ICON Public Company - Q1 2024
April 25, 2024
Transcript
Operator (participant)
Hello, and welcome to the ICON plc Q1 2024 results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a telephone question, please press star one on your keypad to join the queue. To withdraw your question, press star one one again. Please be advised that today's conference is being recorded. I would now like to hand over to Kate Haven, VP of Investor Relations. Please go ahead.
Kate Haven (Head of Investor Relations)
Thank you. Good day, and thank you for joining us on this call covering the quarter ended March 31st, 2024. Also on the call today, we have our CEO, Dr. Steve Cutler, our CFO, Brendan Brennan, and Senior Vice President of Corporate and Commercial Finance, Eimear Lyons. 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 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 they are made, and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events, or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by the company, including the Form 20-F, filed on February 23rd, 2024. This presentation includes selected non-GAAP financial measures, which Steve and Brendan will be referencing in their prepared remarks. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release section titled Condensed Consolidated Statements of Operations. 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.
Included in the press release in the earnings slides, you will note a reconciliation of non-GAAP measures. Adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share excludes stock compensation expense, restructuring costs, foreign currency gains and losses, amortization, and transaction-related and integration-related costs, and their respective tax benefits. 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 for a brief follow-up. I would now like to hand the call over to our CEO, Dr. Steve Cutler.
Steve Cutler (CEO)
Thank you, Kate, and good day, everyone. ICON's performance in quarter one marked a strong start to the year, combining solid financial results and impressive uptick in business awards and excellent adjusted earnings growth. Net business wins were a record in the quarter, exceeding $2.65 billion, as our comprehensive scaled offering continues to fuel our leadership position in clinical development. The market trends we saw early in quarter one continued throughout the balance of the quarter, characterized by stabilizing demand within the biotech customer base, as well as a continuation of the robust demand we have consistently seen from large pharma customers.
Underlying demand drivers are incrementally more positive through quarter one, with biotech funding increasing over 50% on a year-over-year basis in quarter one, according to BioCentury, and large pharma R&D spend figures indicating low single-digit growth for the full year, in line with previous expectations. Proposal volumes are at healthy levels, with overall RFP volume increasing low double digits on a trailing twelve-month basis. In quarter one, net bookings grew 10% on a year-over-year basis, resulting in a Book-to-Bill of 1.25 to 7x in the quarter and increasing our trailing-twelve-month Book-to-Bill ratio to 1.24. We had a robust business development performance across all operational segments, with notable strength in our large pharma full service solution segment, as well as in our laboratory business.
While it's early in quarter two, to date, we have seen a continuation of these trends across customer segments, and we remain positive on the outlook for the full year. We expect book-to-bill to be in the range of 1.2-1.3x on a quarterly basis, maintaining our previous target range and expectation for an average book-to-bill of 1.25x for the full year 2024. One of our important strategic initiatives as we came into 2024 was the focused rebranding of our dedicated biotech solutions business, ICON Biotech. We saw an opportunity to enhance our market position within the biotech segment with customers that historically associated ICON with a large pharma focus.
ICON Biotech is the world's largest dedicated biotech CRO, with approximately 8,000 staff that are exclusively committed to that segment and understand the unique needs of the biotech customers we support. We are committed to optimally serving this key customer group and believe we can best do so through our current dedicated structure. Following the rebrand activity in quarter four last year, I am pleased to report that we are already seeing positive momentum in terms of customer receptivity and an increased win rate in this segment. In addition to our focused efforts within the biotech segment, we continue to drive forward our leadership in large pharma. Growing strategic partnerships is a critical element to this strategy, which not only includes the execution of new strategic partnerships, but renewing and expanding existing customer relationships.
In quarter one, we were successful in renewing a long-standing top 20 pharma partnership, primarily utilizing Full Service Solutions. The renewal reinforces our strong delivery, history of execution for this important customer, and our collective team's collaboration to drive efficiency across their development portfolio. Another important factor in ICON's ability to secure and grow our customer partnerships is through the development of innovative solutions across our portfolio. We are excited about the future potential of our comprehensive and cost-effective offering in clinical trial tokenization. This end-to-end approach follows patients longitudinally through their healthcare journey beyond their participation in a clinical trial. The surge in drug development in areas like diabetes and obesity has increased the need to collect and analyze long-term follow-up safety, efficacy, and health expenditure data.
We are anticipating greater market, regulatory, and reimbursement requirements in the future, hence the need to deliver broader, more comprehensive insights that ultimately drive increased value for our customers. Turning to our financial performance in quarter one, our team delivered another period of strong results across a number of measures. Total revenue increased 6% on a year-over-year basis. Gross margin of 29.9% increased 10 basis points over quarter one, 2023, and total SG&A expense decreased 90 basis points on a year-over-year basis to 8.7% of total revenue, driving a very strong adjusted EBITDA growth of 11.3% over quarter one, 2023. This resulted in an adjusted EBITDA margin of 21.2% in the quarter, up 100 basis points year-on-year.
Given the performance on adjusted EBITDA growth and the continued paydown of our Term Loan B debt, we saw excellent year-over-year growth in adjusted earnings per share of 20%. The execution of our capital deployment strategy continued as planned in the first quarter. We closed the previously announced acquisition of HumanFirst in January, a leader in the field of digital health technology selection. This important capability is strategically aligned with our approach to providing an enhanced, integrated offering. The combination of our leading clinical outcome assessment capabilities and digital health technology selection offers the ability for customers to optimize clinical trial design and enhance data collection quality. As we previously noted, our capital deployment priority remains M&A, and we continue to actively evaluate assets that will strategically and operationally enhance the current areas of our service portfolio.
After positive rating changes from S&P and Moody's in the back half of 2023, moving ICON back to investment-grade status, we began the execution of the planned refinancing of our variable rate debt in quarter one. This included a successful repricing of our existing Term Loan B in the quarter, reducing our interest rate by 25 basis points, as well as the removal of our credit adjustment spread. In parallel, we improved the terms of our revolver facility, and we are working closely with our banking partners to progress refinancing of our debt. This will allow us to better utilize our balance sheet and provide more certainty on our annual interest expense. We continue to expect our full-year interest expense will be in the range of $200 million-$230 million this year.
We are updating our full-year 2024 guidance range to account for our financial performance in quarter one and the positive market environment we've seen so far this year. We expect revenue to be in the range of $8.48 billion-$8.72 billion, an increase of 4.4%-7.4% over full-year 2023. Additionally, we expect adjusted earnings per share to be in the range of $14.65-$15.15, an increase of 14.5%-18.5% on a year-over-year basis. The new ranges maintain the midpoint of our previous guidance range, reflecting an outlook that is consistent in terms of overall market activity and our performance year-to-date.
