Syneos Health Inc

F:8IN

Earnings Call Transcript 2021-Q1

[Ronnie Speight, SVP, IR]

Good morning, everyone. With me on the call today are Alistair Macdonald, our Chief Executive Officer; Jason Meggs, our Chief Financial Officer; Michelle Keefe, our President of Commercial Solutions; and Paul Colvin, our President of Clinical Solutions.

In addition to the press release, a slide presentation corresponding to our prepared remarks is available on our website at investor.syneoshealth.com.

Remarks that we make about future expectations, plans, growth, anticipated financial results and prospects and our expectations regarding the COVID-19 pandemic constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, and we disclaim any obligation to update them. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors. These factors are discussed in the Risk Factors section of our Form 10-K for the year ended December 31, 2020.

During this call, we will discuss certain non-GAAP financial measures which exclude the effects of events and transactions we consider to be outside of our core operations. These non-GAAP measures should be considered a supplement to and not a replacement for measures prepared in accordance with GAAP. For a reconciliation of non-GAAP financial measures with the most directly comparable GAAP measures, please refer to the appendix of our presentation.

I would now like to turn the call over to Alistair Macdonald. Alistair?

[Alistair Macdonald, CEO & Director]

Thanks, Ronnie. Good morning, everyone, and thank you for joining us today. I hope you and your families are safe and in good health. I'm excited that our team delivered strong first quarter results, exceeding the midpoint of our guidance across all financial metrics as we continue to execute through the continuing impacts of COVID-19. We had another strong quarter of gross awards across both segments, and our integrated product offerings continue to fuel strong backlog growth. Total reported revenue continued to grow sequentially and, importantly, returned to year-over-year growth.

We are enthusiastic that our unique strategy continues to resonate in the market. We continue to deliver on our Value Creation Plan by further penetrating large pharma, enhancing our SMID leadership position and accelerating our Syneos One and full-service commercial offerings. We believe our global scale, integrated capabilities and unique product development strategy positions us well in this environment as we continue to gain share and remain focused on high-quality execution.

We expect strong year-over-year growth for the balance of 2021, primarily driven by our robust backlog of both COVID-19 treatment and vaccine trials plus our non-COVID-related projects. As we all know, the CRO space has recently witnessed increased consolidation activity. We believe this is a sign of the underlying strength and attractiveness of our sector and provides a positive backdrop for the future.

Now for other key highlights from the quarter. First, we closed Q1 with solid net new business awards, resulting in book-to-bill ratios of 1.3x for Clinical Solutions, 1.23x for Commercial Solutions and 1.28x in total. This produced a record clinical backlog with year-over-year growth of 22.5%, Deployment Solutions backlog growth of 7.6% and a total company trailing 12-month book-to-bill ratio of 1.32x.

Second, we achieved strong profitability gains in the first quarter, with 10% year-over-year adjusted EBITDA growth and 70 basis point adjusted EBITDA margin improvement compared to the first quarter of 2020.

Third, we achieved a strong start to cash flow for 2021, with net cash provided by operations of $127.1 million, which represents a record for the first quarter.

Now getting into the details of our results and operating metrics for each business. During the first quarter, we continued to recover from the impacts of COVID-19, with total revenue growth of 6% compared to the fourth quarter of 2020. Clinical Solutions revenue grew 8.6% over the fourth quarter, driven by contributions from our acquisitions of Synteract and Illingworth Research Group and an acceleration in the start-up of new clinical projects, including a continued recovery in reimbursable expenses.

Our clinical team also delivered a record quarter of gross awards, further demonstrating the strong demand we are experiencing. We did, however, experience some pipeline reprioritizations that impacted our net book-to-bill ratio, the effects of which were offset by demand from replacement projects and the acceleration of existing projects. Therefore, these changes do not impact our revenue expectations for full year 2021.

Our TTM book-to-bill ratio remains strong at 1.39x including the impact of acquisitions. Clinical Solutions is well positioned for accelerated revenue growth over the balance of 2021, driven by strong sales, record ending backlog and a record pipeline of new opportunities.

We also achieved continued success in winning COVID-19-related clinical projects during Q1, although this rapidly evolving therapeutic area represented less than 4% of our backlog at the end of the quarter.

Our clinical teams continue to experience gradual improvement in their access to investigative sites, which we believe has stabilized at a point where we are largely able to obtain the level of access needed to ensure all trials are progressing. Currently, over 70% of sites are permitting some level of physical visits, which can vary period to period based upon a site's capacity and the requirements of a given trial. The remainder of our sites are accessible via some level of remote monitoring activity.

While sites continue to be cautious amid localized increases in COVID-19 cases, we believe they are well prepared to operate in this environment, and we continue to expect further recovery in our level of physical access as 2021 progresses.

We are also experiencing ongoing improvement in the pace of both patient enrollment and start-up of new clinical trials. By mid-April, the new patient enrollment rates and new site activations were trending at approximately 150% of pre-COVID levels. We expect the strength in site activations and enrollment, along with our COVID vaccine trials, to increase our backlog conversion and accelerate year-over-year Clinical Solutions revenue growth for the balance of this year.

