Syneos Health Inc

F:8IN

Earnings Call Transcript 2020-Q4

[Operator]

Good morning, and welcome to the Syneos Health Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time.

I would like to hand the conference over to Ronnie Speight, Senior Vice President of Investor Relations. Please go ahead, sir.

[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 remark is available on our website at investor.syneoshealth.com. Remarks that we make about future expectations, brands, growth, anticipated financial results and prospects and our expectations regarding the COVID-19 pandemic constitute forward-looking statement 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]

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 pleased to report that we delivered a solid fourth quarter and full year financial results as we continue our recovery from the impact of COVID-19.

As demonstrated by our strong sales performance in the quarter, which capped off a record year of award. Our growing portfolio of innovative and integrated product development solutions continues to resonate with customers of all sizes. Revenue across both segments grew sequentially, overall profitability was also strong, growing both sequentially and on a year-over-year basis.

We continue to deliver on the value creation plan outlined at our Investor event in December, executing on our key growth strategies of further penetrating large pharma, enhancing our leadership position with SMID customers, and accelerating our innovative Syneos One and full-service commercial offering.

We expect strong growth in both our segments in 2021, which will become most apparent from the second quarter onward, primarily driven by the robust new awards added to our backlog since late 2019 beginning to ramp, along with our COVID vaccine trials. Our robust backlog now exceeds $10 billion, providing us with a consistent revenue pipeline and highlighting our confidence in the long-term strength of our business.

We have maintained our balanced approach to capital deployment, remaining focused on strategic M&A activity that will help expand our access to new markets and add key services to our portfolio. During the fourth quarter, we closed the acquisition of Synteract, which provides us with an expanded presence in the emerging biopharma market, with strong biotech funding and innovation are driving double digit growth.

We are also excited about our more recent acquisition of the Illingworth Research Group, a leading global provider of clinical research home health services, which covers 46 countries, and enables clinical trial participation from the comfort and safety of a patient's own home. COVID-19 has accelerated the decentralization of healthcare delivery and the need for in-home clinical trial services. And we believe this trend is favorable as it relates to the demand for Illingworth Services.

Illingworth expands the scale and capabilities of our decentralized solution, allowing our customers to realize efficiencies in patient recruitment and engagement with improved patient access and diversity.

Now, for other key highlights from the quarter. First, we closed Q4 with strong net new business award, resulting in book-to-bill ratios of 1.52 times for clinical solutions, 1.63 times for commercial solutions, and 1.55 times in total. During full year 2020, we achieved a record $5.9 billion of net award and an aggregate book-to-bill ratio of 1.33 times, resulting in robust backlog growth and record ending backlog.

Second, we experienced strong profitability for the fourth quarter with 3.3% year-over-year adjusted EBITDA growth, and a 160 basis point adjusted EBITDA margin increased to 17.1%. This brings our full year adjusted EBITDA margins of 14.3%, a 50 basis point increase over 2019.

And third, we generated another quarter of robust operating cash flow at a $114.3 million, resulting in a record total of $425.5 million for the full year 2020, further strengthening our overall financial position and liquidity.

Now getting into the detail of our results. During the fourth quarter, we continue to sequentially recover from the impacts of COVID-19 with total revenue growth of 3.7% compared to the third quarter. Clinical Solutions revenue continued its sequential recovery, growing 3.2% over the third quarter. Our clinical team also delivered a strong fourth quarter of net award, resulting in net awards growth of 13.3% for the full year.

Full year clinical net awards were a record $4.7 billion, resulting in a strong TTM book-to-bill ratio of 1.42 times, and year-over-year backlog growth of 24.6%, including the impact of acquisitions. Clinical solutions is well-positioned to see accelerating revenue growth in 2021, as a result of their strong backlog growth and robust pipeline.

We also won over 80 COVID-related clinical projects during 2020. These represent approximately 7% of our gross awards for 2020, and we continue to see a substantial pipeline of additional COVID-related opportunities. While we continue to see some operational delays in studies, we have not experienced any meaningful cancellations as a consequence of COVID-19. The pandemic continues to drive a high utilization of remote monitoring and lower patient enrollment in some therapy areas. Although we anticipate our return to normal levels as we progress through 2021.

Turning now to Commercial Solutions, revenue grew 5.4% compared to the third quarter, including sequential growth across all businesses. Our commercial team once again had a strong fourth quarter and award, resulting in a $1.16 billion of net award and a book-to-bill ratio of 1.05 times for full year 2020.

Importantly, our full-service commercial awards more than doubled in 2020 compared to 2019, demonstrating that our integrated delivery model is increasingly penetrating the market, particularly with our SMID customer base.

This awards performance drove deployment solutions backlog to a record level with growth of 4% compared to the fourth quarter of 2019. Deployment solutions also executed a record number of new teams start in 2020, planning our diverse field team resources and our virtual engagement center. Although, net awards and book-to-bill for 2020 were impacted by higher cancellations during the first half of the year, our commercial pipeline remains robust given the growing complexity of customer product strategies, and the rapid pace of FDA new drug approval.

We continue to deliver high levels of innovations for our customer base, including the evolution of Kinetic, our modern customer engagement capability. Kinetic combines insights, intelligence, and the omnichannel expertise to strengthen relationships between field teams and HCPs by targeted digital messaging.

PM360, a leading publication for marketing decision makers, recently recognized digital amplifier, a key component of Kinetic as an innovative 2020 service. An example of Kinetic powerful impact includes enabling a customer to reach 80% of targeted HCP, despite the fact that personal access was not possible due to COVID-19. It also creates a subsequent double digit prescription growth for those HCPs who receive digital messaging that complemented personal messaging.

Kinetic results are increasingly driving new business with our customers who are looking to transition to a more digital footprint, contributing to 14% of our commercial gross awards during 2020.

Additionally, as we continue to deliver innovation across the lab to life spectrum, we are now leveraging Kinetic in our clinical programs to fuel innovation in patient outreach and recruitment for our customers. While originally designed to optimize HCP outreach for our commercial field teams, we are now working with our clinical customers to apply Kinetic for their active clinical project. We are seeing very positive early results in patient engagement and enrollment by using Kinetic digital amplification capabilities to enhance patient outreach and referrals through targeted physician.

We are accessing our dynamic assembly network to optimize a variety of data sources, media types, and advanced analytic to customize a Kinetic program for any given clinical therapy. These innovations are further accelerating uptake of our insights-driven product development model.

With our broader context, let me provide an update on some of the key operating metrics we have highlighted in recent discussion. Our clinical teams continue to see gradual improvement in their physical access to investigative sites, with about 70% of sites permitting some level of physical visit.