Before I hand it over to Brendan for further detail on our financial performance, I want to provide a brief update on our previously announced CFO transition. As we indicated earlier this month, Brendan has decided to depart ICON after a long and very successful tenure in our finance organization of the company, and importantly, as our CFO for the past 12 years. While we're sorry to see Brendan go, we understand his desire to take on a new challenge in his, in his career, moving to a different industry, and we are very grateful for his significant contributions to our organization over the past 18 years. As previously noted, we have commenced a process with a large global recruitment firm to identify our next chief financial officer, which includes both external and internal candidates for the role.
We plan to provide additional updates on this process and transition period as we progress. In the meantime, Brendan is firmly in his role as the CFO, and we have not made any changes to our broader finance organization as a result of this announcement. Finally, we are looking forward to our upcoming Investor Day, which will take place on May the thirtieth in New York City. The leadership team of ICON will be present at this important event, and further details will be made available on our website in the coming week. In closing, I wanna thank all of our colleagues at ICON for their dedicated efforts in quarter one, in continuing to support our mission in bringing new therapies to patients around the world. Brendan, I'll now turn it over to you.
Brendan Brennan (CFO)
Thanks, Steve. I appreciate the kind words and want to reiterate my commitment to ensuring a smooth transition. We plan to work closely with Steve and our broader management team to accomplish this. Turning to our financial results in quarter one. In quarter one, ICON achieved gross business wins of $3.11 billion and recorded $460 million worth of cancellations. This resulted in a solid level of net awards in the quarter of $2.65 billion, and a net book-to-bill of 1.27. With the addition of the new awards in quarter one, our backlog grew to a record $23.4 billion, representing an increase of 2.5% on quarter four of 2023, or an increase of 10.1% year-over-year.
Our backlog burn was 9.2% in the quarter, slightly down from the quarter four levels, and we anticipate similar levels through the remainder of the year. Revenue in quarter one was $2.09 billion. This represents a year-on-year increase of 5.7% or 5.4% on a constant currency basis. Overall, customer concentration in our top 25 customers decreased from quarter four, 2023. Our top 5 customers represented 26% of revenue in quarter one. Our top 10 represented 41.4%, while our top 25 represented 62%. Gross margin for the quarter was 29.9%, compared to 30.4% in quarter four, 2023. Gross margin increased 10 basis points of a gross margin of 29.8% in quarter one of 2023.
Total SG&A expense was $181.7 million in quarter one, or 8.7% of revenue. This is in line with the prior quarter on total percent of revenue. In the comparable period last year, total SG&A expense was $189.6 million or 9.6% of revenue. Adjusted EBITDA was $444 million for the quarter, or 21.2% of revenue. In the comparable period last year, adjusted EBITDA was $399.1 million, or 20.2% of revenue, representing a very strong year-on-year increase of 11.3%, an expansion of 100 basis points in margin. Adjusted operating income for quarter one was $411.4 million, a margin of 19.7%.
This was an increase of 11.6% adjusted operating income of $368.7 million, a margin of 18.6% in quarter one of 2023. Net interest expense was $65.8 million for quarter one. We continue to expect the full year interest expense to total approximately $200 million-$230 million in 2024. The effective tax rate was 16.5% for the quarter. We continue to expect the full year 2024 adjusted effective tax rate to be approximately 16.5%.
Adjusted net income attributable to the group for the quarter was $288.5 million, a margin of 13.8%, equating to an adjusted earnings per share of $3.47, an increase of 19.7% year-over-year. In the first quarter, the company recorded $7 million of transaction and integration-related costs. U.S. GAAP income from operations amounted to $285.5 million, or 13.7% of revenue during quarter one. U.S. GAAP net income in quarter one was $187.4 million, or $2.25 per diluted share, compared to $1.41 per share for the equivalent prior year period, an increase of 60%.
Net accounts receivable was $1.146 billion at March 31st, 2024. This compares with a net accounts receivable balance of $1.088 billion at the end of quarter four 2023. DSO was 49 days as of March 31st, 2023, a decrease of 5 days from quarter one 2023. Cash from operating activities in the quarter was $327.1 million, and free cash flow was $300 million in the quarter, an increase of 102% on a year-over-year basis. While DSO increased sequentially, we continued to target mid-forties in terms of DSO on a full year basis, albeit we can have fluctuations on the timing of payments that can influence total DSO in any particular quarter.
At March 31st, 2024, cash totaled $398 million, and net debt totaled $3.5 billion, leaving a net debt position of $3.1 billion. This compared to net debt of $3.4 billion at December 31st, 2023, and net debt of $4.2 billion at March 31st, 2023. Capital expenditure during the quarter was $27.2 million. From a capital deployment perspective, we made a payment of $275 million on Term Loan B facility in quarter one and ended the quarter with a leverage ratio of 1.8x net debt to Adjusted EBITDA.
Given the successful repricing of our Term Loan B and our intention to refinance our existing debt, we do not anticipate making discretionary payments in quarter two at this time. After successfully deleveraging over the past few years, as well as our return to investment grade rated company, we feel we are well positioned from a balance sheet perspective to deploy more capital opportunistically for M&A, as well as potential share repurchase. Our preferred use of capital remains M&A, and we have a number of opportunities in the pipeline that we are currently engaged on, which would add scale and capability to fast-growing strategic areas of our portfolio. Our key assumptions behind the full year guidance remain in place.
An effective tax rate of 16.5%, free cash flow target of circa $1.1 billion, CapEx spend in the range of $150 million-$200 million, and interest expense in the range of $200 million-$230 million, all for the full year of 2024. Finally, I would also like to sincerely thank our ICON employees around the world for their hard work and dedication in delivering our strong performance in quarter one. Operator, we are now ready for questions.
Operator (participant)
Thank you. As a reminder, if you wish to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Please remember to limit yourself to one question with an opportunity for a short follow-up if needed. Please stand by while we prepare your first question. The first question comes from Charles Rhyee at TD Cowen. Charles, your line is open. Please go ahead.
Speaker 19
Hi, thanks. This is Adam on for Charles. We've seen an uptick in emerging biopharma funding, and I'm wondering if you can give us a sense of what's usually the general timeframe for that to flow into RFPs, bookings, and then ultimately, revenue. You guys noted seeing stabilizing biotech demand, and wondering if you guys are already starting to see in the robust growth in net wins this quarter, biotech contribute? Thanks.
Steve Cutler (CEO)
Sure. So overall, we've seen a, you know, a solid increase in RFPs in the quarter, you know, in a sort of low double-digit sort of area. The biotech and the biotech funding, as you've noted, has certainly has ticked up very nicely. We haven't seen that necessarily come through so much on the RFPs just yet, and I would expect that's probably gonna be delayed a quarter or two. So we would expect somewhere in the second half of the year for the results of that biotech funding, assuming it continues, of course, to come through in terms of awards. And then as we get toward the end of the year and even into next year, you know, to hit the revenue line.