As customers continue to search for innovative ways to drive efficiency and bring trials closer to the patient, we are continuing to invest in our decentralized clinical trial solutions. Our recently announced partnerships with Science 37 and Medable will offer customers a seamless and integrated technology platform to streamline work orchestration, real-world evidence generation and data harmonization. These approaches will improve data capture, patient access to trials and the patient experience. Both Science 37 and Medable are now part of our Dynamic Assembly network. When combined with the home health and mobile research nursing capabilities of Illingworth Research Group, we are able to advance our best-in-class decentralized clinical trial model, decreasing patient side burn and often allowing patients to remain in their homes and with their primary care physicians. Decentralized solutions also furthers our DE&I mission to engage more diverse representative patient populations and increase access for patients who previously could not participate in clinical research.

Turning now to Commercial Solutions. We continue to see sequential growth in our core business with the pace of recovery overcoming our typical first quarter seasonal trend. This growth was more than offset by the divestiture of our medication adherence business, resulting in a decline in total revenue of 1.9% compared to the fourth quarter. Our commercial team once again had a strong quarter of net awards, with year-over-year growth of 10.6%, increasing our TTM book-to-bill ratio to 1.09x. Importantly, our full-service commercial gross awards increased by nearly 60% compared to the first quarter of 2020, demonstrating that our integrated delivery model is increasingly penetrating the market and appealing to customers of all sizes. This awards performance drove Deployment Solutions backlog growth of 7.6% compared to the first quarter of 2020.

Our cutting-edge customer engagement capability, Kinetic, is being deployed to support the education and awareness of many COVID-19 therapies with Emergency Use Authorization, pioneering the frontiers of commercial best practices. Our unique ability to integrate expertise across medical, regulatory, communications, consulting and Kinetic has enabled the delivery of customized education to service the specific needs of the EUA environment. This is a further demonstration of the leadership position we have established and the innovative approaches we provide to customers as they navigate the evolving commercial market.

We continue to leverage our innovative Kinetic capabilities to optimize HCP engagement through a combination of face-to-face and virtual field team activities, which helped enable very strong first quarter additions of field representatives. Our communications business also continues to see increased demand for strategic integrated programs, and our consulting practices are experiencing double-digit year-over-year growth. This comprehensive suite of capabilities is fueling growth in our full-service commercial portfolio. We expect these dynamics, coupled with strong backlog growth and demand in Deployment Solutions, to drive sequential and accelerating year-over-year Commercial Solutions growth as we progress through 2021.

Our unique Syneos One product development offering also continues to resonate strongly in the market, particularly with our small to midsized customers. The awards influenced by Syneos One to date have primarily been for the clinical component of product development, but we are seeing an increasing contribution to commercial awards. We expect the first Syneos One portfolio asset to begin commercialization in the second half of this year, followed by additional assets in the coming years, providing an incremental pipeline for future commercial awards and revenue. We are also seeing early signs of success in the collaboration between Syneos One and Synteract, further supporting earlier-stage work for these customers.

Before I turn the call over to Jason, I again want to offer my sincere thanks to the entire Syneos health community for their ongoing resilience, focus and collaboration. They continue to help build a superior culture with each other, and they continue to deliver the best execution for our customers and their patients under challenging circumstances.

Jason will now provide additional comments on our financial performance and guidance. Jason?

[Jason Meggs, CFO]

Thank you, Alistair, and good morning, everyone. Our total revenue for the first quarter of 2021 was $1.21 billion, up 3.9% and 2.9% in constant currency compared to the first quarter of 2020. Net debt is outlined on Slides 5 and 11 of our earnings presentation. Our comments today reflect the recast of our regulatory and operations consulting practices from the Commercial Solutions segment to the Clinical Solutions segment. Moving the practices to the Clinical Solutions segment more appropriately aligns the services to better serve our customers.

Our Clinical Solutions revenue for the first quarter was $938 million, up 6.3% or 5.2% in constant currency compared to the first quarter of 2020. These increases include a contribution of 575 basis points from acquisitions and increased project start-up activity. This growth was partially offset by a headwind of 140 basis points from the 2020 divestiture of our contingent staffing business and a 130 basis point headwind from the slower recovery in reimbursable expenses.

Our first quarter Commercial Solutions revenue was $270.8 million, down 3.6% or 4.2% in constant currency compared to the first quarter of 2020. This decline in commercial revenue includes a 420 basis point headwind from reimbursable expenses, driven by the impacts of COVID-19 and a 245 basis point headwind from the divestiture of our medication adherence business. This decline was partially offset by growth in our consulting business.

Adjusted EBITDA increased 10% to $151.1 million, representing an adjusted EBITDA margin of 12.5%, an increase of 70 basis points compared to the first quarter of 2020. The increase in adjusted EBITDA margin for the first quarter was primarily the result of favorable revenue mix and our ForwardBound program, partially offset by the impact of foreign exchange.

