ICON PLC

NASDAQ:ICLR

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to today's ICON plc Q4 2020 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, and that's Wednesday, the 24th of February 2021.

I'd now like to hand the conference over to your first speaker today, Jonathan Curtain. Please go ahead, sir.

[Jonathan Curtain, executive]

Thanks, Jan. Good day, ladies and gentlemen. Thank you for joining us on this call covering the quarter and full year ended December 31, 2020. Also on the call today, we have our CEO, Dr. Steve Cutler; and our CFO, Mr. Brendan Brennan, and we are delighted to be joined by Colin Shannon, Chairman and CEO of PRA Health Sciences.

I would like to note that this call is webcast and that there are slides available to download on our website to accompany today's call. Certain statements in today's call will be forward-looking statements. These statements are based on management's current expectations and information currently available, including current economic and industry conditions. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with the company's business, and listeners are cautioned that forward-looking statements are not guarantees of future performance. Forward-looking statements are only as of the date they are made. We do not undertake any obligation to update publicly any forward-looking statement either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in SEC reports filed by the company.

In addition, as announced this morning, Icon and PRA Health Sciences have entered into a definitive merger agreement. This call will touch on the transaction. Please note, this call does not constitute an offer to sell or buy or the solicitation of any offer to buy or sell any securities, nor shall there be any sale of securities in a jurisdiction in which such offer, solicitation or sale was lawful prior to registration or qualification under the securities law of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting regulatory requirements of Section 10 of the Securities Act of 1933. In connection with the proposed transaction, ICON expects to file a registration statement on Form 4F with the SEC containing to a preliminary prospectus of ICON that also constitutes a preliminary proxy statement of each of ICON and PRA. ICON PRA will file other documents regarding the proposed transaction with the SEC.

Before making any voting or investment decisions, investors and security holders of ICON and PRA stock are encouraged to carefully read the entire registration statement and proxy statement/prospectus when filed and made available on each of our websites and at sec.gov. This presentation includes selected non-GAAP financial measures. For a presentation of the most directly comparable GAAP financial measures, please refer to the press release statement has the consolidated -- condensed consolidated statements of operations U.S. GAAP unaudited. While non-GAAP financial measures are not superior to or a substitute for the comparable GAAP measures, we believe certain non-GAAP information is more useful to investors for historical comparison purposes.

We'll be limiting the call today to 1 hour and would therefore ask participants to keep their questions to 1 each with an opportunity to ask 1 related follow-up question. I would now like to hand over the call to our CEO, Dr. Steve Cutler.

[Steven Cutler, executive]

Thank you, Jonathan, and good day, everyone. It's an exciting day for ICON and a significant industry milestone, as we announce that ICON has agreed to acquire PRA Health Sciences, one of the world's leading CROs with over 19,000 employees and offices in 42 countries. This strategic transaction brings together 2 high-quality, innovative, growing organizations with similar culture and values, combining to become a world-leading health care intelligence and clinical CRO.

With the addition of PRA, ICON will create a new paradigm for bringing clinical research to patients, offering expanded capabilities to customers, and growth opportunities for employees while delivering significant shareholder value. There are several key strategic reasons why we have decided to proactively unite our organizations at this time. First, by joining together, we will significantly enhance our operational scale, which is essential to meeting current and future customer demands. With broader and deeper service, geographic and therapeutic offerings and extensive data-driven health care technology, we can deliver enhanced solutions for all customers, increasing access to patients and reducing development time and cost.

The combined businesses will have over 35,000 employees across the globe, pro forma revenue of approximately USD 6 billion and will be #1 or 2 across all key clinical CRO market segments. The united companies have a highly complementary customer base through strategic partnerships with the majority of the world's top biopharma companies, providing a platform for sustainable growth.

Secondly, ICON and PRA share a common focus on leveraging data and applying technology to execute clinical trials and post-approval studies with the highest quality and speed.

The pandemic has accelerated the transformation of the clinical trial landscape and opened up significant opportunities to decentralize trials. We believe this trend is here to stay. And by integrating capabilities, including PRA's mobile and connected health platforms, real-world data and information solutions with ICON's global site network, home health services and wearables expertise, we can deliver truly differentiated, decentralized and hybrid trial solutions.

Continuing to build on our patient site and data strategy has been a primary focus at ICON. And with the addition of PRA's technology and expertise, we will innovate and evolve our strategy in this area, which will continue to be at the forefront of our strategic priorities. And finally, from a shareholder perspective, as outlined in our press release and accompanying slide deck, the transaction is anticipated to be highly accretive, delivering double-digit accretion in the first full year and growing to 20% plus thereafter. This will be driven by growth momentum, estimated annual cost synergies of $150 million and a combined effective tax rate decreasing to 14%, both to be realized in approximately 4 years.

We also expect to further leverage our industry-leading global business services platform to generate strong and sustainable EPS growth over the longer term.

ICON and PRA are proactively consolidating from positions of strength in an expanding market, which will enable us to take full advantage of the current robust industry demand as evidenced by the quarter 4 bookings reported by both companies. We are confident that our focus in the clinical development space will continue to engage our customers and drive strong growth over the longer term.

Our combined strength in delivering global functional and full-service clinical solutions is industry-leading, and we believe the need for these larger scale, flexible solutions will continue to grow. The complementary nature of our services will also present revenue synergies across our broader customer base. We see near-term opportunities in areas such as Central and Specialty Labs, the Accellacare Site Network, language services, home health, early phase, mobile health and data information solutions.