So I think while we've seen, we continue to see solid demand in the biotech funding, the real uptick and the opportunity, I think, going forward is probably more weighted towards the end of the year, a couple of quarters delay, and then as we get into early next year on the revenue side of things.
Speaker 19
That's helpful. Thank you.
Operator (participant)
Please stand by for your next question. Your next question comes from Max Smock at William Blair. Max, your line is open. Please go ahead.
Max Smock (Equity Research Analyst)
Hey, everyone. Thanks for taking our questions. Steve, you called it a continuation of positive trends here in the second quarter. Results were solid, and you had a great quarter for bookings. Given things seem to be moving in the right direction here, can you just walk through the rationale for taking down the high end of your guidance range for 2024?
Steve Cutler (CEO)
Yeah, Max, it's still early in the year. And of course, we have... I mean, we've narrowed the guidance, as you've noted, quite significantly now, so on both the EPS and the revenue side. And because it's still early in the year, we feel it's not appropriate necessarily to increase the midpoint of the guidance. It was really just a matter of we're pretty confident about that midpoint as we announced it initially. And so we feel at this point the right thing to do is just to narrow that guidance. We'll certainly be looking at you know what we'll be doing in the next couple of months. And as we get to the July call, we'll you know we'll see where we are.
But inevitably, in our business, there are puts and calls, things, some headwinds and some tailwinds. And overall, as we're only, you know, three months into the year from an announced results point of view, we felt it was the right thing to do was to narrow, because we're confident about the midpoint, but not to move that midpoint at this point.
Max Smock (Equity Research Analyst)
Understood. Thank you for that. Maybe just to clarify one quickly on RFPs. You mentioned up low double digits in total. Do you have that breakdown or how that breaks down between biotech and large pharma? And then how does each of those buckets compare to where they were at, at the end of last year? And then it sounds like based on your prior answer a few minutes ago, you would actually expect RFPs to get better from here, given the lag between funding and that ultimately showing up in RFP flow. I just wanted to make sure I understood that commentary correctly. Thank you.
Steve Cutler (CEO)
Yeah, I mean, well, to answer the second part of your question first, yeah, we do think there's a bit of a lag period there. So the better funding environment that we've all seen in the first quarter or so, and we talked about that, we think that's gonna flow through probably in the second half of the year. So to be absolutely crystal clear on that, there's a lag of at least a couple of quarters there. In terms of the, you know, we don't really split out too much the RFP data. But, you know, qualitatively, certainly large pharma continues to be strong, and we've seen that. Biotech's also been solid, perhaps not quite as strong, but it does seem to be on the uplift.
So, you know, if I look at, say, low double digits, you know, large pharma is well above that. Biotech's probably more in the mid-singles, if I had to put a number on it. And it's, you know, as I say, solid, strong. We're seeing plenty of good opportunities in the biotech space. We've been successful. Our win rate in that biotech space has gone up over the last quarter or so, so we feel good about the solutions and the propositions we're putting in front of customers and their receptivity to those. But as I say, overall, the very solid, very constructive environment on the RFP front, and we feel good about where the market's heading overall.
Max Smock (Equity Research Analyst)
Got it. Thanks again for taking our questions.
Steve Cutler (CEO)
Good.
Operator (participant)
Please stand by for your next question. Next question is from Casey Woodring at JPMorgan. Casey, your line is open. Please go ahead.
Casey Woodring (VP, Equity Research)
Great, thank you for taking my questions. So your book-to-bill target for the year is 1.25, on average, the midpoint of that 1.2-1.3 range. I know bookings fluctuate on a quarterly basis, but given the strong start to the year and the improving funding backdrop, do you think you can sustain quarterly bookings above that 1.25 number? And then, you know, on that point, you know, from a quarterly phasing perspective, if we see similar bookings in 2Q here that we saw in 1Q, you know, above 1.25, is it fair to assume that there would be upside to the back half of the year?
Steve Cutler (CEO)
Oh, Casey, we, you know, we've had a good quarter on the bookings. It was very solid, and then we're really pleased with the way that's the market's sort of moving. I'm not gonna get ahead of ourselves in terms of going above the 1.25. I think that's a solid target that we have. We'll see how the biotech funding and environment sort of contributes to RFP opportunities in the back end, as we've talked about. You know, it's not out of the question, we could be above that, but I think at this stage, we'll stick with our 1.2-1.3, and being somewhere in the middle of that on an average basis across the quarters.
That, that's the way we, we think about it. If, you know, we got above that, I'm not sure that, you know, revenue takes a bit of a while to, to flow through. A lot of the work we're still winning is oncology. Our burn rate's around 9.2. I don't see that going up anytime soon. So, you know, it, it, there may be some modest impact if we have a particularly strong second quarter, on the, on the business wins, but I'm not certainly gonna promise that at this stage. I think we feel like the opportunities are flowing through nicely. As I said, it's very early in the second quarter, but the, the opportunities are, are flowing through nicely.
We have a good opportunity list, and I feel confident about our performance in Q2, but it's very early days on that front, and we feel, you know, as that plays out, we'll come to July, and we'll, you know, adjust our forecast and where we're going. So, overall, positive, strong, constructive, but we're not ready to declare victory and to, you know, to push too fast ahead, despite what you'd like us to do.
Casey Woodring (VP, Equity Research)
Got it. That's helpful. And then maybe just a quick follow-up. Can you talk about your win rate in the quarter and maybe elaborate on how much of the bookings growth you saw was a result of share gains versus trial growth coming back? Thank you.
Steve Cutler (CEO)
You know, our win rate was consistent with where it's been. Certainly, the large pharma win rate's been very positive, being constrained, and that's been consistent. Biotech certainly came back in the quarter very well. So we feel we're making a lot of progress in the biotech space, you know, with the opportunities that we pitched, and we've got some good opportunities in the hopper for the second quarter. So we feel that we're on our game nicely with the biotech. That story, the rebranding that we put in place towards the end of last year, is really starting to gain some traction with customers. We have a number of very significant opportunities.
Some of these biotech opportunities are, you know, are really large, really large trials, really large programs, and, you know, we've been successful on a, on a number of them. So, you know, we feel, you know, we're, we're in a good place and, and the, and the, the hit rate, strike rate, call it what you like, it's, it's not as high, of course, in biotech as it is in large pharma, where we tend to have the strategic partnerships, but we, we compete very strongly and, and increasingly strongly in that space. And we feel the, the rebranding approach is really starting to pay dividends, along with the, you know, the, the, the good people and the good team we have on the, on the, the biotech space.