Adjusted diluted EPS of $0.79 for the first quarter increased by 16.2% year-over-year, primarily driven by the increase in adjusted EBITDA and lower interest expense.

Our operations generated $127.1 million in cash flow for the first quarter, a significant improvement from utilizing $38.6 million in the first quarter of 2020. DSO for the quarter improved to 39.2 days. Further, our capital expenditures for the first quarter were $11.2 million, and we expect $65 million to $75 million for the full year. We ended the quarter with $264.4 million of unrestricted cash and total debt outstanding of $2.92 billion, resulting in net leverage of 4.1x. We remain committed to achieving our net leverage target of 3 to 3.5x by the end of this year.

During the quarter, we repaid $41.8 million of our Term Loan A and $64.1 million of our Term Loan B, partially funded by the $65 million expansion of our AR securitization facility. We also repurchased $44.5 million of our outstanding shares. Our non-GAAP effective tax rate for the first quarter was 24%, consistent with our expectations for the full year 2021.

Turning now to our 2021 guidance. This guidance contemplates our current view of the estimated impact of COVID-19 on our business, recognizing the factors related to COVID-19 are outside of the company's control. We continue to expect full year 2021 revenue in the range of $5.13 billion to $5.33 billion, representing growth of 16.1% to 20.6%. This growth includes an estimated contribution from acquisitions of 540 to 580 basis points and the headwind from our 2020 divestitures of approximately 110 basis points.

We continue to expect total adjusted EBITDA in the range of $745 million to $785 million. This represents an adjusted EBITDA margin of 14.5% to 14.7%, up 30 basis points from 2020 at the midpoint. Lastly, we are increasing our expected adjusted diluted EPS to a range of $4.17 to $4.42 or year-over-year growth of 22.3% to 29.6%, primarily to reflect the impact of our first quarter share repurchases and our expectation of lower interest expense. Our guidance incorporates interest expense of $87 million to $89 million, a non-GAAP effective tax rate of 24% and an estimated diluted share count of 105.9 million shares. Further, we continue to expect our net cash outlay for income taxes to range from $50 million to $60 million.

I also want to provide you with some commentary for the second quarter given our current expectations. As Alistair highlighted, we expect year-over-year growth to accelerate in both businesses as we begin to lap the 2020 impacts of the pandemic. We expect second quarter revenue of $1.25 billion to $1.29 billion and total adjusted EBITDA of $167 million to $177 million. This reflects as reported revenue growth of 23.3% to 27.3% compared to the second quarter of 2020. This revenue growth includes an estimated contribution from acquisitions of approximately 605 basis points and a headwind from our 2020 divestitures of approximately 130 basis points. This growth also includes an expected tailwind of approximately 150 basis points due to growth in reimbursable expenses.

This completes our prepared remarks, and we'd be happy to answer any questions. Operator?

[Operator]

[Operator Instructions]. Our first question comes from Robert Jones with Goldman Sachs.

[Robert Jones, Goldman Sachs Group]

Yes, I wanted to go back to the pipeline reprioritization, Alistair, that you mentioned in the prepared remarks. I know you guys don't give gross bookings. But looking at the math, it does look like these reprioritizations or cancellations obviously drove the net bookings lower than expected. So just anything more you could give there? Was this a large change within 1 client? Was it from several? Any commonalities in therapeutic areas? Just wanted to try to get a better understanding of the impact in the quarter between gross and net bookings.

[Alistair Macdonald, CEO & Director]

Yes. Sure, Bob. Yes, it's a couple of customers on the larger side, one in oncology with reprioritized -- well, I think some of them are a delay in the delivery of the -- of that program. So actually just pushes a couple of projects out of our awards window. So rather than starting within the next 12 months, they're pushing further back, so we have to take them out due to our bookings policy. So they will come back in at a later stage in 2021 as awards, so -- and another one, I don't remember the therapeutic care on the other one, but not -- they're not related.

I think they're just -- as customers rereview kind of their overall spend and approvals on what they're bringing to market, some of it has gone backwards to the right, but some of it is just being replaced by other projects that because of that replacement you're building a little bit of time lag, so it actually pushes it out a couple of months.

So nothing there really that concerns us. It's not a trend that we're seeing. It's just a couple of customers doing it, quite sizable, though, one of them. So I think we would have been at record probably book-to-bills if these haven't happened. So it's a very strong environment. I think 1.3x pretty good book-to-bill anyway. And on top of that, we would have had extra juice in the tank. So unfortunate for us that, that happens, but that's the nature of our business, right?

[Robert Jones, Goldman Sachs Group]

No. No, it makes sense. I guess maybe just one follow-up just because you mentioned the announcements of the partnerships with Science 37 and Medable. It seems like there's -- some of your peers have done similar partnerships with those players. Some of the other competitors have taken more of an internal investment approach. So I guess the question really is, just how differentiated are these decentralized offerings in the marketplace from each other? And it seems like there's clearly a quickening of the pace to have these offerings. I'm just curious, any comments on what you're hearing from your sponsors as far as being able to provide these capabilities?