Similar to the third quarter, some of these sites are facing capacity constraints, requiring a higher mix of remote monitoring visits than we previously anticipated. Another 25% of our sites are now accessible only via some level of remote monitoring activity, while about 5% of sites remain inaccessible.

While sites generally continue to be somewhat cautious amid localized increases in COVID-19 cases, we believe they are much better prepared to operate in this environment than they were in early 2020. Therefore, we expect site access continue to improve gradually through the first half of 2021.

Our clinical teams are also experiencing continued improvement in the pace of both patient enrollment and the startup of new clinical trial. By early February, new patient enrollment rates approached 120% of pre-COVID levels, and new site activations are trending at about 150% of pre-COVID level.

We expect this strength in site activations and enrollments to drive the ramp of our core backlog, along with our COVID vaccine trials, creating year-over-year organic growth in the first quarter, when excluding the impact of reimbursable expenses and our 2020 divestiture of continued staffing.

Further, we expect clinical solutions year-over-year organic revenue growth to accelerate in the second quarter of 2021 and for the balance of the year, as we lap the initial 2020 impacts of the pandemic.

Within commercial solutions, our deployment solutions field teams are executing on their omnichannel strategy, while experiencing a gradual return to in-person visit, currently in about 65% of our territories.

The pace of this return to physical visit varies by customer with some of our large pharma customers taking a more cautious stance on allowing their teams back into the field. However, we continue to leverage our innovative Kinetic capabilities to optimize HCP engagement through a combination of face-to-face and virtual field team activities, with total contact volume trending well above pre-COVID levels.

Importantly, we are seeing significant improvements in the average weekly productivity of our rep through the utilization of Kinetic and other virtual capabilities. The primary impact of COVID-19 has been reduced revenue from reimbursable expenses, along with increased cancellations and the delayed startup of new customer program.

However, as we have helped customers adapt to the current environment with our virtual capabilities, new programs, startups have begun to accelerate, which we expect to continue in 2021.

Our communications business continues to see increased demand for strategic integrated programs. Our unique combination of services across the advertising, public relations and medical communications enables customers to navigate the dynamic modern landscape including DE&I and CSR programs, COVID-19 response, virtual engagement and other timely issues. This comprehensive approach is fueling growth in our full-service commercial services, particularly with our SMID customers.

In addition, the performance of our diverse consulting practices remains strong, delivering double-digit revenue growth in 2020, while building a record backlog of work entering 2021. We expect to see year-over-year commercial solutions growth in the first quarter, when excluding the impact of reimbursable expenses and the medication adherence divestiture, primarily driven by continued new team sales in deployment solution. We expect to see this year-over-year growth accelerate in the second quarter of 2021, as we begin to lap the impact of our elevated 2020 calculations.

Before I turn the call over to Jason, I want to welcome our new colleague from Synteract and Illingworth Research Group to the Syneos Health team. I, again want to offer my heartfelt thanks to the entire Syneos Health Community for their ongoing resilient, focus and collaboration, as they continue to provide superior execution for our customers on a very challenging circumstance.

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 fourth quarter of 2020 was $1.14 billion, down 6.1% and 7% in constant currency compared to the fourth quarter of 2019 on an adjusted basis. Our clinical solutions revenue for the fourth quarter was $855.6 million, down 5% or 5.9% in constant currency compared to the fourth quarter of 2019 on an adjusted basis.

These declines include a contribution of 140 basis points from acquisitions, partially offset by headwind of 120 basis points from the second quarter divestiture of our contingent staffing business. Clinical solutions revenue growth included a 470 basis point headwind from the slower recovery and reimbursable expenses, as more of our site visit activity remained remote and patient enrollment continued to recover.

Our fourth quarter commercial solutions revenue was $284.5 million, down 9.3% or 9.9% in constant currency. The decline in commercial revenue was primarily due to the impact of elevated cancellations during the first half of 2020, as well as the impact of COVID-19, including a disproportionate decline in reimbursable expenses and delays in program starts.

This decline in reimbursable expenses represented a 660 basis point headwind to commercial solutions year-over-year revenue growth in the fourth quarter. Commercial solutions revenue for the fourth quarter outperformed our expectations, despite being negatively impacted by our divestiture of the medication adherence business.

In addition to the strengthening performance, we also have a robust pipeline of commercial opportunities, highlighting the demand for our innovative solutions.

Adjusted EBITDA increased 3.3% year-over-year to $194.8 million, representing an adjusted EBITDA margin of 17.1%, an increase of 160 basis points. The increase in adjusted EBITDA margin for the fourth quarter was primarily result of our synergies, cost management initiatives including ForwardBound and lower reimbursable expenses.

For the full year 2020, adjusted EBITDA was $633.6 million a decrease of 1.8%, with margin increasing 50 basis points to 14.3%. With 2020 being our final year of measurement, we realize our targeted $140 million in total merger synergies prior to the impact of our strategic reinvestments.

In addition, it is important to note that our unadjusted EBITDA grew by 10.8% in 2020. This was primarily driven by a reduction in restructuring, transaction and integration-related expenses, as we wind down the bulk of our merger-related cost. We expect this trend to continue in 2021 with faster growth in unadjusted EBITDA, as we continue our focus on cash flow conversion.

Adjusted diluted EPS of $1.11 for the fourth quarter increased by 7.8% year-over-year, primarily driven by the increase in adjusted EBITDA and lower interest expense. For the full year 2020, we generated adjusted diluted EPS of $3.41 up 5.6% compared to 2019, primarily driven by lower interest expense.

Our operations generated a $114.3 million in cash flow for the fourth quarter, bringing the full year to a record $425.5 million. DSO for the quarter improved to 44.5 days. We ended the quarter with $271.9 million of unrestricted cash and total debt outstanding of $2.97 billion, resulting in net leverage of 4.3 times. Although, net leverage increased primarily due to the financing of Synteract and Illingworth acquisitions, we remain committed to achieving our net leverage target of 3 to 3.5 times by the end of this year.

During the quarter, we repaid $13.5 million of our term loan A and $200 million of our term loan B, and repurchased $8.1 million of our outstanding shares. Further, we issued $600 million of senior notes bearing interest at 3.625%. These notes mature in 2029, providing additional flexibility in our capital structure. For the fourth quarter, the issuance of these notes resulted in an incremental $2 million of interest expense compared to our guidance.

Our non-GAAP effective tax rate for the fourth quarter of full year 2020 was 24%. Given the benefit of our NOL deductions, our actual net cash outlay for income taxes in 2020 was approximately $23 million.

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.