Operator (participant)
Please hold on while I prepare the next question. The next question comes from Ann Hynes at Mizuho Securities. Your line is open. Please go ahead.
Ann Hynes (Senior Healthcare Services Equity Analyst, Managing Director)
Hi, good morning. You both mentioned M&A as a priority in your prepared remarks. Can you just remind us, what type of services or needs that you think ICON is missing? And then secondly, your DSOs, down year-over-year, but they did tick up sequentially. If you can provide some more data on that, that'd be great. Thanks.
Steve Cutler (CEO)
Sure. I'll take the M&A, and then I'll let Brendan handle the DSO question. Anne, we've been fairly clear in the path there is M&A is a priority, and it is around adding capabilities to services and functions that we currently have in the organization. So we're looking to uptick. It could be in the laboratory space, it could be in the site space, it could be in the other parts of the business devices. You know, there's a number of areas that we feel we could move that sort of functional service area within our organization up to being, you know, either one or two in the market. Overall, of course, we feel we're very-- we're equal number one or even a little ahead in some areas.
Certainly on the FSP space, we're by far the number one player. On the full service space, we're very close to being the number one player, if not the number one player. But there are areas within that business, as I said, laboratories, sites, devices, that we feel that are within our bailiwick and within our wheelhouse, but that could be upticked from a revenue and operational point of view, to help us, you know, to really provide a little, a little more scale in some of those areas. So those are the, those are the sorts of areas we're focused on. We have a number of those opportunities in the hopper, and. As you've seen, our finances and our balance sheet now lend themselves much more effectively to, you know, to making those transactions.
We've done a couple relatively recently with HumanFirst and BioTel. They were relatively small. We're looking to continue that, but uptick in terms of the revenue and EBITDA contribution that these new ones would make to the overall P&L. Brendan, you wanna take this?
Brendan Brennan (CFO)
Yeah. Thanks, Ann. I was, I'm still heartened, I suppose, by the level of cash from operations and free cash flow, which is very strong in the quarter. So I'm very happy that we're making a lot of progress from where we were in the past. Albeit, yes, we did see a two-day attenuation in the DSO from Q4 to Q1. I don't think there's anything particular there. We said we would continue to focus on being in the mid-forties for the full year, so that's obviously our goal. We know we had-- unfortunately, Easter just happened to have hit, that Easter holiday period happened to hit at the exact end of the quarter, you know, 31st of March. Easter was early this year, so that didn't help.
But, you know, it's a couple of days, so that's, you know, something I think we can recoup as we go through the course of the year. And still, overall, happy with the cash flows, which were very strong in the quarter.
Ann Hynes (Senior Healthcare Services Equity Analyst, Managing Director)
All right, thanks.
Operator (participant)
Please stand by for your next question. The next question comes from Dan Leonard at UBS. Your line is open. Please go ahead.
Dan Leonard (Managing Director, Research Analyst)
Thank you. Steven, I was hoping maybe you could elaborate a bit further on your improved win rate in biotech.
Steve Cutler (CEO)
You know, Dan, I could give you a million reasons why we've improved that. You know, it's a multifactorial thing. There's, you know, we've had some great opportunities, and the team, I think we have new leadership in the biotech space, and they're doing a good job in bringing our organization, you know, really through in the, in that, in terms of our customers and biotech, you know, traction and understanding of what our offering is. We have, as I said, 8,000 people in that. That story is resonating well with the biotech customers.
They recognize, I mean, there's a, as you all know, it's typical for biotech customers to at least have some sort of consideration for smaller CROs because they believe they can be more fast and agile. You know, at the end of the day, we have 8,000 people dedicated to running the biotech, and they can - they have, with their new leadership, an autonomy and an ability to move that business and to make decisions in that business, in a quick and an agile manner. And I think so we've addressed that, albeit within the framework of a large and very financially stable and viable company.
And so that's the benefit that we're trying to give both to our biotech customers, and they're resonating very well. I've had a couple of discussions with them myself, and they understand what we bring now to the biotech space, that dedicated resource and that financial stability and ability to bring innovation and creativity and agility to their projects. So, as we have our senior managers sort of double down and focus in on these key opportunities, in terms of, you know, engaging with customers, talking to them, understanding their needs, putting to them the various innovations and open solutions that we can, as an organization present, you know, it's starting to really resonate nicely.
And it's, as I say, turned into a... It gave us a nice uptick on the win rate. There's no one reason that this sort of thing happens, but it is, I think, a trend, and I do believe it'll continue.
Dan Leonard (Managing Director, Research Analyst)
Thank you. A related follow-up, I just wanna make sure I understand better the biotech rebrand. You know, a couple of years ago, at your Analyst Day, you talked about your dedicated business units for biotech, 8,000 employees and such. So what exactly changed at the end of the year?
Steve Cutler (CEO)
I, you know, I don't know, I don't know that much changed operationally from our point of view. What, what I think we've done now is communicate that better to customers-
Dan Leonard (Managing Director, Research Analyst)
Mm.
Steve Cutler (CEO)
- and to engage our... You know, we said we have, we have new leadership in there, and they've, they've done a really nice job in, in making that connection with, with customers, personally and, on a, you know, on a, face-to-face side of basis. So there's a, you know, there's an element of ICON being known, I think, as a larger pharma CRO in the past, and that's quite valid and continues, you know, as, as you well know. But we also do, a significant amount of work. About 30%-35% of our work is in the biotech space, and, and that's, that's... So it's a very important segment for us. As, as you all know, there's a lot of innovation in drug development comes out of the biotech, and certain drug research comes out of the biotech.
A lot of the new drugs, I think it was something like 40% of new drugs that got to market last year through FDA, were, you know, originated in the biotech space. So they make a huge contribution to the, you know, the drug development landscape. And being a key provider and a key partner of that segment is really important. So I think they better understand that now. We've been able to communicate that better. Our marketing message is getting out there.
But probably more important than marketing messages is our key senior leaders in that team have been out talking with customers and having them understand what it means to have 8,000 people available to them, and for them to be able to, you know, put the innovation and with that level of financial viability. It's a communication thing, and I think we're really starting to get on top of that now.
Eimear Lyons (SVP of Corporate and Commercial Finance)
Yeah, and I think it's an important point, Dan, that you made, that structurally, actually, it isn't different than what we presented at the Analyst Day, in terms of having a dedicated-
... segment to biotech with those dedicated resources. It's really around that customer perception and making sure people understand that, which is what we're redoubling efforts on, and not making the structural changes there.
Operator (participant)
Appreciate that. Thank you both.
Dan Leonard (Managing Director, Research Analyst)
Good.