[Alistair Macdonald, CEO & Director]

Yes, sure. Well, I think -- I mean, we've worked with both of these organizations for a while. So we've got good experience of both and some of the smaller ones. I think, as customers are driven by COVID to look at more innovative offerings, we're able to bring them through. They are fairly similar in their overall offerings. We have customers who come and say, "We like Medable, so we'd like you to work with them." There are customers who come and say, "We like Science 37, so we'd like you to work with them." So having the ability to offer both flavors is important for us under the Dynamic Assembly model. That partnership model that service in good stead continues to do so.

So they're different flavors of the same theme. You got to think of it. It's like -- it's a bit different, but it's slightly old days, using Metadata, Oracle or something else. So I think that pressure to decentralize, to open more channels to a trial. So if you can get to a patient at home, what we're doing is coupling them up with Illingworth and enabling ourselves to actually take the decentralization all the way to the patient's home, which I think is helping us differentiate and helping us differentiate with Medable and helping us differentiate with Science 37.

[Robert Jones, Goldman Sachs Group]

Got it. Makes sense.

[Operator]

Our next question comes from David Windley with Jefferies.

[David Windley, Jefferies]

I wanted to follow up on Bob's last question, a good segue. On -- Alistair, on the DCT environment, two parts to the question here. First, on the Medable, Science 37 comments, it's my understanding that maybe Medable is a little bit more maybe tech software-driven, Science 37 maybe a little bit more tech-enabled service-driven. If you could, if you don't mind, drill down a little bit further on the difference in offering, if there is any. I know you see they're pretty much the same. I'll let you answer that one, and then I got -- have a follow-up.

[Alistair Macdonald, CEO & Director]

Well, I'm going to ask Paul to give you a bit more flavor for that because he knows the detail of service capabilities. So Paul, a couple of differences, if you will?

[Paul Colvin, President, Clinical Solutions]

Yes. No, I think, Alistair, you've hit that pretty well. And Dave, I think your comment is pretty accurate. I think, when I look at that from a telemedicine perspective, Science 37, obviously, has had more experience in that front, has a broader capability. Medable and Science 37 both have capabilities to provide eCOA, ePRO opportunities. When I think about why those partnerships really are key for us, I think having the Illingworth Group in that home health care model, what it really does is we have partners and clients that have different partners they work with. So having both Science 37, having Medable, having with Dynamic Assembly, the ability to pull the best-in-class technologies in and combine that with the home health care, we think, gives us really that full offering and ability to create something new and different. So when I look at those, I think both can work in specific situations. It depends on how the client is building that. It just gives us the ultimate flexibility. And I think what we can bring to them with our home health care is also a great testing ground as they think around new technologies and how those will evolve over time.

[David Windley, Jefferies]

So if I could -- if -- the other and perhaps broader strategic question, and I had a follow-up to that is, you have acquired Illingworth as I think about the different capabilities needed to bring a decentralized trial to life, that home health element, clearly a very valuable one, what's the distinction between what you think you want to acquire and control versus things that you're more willing to plug and play in a Dynamic Assembly? Is it as simple as if it's software and tech, you don't want to own it? And if it's services, you do? But I'd love to understand what your distinction is there.

[Alistair Macdonald, CEO & Director]

Yes. It's kind of down that split, Dave. So if it's more service-oriented, we feel like we're well positioned to own that. Illingworth came with some tech. And I think as we've matured as a business, we actually have more of our own tech than we have historically. So at the moment, we're plugging and playing technology and looking to own more of the service side, but that can transition as we get more tech that comes in with some of these service companies. So we like the space, we like the innovation it brings, so we'll continue to look.

[David Windley, Jefferies]

Last quick one. You mentioned full-service commercial, really maybe more under the auspices of Syneos One as being something that you think launches in the second half. Would you mind fleshing out a little bit the prospects for your full-service commercial launches in the next 6 to 12 months?

[Alistair Macdonald, CEO & Director]

Yes. I think the comment we made in the prepared remarks is really driven by work that Michelle's team is winning almost independent of Syneos One. I think the Syneos One behavior and the Syneos One mindset of delivering a package that is integrated a full-service launch that's connected to clinical, while the commercial teams are picking that up and running with it themselves, so we're seeing a lot more full-service commercial of its own right kind of disconnect a little bit from what we would class as a Syneos One award, which is clinical and commercial or committed together.

So I think we are definitely seeing a rise in that. Certainly, small to mid-customers are bringing that in. I think we're sort of 60% increase in the amount of businesses coming through that channel. So starting to resonate pretty strongly with that customer size. Michelle, any adds for Dave?

[Michelle Keefe, President, Commercial Solutions]

David, yes, just two things. You heard us talk about our Syneos One win in Q2 of 2020. That is going to start flowing through commercial the end of this year and be heavy into 2022. And one of our first clinical partnerships from Syneos One also was starting to commercialize heavily in the back half of 2021. So I think that's just additional. So those are wins we have line of sight to that we're going to start seeing the revenue flow through commercial as well.

