.
Yeah. And maybe last one, just in terms of thinking about the consolidation piece, just on the market share front, how are you thinking about your guys' position there? Have you seen share shift towards yourself and the larger players? Maybe, maybe just quickly on that.
I would say certainly on the R&DS side, we and the larger players took share from the smaller players, and we're taking share from some of the larger players right now. So overall, there's definitely been a shift there. On the TAS side, it's kind of market to market, and there are a zillion competitors out there on the TAS side, in various portions of your business.
Right.
You know, it's harder to make blanket statements about TAS, but, you know, we're comfortable with our market position there.
Okay. Think we're up on time, Ron. Thanks.
Okay, great. Thanks, Patrick.