Operator (participant)
Please stand by while I prepare your next question. The next question is from Michael Ryskin at Bank of America. Please go ahead.
Michael Ryskin (Managing Director)
Great. Thanks for taking the question, guys. Brendan, I wanna say congrats and wish you the best going forward. I know you'll still be here for the next couple of calls, but still it's good working with you.
Brendan Brennan (CFO)
Thanks, Michael.
Michael Ryskin (Managing Director)
Yep. Wanna focus a little bit on the big pharma segment a little bit, or customer group a little bit. I think in your prepared remarks, you called out, you know, continuation of robust demand, and you talked about, you know, R&D for the group for 2024 seems to be pretty stable in line with prior. I just wanna get a sense of, you know, how much of that is already locked in when we think where we are in the year in April. Is there a risk of that changing as you go forward? I know budgets can be set, but, you know, there's also news this morning of Bristol announcing job cuts, 2,200 layoffs. So there's still some things that are fluid in that end market.
So just curious how those conversations have evolved year to date and sort of, you know, upside, downside risk for the rest of the year?
Steve Cutler (CEO)
Yeah, right. Mike, I'll take it, and Brendan might wanna jump in. I mean, as you said, we've seen pretty strong demand in the large pharma space, and it's not just this quarter, it's been really over the last 12, 18 months. Nothing is, you know, has changed in that respect. Now, you know, have some of the larger companies changed their models or adjusted their budgets? And the absolute answer is yes to that. We've seen a little-- We've certainly seen some of that in the first quarter, where revenues from... Have gone down and up in different areas. We're very encouraged by, you know, we're encouraged by the overall growth of the organization.
Michael Ryskin (Managing Director)
Mm.
Steve Cutler (CEO)
'Cause certainly outside our top 10 on a year-on-year basis, we've seen, you know, significant revenue uptick in growth. And that's not necessarily all sort of smaller customers. Our, you know, the biotech customers, some of them are quite large for us. But so it doesn't exactly equate when you go outside top 10 or outside the top 25 to be smaller biotech customers. But that segment has certainly increased, and there's one or two in the, you know, in the upper echelons of our revenue group that have come down a bit-
Michael Ryskin (Managing Director)
Yeah.
Steve Cutler (CEO)
... because of the things that you just mentioned, you know, budget cuts and some challenges they have with patent extensions, et cetera, et cetera. So it's you know, quarter to quarter, it can go one way or the other. Sometimes we finish a significant project the end of last year, and then the revenue falls off a little bit for the first quarter. That sort of thing happens. Overall, we see a very stable and very strong demand in the large pharma. And as we I think I talked about sort of 3%-4%, but we believe we're you know, we're taking market share in that space, and a good part of our growth is due to our strong operational delivery in that space.
And so it's a strong and a continuing market for us. And, you know, we believe while there will be puts and calls and ups and downs, and some customers will have greater budget challenges, and many of them have some significant patent life challenges or line loss of exclusivity issues coming up over the next... That's a relatively common theme. It's a constant thing that they deal with on a regular basis. It means they have to do more R&D to bring new compounds through. So, you know, overall, we feel good about that space.
Michael Ryskin (Managing Director)
Yeah.
Brendan Brennan (CFO)
No, I, you know, I think just reflecting on it, you know, one of the things that we talked about at the start of our call was, you know, we have actually seen pretty decent traction from, from the large pharma group, and probably more on the full service side of the house as well as we've come into 2024. And that's been heartening. But you also see in our statistics that we continue to diversify as a customer base. You know, the customer base continues to diversify, and so that, you know, large concentration, you know, it's always gonna be there as part of our piece. You know, it's always part of how CROs are built, but it continues to diversify. And as to Steve's point, some go up, some go down.
What we're focused on as an organization is that in holistic terms, we're moving in the right direction. And I feel we have a market both in pharma and biotech that really does support that. So yeah, that's what we wanna see continuing, is that diversification increasing over time.
Michael Ryskin (Managing Director)
Okay, that's helpful, and appreciate it. If I could squeeze in a quick follow-up, going back to the CFO transition. Sounds like, you know, you never know, but you might not be able to announce the successor until later in the year, but you've got the Analyst Day coming up in May. So, anything you can say in terms of what we should look forward to from the event? Thanks.
Steve Cutler (CEO)
Well, you can look forward to our plans for the next few years, Mike, and where we are and what our innovation is, and how we're gonna, you know, move the organization forward. In terms of the Investor Day anyway, but we will, we certainly will provide an update on our CFO transition at the Investor Day. We'll have some further information on it, I think at that time, although it's still relatively early days. Having said that, we're moving fairly quickly. We've engaged a global recruitment firm. You know, and we're looking. We already have interest from some very good candidates. No one, of course, who's gonna approach Brendan, Brendan's ability.
Brendan Brennan (CFO)
Thank you, Steve. Thank you.
Steve Cutler (CEO)
But you know, unless we can clone him in the next six months, we're... It's, we do have to replace him, and of course, as I mentioned, we wish him all the best. But we have already some interest with some very good candidates who run public companies. And so we feel good about the position we're in. And as I say, we'll-- You know, the Investor Day is not far away. It's only, what is it, a month away or so? So we won't have any sort of definitive announcement for you at that point, but I'll certainly give you an update on where we are.
And, you know, we have, as I say, some fairly tight timelines in terms of long lists and short lists and, making appointments. And, you know, we do anticipate that we'll, we'll have somebody on board, within the course of this year. That's, that's the expectation. And, I do hope they'd be able to overlap with, with Brendan and, and, learn a little from him as he, as he heads out the door. But, so that's where we are. We feel that, we're in a, a reasonable place, given, fairly early on in the, in the search.
Michael Ryskin (Managing Director)
That's great. Thanks. Appreciate all that color.
Operator (participant)
Please turn the line for your next question. The next question comes from Eric Caldwell at Baird. Your line is open. Please go ahead.
Eric Coldwell (Senior Research Analyst)
Thanks very much. I wanted to go back to the biotech rebranding and the improved win rate and your double down focus there. I'm curious if you could share with us the number of small biotechs that you work with, whether you wanna call that emerging biopharma, pre-revenue clients, however you wish to define them, and then how that number has changed. And then also what that is as a percent of revenue and/or backlog. I think a couple of years ago, it was laid out as somewhere around, if I remember, about 16% of revenue, the way you used to define it. So if you could give us an update on that.
And then, with this focus, is it on the really small, really early-stage biotech clients, or is it more mid and large biotech, where you're just looking to further penetrate, you know, a more mature biotech segment? I'm curious on, you know, how broad the focus is, how deep you're going in terms of the nascency of some of these clients, their size, et cetera. Thank you.