[Operator]

Our next question comes from Erin Wright with Crédit Suisse.

[Erin Wright, Crédit Suisse]

Can you give us an update on the general market dynamics that you're seeing in terms of the site accessibility, RFP flow, study start-up, enrollment time lines that you're seeing? And what does your guidance assume now in terms of returning to that more normalized environment from a COVID perspective?

[Alistair Macdonald, CEO & Director]

You sneaked about 8 questions in there, Erin. But well, here we go, right? So demand environment is strong, good. I think we have record RFPs in clinical and commercial is very strong for this time of the year. There's a seasonal effect in commercial, but very strong flow this time of the year. And I think some of that is being fueled by EAU requests and RFPs that are coming through from Michelle's team.

Site accessibility, we're about 75% where we can get -- about 70%, sorry, where we can get fully on site, and that continues to improve slowly. And then the difference, I think, we've seen in the last quarter is we're able to connect with pretty much every single site. I mean there are a couple of holdouts, right? But we're able to connect remotely with just about everybody. So we're able to keep all the sites moving forward, et cetera. So that's improving.

Site start-up is about 150% of where we were pre-COVID. In fact, I just saw the head of start-up that came into the office for the first time in 14 months. But they are pretty much flat out right now. And that's a combination between COVID trials coming through, but standard trials coming through and starting up and going through activations. So that's a good sign for us as we drive more revenue in the future. It's more activity right at the start-up process.

And then enrollment is picking up as well. So we're seeing good engagement and enrollment. We're about 150%. Some of that is skewed by a couple of larger COVID vaccine trials that are running through. So you get a bit of a skew from the enrollment of those and the pace of those.

So yes, good signs. I mean, obviously, our thoughts go out to some of the bigger countries that are really in the teeth of COVID, now India, Brazil, et cetera, where we're seeing a little bit of a delay in some of those sites, but that tends to be dampened down a bit by the fact that the rest of the world is -- seems to be in recovery and vaccines are starting to have a really meaningful impact in some of the bigger markets.

[Erin Wright, Crédit Suisse]

Okay. That's helpful. And then I'm probably reading way too much into this. But I guess, can you speak to the rationale behind the resegmentation of the regulatory and consulting business? Has there been any sort of changes to the commitment in terms of the full commercial offering? I mean, clearly, you're still talking about the end-to-end Syneos One offering here and the strategy still seems to be there. But has there been any change in commitment? I mean, the business has changed since the inVentiv transaction.

[Alistair Macdonald, CEO & Director]

Yes, absolutely. Yes, the business has changed and evolved a lot since that transaction. So in the consulting group that sits within commercial, we moved pretty much a whole of Kinapse into that from day 1. It actually -- as the regulatory and QA consulting pieces of that outfit have grown in strength, their work is actually on the clinical side. So to make that connection a lot stronger operationally, we've actually taken those 2 groups and moved them into the clinical -- into clinical development services, our CDS group, so that they're more aligned with our actual kind of day-to-day regulatory and day-to-day start-up activities because that's who they work with constantly. So it seemed a bit of a reach to leave them over in the commercial side when 100% of the work's in clinical.

[Operator]

Our next question comes from Patrick Donnelly with Citi.

[Patrick Donnelly, Citigroup]

Just one on the commercial side, following up on an earlier question. Can you just talk through the trends you're seeing there? How much COVID work's in there? And what's the visibility in that segment relative to the past few quarters? How are you feeling about the go-forward there?

[Alistair Macdonald, CEO & Director]

Well, I'll start, and I'll hand you to Michelle. I think we feel very good about it going forward, to be honest. We're seeing a lot of engagement around Kinetic, seeing a lot of engagement around full-service commercial. That's launched and mature products. I think we won a good slug of COVID work in Q1 that is going to go -- burn relatively quick -- well, a lot of Michelle's work burns relatively quickly anyway. But a good bit of COVID work. I think 22 projects, 23 projects, something like that, COVID-related in commercial. And that demand seems to be pushing up as more products come through to market.

So yes, we feel good about it. We feel confident about it. I think we had a record number of new reps in the quarter go into the field. So that's a pretty good sign that, that business is robust and there's good demand. But Michelle, anything I missed?

[Michelle Keefe, President, Commercial Solutions]

Yes. I'd add two things. I think one thing is our Kinetic-enabled hybrid representatives are really starting to create some great momentum in the marketplace. I think that's a big differentiator in regards to the new way that I would say field-based teams are working, which is fully virtual, having the ability to work fully virtual, in-person and utilizing digital strategies to communicate with customers based on the channels that they're interested in. And so that is absolutely driving significant interest from our customer base. So I think that's the first thing.

And the second thing I would say is our project-based businesses, which tend to be more in consulting. I think you heard us make the comment that we're in double-digit growth in consulting and communications -- health care communications is becoming critically important. So those are growing, and we're seeing some really nice growth in those areas.