Most importantly, at the heart of both our companies are our people, and notably, ICON and PRA share a common culture focused on operational excellence, customer delivery, technology application and employee development. The strength of our cultures has been evident during the current COVID pandemic, where our people have demonstrated great strength and resilience.

As a combined company with expanded capabilities and expertise, we expect to offer employees exciting roles and significant career development opportunities within and across the key service areas and geographies in the company.

The combined company will be headquartered in Dublin, Ireland. I will serve as the Chief Executive Officer, and Brendan will serve as the Chief Financial Officer. Ciaran Murray will serve as the Chairman of the Board of Directors. PRA will nominate 2 directors to join the ICON Board, one of whom I'm delighted to say will be Colin.

Both ICON and PRA have a solid track record of delivery, and highly experienced management teams who have a strong history of integrating successful businesses. To ensure our continued success, we will harness the outstanding leadership and talent that resides in both organizations to deliver operational excellence and continue our focus and mission on patient-centered drug and device development.

Before turning over the call to Colin, I'd like to thank the ICON and PRA teams who put together this transaction over the last couple of months. They've all worked extremely hard, and we're very grateful to them.

And with that, I'll turn it over to Colin.

[Colin Shannon, executive]

Thank you, Steve, and hello, everyone. I would like to also echo Steve's enthusiasm for this historic day for PRA Health Sciences and ICON. I have been honored to serve as an executive at PRA since 2007, and I'm incredibly proud of the achievements of our 19,000 employees and their dedication to improving the lives of patients around the globe. I believe joining forces with ICON at this time presents a unique opportunity to create a stronger organization that is aligned culturally and is united in our missions and passion to deliver life-saving therapies to patients.

This transaction better positions both PRA and ICON to not only serve the companies of the market, but to work together to develop and build new patient-centered solutions in the future. PRA has always prided itself on being an innovator, and we believe the investments we have made in areas such as mobile and connected health, real-world evidence, data solutions and wearables will serve the new organization well as we move forward towards a more patient-centered focused industry.

I have talked frequently about the need to apply health care intelligence to enhance development, and I know Steve shares my vision to find better ways of leveraging all of our data assets around patient health care to better optimize clinical trial design and execution to maximize efficiency and speed to market for new drugs and devices.

Our respective organizations have shared heritage of building strong, long-term customer partnerships across all market segments, ranging from small-early-stage biotech firms to the world's largest biopharma companies. We intend to continue to focus on being a partner of choice across all these segments. I look forward to my continued involvement in the new organization as a member of the Board of Directors and will fully support Steve and the rest of our teams as they work through the integration of the businesses following the closing.

I would now like to hand the call over to Brendan.

[Brendan Brennan, executive]

Thank you, Colin. Firstly, I would like to cover the terms of the deal. Today, we are announcing that we signed a definitive agreement to acquire all of the outstanding shares of PRA in a cash and stock transaction, whereby PRA Health shareholders will receive $80 in cash and 0.4125 ICON common shares for each PRA Health common share. This represents an aggregate value of $12 billion with consideration consisting of 48% cash and 52% stock with a pro forma equity ownership comprised of approximately 66% ICON shareholders and approximately 34% PRA shareholders.

The definitive agreement has been approved by the Boards of Directors of both companies. The transaction is subject to the required regulatory approvals and customary closing conditions as well as the approval of ICON and PRA shareholders. We currently expect the transition -- transaction to close in Q3 2021. We expect to finance the transaction through a mix of cash on hand and new financing. Upon closing of the transaction, we expect our net leverage to be approximately 4.5x adjusted EBITDA, including credit for the $150 million of run rate synergies.

Both ICON and PRA have a long track record of effective execution, sustainable growth and increasing shareholder value. Using our shared management expertise, best practice operating models, synergies and efficient tax structures, we expect to create significant future shareholder value from full year 1. In terms of our longer-term growth outlook, we believe we can grow our revenues in the high single digits, supported by the strong market demand, our expanded relationships with large pharma, growing base of midsized customers and leveraging the continued strong biotech environment.

Both companies have a strong track record of EBITDA growth. And as we grow our top line, we will look to leverage our best-in-class support infrastructure to deliver adjusted EBITDA growth in the low teens.

As I mentioned, we are targeting annualized cost synergies to be in the range of $150 million, realized in approximately 4 years. And these will come from a number of areas, including optimizing business processes and IT infrastructure, facility-related savings, corporate costs and leveraging of our support service centers of excellence.

The blended tax rate of the combined business will be 17% at close and we are targeting to reduce this to 14% in approximately 4 years. This will support adjusted earnings per share growth in the mid-teens plus range. Overall, the combination of strong revenue and EBITDA growth will drive double-digit accretion in full year 2022, growing to 20% plus thereafter.

As we grow, we will continue to generate robust cash flows, which we expect will enable us to delever from 4.5x net debt to adjusted EBITDA to close to target of below 2.5x net debt to adjusted EBITDA by the end of 2023.

Our shared track record of delivering against our financial objectives gives us confidence in our ability to hit these financial goals, as does the strong momentum that both ICON and PRA bring into the union. This is demonstrated by our Q4 and FY 2020 results, which I will now talk to briefly.

In quarter 4 results, ICON achieved gross business wins of $1.285 billion and recorded $205 million worth of cancellations. Consequently, net awards in the quarter were a record $1.80 billion, resulting in a net book-to-bill of 1.42x. Full year gross business wins were $4.572 billion, and cancellations were $725 million, resulting in net business wins of $3.847 billion and a net book-to-bill of 1.38x. With the addition of these new awards, our backlog grew to $9.7 billion. This represents a year-on-year increase of 13.4%.