Steve Cutler (CEO)
Okay. I mean, there's a lot, a lot, there's a lot in that question, Eric, so I'll try to unpick it a little bit. Yeah, the biotech rebound, well, you know, we think of biotechs overall, as I indicated, you know, sort of low 30% of our revenues, in that sort of number. But the number I think we've talked about a few years ago was on our capital market dependency-
Eric Coldwell (Senior Research Analyst)
Mm.
Steve Cutler (CEO)
Type biotechs, the ones that don't. That really require to go out and raise money, and that's around 15%. So we work with a variety of biotechs in the vicinity of, you know, I'm not even sure exactly how many, but it's around the 500 sort of number. It's a lot, and we do anything from small consulting projects with them to very, very large scale phase IIIs, in the $100s of millions with some of them. They're an entity in themselves.
They work in a different way to large pharma, well, and hence, having a different focus on them or, you know, having a group of people who focus on them differently, in terms of their ability to engage, in terms of our opportunity to input on their trial design, on their development programs. It's a very different market, quite frankly, and one that, you know, our people, I think, are increasingly working in extremely well. And I think, as I said, with the rebrand, the customers are understanding that and appreciating that.
They recognize our expertise and resources. They also recognize our financial viability and stability, which I think is something that's very important when these customers want to take a drug right through to market, rather than just to partner up with a large pharma. So we offer them a different strategic option these companies going forward, and that's I think extremely valuable to them, and we've been able to sort of communicate that to them in the market that's in. I hope that gives you a little bit of a flavor for what that group of customers is.
Eric Coldwell (Senior Research Analyst)
Thank you. If I could just throw one more in, then I'll jump off. Headcount's been flat over the last year, and you are growing in the mid-single digits. I'm just curious what your thoughts are on labor productivity, retention, and then also hiring demands as 2024 progresses and maybe moving into 2025 if current trends continue.
Steve Cutler (CEO)
Sure. Well, you're right. Yeah, we have, we haven't increased headcount dramatically. It's been very flat over the last 12 months or so, and yet we have been able to increase revenue. A good part of the reason is our strategy around our efficiency. We've been able to bring in and use the bots, machine learning. AI has been a significant contributing factor. Our IT group has done an excellent job in bringing that in. I think we talked about 2 million hours of time last year, and we've got a target of something like 3.5 million for this year. So that's a really important part of it. The optimization of the location of our workforce is also an important part of it.
We have a terrific team here at Icon, who work really hard and who are very efficient and who understand the need to continue to be more efficient. That's a really important part of what we do. I think the other part of it is the systems and technology that we're continually able to deploy around the organization has given our people the opportunity to be more efficient and to operate and to get more done within the same amount of time. So, you know, all of those things, I think, have helped us to keep our headcount pretty flat. I think it's gone up 100 or so over the year. And it's really allowed us to be continually more productive. We have to do that.
You know, we set ourselves a goal of increasing at least several percent in productivity each year to allow, you know, us to continue to be the efficient organization we can be. The other part of it, I think, that's helped is on the retention. Again, the team and the managers in the organization have done a terrific job in continuing to engage people in a way that's brought our retention up to, you know, it's in the high eighties now. You know, we're. I don't know there's a time we've had better-
Eric Coldwell (Senior Research Analyst)
Mm-hmm.
Steve Cutler (CEO)
... retention in the organization. It's quite extraordinary, really, the way it's improved on a quarter-by-quarter basis, really over the last couple of years, post-COVID. So we're in much better retention than we had pre-COVID, and probably better retention than we've had at any time in our history, I would've thought. And again, I guess it's a tribute to the managers and the leaders of the organization who've, you know, created an environment around here that people wanna work in and people feel engaged in. So I'd give them the credit on that front.
But it's all helped us to become more efficient and hence to, you know, to avoid having to increase our headcount in line with our revenue level.
Operator (participant)
Please stand by for your next question. The next question is from Patrick Donnelly at Citi. Your line is open, please go ahead.
Patrick Donnelly (Managing Director, Equity Research)
Hey, guys. Thanks for taking the questions. Maybe on the back of that last one, on the headcount piece, it's probably one for Brendan. Just on the margin side, you know, obviously, SG&A has been a nice lever. You know, can you talk about, is that still heading towards 8% in the relative near term? And, you know, obviously, you guys are talking about 50 basis points overall, but can you just talk about the margin dynamics, FSP, that shift has seemed to quiet down a little bit. I guess it's just because full service has been strong for you guys, better margins on that front. But again, can you just talk about, I guess, the SG&A levers?
Is it still right to think about that 8% near term, and then again, that FSP shift, it feels like you guys have that well under control, but just wanna talk through that as well?
Brendan Brennan (CFO)
Yeah, Patrick. Well, I think from the-- just maybe starting off with the gross margin piece, you know, and I think we kind of clearly indicated coming into this year, that we still are targeting to be in around where we were in the current quarter, in around that 30% mark, for the full year. And that's obviously, there's lots of moving parts underneath that. Steve made reference to our efficiency as an organization. You made reference to the fact that we were talking a little bit more last year about FSP, albeit full service has been much more impactful so far this year. And that obviously has a little bit of shift in the margin profile, but it's taken account of in terms of our forecast gross margin there in around the 30% mark.
So yeah, those pieces are kind of baked in, if you like, in terms of margin shift. And we feel that we can sustain that 30% gross margin in that profile. As I kind of mentioned on numerous of calls in the past, our leverage that we expect, and we talked about 50 basis points of expansion in 2024, is predominantly on SG&A. I think you can see we're making good progress on that. I had referenced that was where we expected to see the margin leverage this year. And yeah, we always, you know, we're assiduous cost managers, as you well know, and we look to building efficiency using the same pieces that Steve referenced in terms of our gross margin efficiency.
So our technology, the use of systems, and the use of machine learning, AI, and robotics to ensure that we're as efficient as an organization. And people spend their time working on value-added work, as opposed to rote or things that can be automated. So that's where we continue to look at, and I think that will probably predominantly be the large way we will be leveraging our margin and cost base, not just this year, but into the future. So yeah, we're making good progress and would like to see that progress continue.
Operator (participant)
Please stand by for the next question. The next question comes from Justin Bowers at Deutsche Bank. Please go ahead.
Justin Bowers (Senior Equity Research Analyst)
Hi, good afternoon or morning, everyone. So, we'll stick with large pharma here. Can you talk a little bit about the velocity of decision-making amongst the large pharma, clients with respect to either new programs or the outsourcing approaches, you know, relative to last year and some of the concerns there? And then, you know, just with respect to outsourcing penetration, I think historically we've thought, you know, we've seen the industry grow, let's say, one or two points per year there. And is that still intact for 2024 and, you know, the next couple of years?