Since we issued our initial guidance, we have seen some movement in foreign exchange rates that has resulted in incremental revenue tailwind for the full year, while also generating a partially offsetting headwind to our adjusted EBITDA. Given that we're still early in the year and have seen only a limited potential impact, we are maintaining our existing guidance ranges.

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 basis points to 580 basis points, and a headwind from our 2020 divestitures of approximately a 110 basis points. With this strong revenue growth and the success of our ForwardBound programs, partially offset by headwind from the exploration of our temporary cost saving measures in 2020, we 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 expect adjusted diluted EPS of $4.09 to $4.38 or a year-over-year growth of 19.9% to 28.4%. As noted on Slide 8, our guidance incorporates interest expense of $94 million, a non-GAAP effective tax rate of 24%, and an estimated diluted share count of 106.7 million shares.

Further for 2021, we 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 first quarter, given our normal seasonality and current expectations for the continued pace of the recovery from COVID-19. As Alistair highlighted, we expect your year-over-year growth to accelerate in the second quarter in both businesses, as we begin to lap the 2020 impacts in the pandemic. For clinical solutions, we expect this to be powered by the ramp in our core backlog conversion, along with our COVID vaccine trials.

For commercial solutions, we expect this growth to be driven by robust new team starts and deployment solutions, along with continued strength in communications and consulting. We expect first quarter revenue of $1.17 billion to $1.21 billion, and total adjusted EBITDA of $141 million $151 million. This reflects as recorded growth of 0.6% to 4%, compared to the first quarter of 2020.

This revenue growth includes an estimated contribution from acquisitions of approximately 490 basis points, and a headwind from our 2020 divestitures of approximately 170 basis points. This growth is also net of an expected headwind of approximately 210 basis points due to the continued slower recovery and reimbursable expenses.

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

[Operator]

[Operator instructions] And our first question coming from the line of Eric Coldwell with Baird. Your line is now open.

[Eric Coldwell, Baird]

Thanks very much, and good morning. I was hoping to dig into these commercial bookings a little bit. You always have fourth quarter favorable seasonality or at least that's the expectation. But this was obviously a very good number. I'm curious if some of these awards were related to anything you'd call out as sort of unique, whether it's COVID-related therapies, or maybe something interesting happening in Syneos One, with some of the projects you've talked about in your recent presentations? Or if it was really just broad based? I just was hoping to dig in a little bit more on the booking strength. Thanks so much.

[Alistair Macdonald, CEO]

Okay. Good morning, Eric. Alistair, here. Yes, we're very pleased with that, obviously, 1.6, in excess of 1.6 times book-to-bill for commercial is a great result. Yes, it is seasonality, but we're always pleased to see the growth in that number.

And I think it's a little bit of all the things you suggested to a certain degree, there's some COVID work in there, which we're starting to see more and more of coming through into the commercial realm. There is a broad base efforts around the connected platform, we're winning a lot of work with that platform now, as people look for more digital approach to field teams, and HCP engagement.

So, the investments that we've made in that technology, and the processes and people that fits around that are important. I think we're seeing good traction in full service commercial. And that's work that's coming in from Syneos One, as you said, but also just integrated, full service commercial on its own. So, people buying the whole package from Michelle and her team as we go. And I do think there's also a sense of optimism in that commercial space around the recovery from COVID.

So, we're seeing vacancy management comeback, we're seeing teams launched at a record year in 2020, for the number of teams launched. And that a lot of that work is coming from our SMID sector where, there it's more teams, but smaller, which helps us to continue to diversify the backlog. So really very broad basis.

To your follow-up question with a robust pipeline going into Q1 of this year, so very pleased with how that's shaping up.

[Eric Coldwell, Baird]

I like how you read my thoughts there a little bit. But actually, my real follow-on question was a little bit different angle. I think last year, we saw if memory serves the second best or tied for second best year of FDA approvals for new drugs. And there's been the sense that pharma's really weren't launching their new products the way they historically did, and that there were maybe delays in that traditional if you go back years ago that the original blitzkrieg that you get upon approval.

I'm just curious, what is the backlog where the pipeline looks for these newer product? And what kind of decisions are clients making around these launches? And is it really a pig in a python situation? Or is it, no, we're changing the game and we are - as you said, maybe smaller teams, maybe more omnichannel, we're going forward, but don't expect the big blitzkrieg of the past?

[Alistair Macdonald, CEO]

Yes. I think some of those bigger efforts will be there. We've seen that a little bit in 2020. Some of the more strategic partnerships that we've won, certainly include some of those. But I do think it's the nature of the products that are coming through. It's more specialty, its highest volume and less boots on the ground, more educational, more support through MSOs and nurse educators to make sure the physicians are seeing these specialty patients are supported very strongly in the field with everything that they need in a more omnichannel way.

I think omnichannel, one of the legacies of COVID for us, that we see is really that shift over to a more permanent shift over to a digital footprint in commercial launches, in commercial detailing, in the support that we give around that with the Kinetic platform, I think really has been a great recent driver for us.

So, that innovation needs to be there. I mean, Michelle, your thoughts on the style of launches now, compared to where we were just a few years ago?

[Michelle Keefe, President, Commercial Solutions]

Yes, it's a great question. And I totally reiterate everything that Alistair just said. But what I would add is that, I think that customers are getting very smart about how they communicate with all their stakeholders. And it's really about data and insights around your different customer mix, whether it's HCPs, or payers or patients, and creating a very personalized experience for that individual.

And so, I think what we're finding is that it's not one strategy anymore. It's not these large sales teams that go out at launch and a bunch of tactics and effort early on. It's really very focused around creating the right message at the right time for the right customer. And that those customers, the ROI on those individual customers are different, and the relationship you need to have with those different customers is different.

So, I think it's great for the commercial business, because it diversifies the type of solutions we're bringing forward, and diversifies our backlog. So I do think it's something that we're uniquely positioned to address because of the breadth of our capabilities. It also creates what I think we all want to see, which is a more diversified backlog.

[Eric Coldwell, Baird]

Thanks very much, guys. I appreciate it.

[Operator]

Now, next question coming from the line of Robert Jones with Goldman Sachs. Your line is open.

[Robert Jones, Goldman Sachs]

Thanks. Good morning. Thanks for taking the questions. I guess, maybe just one on clinical. Alistair, you and your peers have consistently talked about delays but not cancellations, as it relates to COVID and COVID work and COVID complications from conducting trials.

I guess, just given that dynamic, could you talk a little bit more about to what degree there is really pent-up clinical trial demand? And as it relates to that, anything you could share on how we should be thinking about backlog burn as we get into 2021?

