Syneos Health, Inc.

Fourth quarter 2022 total revenue was $1.36 billion, down 1% reported and up 1.7% constant currency; excluding reimbursables and constant currency, revenue declined 0.4%. Clinical Solutions revenue was $1.02 billion, down 2.1% reported and up 0.7% constant currency; Commercial Solutions revenue was $336.6 million, up 2.5% reported and 4.8% constant currency. Adjusted EBITDA was $209.1 million, down 11.8%, with a 15.4% margin, down 190 basis points year over year. Adjusted diluted EPS was $1.23, down 16.9% year over year; full-year adjusted diluted EPS was $4.72, up 5.8%. Full-year 2022 adjusted EBITDA was $800.8 million, up 4.6%, with a 14.8% margin, up 10 basis points. Operating cash flow was $123.8 million in Q4 and $427 million for the full year; capex was $23.6 million in Q4 and $93.5 million for the year. Year-end debt outstanding was $2.69 billion and unrestricted cash was $111.9 million, for net leverage of 3.2x. For 2023, management guided to revenue of $4.98 billion to $5.18 billion, adjusted EBITDA of $675 million to $725 million, and adjusted diluted EPS of $3.26 to $3.53. First-quarter 2023 guidance was revenue of $1.26 billion to $1.31 billion and adjusted EBITDA of $136 million to $148 million.

Michelle Keefe emphasized that the company is focused on transformation, especially in Clinical operations, business development, and cost structure realignment. She said customer feedback on the enhanced operating model has been very positive, and that early signs in Clinical RFP flow, repeat-business wins, and the sixth preferred-provider relationship suggest the strategy is starting to resonate. Her tone was cautious but confident: near-term margins will be pressured by investment, but she framed that as necessary to rebuild competitiveness and drive long-term growth.

Jason Meggs said Q4 EBITDA margin was below expectations because of a less favorable mix, higher reimbursables, and foreign exchange, and noted that reimbursable expenses were unusually high because two fast-burning projects ramped quickly; that headwind will continue into the first half of 2023. He laid out 2023 guidance for revenue of $4.98 billion to $5.18 billion, EBITDA of $675 million to $725 million, and EPS of $3.26 to $3.53, with interest expense expected to rise to $139 million to $149 million and a tax rate of 23.5%. He also said the combined transformation initiatives should create $30 million to $40 million of net savings in 2023 and $100 million to $150 million in 2024, after netting out the investments being made into the business.

Analysts focused on the slowdown in Clinical bookings, whether the company is losing share versus just seeing timing delays, and how the Inflation Reduction Act is affecting both Commercial and Clinical demand. Management said large pharma Commercial RFP flow is still up on a trailing-12-month basis but has slowed sequentially, and that the IRA is causing customers to be more deliberate about portfolio and commercialization decisions; they do not see a meaningful Clinical impact yet. On Clinical, management pointed to improved repeat-customer wins, stronger SMID RFP flow, and the new sixth preferred provider relationship as evidence of early traction, while acknowledging that win rates and awards still need to improve and that some push-outs remain. Analysts also probed the staffing and restructuring of business development, and management said it realigned talent around customer needs rather than simply cutting roles.