Revenue in quarter 4 was $760.2 million. This represents a year-on-year increase of 4.8% or 3.3% on a constant currency basis and 2.8% on a constant dollar organic basis. Full year 2020 revenue was $2.7973 billion. This represents a year-on-year decrease of 0.3% or 0.5% on a constant currency basis. On a constant dollar organic basis, revenue declined -- revenue decline was 1.7%. Operating income for quarter 4 was $119.9 million, a margin of 15.8%. This compared to 15.4% last quarter and 15.9% in the comparable quarter last year. For the full year 2020, operating income was $409.6 million, a margin of 14.6% compared to a margin of 15.4% for the full year 2019.

Net income for the quarter was $101.2 million, a margin of 13.3%, equated to diluted earnings per share of $1.90. This compares to earnings per share of $1.83 in the comparable quarter last year.

Net income attributable to the group for the full year 2020 was $348.2 million, a margin of 12.4%, equating to diluted earnings per share of $6.53. This compares to earnings per share of $6.88 in 2019. For the full year 2021, we are guiding for the ICON stand-alone business, revenues in the range of $3.2 billion to $3.3 billion, representing growth between 14.4% and 18% and EPS in the range of $8 to $8.50, representing growth of 24% to 30%.

With all of that said, operator, I'd like to hand back to you now for questions.

[Operator]

[Operator Instructions] And we will take our first question. Our first question comes from the line of Robert Jones.

[Robert Jones, analyst]

Great. And congratulations to both teams on the deal. I guess maybe just high level to start off. I think for most of us who've followed the space for a long time, there was always a view that kind of big CRO-on-CRO deals just haven't happened because of potential attrition on the customer and employee side and things of that nature. And I totally appreciate that there's clearly synergies to be had from this combination, but it does really seem to be driven a lot -- the logic, at least on the surface, seems a lot to be driven by scale. So I guess the question really is, why now? And then specifically, what capabilities do you think this combination brings to bear that will address specific evolving needs of the market?

[Steven Cutler, executive]

Yes. Robert, let me take that first. In terms of why now, this is not something that for us has just happened over the last few months. We've done, as you all know, we've been interested in this sort of transaction for some years now. And this has been a process that we've been involved in and have been looking at the market for over the last 3 or 4 years.

And as we think about why now, it really came down to a number of factors. One is the acquisition target. PRA have always been a highly respected competitor. We've admired what Colin and his team have done for many years. And so we always thought they were an extremely desirable asset, I suppose. They've been, as I say, a very good competitor over many years, and that's been important for us.

In terms of the opportunity, the complementarity of the fit in terms of customers, in terms of services, in terms of [ breadth ] deepening and strengthening our scale, it's a fit that works very well for us. They are a clinically focused CRO. We're really in the Phase I to late phase space and the data and technology around that. That worked well for us from a culture point of view. There was a really good fit, I think, between the 2 organizations. So it was -- from a fit point of view, it really worked well.

And then there's the opportunity, as we come out of the pandemic for how clinical trials are really changing and the opportunity to really get on that pivotal moment, I suppose, bring together 2 really strong organizations and take advantage of that opportunity. So we bring together really key capabilities. I mean, in terms of scale, it comes down to the key functional therapeutic and medical sort of areas, that's clear, but more so also in our technology. PRA brings some different technology and data opportunities and innovation to fit very nicely with ICON's site, patient and data strategy. Our global site network, our home health services fit very well with their mobile and health care platform. And we believe those combinations really offer us a huge opportunity to come out of this pandemic with a whole new way of doing clinical trials, as we called it, and we've called it as a health care intelligence organization, taking the whole data story to another level and really making clear changes in the way we run clinical trials and the way we improve the efficiency with which we do clinical ties. So there were a number of things coming together that really drove us to making the decision to bring these 2 organizations together.

[Robert Jones, analyst]

Okay. And I guess, maybe, Brendan, just 1 on the synergies, $150 million ramp over 4 years. Anything you can give us as far as the breakdown on where the synergies are coming from, the SG&A versus COGS? And then just anything on the ramp of the $150 million over the 4 years would be really helpful.

[Brendan Brennan, executive]

Sure. Sure, Bob. Yes. I mean we haven't nailed it all down yet, but to give you the kind of the broad book, certainly, we'll be looking at the global infrastructure and making sure that it's as efficient as it can be from an office footprint perspective. We'll be looking at harmonizing some of our software systems, obviously, which will give us some opportunity there. And as I mentioned in the notes as well, obviously, we'll be looking to kind of really leverage our operational centers of excellence from our support services point of view and really making sure that we, as a strong growth company, can continue to leverage SG&A really well as we go forward. So we're looking at all those areas for the kind of major buckets. We want to get into that, Bob, as fast as we can. But we think the 4-year time is a reasonable estimate about when we're going to get to the full amount. And of course, we'll make every effort to ensure that we deliver on those numbers sufficiently over time. So I don't -- the exact timing, we don't have quite yet, but certainly, we do feel very confident in our ability to get that number over that period.

[Operator]

And your next question comes from the line of Jack Meehan.

[Jack Meehan, analyst]

Congrats on the deal. I was wondering if you could provide a little bit more color as you were [ packing ] up the client base for ICON versus PRA. If you could just give us some color around customer overlap and where there might be -- where there was some overlap between the 2 companies?