[Alistair Macdonald, CEO]

Yes. Good morning, Bob. Thanks for the question. I think you see a little bit of that pent-up demand starting to flow through not just our Q4 book-to-bill, but those have reported ahead of us all have pretty strong book-to-bills across the space. So we're starting to see that flow come again. The SMID pipeline is very strong. And the pipeline that lags a little bit still is Large Pharma. I think, they're very cautious to come out making sure that they're not going to put people in homes way, et cetera.

So, we're seeing that pipeline recovery, which indicates that that pent-up demand is there. Some of it is still COVID driven as well. We still see a fairly healthy pipeline of COVID in our overall pipeline, treatment trials as well as some vaccine trials, though. So we see that coming through.

I think, as we start to recover from the lack of site kind of participation because of COVID, because of the site closures, you'll see that burn rate pickup, whereas our burn rate starts to pick up kind of as we go through Q2 and then accelerates into the back half of the year, as those COVID restrictions come off.

But also, as the work that we won kind of from the end '19 onwards and 2020 for us has been a record year in sales, it helps us to bring that backlog through, plus, on top of that you've got the COVID. Our COVID trials are slightly - we're probably a quarter behind where some of the others were in terms of the COVID vaccine trials coming through. So you kind of get that double acceleration for us, where our backlog, ex-COVID dots to burn again, at a higher clip, because of site access, et cetera, and enrollment picking up.

We got new trials, obviously built up to go on top of those that are going through start-up now. I mean, we talked about our start-up figures were 150% of site activations, compared to pre-COVID. We weren't exactly hanging around before COVID, now we've got this massive pile of startup work that's starting to work its way through the model. Those trials will come on to enroll, Q2 and onwards.

And then you've got COVID, that's kind of driving a little bit extra on top. So, a lot of growth this year. The slope is a little bit steeper, because of the recovered rate from COVID than we'd normally expect to see. But we've been preparing for that and recruiting slightly ahead of the curve to make sure that we can handle the growth. So, it's an unusual year in that sense that the growth is so quick, but it's got three or four elements in it that are really all tailwind.

[Robert Jones, Goldman Sachs]

No, that's helpful. And some of this might tie into my follow-up. But, Jason, if I heard the 1Q numbers correctly, it looks like the EBITDA margin at the enterprise level somewhere around 12% at the midpoint. I know, 4Q is seasonally high, but even looking back at 2Q, 3Q that's kind of in line to below. Anything specific it might actually obviously relate to some of the things Alistair just shared, but at any specific dynamic that you would point to, as far as why wouldn't your EBITDA margin might be a little lower?

[Jason Meggs, CFO]

Hey, Bob. Good morning. Yes, I mean, typically, if you go back and look, we're in that sort of 12% to 12.5% range in quarter one, come out of a very strong quarter four from a margin percentage basis and dollars, frankly, because of the push of everyone to get all their change orders finished. All the taxes have kept out for the year. On the payroll side, you have your PTO vacation reversals, where things really just drive that quarter four high and then all that resets and starts over and you have sort of this double whammy to quarter one. They are on the cost side. So, it's really in line with what we typically see from those seasonal items, and nothing really to point out that's different.

[Robert Jones, Goldman Sachs]

Okay, got it. Thanks so much.

[Alistair Macdonald, CEO]

Thanks, Rob.

[Operator]

Our next question coming from the line of Tycho Peterson from JPMorgan. Your line is open.

[Tycho Peterson, JPMorgan]

Hey, thanks. I actually want to follow up on one of Bob's questions about the recovery trends. Alistair, you talked about set activations net 150% of pre-COVID levels, enrollment 120% of pre-COVID levels, but obviously, you're only at 70% of site accessibility. So, I'm curious how you think about kind of resolving the bottlenecks. There is the answer, leveraging Illingworth and doing more remote monitoring and making investment there to try to kind of leverage that channel more. Are there ways to kind of free up the bottlenecks?

[Alistair Macdonald, CEO]

Yes, there are. I mean, you obviously have to get the approvals in place to be able to do the Illingworth piece, the at home health piece. So, there are steps to do to get through that. And also, one of the factors in those numbers, obviously, is our COVID work starts to ramp. We've got a lot of COVID patients, in the COVID sites coming through those start-up numbers. So, it skews the overall a bit.

So, if you look at that, just keep that in mind when you think about those numbers that acceleration does have a bit of COVID in it. But I think, sites are handling issues on a local level through PPE and local kind of protocols, though, they're engaging more, they're getting back into the enrollment phase. You will see COVID starting to clear in a lot of different countries.

I was on a phone call on Tuesday, this week with a customer in India, who was talking about the COVID rates there dropping down. We see that in the U.S. We're seeing that in Europe, there's a lot of optimism, I think insights that they can get patients back in and get moving forward quicker.

So, yes, those bottlenecks need to be managed carefully. One of the real bottlenecks is actually the amount of time, people on site can spend on each project. So, getting CRAs on site can be a little bit more difficult, but that's where the remote monitoring access comes in to clear out backlogs. So, you don't have to spend so much time on site. So, a lot of different strategies to deal with it. But yes, certainly we'll be leveraging anywhere to do that wherever we can.

[Tycho Peterson, JPMorgan]

And then you talked about FSP was doubling, obviously Syneos One helping there. Now that you've got to Synteract, can you talk a little bit more about, how that may help drive more FSP to billing in this midcap biotech piece?

[Alistair Macdonald, CEO]

Yes. Well, we don't really think about FSP from Synteract, they're more full-service models for the emerging biotech. But yes, I mean, overall very pleased with our FSP growth continues to be a tool that we use with our Large Pharma partners, and anybody really with scale to support either a hybrid model or just full FSPs. So there's a lot of interest in that.

But on the Synteract side, that's really about full service. There are a few little biometrics data management FSPs that they had that we've already rolled into our major - our main FSP effort.

[Tycho Peterson, JPMorgan]

Okay. And then last one, you just mentioned the opportunity to leverage Kinetic into the clinical side. How do you think about that? Is that really just to drive faster enrollment, or maybe what's the opportunity there?

[Alistair Macdonald, CEO]

We're really excited about using Kinetic in clinical. We've used it now probably a half a dozen times or so in big trials, and the impact that has is quite very, very marked. So we're very pleased with that as a new tool. It really helps to - the clue is really in the name of digital amplifier, it's something that helps to identify trials in a broader way to people and referring physicians' networks of physicians that we can target, and the way that the technology works to make sure that folks with potential patients are actually seeing the information around trials that are in their vicinity in general or in their specialty.

So we've seen a lot of referrals through that to actually investigate the site. And that's been a great kind of a proof point of the model using our insights from commercial. We use this platform on HCP to communicate to them. And it's really about audience engagement, the patient, referring physicians, et cetera all-in audience. And this helps us to get the right materials in front of them at the right time, when they're receptive to finding out information that could be useful for their patients.