Steve Cutler (CEO)
Sure, Justin. I mean, I'll answer your second part first. Penetration, yeah, 1%-2% a year, 1-2, 100-200 basis points, I think is the way to think about it. And that's what we think about it. We think there's still plenty of upside over the next decade or two. Maybe there's no doubt a ceiling, maybe it's 70%-75%, but we're probably only at sort of 50%-55% now. So I think there's still plenty of room for upside on the penetration side. And of course, it varies depending on which company you're at. You know, large pharmas, it's gonna be lower than it is at in the biotech, where we'll typically do pretty much everything for them.
In terms of velocity of decision, I don't think we see any particular change in the velocity of decision. Things, you know, can take some time, and sometimes they, they happen very quickly. A rescue project can be made, a decision can be made in a week. If it's a large development program with a new asset, in a, in a, in a significant indication, that could take, you know, 3-6 months, really, depending on the, on the individual customer, on their circumstances, on whether they're raising money or not. I don't, I don't see any much difference between large pharma and between biotech. Sometimes the biotechs take a fair bit of time on these things.
Possibly, possibly they're a little faster in terms of making decisions, but I, I'm not sure I notice too much of a, of a difference on, on that one, and I certainly haven't noticed any elongation of the decision velocity over the last, you know, quarter or two. I think that, you know, that's, that's continued at about the same rate as normal.
Justin Bowers (Senior Equity Research Analyst)
Understood. Yeah, I was just thinking in terms of, you know, the IRA impact of the IRA and, you know, the rate environment last year and how that changed so quickly. But I'll take the rest offline. Appreciate the question.
Steve Cutler (CEO)
Okay. Thanks, Justin.
Brendan Brennan (CFO)
Thanks, Justin.
Operator (participant)
Please stand by for your next question. The next question is from David Windley at Jefferies. Please go ahead.
Dave Windley (Managing Director)
Hi, thanks for getting me in. My first question, Steve, you, you've both mentioned a couple times about large pharma and FSO being strong to start off the year. You also mentioned the client renewal on that front. I wondered if those are one and the same, or if the large pharma and FSO uplift is broader than just that one client renewal. Maybe you'd give some color around that.
Steve Cutler (CEO)
Well, Dave, the particular renewal we've had is particularly in full service. So that's certainly the case. But I think it goes, the full service sort of comeback, if that's the way to put it, goes a bit beyond that one customer. You know, typically, in our industry, we see a little bit, you know, swings and roundabouts, and the pendulum goes one way and comes back the other. I think a year or so ago, we were seeing a push more towards functional. I think that's now starting to come back, and we're seeing maybe a little bit more of a. I wouldn't say it's a tidal wave or a tsunami.
Dave Windley (Managing Director)
Mm-hmm.
Steve Cutler (CEO)
But there is probably an attenuation of that push towards FSP, and perhaps it's coming back a little bit on the full service. What we probably are seeing more than anything is an increase in these, what we call these blended models, where particularly large pharma, of course, want to do or want to have the facility to do both. Both a more functional approach and a more full service approach, if that makes sense. So on a project, they might do their data management and medical writing or stats or whatever, through a functional service agreement, but the clinical and the project management for the particular trial or the particular program would be more on a full service basis. So, you know, those...
We feel like we're very well positioned to be able to accommodate those sorts of solutions. We are the biggest FSP provider, and we obviously have a very significant footprint in full service as well. So our ability to put those models together is, I think, unprecedented in the industry. And so if we add that, and we add our technology and our site networks to it, we can put together a really compelling offering for these large pharma customers.
Dave Windley (Managing Director)
Great, thanks. And then, switching subjects, following up on some comments around data strategy, and you talked about tokenization. I guess I'm thinking about your internal Symphony asset, but probably also reliance on external data assets. And maybe you could just comment on your current thoughts on data strategy, and then also, you know, kind of how critical is data versus, you know, maybe the analytics, what you do with the data, how you bring the data to the sites, things like that, and maybe talk about what is your data strategy currently, and then how important is the data strategy in the context of actually, you know, delivering at the site level? Thanks.
Steve Cutler (CEO)
Sure. Let me start with the tokenization. The Symphony business that we have within the organization is a critical part of our business from the tokenization level. And I think I'm really excited about this tokenization because I think it gives us the ability to follow up patients in a very cost-effective manner for an extended period of time, well beyond the clinical trial. So when you think about as we get into more of these obesity-type trials, where we have to treat thousands of patients over an extended period of time, and the ability to collect data very cost-effectively with them, I think offers us a huge opportunity and offers our customers a huge opportunity.
You think if back in the day when those of us who are old enough to remember the Vioxx challenges around cardiovascular events in the painka- If they'd been able to tokenize a lot of that, a lot of those patients, they'd have had been able to put in context those cardiovascular events and potentially have a different outcome. But... And that's the way I'm thinking about the ability for us to tokenize patients in this obesity space, in the diabetes space, where we're doing back again to some of these really large-scale clinical trials. We've been away a bit from these large-scale clinical trials in the industry. We got into rare diseases and very specific, small, you know, 100-patient studies were big studies.
Now, I think the opportunity going forward is to get into some of these really large ones, and I think our ability to tokenize these patients and to follow them up and to provide that data to customers on a long-term basis is really exciting. In terms of our data strategy, you know, we continue to not necessarily want to own-
Dave Windley (Managing Director)
Mm.
Steve Cutler (CEO)
All of the data. We aim, we obtain data from a number of different sources. Symphony is a really important part of that, but we have our lab, we have our lab data, we have a number of external sources of data around from Citeline and organizations like that. Of course, we have our clinical trial management system. And what we're bringing together in a, you know, from a number of different sources, is an ability through our technology then to identify patients for trials, and to find those patients and get those patients into clinical trials. One of our initiatives on the innovation space is through an organization called Veradigm, where we can actually utilize their electronic medical records and go out and find patients, and bring patients in, and have patients referred to our clinical trials.
So it's early days on that one. We're trying that out on a number of trials, particularly on some of these more rare disease trials. But the ability for us to access data that we don't necessarily own, but we have access to, and we can bring together and collate through our system, through our One Search system, which you've, you've seen, and no doubt at the Investor Day, and you'll see some more of this technology at our Investor Day in New York in next month. We'll show you what we've been doing and what we're able to do in terms of bringing these disparate sorts of data together, presenting them in a way that allows us to take actions and take and make insights into where we find patients for clinical trials.
It's for us, it's all about delivering patients into clinical trials and doing that in a really cost-effective and a timely basis. And our whole data strategy is, you know, aligned towards that. I know it's a bit of a high-level answer. We'll be able to give you a bit more information on this, David, at the Investor Day in New York in a month's time.