[Steven Cutler, executive]

Sure, Jack, let me talk about that. And then maybe Colin might jump in. I think this is one of the advantages of the deal. We saw some really strong complementarity on the customers. We have -- we've now gone, as I said in my comments, to a majority of the top 20 pharma companies we have strategic partnerships with across the combined organization. We also have a very strong franchise within the important biotech market. And that's an area that Colin and I have been focused on as well. So we've seen continued strength in that market and continue delivery in that market. So as you look at it across the key partnerships, the key strategic partnerships, the complementarities, look, there is some overlap in some customers, and we'll work through that, but we don't see a huge amount of risk in that area. We see -- we have good relationships with those customers, and then there are customers that one or other of us have very strong relationships with as well. So as I say, it's one of the features of the deal from my point of view and one of the reasons for moving forward, in that we have such good complementarity on that space.

Colin, do you want to add?

[Colin Shannon, executive]

Just a brief, I was thinking about the fact that we've got such a well-diversified portfolio of clients, ranging from the largest to the smallest. I love the fact that Steve and his team are very focused on the innovations by the biotechs and helping support the larger clients. We're looking to structure an organization that actually meets all types of clients, because we know how important it is to get medicines to patients faster. That's really the determining factor here. And I think we all support that. And the great thing is, is that as we really looked at the whole client mix, it was, as Steve said, it was a very complementary mix. So it's a fantastic opportunity.

[Brendan Brennan, executive]

And if I could just add, Jack, to that, just to make a point that in the new organization, no individual customer will be greater than 10%. So again, it just speaks about diversification of the customer base.

[Jack Meehan, analyst]

Yes, that's helpful. And then you've touched on the cost -- the potential on the cost synergy side. I was wondering if you had any thoughts whether there could be some potential for revenue synergies over time? Specifically was thinking whether there's potential to do some more investment in the central lab and bringing work from PRA? And then just your thoughts on the data solutions business and whether there could be some potential there?

[Steven Cutler, executive]

Yes. I think, Jack, on the revenue synergies, we certainly see a significant opportunity there. I think, again, I mentioned in my comments, the lab is the obvious one, both the central lab and the specialty lab. Our Home Health Services group, which is growing very strongly at the moment. The Accellacare Site Network is going to dovetail, I think, very nicely with some of the technology and data, mobile and health connected data platforms that PRA bring. We really bring together a number of components on that decentralized clinical trial area that really give us, I think, a very compelling offering on that front. So I'm really enthused about the -- that opportunity. The revenue synergies are there, and we think that's going to be very strong.

[Operator]

And your next question comes from the line of Tycho Peterson.

[Tycho Peterson, analyst]

Real-world evidence is obviously part of the focus here. Can you just talk about how much exposure you think the combined company has to that segment of the business post close?

[Steven Cutler, executive]

Yes, Tycho, we have significant exposure to that and a significant opportunity to engage further on that through some of the technology and the data that PRA bring to the combined entity. It's going to be an area that we, I think, can press down on very significantly and move forward. Our late phase group, we believe, is -- really jumps up in the industry to within the top handful of providers. The real-world data and the real-world evidence data source that PRA bring to that through their various components is going to be really important to how we drive that segment forward.

[Tycho Peterson, analyst]

Okay. And then can you elaborate a little bit on your comments on leveraging the Accellacare Site Network, just how meaningful you think that could be? You mentioned it a couple of times.

[Steven Cutler, executive]

Yes. I mean, we have that -- that Accellacare network is growing. We have it global now with the acquisition of MeDiNova in Europe and, of course, the PMG sites in the United States. They contribute -- they're contributing increasingly to our overall patient recruitment numbers; certainly through the pandemic, they played a major role in that. And we see, as we build the decentralized model, having them as very much the central part of that -- because they're onboard with us, we have our people there -- is really going to be a way to sort of grease the skids with our decentralized trial network. And so that will be the basis for how we go forward there, adding, as I say, the mobile platform that PRA brings and allows us to really put together an integrated offering on the DCT, the decentralized clinical trial side of things. This is something that we -- obviously, we need to spend a little bit of time in pulling together. But all of the key components are there, and that will be a real strong focus operationally as we come together.

[Tycho Peterson, analyst]

Okay. And then lastly, CRO mergers have not always been smooth. Bob Jones mentioned the attrition risks. I'm just curious where you see any potential risks on the merger going forward?

[Steven Cutler, executive]

Well, we looked at the risks as we contemplated the merger. But overall, as we assessed the clear benefits, which I think we've outlined in terms of bringing in the new technology, the growth opportunities, the decentralized trials, the scale far outweigh the risks such as they are. That's not to say that there aren't risks, and we'll be working very hard to mitigate those through various plans that we have. We'll be putting together a dedicated team to do this. We'll be working very hard to make sure our employees understand what their opportunities are going forward. We'll be communicating with them on a very regular basis and then helping them to understand what part they play in it. We're also obviously emphasizing to our customers and to our employees that the work as it stands at the moment needs to continue, and that's a very strong focus. It's a focus across both our organizations, and it will continue to be 1 across the combined entity. So there are various tools and processes in place -- we'll put in place. We believe the integration is going to take a little bit of time. Certainly, we'll get a good chunk of it done, I believe, by the end of 2022, but it's going to go on beyond that, and that we'll be making clear decisions and communicating very carefully with our employees, and of course, with our customers, as to how -- as to what we're doing and why we're doing it. So it's -- as I say, I think we think, overall, the benefits far outweigh the risks on this. But we're not thinking this is going to be necessarily something that will be done tomorrow. It is something that we're going to take some time over. We're going to consider, and we're going to make sure that we continue to deliver on the current portfolio as we go forward.