So, a great tool. We've got a lot of interest in it from our Large Pharma clients about using it kind of across their platforms already. And that's pretty significant if you - we know how slowly some of our customers move sometimes, but some of them have used this tool, and they want it for everything. So we're very, very excited about that.

[Tycho Peterson, JPMorgan]

Thank you.

[Jason Meggs, CFO]

Tycho, I just want to hop back on the FSP question, the full service. So I think, in Alistair's prepared remarks, he mentioned that we've seen a doubling of our full-service commercial awards in 2020, which is the model we've been driving over the last several years, which things like Kinetic, and other investments we've made. I'll put those services together.

So think of it FSP on the clinical side as moved to full service, and we have a combination of both businesses. We're driving that way on the commercial side as well. Point solutions in the past, we're driving more towards full service commercial, and overall, commercial services and we've seen a doubling of those awards during 2020.

[Tycho Peterson, JPMorgan]

Got it. Thank you.

[Alistair Macdonald, CEO]

Thanks, Tycho.

[Operator]

Now our next question coming from the line of David Windley with Jefferies. Your line is open.

[David Windley, Jefferies]

Hi, thanks for taking my questions. Good morning. First, I wanted to just a clarification, kind of a housekeeping one around backlog where I was looking at the role. And it looks like there's a fairly substantial add of some sort. Maybe it's the Synteract backlog or an FX adjustment or both. Is that the kind of the plug, I need to get to the $10.2 billion at the end of the year, it doesn't look like bookings by themselves would do it?

[Jason Meggs, CFO]

That's right, Dave. So you would add the Synteract and the Illingworth backlog to the core Syneos Health backlog and that's how you would get to the full $10.2 billion.

[David Windley, Jefferies]

Do you have numbers for those, or I guess I can just back into the total?

[Jason Meggs, CFO]

Yes. I mean, it's roughly I think in the half billion range for the combined.

[David Windley, Jefferies]

Okay. And then Alistair really both of you have talked about ramp to Bob's question about first quarter, ramp of revenue, backlog burn rate kicking in, in the second quarter. So, I wanted to understand that a little bit better in that, I think you're telling us that your site activation activity is running hot at least in part because of COVID, which sounds to me, like those are already starting to contribute in the first quarter, but the burn rate not really growing until the second quarter. So, if you just kind of flush that out a little more, I appreciate it.

[Alistair Macdonald, CEO]

Yes. Sure, Dave. Good to hear from you. Yes, you're exactly right. So, you get these types of activities going now, in the Q4 and into in 3Q and Q1. And then the real revenue starts to flow out of these trials, when those patients are enrolling, the monitoring is being done, the visits are being captured. So, that really starts to come on stream in the Q1 and Q2 for us, because that's when the COVID, we get that COVID acceleration coming through from the vaccine trials that we're running.

And remember, a lot of the work that we won in COVID is the majority of our work in COVID is on the treatment side, which run a bit more like regular trials. So, they're not starting off in one month and enrolled in the next. They are a bit more slow and steady. It takes a couple of months to get opened up and the enrollments a bit slower.

So, that spreads it out a little bit, which is why our backlog accelerates through Q2 into Q3 and not immediately as we hit Q1.

[David Windley, Jefferies]

Okay. Final question for me. Jason, you mentioned in your prepared remarks, continued focus on improvement in cash flow conversion, and wanted to understand if you're thinking on that, say, CapEx declining or just further improvement in DSOs? What do you think your levers are there to improve that percentage?

[Jason Meggs, CFO]

Yes. So, all those things absolutely Dave, in terms of continuing to focus on improvement of our DSO accounts, which is very important. You can see some of that coming through the end of the year here, particularly as you look at deferred revenue and what we've done there on the DSO. And we will continue to pay close attention to CapEx. But we're not trying to under invest in the business by any stretch. And then the below the line items, over the years, as we've put the companies together, we've had to spend money to do that. And launching ForwardBound, and we're just focused on all those areas as well.

[David Windley, Jefferies]

Okay. Thank you.

[Operator]

And our next question coming from John Kreger. Your line is open.

[John Kreger, William Blair]

Hi, thanks very much. Alistair, just following up on the comment you made about some of the COVID work a few minutes ago. What is the duration of those awards that you're seeing now across both clinical and commercial for clinical? Can we think of those as sort of a two to three years sort of typical study? Or will they burn faster from your impression?

[Alistair Macdonald, CEO]

That's a good question. I'll pass you over to Paul for some specifics in a second. But yes, they are faster, particularly the vaccine trials. I think, they're typically obviously going to run a lot faster. The treatment trials tend to have a bit more of a follow-up on them to see the overall long-term impact, talking about people with hepatic failure or ongoing long breathing respiratory issues that will need to be followed for a longer period. So, they're a little bit more grateful in terms of timeline.

But, Paul, your thoughts on the overall burn and kind of timelines for those trials?

[Paul Colvin, President, Clinical Solutions]

No, I think you're spot on there, Alistair, that again, the treatment trials, our experiences are more aligned to our normal burn rate. But certainly when you have the vaccine trials, there's a faster enrollment in both indirect and direct spend on those. So, I think that's the typical that we've seen. I'd say the bigger mix issues will just be around therapeutic area when you think about burn rate.

[John Kreger, William Blair]

Great, thanks. And Jason in the '21 guidance that you've given us for the top line, can you give us a sense about what you expect COVID work to contribute both in clinical and commercial?

[Jason Meggs, CFO]

Yes. Hey, John. Good morning. So yes, when if you look at the - we'll start with commercial, if you go back to one of the earlier questions, I think it was Eric's question on our quarter four bookings and commercial. We've seen some bookings on the COVID work that we've talked about in prior quarters, but nothing major yet from that. Those are still out for approvals.

So we're doing some pre-launch work that's coming through, but it's immaterial. But the larger bookings in the revenue from that would be, I would say more second quarter, even second half of '21. So not too much there, in addition to some of the work we've done, which has been less than probably $25 million in communications and consulting for COVID in 2020. So nothing material there.

And on the clinical side, not material in 2020. We talked about the awards being less than 7%, backlogs even less than 5%, close to 4% if even that, and the revenue has been quite low in 2020 as well, again are less than $25 million. That does go up quite a bit as we go through the trials that are now launching and starting.

We haven't guided exactly or provided insight into that. But it is a substantial part of the ramp from 2Q onwards, but we just haven't provided specific numbers on that.