Dave Windley (Managing Director)
Thanks very much. Brendan, congrats on your career at ICON. Appreciate working with you. Thank you.
Brendan Brennan (CFO)
Thanks, Dave. Appreciate that.
Operator (participant)
Thank you. We still have a number of questions left, so in the interest of time, we will be limiting you to one question only. Please stand by for your next question. The next question is from Elizabeth Anderson at Evercore ISI. Please go ahead.
Elizabeth Anderson (Senior Managing Director)
Hi, guys. Thanks so much for the question. Maybe pivoting off of what Dave just asked. How do we think about the current market for real-world evidence? I mean, I think that there's, like, some maybe two phenomena going on, maybe some sort of cyclical element on it, and also maybe some sort of structural changes as we've seen, you know, obviously, the rise in AI and that kind of thing impacting the market. Could you sort of give us what you sort of view as what's going on there with your business and sort of where you see your... the competitive landscape shaking out over the next year or two? Thanks.
Steve Cutler (CEO)
Elizabeth, yeah, we, you know, we continue to see real-world as a, as an important, a really important part of, the landscape and what we need to do. Symphony is a part of that, and we have other sources of real-world evidence. As I mentioned, the Veradigm opportunity. So, you know, it, it's we see continued interest in there. We see opportunity for growth in there, particularly as we get, as I say, these larger scale trials. I think real-world is gonna be continuing and gonna grow significantly. So, you know, there's a lot there.
I don't think we see any sort of major shift right now, but I think as the obesity drugs really start to be developed, or the new round of them start to be developed, we'll see an increasing role for real-world evidence and the ability to access it and to take insights from it. So, you know, I could rave on for hours about real-world. I won't do that. But again, we'll—you'll hear more about that at our Investor Day in a couple of weeks.
Elizabeth Anderson (Senior Managing Director)
Great. Thanks so much, and congrats, Brendan. It's been a pleasure.
Brendan Brennan (CFO)
Thanks, Elizabeth. Cheers.
Operator (participant)
Please stand by for your next question. Next question is from Jack Meehan of Nephron Research. Please go ahead.
Jack Meehan (Research Analyst)
Hi. Thanks for squeezing me in. Just one question. You know, in the past, in the deck, you've also given us the contribution from the number one customer as well. Was just curious how they're doing, what was their contribution in the quarter? Thanks.
Brendan Brennan (CFO)
Yeah. Hi, Jack, it's Brendan here. It was similar to last quarter, in that kind of 8%-9% range. I think we wanted to move away from being overly focused on one customer. I think I made the point earlier in the call that we are seeing a more diversified company as we go forward. And it aligns again with our quarterly filings with the SEC, that we would carve out 1-5. So that's the way we'll be showing that as we go forward.
Operator (participant)
Please stand by for your next question. The next question is from Luke Sergott at Barclays. Please go ahead.
Luke Sergott (Director, Healthcare Equity Research)
Great, thanks. Can you talk about the, like, the pass-throughs, the trends that you're seeing here in the current quarter and the elevated booking, you know, your bookings that you had for this quarter? Anything to step up there? Or any... We're just trying to find anything, I guess, to pick at or find issue with.
Brendan Brennan (CFO)
No, no, no, look there, Luke, Brendan here. Obviously, the, you know, we, we had a very solid quarter in terms of bookings, but that wasn't, you know, based on, you know, elevated pass-throughs or anything like that. We had a very solid direct fee book to bill as well, up to similar. So, no, nothing, nothing there to particularly get you guys worried about. It was a very solid quarter across the organization and, and very much in terms of direct fee also.
Luke Sergott (Director, Healthcare Equity Research)
Great, thanks. I vote for Windley to throw his hat in the ring, Brendan.
Steve Cutler (CEO)
Oh, wow!
Brendan Brennan (CFO)
Oh, for the gig? Yeah. Yeah.
Luke Sergott (Director, Healthcare Equity Research)
Yeah, of course.
Steve Cutler (CEO)
Put him in.
Luke Sergott (Director, Healthcare Equity Research)
Oh, gosh!
Eimear Lyons (SVP of Corporate and Commercial Finance)
In the acceleration.
Steve Cutler (CEO)
We need to talk, Luke.
Brendan Brennan (CFO)
Yeah, I won't describe Steve's face right now, Luke.
Operator (participant)
Please stand by for your next question. This comes from Jack Wallace at Guggenheim Partners. Please go ahead.
Speaker 18
Hi, this is Mitchell. I'm for Jack. Thanks for taking my question. Most might have been asked and answered, but maybe just one on therapeutic mix. Is there anything to note in regards to changes in mix in the first quarter or in the pipeline? Thanks.
Steve Cutler (CEO)
Mitch, no, not really. You know, we continue with the good 40% of our work in the oncology space, and then the rest of them are sort of between 10%-15%. You know, the anti-infectives, vaccines, CNS, cardiovascular. You know, it might mix, it might go up and down a little bit on a trial, you know, if a big trial comes in. But really, there's still the most, not most, not more than 50%, but about 40% of our oncology and rare disease, and so that tends to dominate our portfolio.
Operator (participant)
Please stand by for your final question. This comes from Jailendra Singh at Truist Securities. Please go ahead.
Jailendra Singh (Managing Director)
Thank you, and thanks for squeezing me in, and congrats, Ben, and, as well. Just wanted to ask about BioSecure Act and what you guys are hearing from your global pharma customers, and even this act passes, if you see this act having any implications for the CRO industry and global CRO players like Icon?
Steve Cutler (CEO)
Yeah, Jailendra, you know, I won't profess to be an expert in the implications of the BioSecure Act, but there are potential issues. I think it's probably more for our pharma customers in terms of their access to CDMOs and those sorts of organizations, and the potential, particularly, I think, in China, for some challenges in terms of supply. And I guess if it's supply of their drug product, there may potentially be some implications for supply of clinical trial suppliers. But really, our pharma brethren are pretty smart people, and they plan very well for these sorts of things. So I'd be very surprised if we saw any really material impact.
I know there are some concerns about they've expressed those to the government, but, you know, I think the supply chain challenge, I think, has been ongoing now for several years. And I think they're thinking, and I think they've already thought very hard about where they get particularly the manufacturing of their, of their drug and their APIs done. And so I don't see much implication for us, certainly in the short term.
Jailendra Singh (Managing Director)
Thank you.
Steve Cutler (CEO)
Okay, so I think we're at the end of the questions, so thank you, operator. We will, I wanna thank you all for joining our call today, and for your continued interest in ICON. We look forward to seeing many of you at our upcoming Investor Day in New York City, and providing you with an opportunity to spotlight the important work we do here at ICON. Thank you all, and have a good day.
Operator (participant)
This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.