[Colin Shannon, executive]

And just to add a little bit to Steve's comments, if you don't mind. When we were looking at this as well, we were thinking about the change that's happening within the industry. And the way that we're being innovative and forward looking, we believe that as both our companies are coming from a position of strength, there's no distressed asset here that needs to be fixed in any way. And so we're looking forward to bringing together 2 very good companies. And taking -- looking at how we can help in the marketplace and really driving that innovation and change. And I think what we're doing is going to actually have a very attractive offering and be a destination place for employees to want to join and be part of that evolution.

[Operator]

And your next question, sir, comes from the line of Erin Wright.

[Erin Wilson, analyst]

Great. Can you speak to how you're thinking about the FSP opportunity and how you're thinking about the growth prospects across that segment and how you can better leverage that, given it's a larger portion of PRA?

[Steven Cutler, executive]

Yes. I'll have a crack at that. And then maybe, Colin, again, will jump in. We certainly see significant growth, and we have seen very significant growth in the FSP space over the last 12 months or so, and we anticipate that will go forward. I think importantly, though, as you look at the FSP growth, it's the combination of 2, of having our product registration Phase II, Phase III business also being an important component and a significant component of our business. And the interaction -- an integration, to some extent, at least the sharing of resources between those 2 gives us that flexibility that I was talking about in terms of large-scale projects and customers putting together more hybrid solutions. So FSP will be a continued and a very significant focus for us. As an organization we'll be, by far, I think, the largest FSP provider in the industry. We're moving that to a new place. We're getting more data orientated. We're adding technology. We're differentiating ourselves in that space. And I know PRA have been very successful in that space as well. So it's an opportunity and an area that is going to be a key focus for us. Colin?

[Colin Shannon, executive]

Yes. Steve, you covered that nicely. I think the only thing I would add is that our goal is to supply the services the client needs. And we have got this large opportunity. And we don't try to make the client change their mind. We try to work with them. That's why it's strategic in nature. And we try to figure out the best way of having them to achieve their goals. We'll be able to utilize a lot of our internal tools to help drive productivity and other mechanism and gains. But with an improved service offering, it gives us more opportunity to expand the range of our services that we can actually provide to our clients. So we see opportunities not just in FSP, but across all service offerings, and we see a lot of opportunity to expand the whole of our client base.

[Erin Wilson, analyst]

Okay. Great. And then a broader question here. How did you think about this, weighing this versus smaller tuck-in deals, you obviously had some optionality from a balance sheet perspective. But do you think now makes more sense to be a bigger CRO with scale maybe with the global nature of clinical trials that we're looking at today than maybe it did several years ago?

[Steven Cutler, executive]

We do, Erin. Yes, we do. As I say, it's a combination of the right partner, which we believe we've got in PRA, I said they have been such a good -- strong competitor over the years. We know what a good organization PRA is. That was a key part of it. But it's also coming out -- we do see we're coming out of the pandemic. We can see the light at the end of the tunnel, and we do see it as a pivotal point for the way we're running clinical trials. People know what a clinical trial is now. I don't -- never heard so much public recognition of the role that our industry, obviously, the pharmaceutical industry, but our industry as well have played in the pandemic and the bringing to the market of the vaccines. And that, I think, is really -- and I think we'll look back on this time as being a really important time. And we think this is the right time to do a deal like this, to move our industry forward and the combination of these 2 companies, ICON and PRA, I think, really offer us a huge opportunity in the long term.

[Operator]

And your next question comes from the line of Eric Coldwell.

[Eric Coldwell, analyst]

I have several. Let's hopefully do these in bullet point form. Brendan, it looks like ICON will be moving to an adjusted EPS presentation from prior GAAP. I'm curious if you have any early clues for us on what the exclusions will be, what you will treat as non-GAAP?

[Brendan Brennan, executive]

Well, we'll look to be kind of more industry standard, Eric. But at this stage, we're certainly only thinking about kind of the big line items. I think it wouldn't be ICON if we put too many of them in, to be honest. So it will be deal costs, stock comp and amortization. They will be the big 3.

[Eric Coldwell, analyst]

Deal costs, stock comp and amort. That's about what I expected you to say. Leverage 4.5x. Did you say that was pro forma for the synergies? Or is that as reported?

[Brendan Brennan, executive]

That's -- well, that includes the synergies.

[Eric Coldwell, analyst]

Okay. So you're pulling the synergies forward into that leverage account?

[Brendan Brennan, executive]

Yes.

[Eric Coldwell, analyst]

Okay. And maybe one for Colin and Steve. Obviously PRA management, other than Colin being on the Board, notably absent here. I'm not sure, there could be a lot of stuff behind the scenes. But look, we highly respect ICON leadership. I think having continuity certainly has its benefits. On the other hand, not having top visible executives from PRA in management, unless I missed something, might that not increase flight risk for PRA in this incredibly hot CRO market, where there is growing demand for talent?