[John Kreger, William Blair]

Great. Thanks. And then Alistair, maybe one more last quick one. With another year under your belt post-merger, what are your latest experience around sort of integrated wins? Are you seeing those go up or down as a percentage of the total? And are you still seeing those primarily in your sort of SMID client base?

[Alistair Macdonald, CEO]

Yes, it's good question. So integrated wins for me fall into a couple of categories now, broad based, large client kind of cross-sells, where we're penetrating customers in clinical with commercial particularly around communications and consulting and vice versa. But then obviously, the Syneos One platform continues to gain traction in the SMID base certainly. We've got one big partner who uses that model as well, which is exciting.

And then I think the area that we've seen the most growth, which is it goes back to the Tycho's question a little bit about where we saw this double is full service commercial. We saw full service commercial packages double in 2020 over what we've done in 2019. And I think that's a model that will gain traction more and more.

So, as we move into that more kind of full service, commercial launch phase, so yes, very excited about those things.

[John Kreger, William Blair]

Great. Thank you.

[Alistair Macdonald, CEO]

Thanks, John.

[Operator]

Our next question coming from the line of Patrick Donnelly with Citi. Your line is open.

[Patrick Donnelly, Citi]

Great. Thanks for taking my questions, guys. Maybe Jason, just on the reimbursable expenses part. I know, you talked about a remaining headwind in 1Q. Can you just talk about that sequentially, and then also kind of the split between commercial and clinical that feel pretty similar between the two?

[Jason Meggs, CFO]

Yes. Hey, Patrick, it's difficult to hear. You're cutting in and out. I don't know if it's my phone or not. But the reimbursable, yes, I mean, it's been disproportionately impacting commercial, but it's been impacting both businesses. Sequentially, when you think about just an organic basis, we've seen it step up quarter two, quarter three, quarter four. And we expect to see that again, in quarter one in terms of the sequential reimbursable. But both businesses still being impacted year-on-year from quarter one of last year where we were pre-COVID.

So, that's a big driver. If you sort of back out the reimbursable expense impacts in quarter one, the business is largely flat. So it's a pretty big impact as we outlined. And then we expect to see that continue to grow throughout the year to when we get, hopefully through everything first half. And we'll see it continue to go up in the back half.

But we don't anticipate, as we've said earlier, and I guess in quarter three call that we'll ever see it back to the percentage of our total revenue that it was pre-COVID, just given the changes in remote monitoring and remote detailing, et cetera, and the digital capabilities that are now in the commercial business.

[Patrick Donnelly, Citi]

Okay, that's helpful. And then Alistair maybe one for you. I know, you guys have talked about bringing the leverage ratio down to 3-3.5 by year-end. How should we think about capital deployment, M&A this year, given the balance there?

[Alistair Macdonald, CEO]

Yes, we want to remain opportunistic as we go forward. The priority for us is to continue to pay down debt. We've been bringing leverage down over the last two or three years on that basis. But if there are deals to be done that help us drive towards strategic goals like we did with Synteract, I think we're going to be interested in taking a look at those kind of tuck-in level deals, that can take us into a high growth market or can open up channels for us like anything with those though.

So the priority is going to be paying down the debt, obviously. But we would still be open to more deals like that or if there was something geographically, we wanted to do, we'd look at that as well.

[Patrick Donnelly, Citi]

All right. Thanks, guys.

[Alistair Macdonald, CEO]

Thanks, Pat.

[Jason Meggs, CFO]

Thanks, Patrick.

[Operator]

Now, next question coming from the line of Erin Wright with Credit Suisse. Your line is now open.

[Erin Wright, Credit Suisse]

Great, thanks. Can you talk about the sustainability of the strings that we've seen in real world evidence? And what the growth was in the quarter? And what your expectations are for the durability of that string in 2021, because that's been a theme across the CRO world lately?

[Alistair Macdonald, CEO]

Yes. Good morning, Erin. Yes, we got a ton of questions JPM around real world evidence. It is a very interesting space. We've grown a very good capability there from a smaller base and we saw a great growth last year. I think it was our fastest growing organic group. So, we're interested to keep hiring in that space, if we've had a lot of success bringing into that group from other CROs as well as pharma, and I think it's a really important space to hire people in from a Large Pharma who are typically the biggest customer of that kind of service. I do think it's going to be a growth area for the next several years, not just 2021.

And I think COVID will fuel that as well, there's a lot of patients that are going to need longer term follow up, either those that were in the vaccine trials, or those that are in some kind of deficit from a lung COVID - what they call lung COVID, or who have been in a trial to look at some of the treatment impacts. Because governments need to see lots more data on these patients, because a lot of it wasn't collected as they went through Phase 3 because of the speed.

So I think that will feel demand in the long-term follow-up real world space, as well as, people looking at data, using data to answer questions that come back from regulators. So, we see organizations who've got the capability to produce regulatory grade, submission packages. We've worked with constant AI on that kind of thing in the oncology space. So, the ability to pull that data together, and then look at the gaps that you still have to answer a question from the regulator, is going to be a big part of that real world growth as well.

[Erin Wright, Credit Suisse]

Okay, great. That's helpful. And then can you speak a little bit about the acquisition of Illingworth and how much that adds to top line growth presumably, that was all embedded in guidance and margin profile, as well as business customer base profile? Any sort of overlap there? And do you anticipate meaningful near-term stepped-up investment associated with your positioning around decentralized trial?

[Alistair Macdonald, CEO]

I'm going to try and remember all of that question in there. So I think I'll start with customer profile. So Illingworth, a pretty small organization in comparison to the largest Syneos. But one of the things that we immediately attract to these customer base, they work with all the big pharma's globally. So you got access to new contacts, new channels through that as well. So that's a good element of that.

Yes, we'll continue to investing with, obviously, we'll be bringing them on to some of our systems, but we're going to use them as an independent business unit. They obviously have some other CROs' customers too. So, we've had conversations with those. And it's quite a rare asset, so we'll obviously be delivering for other CROs as well as direct pharma customers.

But also being able to introduce that to our SMID customers, we work with Illingworth with outsource work to Illingworth, and had a good relationship, and they do great work, which was a big driver of the acquisition itself.

We'll continue to invest in it. Yes, the numbers have been incorporated into the overall guidance. And it's a fast-growing area, I think, fueled by COVID, but it was a fast-growing area before COVID as well. So, we want to make sure that we write that. As we implement it, as part of our decentralized trial approach, it's all great and while having the right technologies to do decentralized trials. You still got to go and check on those patients that are being goes at home. And Illingworth gives us the capacity and the reach to do that on a lot of trials and a lot of locations. So we're very excited to be able to bring that to customers as an option.

As you know, people are a little bit more reluctant to go to a trial site or go to a hospital for treatment. If it can be delivered at home, we can now do that. So we're excited about that. I think I covered it all. But did I miss anything?