And then your comment about COVID-19, it's really just another therapy. It's just another area of expertise that we've built because of the unique product development platform that we have. We're so good now at integrating capabilities customized for whatever our customers are interested in doing that we're seeing a lot of integrated offerings around some of these COVID treatments that currently either have Emergency Use Authorization or about to have Emergency Use Authorization. And that's kind of a place in the middle that customers haven't traditionally had to communicate the information about, right? EUA has become very common in the last year in this environment.

And so really understanding from a regulatory perspective and a compliance perspective, along with the need to communicate this information to customers in a very specific way and a very -- in the channels that we need to get it out to, I mean just think about how many HCPs across the world need to have this kind of information. Our unique ability to manage that with Kinetic as well our digital capabilities has been -- we're starting to get a lot of traction there as well. So we feel really good about where we're going as a commercial division.

[Patrick Donnelly, Citigroup]

Yes. That's helpful. And then maybe just, Alistair, on the improved backlog...

[Alistair Macdonald, CEO & Director]

Pat, you still here?

[Patrick Donnelly, Citigroup]

Sorry. Yes. Is that just around the pent-up clinical trial demand coming back? And what's your line of sight into how quickly that plays out? So like it sounds like you're pretty confident in accelerating growth into 2Q. So just around the improved backlog burn there.

[Alistair Macdonald, CEO & Director]

Yes. So some of it. I mean, if you remember, Q4, it seems so long ago, we had a 1.5-plus book-to-bill. I can't remember the exact number, 1.55, somewhere around that. So throwing the 1.3 on top of that in Q1 feels good to me. Those projects that we've won, starting to get into start-up from the Q4 awards in Q2, plus you've got revenue that's still unlocking from the work that was pushed backwards out of 2020. So you've got that work coming back. You've got demand coming out of the market that we're taking share on. We've got new recruits coming through, so we're able to burn that revenue off pretty well.

So yes, I'm very confident where we're sitting, looking at what we've got in terms of backlog and the coverage that we have through to the end of the year. We're off to a good start. We be where we thought we were going to be and very optimistic about the rest of the year and out into 2022.

[Patrick Donnelly, Citigroup]

Great. And then...

[Jason Meggs, CFO]

Yes. Patrick, just to add on your first question there relative to commercial on visibility, the -- we talked about the 7.6% backlog growth in Deployment Solutions and the overall commercial backlog, which we don't disclose, but we track internally, is higher than that. And as we look at the balance of the year, given we only take 12 months of bookings into our backlog, it really does give us good visibility naturally to be stronger when we get to June. But right now, we feel good about where that's at.

And on the consulting -- or I'm sorry, the clinical burn rate, we'll see that tick up into the mid-9s percent in quarter 2, quarter 3, a little below mid-9s in quarter 2 and then back up closer to 10% in quarter 4 based on what we see just for modeling purposes.

[Operator]

Our next question comes from John Kreger with William Blair.

[John Kreger, William Blair & Company]

Great to hear you guys talk about an expectation that revenue growth will accelerate. I know you've got some puts and takes there with acquisitions and divestitures. So if you just -- can you give us a sense by the second half of the year, maybe by the fourth quarter, what do you think sort of a normalized organic growth should be relative to your plan in clinical and commercial?

[Jason Meggs, CFO]

John, it's Jason here. So yes, I mean, we do have a lot of moving pieces, as you say. I mean if you -- and that includes reimbursable expenses, right, as we still work through the COVID recovery. If you just kind of strip everything out, both businesses year-over-year, excluding reimbursable expenses, were growing in the first quarter in sort of mid-single digits. And then as you look to quarter 2, you start to see the clinical business really rebound strongly given the year-over-year compare as well as all the things Alistair outlined relative to study start-up metrics and everything being really strong in our COVID trials, particularly the vaccination trials really ramping.

The commercial business is going to get up in the second quarter into -- closer to double digits in quarter 2. And then both businesses will be in sort of mid-double digits in the second half, if you think about by quarter, is sort of the way it works out. So clinical recovers quickly or more quickly and then into the mid-double digits organically. And then commercial is more double digits and then up into the mid-double sort of pacing.

[John Kreger, William Blair & Company]

Very helpful. And Jason, can you just give us what the COVID revenue contribution was in the first quarter in both segments and maybe a rough sense about COVID awards relative to the total that you reported?

[Jason Meggs, CFO]

Yes. So on the award side, we talked about it being less than 4% of our total backlog. And on the award side, it was less than 2%, I think, in quarter 1. So not a big component. We haven't really talked about the actual COVID revenue. What we have said is that it's not material yet. And last year, it was less than $25 million in total for us. And I would say, as it ramps in quarter 1, it's probably not far off of that full year number of last year, but really starting to ramp in the second quarter and beyond.

[John Kreger, William Blair & Company]

Great. And maybe just one last quick one. Alistair, you gave that -- a pretty remarkable stat that your start-up metrics are running something like 150% of pre-COVID normal. Is that just really asking the staff to sprint as fast as they can? Or has something changed structurally that you think you can maintain?