[Colin Shannon, executive]

Eric, let me take that. I mean, this is -- obviously, this is the initial announcement of the deal. So don't take the fact that we don't have any of the PRA execs on the call as any sort of reason for thinking they may not be part of the organization going -- we're going to do our assessment. It's going to be 4 to 5 months -- 4 to 6 months until we close. So we have a little bit of time to assess people's interest in continuing with us and how that -- how the organization will come together. And we'll be doing that in a very objective manner and making sure we have the best people. We have huge respect at ICON, as I said, for PRA, for their management team and we recognize what talent there is right across their organization. And so we'll be looking very hard and making sure that we have roles for all those people. And certainly, initially, in terms of the integration, we are going to go forward as 2 organizations. We'll come together over a period of time, but we want to focus on delivering what we have, and that's a really important factor for our customers. They are going to want us to continue to deliver. We're both delivering well on our portfolios, and we have good people who are doing that. Over time, we'll bring that together, and we'll focus the organization in that way, but we are going to make this a meritocracy rather than any sort of overrun by any 1 of the organizations.

[Eric Coldwell, analyst]

Very understandable. A couple of quick ones, apologize for hogging the mic here. But expected debt costs, Brendan, what's the weighted average cost of capital expected for the transaction?

[Brendan Brennan, executive]

Weighted average cost of capital?

[Eric Coldwell, analyst]

Yes.

[Brendan Brennan, executive]

About...do you want to chime in? Go ahead.

[Jonathan Curtain, executive]

Eric, it's Jonathan here. Yes. We expect it to be above our weighted cost of capital, so it'll be above 10%.

[Eric Coldwell, analyst]

Okay. And the debt specifically?

[Steven Cutler, executive]

That's referring to debt specifically, yes.

[Brendan Brennan, executive]

Yes. Sorry, Eric, what was the question on the debt?

[Eric Coldwell, analyst]

I'm sorry?

[Brendan Brennan, executive]

I'm sorry, can you just repeat the question on the debt side?

[Eric Coldwell, analyst]

Yes. No, look, we can take this off-line. I think I might be -- maybe we're on different pages with this one. I will actually cede the call now, I'm going to -- thank you very much. Good luck with everything.

[Brendan Brennan, executive]

Thanks, Eric.

[Operator]

And your next question comes from the line of Dave Windley.

[David Windley, analyst]

Congratulations to the teams. I want to start off, probably hope to hear from Steve and Colin both on this. But the decentralized trial capabilities that you list out on the slide are, I think, among the most compelling here. That said, it's unclear -- I mean it seems like we've certainly gotten stimulus to those types of trials in 2020 with pandemic and the need to navigate differently. I'm wondering what's your sense of clients' temperature to continue to aggressively embrace those types of capabilities and how the capabilities that you list on that slide can feed into that? And then in addition to that, how that might affect pricing of trials and perhaps cost synergy opportunities as you think about executing trials with fewer staff? So kind of a big question.

[Steven Cutler, executive]

Yes, that is a big question, Dave. I think as you quite rightly point out, and I'll cede to Colin in a minute on this one, because I know he has a clear perspective on it. But we have, as I've said, seen a shift in the way we run clinical trials through the pandemic. We really -- I think all of the industry sort of turned on a dime back around about a year ago when the whole pandemic hit us within a couple of weeks, and we were moving from very much on-site sort of monitoring operations to remote monitoring, and the whole decentralized trial conversation, if you like, I think, has jumped forward probably 5 years. I don't think we're going back. I really don't. I think our customers, we're seeing unprecedented, it's an overused word, I know, but unprecedented interest in our offering on the decentralized trial. And even in areas like oncology, where you wouldn't naturally think there's a decentralized trial opportunity. But even in those areas, and of course, in the more chronic ambulatory-type trials, there's a huge amount of interest across our whole customer base, from the larger companies to midsize and the biotechs in how we run these decentralized trials and how we can do them in a way that is much more patient-centric going forward. So those capabilities, as you outlined, really do put us in, I think, a very strong position in a market or, I guess, a segment of the market that is, I think, going to advance significantly over the next, realistically, 3 to 5 years. We're not moving to 100% decentralized trials in the next 6 months. But it is going to move, I think, much faster because of the pandemic. And even as we go through the aftereffects of the pandemic, we see pretty much every trial we start now has a component of off-site monitoring, remote monitoring or decentralization, to some extent or another, and Colin can talk about some of the trials they're doing that are fully decentralized in a pivotal setting. So in terms of that, we see that movement, and we don't see it coming back anytime soon. And in terms of pricing, the pricing will probably be different. But I think there's certainly an opportunity to maintain or even improve margins in that space because we won't be doing some of the really inefficient stuff that we used to have to do, traveling to sites and charging customers for that. We'll be much more effective and efficient in the way we monitor data. I think that has huge opportunities for us from a margin point of view. It allows us to be much more effective in the way we utilize the resources we have. We've talked about the large-scale trial that we just run for our largest customer and how we were able to monitor that study remotely. Sites in Argentina being remotely monitored from some of our people in Asia. That brings us a huge opportunity, I think, to be more effective and efficient and more effective from a pricing operation for our customers as well. So we can do it cheaper for them. We can do more trials because we're better utilized, and we can do it more effectively and at a more sensible and a more reasonable and a stronger margin going forward. I'll stop there and maybe let Colin jump in.

[Brendan Brennan, executive]

I mean, Steve, that was quite thorough, but the only thing I would really add there is that one of the key components here is back to this health care intelligence, I mean what we're producing is now how to get a trial optimized and done as quickly and with as little labor as possible. And using this combination of expertise with data and mingling that together, gives us a really quite unique offering. But we've been able to, with this union, accelerate components that may have taken us years to build out equally by ourselves. And it's the same with ICON. So together, we're getting things done faster, so we can take advantage of these opportunities. We've seen very, very strong pipelines coming through. We had a record Q4 book-to-bill. I was delighted to post an old-fashioned 605, a 1.42, I think, that just is a testament to the work volume that's out there, and we're seeing that continue. So I think that we're nicely positioned.