[Erin Wright, Credit Suisse]

No. That was great. Thank you so much.

[Alistair Macdonald, CEO]

Okay.

[Operator]

And our next question coming from the line of Elizabeth Anderson with Evercore ISI. Your line is open.

[Elizabeth Anderson, Evercore]

Hi, good morning, guys. Maybe I just wanted to follow on to Erin's question. How are sponsors sort of thinking about some of the remote patient monitoring and remote trials as we move out of COVID? Would you say that it was sort of a stopgap measure, as they were willing to engage in the trial? I just wanted to see how that pacing had changed versus of moving towards a post-COVID world?

[Alistair Macdonald, CEO]

Yes. Hey, Elizabeth a great question. Obviously, it was used as a big stopgap, the high of COVID for sure. But now - and it's been something we've been pushing as Syneos, but also, as I think, as the CRO industry, for a while to customers that we can do remote monitoring, et cetera. We've certainly been very active on a CRO on these discussions, and talking directly with the FDA on it.

The reluctance has always been customers are worried about what the regulator will think of data, or that's been monitored more remotely. But I think a lot of those concerns are now put to bed, because this has been a big test, there's been no real that I've seen any way, no real big quality issues associated with remote monitoring. So it can be a strategy.

I don't think it takes over, I think it becomes an adjunct to a well monitored trial. So maybe you have several visits within an overall program that can now be done remotely or through telemedicine, rather than having to have a patient come all the way into the site, et cetera, particularly if there are a lot of visits, maybe some of those visits can be done remotely.

So, I think you'll end up with a hybrid, where you still have a lot of in-person trial workout at the site, supplemented by remote monitoring or alternatively or done from home in the home health channel. We can add services [Indiscernible]

So I think it becomes a - it's here to stay. I think, if you looked at trials, I think it's in 2019 3% of them had a high level of digital implementation, and I expect that to go to 15%, 20%, over the next four or five years. You have to design these things into new trials as it comes through. So yes, we'll see it more and more. But I think we handle those, like, as they're all very prepared to be able to deliver that.

[Elizabeth Anderson, Evercore]

It makes sense. Thank you.

[Operator]

Our next question coming from the line of Sandy Draper with Truist Securities. Your line is open?

[Unidentified Analyst]

Hi, thanks. This is Stan on for Sandy. Maybe we can keep the distributed topic going here. I'm just thinking about, obviously, distribution of product kind of puts the script on the quantity of sites that you're working with. How do you think about maybe the capacity to handle a more of a distributed trial type of environment? Is there a theoretical ceiling to how many trials you can handle that have a distributed component to them?

[Alistair Macdonald, CEO]

Good question. I don't think so. I mean, obviously, down the home health channel, Illingworth is a smaller organization, but we tap into big home health networks, big home health nurse network. So the capacity for that pretty good. And it can expand and scale very rapidly.

So, in that sense, no. In remote monitoring actually, it takes some of the burden down on the site. So I think it's by design, sorry. It's trial design mature, and maybe incorporate a little bit more remote and a little bit more home health. It probably takes a little bit more pressure off of the in-person monitoring, where those resources have been pretty thin over the years, and is always a bit of a talent war in there.

So, I think it probably helps rather than hinders in a way and helps us service more down, because you've got two or three channels potentially within any one trial rather than one single channel.

[Unidentified Analyst]

Got it. That's helpful. Maybe one more for me on Synteract. Just curious about your integration plans. Is the plan here to fully roll up Synteract to your core operations? Is it going to operate separately? And maybe how does the go to market strategy relate in the same way? Is it separate? Is it going to be integrated with the core Syneos offering?

[Alistair Macdonald, CEO]

Yes. I mean, we're holding it as a separate business unit, which services like emerging biotech group. And I think the Synteract team has been phenomenal since they joined us, in working out how they plug in.

What we saw in due diligence with them was a very different customer base, and their customer base wants that agility. They don't need the big kind of institutional hammer that Syneos Health can be sometimes. But they want non-nimbleness in the project team, they want that direct contact, high touch kind of engagement. And we do a lot of that with our SMID clients. But a lot of our SMID clients are quite big now, where they need that structure.

The Synteract group have that more agile boutique kind of CRO field, so we're trying to maintain that. Obviously, the back end, the G&A starting to be integrated now, and where we can support from a functional perspective, for these volatile biometrics, et cetera, that's coming together.

But also, one of the big elements of working with Synteract, they had a limited geographic footprint, really to Western Europe and the U.S., or North America, I should say. So, when they won work that was truly global, which they do win quite a lot of that they weren't able to service all that work in Japan, and Asia and Latin America. And what we do now for them is we are their network. So, if they want to study those, got a couple of million bucks worth of monitoring out in Japan or China or Argentina or wherever it may be, we now do that work for them. Those good revenue synergy there between the organizations as we build.

So, we'll keep it as a separate business unit targeting that high paced, high growth emerging biotech sector. And it is integrating well, so far.

[Unidentified Analyst]

Thank you.

[Operator]

Our next question coming from the line of Dan Brennan with UBS. Your line is open.

[Dan Brennan, UBS]

Great. Thanks for taking the questions. I may have missed it, Jason or Alistair. So just in terms of the outlook for '21, did you discuss kind of clinical versus commercial? What to expect there? And I know the burn came up a few times based in but just what would the clinical outlook imply with the burn rate as they go through the year?

[Jason Meggs, CFO]

Yes. Hey, Dan, we haven't talked specifically about clinical versus commercial. But when you look at, obviously, Synteract and work in the contributions we've talked about there on the M&A side, that's clinical.

And then if you look organically without all the divestiture activity that has happened, because we've had divestitures of Contingent Staffing in clinical and then in the medication [indiscernible] in commercial. Think about commercial being above the sort of organic growth rates that we've talked about in the business and clinical as well. So, that mean, that's kind of a steer in how we're looking at. It's a strong year as Alistair said, on both segments.

On the burn rate, on the clinical side, we've talked about how we bottomed in quarter two, in COVID that 87 has come up to that 92 and 93 range, typical seasonality in quarter one that we see every year where the burn rate can step down, plus, we've had strong awards, that just mathematically can cause it to step down. So, it'll step down some in quarter one, as we've outlined, and then start to recover again through Q2, and through the back half.

But not getting back up to that, 11% and 11.5% given we've seen our average study period extend from low 50-months to 60-months, given all the oncology and Phase 3 work that we're waiting. So, that's how we're looking at it, thinking about it on the burn rate side.