[Alistair Macdonald, CEO & Director]

No, we think we can maintain it. We've enhanced processes. We've been building out the -- our offshore capabilities through ForwardBound. There's a lot more horsepower in that team. They are more automated and more streamlined. So yes, definitely, we can sustain it and grow it, actually. So we're continuing to recruit in that area and having good success bringing people in with good experience. So we've built a good culture, and I think people want to be a part of it.

[Operator]

Our next question comes from Elizabeth Anderson with Evercore ISI.

[Elizabeth Anderson, Evercore ISI]

My first question, how are you thinking about the pacing of reimbursable revenues over the course of the year? Obviously, there's some COVID work that has different profiles. But any thoughts there you could provide would be helpful.

[Jason Meggs, CFO]

Yes. Elizabeth, it's Jason here. So it's kind of I guess, really, we see -- as COVID continues to peel back in quarter 2, as we have said in the past and we get these patients enrolled and investigators back engaged in these trials that Alistair mentioned accelerating and the COVID standing up, at least on the clinical side, we'll see strong growth in the indirect as well, sort of in line with what I was saying earlier and then -- on the organic side. And then you add in the acquisitions, which doesn't really change the trend that much.

On the commercial side, it's going to be strong as well, rebounding pretty quickly in quarter two and then accelerating in quarter three and four, given the easier comp from 2020. So it's recovering in quarter two and then continuing to move up a bit, but not significantly. It's just the comps get easier when you think about year-over-year.

[Elizabeth Anderson, Evercore ISI]

That makes sense. And can you -- do you have any updated comments on the competitive environment? Obviously, a number of your peers are involved in sort of strategic actions. I didn't know what you were seeing on that side. And then in conjunction, do you have any -- have you come across any clients that have concerns about your relative scale versus some of these larger peers?

[Alistair Macdonald, CEO & Director]

Yes. Elizabeth, yes, it has been an interesting few months, that's for sure. We haven't had any customers who are worried about our scale. I think what we did when we did the INC and inVentiv merger, put us to a point where we have all the scale that we probably need in the clinical arena. So we haven't seen anything like that from customers. We work with some of the biggest companies out there and -- biggest pharma companies out there, and they're not worried about our scale at all. So that's all good.

What we are seeing is, obviously, a bit of hesitancy that you get when there's a bit of disruption. We're seeing opportunities for -- to recruit people and to win work. So it's a good environment. There's lots of work out there. But no, we don't see any issues with our scale.

[Operator]

Our next question comes from Donald Hooker with KeyBanc Capital Markets.

[Donald Hooker, KeyBanc Capital Markets]

So you guys have a very interesting sort of list of technology partners that you work with this came up a couple of times in the Q&A here. I'm just wondering, do you get any economics or any kind of direct economics or anything from them as a channel partner? Or is it more sort of a convenience factor for the client that's harder to quantify? I would think you have so much size and scale that you could be -- maybe leverage something there.

[Alistair Macdonald, CEO & Director]

Yes. I mean we've got some, obviously, big spend channels that come through Syneos. So there is some rebate structure in some of the partners where there is big volume. But not all of them because we're able -- we plug some in rarely. So -- but yes, and there's some good efficiencies there as well. So when we're bidding out a certain set of partners, we have all the language ready to go. They understand how they plug in and through start-up. So there's some efficiencies that we can capture there as well and pass through to the customer. So yes, there's some economics in some of the models.

[Jason Meggs, CFO]

And Alistair, if I can add on, though, I think, too, it really is having the size and scale we do. It's the steering committees we can put together and how we continue to drive innovation together. So I mean, from a productivity and process perspective with those large-scale partnerships, I think it just is more around the innovation and productivity we can drive for the clients, and that's a big part of why we want those partnerships.

[Donald Hooker, KeyBanc Capital Markets]

Great. And then as a quick follow-up, maybe also in the large pharma space, I know that's part of the vision for Syneos to get bigger in the top 20. I know it's -- in your appendix, you had the percentage of revenue from large pharma ticking down a bit year-over-year, but I guess the other components are probably growing so fast. It's hard to look at that as any indication of anything. But can you give us any sense of kind of conversations with the large pharma going forward?

[Alistair Macdonald, CEO & Director]

Yes. I think the large pharma capabilities that we have and the penetration we've had has been good. We're still -- I think that tick down is -- and I'll ask Jason for his thoughts, but I think it's related to a big program that we finished. I guess at the end -- I'm guessing at kind of in the middle of Q2 last year. So you've got -- I mean, we've got plenty of large pharma work in start-ups. So as we lap that, that will correct itself. But Jason, any thoughts on that?

[Jason Meggs, CFO]

Yes. I mean we haven't published the stat this quarter, Don, but we have talked about it in the past. I think we talked a little bit about it at Investor Day, but we're in this period of winning the work from our large pharma strategic accounts. And it's gone into backlog, where backlog growth in that area has been quite significant at one point. I think we talked about it being north of 25%. And now that's starting to pull through, revenue is just not completely there yet, given COVID pushed some of that out of 2020 and into 2021, in addition to the dynamics that Alistair just mentioned. So it's just a timing thing until that backlog really starts to pull through into the revenue line.