[David Windley, analyst]

Great. I appreciate those answers. A kind of splitting the hair one here, probably for Brendan. In terms of the adjusted EPS that you answered to Eric's question, he stole that one from me, but also wanted to make sure I understood the before and after as relates to your accretion number. So when you say double-digit accretion and 20% longer term, should we be starting at ICON the way you report today? Or starting at ICON adjusted for the things that you are going to adjust, and then add the 10%?

[Brendan Brennan, executive]

With the adjustments in, Dave, to put too fine a point on it. So we can take that off-line as well, but with the adjustments in, so a like-for-like basis.

[Operator]

And your next question comes from the line of Sandy Draper.

[Alexander Draper, analyst]

And I'll echo my congratulations. And I guess the first question, I don't think this -- Brendan, you addressed this. Are there any collars on the stock component in terms of limits to the upside or into the downside?

[Brendan Brennan, executive]

No. No, Sandy, there's no collars of that nature.

[Alexander Draper, analyst]

Okay. Great. And then second is maybe an ICON-specific, and I know they're a little bit of PRA numbers and look like the fourth quarter was solid. I don't have any guidance there. But Brendan, when I look at the guidance that you gave for ICON stand-alone, it looks like if I do a quick back of the envelope, you're not really assuming any notable improvement in the burn rate. One, just wanted to make sure that's right? And so should we think about sort of what we saw in the fourth quarter and where you're projecting as sort of the new level? I was thinking maybe there would be potential for that to lift up once we get through COVID, just any comments around that? And then I don't know, Colin, if you're willing to make any comments about how you guys are seeing the burn rate and recovery as we move past COVID?

[Brendan Brennan, executive]

Sandy, yes, no, I mean, we -- obviously, we're very pleased with the guidance we're putting out there today, 14.4% to 18% uplift on revenue, I think, is a pretty good performance, even out of a down year when we accept that. The conversion rates, I think, will probably be faster in the first part of the year. Obviously, we'll look to see continual revenue growth as we go through the year, but we do anticipate as we, kind of, are completing out on some additional vaccine work, that will burn a little bit faster into our overall conversion. And so the fashion of the burn rates, you can do the math on how it pans out for the year. And it is not dissimilar as opposed to the exiting position, but I think it will be faster in the first half versus the second half, Sandy. So I hope that helps, and be happy to take any additional questions offline on that.

[Operator]

And your next question comes from the line of Elizabeth Anderson.

[Elizabeth Anderson, analyst]

Congrats on the transaction today. Can you maybe talk a little bit more like tactically about how the transaction came together? I guess, obviously, you had your net cash position and were coming out of COVID, but was it a competitive situation? Did you -- how long had you been discussing it? I think that would just help us get some more context around the decision for right now?

[Steven Cutler, executive]

Sure. Sure, Elizabeth. As I said, this goes back about 4 years. I came into the role early 2017. And we -- I think it's a matter of record, we had an interest in another CRO early on in that time. And that really triggered off for us an ongoing review of the marketplace, believing that ultimately a transaction such as this is the right thing to do. And we've made assessments of really all of our key competitors over that time in a way that I think was prudent and sensible and highly considered.

As we came to early 2020, Colin and I spoke to each other and recognized that there was a nice fit here from a cultural point of view and from a clinical focus point of view, and we were both 2 strong organizations. Suddenly, the pandemic intervened, and things were -- we were sort of busy sailing our own ships for that -- those middle months in 2020, but we came back to it as we saw a light at the end of the tunnel and then through the pandemic, and we quickly realized that with the complementarity on customers, the complementarity on services, the ability to uplift ourselves and get deeper and broader in key geographies. Really, this was a really compelling argument for bringing us together. And so that's really how it happened. We started talking. It's been a process that's taken, not a huge amount of time once we really got down and got to it, because the obvious benefits were so clear to us from the start, be they the cultural fit, as I say, the service fit, the technology fit. PRA, as I say, bring to us and bring to our site network and our home health area, significant revenue synergies that we just think were just too good to ignore. So that's kind of the process we went through. It was -- it's not been something that we just suddenly woke up last week and decided to do. This has been a process, as I say, over a number of years where we've been considering this. And we've really assessed the market very thoroughly.

[Elizabeth Anderson, analyst]

Got it. That's helpful. And then in terms of just your guidance raised for 2021, can you talk about what are the biggest changes in terms of the drivers versus the guidance you gave in January?

[Brendan Brennan, executive]

Yes. Elizabeth, I'm going to take that. It's Brendan here. We've seen, obviously -- and one of the reasons we didn't give detailed guidance in January was we were saying that we wanted to have a little more time, as we got to know some of the new customers we're working with, we've gotten better visibility over those last couple of months. And certainly, in terms of some of the vaccine trials we're working on, the ramp of those into revenue. And I described the conversion levels and patterns we're going to see out of those, I suppose, just a little while ago. But also we had a really, really strong Q4, which is great from a business win perspective, and we saw it across in PRA as well, which is excellent. And so obviously, that gave us a little more comfort coming into the year as well. So we took that extra time to really hone down the numbers and make sure we were in the correct ballpark, and we're very confident with these numbers that we're putting out today.

[Operator]

And your next question comes from the line of Donald Hooker.

