Clinical research company IQVIA (NYSE: IQV) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 5.2% year on year to $4.1 billion. The company expects the full year’s revenue to be around $16.2 billion, close to analysts’ estimates. Its non-GAAP profit of $3 per share was 0.8% above analysts’ consensus estimates.

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Company Overview

Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE: IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, IQVIA’s 7.7% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. IQVIA’s recent performance shows its demand has slowed as its annualized revenue growth of 3.5% over the last two years was below its five-year trend.

IQVIA also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 3.4% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that IQVIA has properly hedged its foreign currency exposure.

This quarter, IQVIA reported year-on-year revenue growth of 5.2%, and its $4.1 billion of revenue exceeded Wall Street’s estimates by 0.5%.

Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and indicates its newer products and services will spur better top-line performance.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

IQVIA has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 12.5%, higher than the broader healthcare sector.

Looking at the trend in its profitability, IQVIA’s operating margin rose by 4.7 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 1.2 percentage points on a two-year basis.

This quarter, IQVIA generated an operating margin profit margin of 13.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

IQVIA’s EPS grew at a spectacular 13.9% compounded annual growth rate over the last five years, higher than its 7.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into IQVIA’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, IQVIA’s operating margin was flat this quarter but expanded by 4.7 percentage points over the last five years. On top of that, its share count shrank by 11.9%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q3, IQVIA reported adjusted EPS of $3, up from $2.84 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects IQVIA’s full-year EPS of $11.63 to grow 8.5%.

Key Takeaways from IQVIA’s Q3 Results

It was good to see IQVIA meet analysts’ constant currency revenue expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Looking ahead, EBITDA guidance was in line. Zooming out, we think this was a decent quarter. The market seemed to be hoping for a more convincing quarter and outlook, and the stock traded down 1.7% to $213.75 immediately following the results.

Is IQVIA an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.