[Operator]

[Operator Instructions]. Our next question comes from Dan Brennan with UBS.

[Daniel Brennan, UBS]

Great. Congrats. I know there's been a couple of questions on COVID. I'm just wondering, could you help us think through implicit in your '21 guidance? Is it possible to think about like how much COVID benefit is baked into the revenue stream in '21? And obviously, you're not going to guide to '22, but I'm just wondering how we think about kind of the tail of opportunity as we get beyond '21.

[Alistair Macdonald, CEO & Director]

Yes. Well, let me give you my thoughts at the moment around this. So I think, yesterday and I think today again, there's a record number of COVID cases in the world. So what we've contemplated in guidance is the impact that COVID's having both as a tailwind from projects and revenue coming through and as a potential headwind if we have a big resurgence in markets around the world.

So when you -- when we're putting the guidance together at the moment, you've got a bit of a double-edged sword from COVID. So we're just trying to make sure that we capture all that and think that through. We've got big offshore service centers, some of them in India, some of them in Argentina, et cetera. So we got to contemplate the impact that it can have as a headwind as well as a potential tailwind in kind of the revenue stream. So Jason, any thoughts?

[Jason Meggs, CFO]

Yes. I mean, I guess, Dan, in terms of the revenue in 2021 and the guide and the burn rate and how we thought about it, on the clinical side, I don't think it's changed much from what we had said previously in terms of things are still working their way through the system, largely stable. But sort of midyear summer is where we think we're back to a more normal operation. In terms of quantification around the amount, I think the backlog information that we gave is a reasonable proxy to think about the percentage of your revenue and then in the pipeline and what we're continuing to see, we're continuing to have plenty of opportunities. As a matter of fact, I saw COVID win this morning. So we continue to have that flowing through.

[Daniel Brennan, UBS]

Great. And I was hopping between calls, but I think there was a question asked related to the M&A environment, but I was hoping maybe, is there a view that you have towards the opportunity to maybe accelerate new business wins? Are you seeing any impact from that? I don't know if the same question was asked, but I would just interested kind of to see what you guys are thinking about and what you're planning for?

[Alistair Macdonald, CEO & Director]

Yes. I mean, customers worry about CROs that are going through big integrations that they've not got any experience in doing before. So that's all I can be -- I can attest to how difficult integrations can be at large scale. So customers naturally get concerned about that. And I don't think it discounts people, but it sets a little thought process going in customers' minds of how stable those organizations are going to be, turnover concerns, anxiety of staff, et cetera, et cetera. So yes, I think it opens the door for us, maybe gives us a slight edge, but we've been through the other side of that. And we'll do what we can to win work off of those companies.

[Operator]

Our next question comes from Luke Sergott with Barclays.

[Luke Sergott, Barclays Bank]

One quick one for me. This is pertaining mostly to bookings. So as I think about Syneos One and the complete offering that you guys have, can you give us an update on that and the size of the backlog that you've developed there? As I think about the COVID work and all those things that are coming out of biotech that it seems that you'd be well positioned there. And then just overall, from a bookings trajectory, given the strong recovery and all the commentary that you've given with that, I would -- I was just wondering how big the cancellations were so that -- I would have thought that the bookings would have been up more steeply in the quarter and maybe it's just because there's not as much COVID work. Or just any type of color there so I can get some idea on that -- on those businesses.

[Alistair Macdonald, CEO & Director]

Yes. I think -- yes, I'll start with the last bit. I think, on the bookings, the reprioritizations, I can say, that we took out of bookings and took as cancellations in Q1, some of those will come back later in the year or early '22 as we get back within the 1-year start window that we are very disciplined around. So I think that is the difference. I mean I'm pretty confident we would have had without that the same kind of level of bookings that we had in Q4 on a book-to-bill basis. So yes, I don't see anything wrong with the demand environment. I think on the Syneos One side, continue to see traction with the small to mid customers, not specifically around COVID. I don't think that makes much difference because people are moving very quickly on their own through Emergency Use Authorization. So the speed that Syneos One brings to regular drug development doesn't apply so much to the COVID side. So I don't think that, that creates much of a tailwind for Syneos One.

[Luke Sergott, Barclays Bank]

Okay. That's helpful.

[Operator]

There are no further questions. I'd like to turn the call back over to Alistair Macdonald for any closing remarks.

[Alistair Macdonald, CEO & Director]

Thank you. Again, our sincere thanks to the entire Syneos team for all they continue to do to manage through challenging circumstances, particularly those currently battling the virus in India, Brazil and other places. We remain very confident in our market positioning, and I look forward to strong growth and profitability in 2021 as the recovery from COVID-19 continues. So thank you very much for your attendance today and for your interest and investment in our organization. Please be safe. Have a great day, and be good. Thank you.

[Operator]

Ladies and gentlemen, this does conclude the conference. You may now disconnect. Everyone, have a great day.