[Dan Brennan, UBS]

Great, thank you. And thanks, Jason. And then maybe within commercial, could you just give us a little bit more color on deployment and communication? How we're thinking about the outlook in '21 there? I know Veeva [ph] talked about some pharma sales headcount reductions that they're anticipating in '21. Are you seeing anything on that front? Or is that factored in the guidance? Thank you.

[Jason Meggs, CFO]

Yes, I mean, consulting has been growing, continue to grow just really strong business. The communications business has been performing really well, winning a lot of new work, and really starting to hit their stride there. And deployment solutions, I think Michelle has talked about, Alistair talked about, we've launched a record number of teams in 2020. And we'll continue to see that this year, and that's before we start seeing the Syneos One team come in that we've talked about the COVID opportunities that if they're approved.

So, really all businesses doing well, and we expect to grow. And then, Michelle, I'll let you talk a little bit about the reps and the Veeva discussion.

[Michelle Keefe, President, Commercial Solutions]

Sure. It's a great question. So, one thing I always say is that, there's more than one CRM company, so they have to have that managing market share between companies and CRM. I can't, speak to that. But the jumps that that means that there is a reduction in overall sales representative. I don't know if you can make that leap.

I think what we're seeing is a diversity in the types of people that Large Pharma needs to launch their brands, right. So, you hear us talk about nurse educators, clinical trial, liaison, reimbursement specialist, et cetera. With the way the FDA is approving new products, I think it was 57 in 2020, they tend to be more specialty products, and they're more complex. So, the types of people calling on customers is a much more diverse group of backgrounds.

And then when you layer on the fact that we have been very successful in enabling them to be fully digitally enabled and virtually enabled and orchestrators, and that managing their HCP interaction, we're finding that it's just a different type of commercial model launch. So overall, we have seen a lot of interest in the business, and we see folks, starting new teams with us. I think, as Jason said, we had a record number of teams start in 2020.

And also, because of our full service commercial, which is another piece of information, we have good line of sight between Syneos One and full service commercial to brands that we're currently doing clinical, and I'm sorry, consulting and communications work on that have not launched teams yet. And it's not in our backlog, and it's not in our growth of work target yet, because it's 12-months out and so we have good line of sight for that as well. So, we feel very strongly that our business, that's not the case.

[Dan Brennan, UBS]

Great. And then if I could sneak one more in. With the variants that have come up, there's likely a longer tail to a lot of the cooler work that's been done. Would you care to give us a view? And I think COVID bookings are less than 7% of total in '21. What do you think that takes out in '22 from the pipeline and less than 10% of bookings in 2022? What do you think that takes out for this year, given the pipeline and demand that you're likely seeing now for additional COVID work?

[Alistair Macdonald, CEO]

Yes, that's a good question. I think, with the variant that we're seeing, and work moving into long-term follow-up real world, I could see the pipeline staying roughly where it is for a quarter or two more. And then it depends what happens with the virus.

In all previous pandemics, like this, you see two peaks, and then it fizzles away. We've had that compete largely being lots of virus numbers dropping around the globe, either through lockdowns, or a little bit more naturally. So, there's a lot of environmental factors kind to kind of pick a number around that.

But I think we'll see a continued kind of RFP flow in and around COVID for several quarters, probably, possibly through the end of the year and maybe into 2023. It's just hard to call at the moment where that goes, because, if everybody gets a handle on it, vaccine rollout is successful does that demand drop away? I don't know. But we'll use the more demand for ongoing longer COVID lung, lung COVID trials. Again, I think probably yes, but I just don't know to what level. So, it's a really hard question to answer, I think.

[Dan Brennan, UBS]

Great. No, that was really helpful. Thanks again.

[Operator]

And our next question is coming from the line of Jack Meehan with Nephron Research. Your line is open.

[Jack Meehan, Nephron]

Thank you. Good morning. I wanted to continue on the vaccine work. It sounds like you've won some more business since the last time we spoke. Just to clarify, is any of this OWS-related?

And then just thoughts around, given we have the approved vaccines, and there's some variants out there, just the level of visibility into this work progressing, as it's built into the ramp? And any risk around cancellations, just your thoughts around that?

[Alistair Macdonald, CEO]

Yes. Thanks, Jack. I think the answer to OWS is no. We've worked on some of the OWS things in terms of functional support, data management, analysis, et cetera. And the new work that we're working on is it tends to be not that, it's smaller companies, non-U.S. entities, so kind of more global work.

Yes, with a profile, I mean, the majority of our work is on the treatment side. So there's obviously a lot of that going on, good access to patients with being good enrollment in those trials. On the vaccine side, I mean, I think the vaccine trials that we've got up and going are enrolling well. There's still a lot of - even though the numbers are trending down in several Western markets, you still got a lot of COVID in other locations. So these are global trials, where we're seeing a lot of enrollment in around the globe, Latin America, Asia, et cetera.

So, yes, I mean, if the vaccines work well, and there's vaccine equity, so all sites, all countries are getting a good vaccine program going distributed, then, yes, it'll be harder to find patience as we go out, which is great. That's kind of what we want, almost as a society. Well, that's what we do one as a society.

But we'll deal with that as we go. You got to stay flexible and be able to move to different sites where there's local operators or to countries where they have a high level.

[Jack Meehan, Nephron]

Appreciate it. And Jason, one clarification for the first quarter guide. For the two segments, appreciate all the qualitative commentary you gave, there's obviously a lot of moving parts with M&A, divestitures, FX, reimbursed expenses. I was wondering if you can just help us with maybe some revenue ranges for clinical and commercial for the first quarter.

[Jason Meggs, CFO]

So, I guess we're not officially guiding Jack by segment, just given the integrated nature of all we're doing these days, and how Syneos One and the different full-service product development capabilities are dropping in.

But I think, the way to think about it is, with reimbursable performing the way they are, these teams standing up on the commercial side. Think of that sort of flattish to down a little bit, sequentially, just given seasonality and then clinical is obviously going to be when you think about core Syneos plus the acquisitions.

[Jack Meehan, Nephron]

Yes. That's helpful.

[Jason Meggs, CFO]

Okay. I mean, I think that'll help you softer getting to the range there.

[Operator]

That's all the time we have for questions today. I will now turn the call back over to Mr. Alistair Macdonald for closing remark.

[Alistair Macdonald, CEO]

Okay, thank you. So our sincere thanks to the entire Syneos team for all they've done in the face of these unprecedented conditions that we've faced over 2020. We remain very confident in our market positioning, and look forward to strong growth and profitability in 2021, as the recovery from COVID-19 continues.

So thanks for your attendance today, everybody, and for you continued interest and investment in our organization. Please be safe. Have a great day and be good. See you soon. Thank you.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all disconnect.