[Donald Hooker, analyst]

I wanted to maybe get an assessment of the broader marketplace in the context of this combination here. What percent of the market do you think of the CRO outsourcing market is outside of the top 5 or 6 CROs now? And what do you think are -- we can see the public CROs, obviously, but what do you think the -- how do you think that the private CROs, the smaller CROs, maybe have performed over 2020, just as a point of comparison, with all the changes?

[Steven Cutler, executive]

Yes. I'll take a crack at that, Donald, and then maybe Jonathan Curtain, who looks after that sort of data and Colin might want to jump in. In terms of the broader market, we still see obviously growth within that market. And we see the larger CROs, the top 6 or 7 taking the majority of that growth. So it's not that the smaller CROs aren't growing, but I don't think -- we don't believe they're growing at the same rate that the top echelon of CROs -- as I say, the top 6 or so are growing. So we believe being part of that top echelon and continuing to being part of that, really puts us in a really good position to take the majority of that market growth.

In terms of the percentage of the market that's outside of the top, this is still, as you would know, a very competitive mark. There's no question about that. There are many hundreds of CROs around the world. I think the top 5 has probably got in the vicinity of 50-ish percent of the market. We can argue about what those -- what that number is. I do think that's going up over time. And as I said, we want to be and believe that we're in the best -- we'd be in the best position for our shareholders, our employees -- and our customers, quite frankly, if we stay and we continue to grow within that top echelon of companies. There's certainly further opportunity, and that market continues -- as that market continues to grow, I think for us particularly, to even accelerate our market share cake, if you like, as we go forward. Colin, Jonathan, anything to add?

[Colin Shannon, executive]

Yes. Yes. I'll add a little bit there, Steve. Thank you. One of the other aspects here is that with the size of our organization, pharma are massive, and they want to partner with companies that they can keep up with them and have the capability to continue to grow without eating into that beyond 10%. So we'll be able to actually be able to grow a lot more substantially with some of the larger clients. I mean and you're right to point out, there are thousands of CROs that are not in the top tier. And it's a very fragmented industry. But to Steve's point, we continue to see the larger ones able to offer more. And there's all the work that's done by pharma just now gives them an opportunity to start looking at the larger companies to share some of the workload off them.

[Jonathan Curtain, executive]

Hey Don, it's Jonathan here. Sorry, not a huge amount to add to that. I think probably what we've seen -- and we've seen this even from an evolution of our backlog perspective is I guess, the broadening and the, I suppose, diversification amongst our customer base. And I think there's no doubt as we look around the market over the last number of years, we've seen mid-sized customers -- -- who potentially, maybe if you go back, say, 10 years ago, mightn't have necessarily wanted to work with the larger CROs -- changing their mindset, because patients can be hard to find in certain therapeutic areas. And they recognize that the scale and the assets that larger CROs have and indeed the focus that they're now giving on that type of customer will cater for their needs. So it's a rather complementary element to our services and our offerings alongside those larger customers.

[Donald Hooker, analyst]

Great. And a quick follow-up maybe. With all the operational disruptions over the past year, I see you guys reported very strong -- both CROs, PRA and ICON reported very strong awards for the quarter. Was there a significant amount of rescue studies or any kind of takeaways or studies that were struggling to restart that were takeaways, have you seen that yet? Or maybe that's something that might come this year? Or how do you think about rescue study opportunity?

[Steven Cutler, executive]

We haven't been -- I can't say we can say we've seen a significant uptick in rescue opportunities, Donald. They come along every now and again. The growth, really, I think, has been -- obviously, there's been a COVID component, a vaccine component for us. Colin might want to comment about what he's seen. And then it's been not -- outside of our top 5, the small and midsized, the biotechs have been very strong for us in growth. Not -- but the rescues -- they may come because they tend to come after -- with a lag period, but we certainly haven't seen, I think, any significant uptick from what our usual sort of rescue rate is.

[Colin Shannon, executive]

I echo that, Steve. There was nothing substantially different from our mix as well. So I agree with Steve.

[Donald Hooker, analyst]

Congrats on your merger.

[Steven Cutler, executive]

Thank you.

[Jonathan Curtain, executive]

Thanks, Don.

[Operator]

And your next question comes from the line of George Hill.

[George Hill, analyst]

I have a couple of quick ones, since I think a lot has already been covered. Is number one, I didn't see if there was a breakup fee on the deal. Number two, I would ask if you guys could comment quickly on if you see any significant white space in the combined company's offering post the transaction close? And lastly, I guess, Steve, I don't know if you would comment on how much of the market do you think is not being realized due to people not being able to readily access clinical trials or trial locations? You talked about kind of the explosion in consumer recognition of the trial process. But I'd be interested in kind of how you guys think about how much of the market is untapped just because people are hard to get to?

[Colin Shannon, executive]

Well, the data analysis that we always look at really shows that approximately only 5% of eligible patients participate in a clinical trial. So there's huge opportunity. And as Steve mentioned earlier on, the pandemic and all of the clinical trial talk has actually been quite a global education process. We can see that changing dramatically over time. We want to help support that. We help that -- we think that, that will help speed up the whole process of getting clinical trials done. But it's going to be a joint combination of us working very closely with our partners and clients to ensure that we streamline that approach. And together, we can achieve medicines to patients faster.

[Steven Cutler, executive]

Yes. And I'd concur with Colin's comments there, George. In terms of your second question, white space that we don't cover, there's very little white space we don't cover and really some very significant depth across medical segments. We are a clinically focused, and we will be and continue to be a clinically focused organization. We think that brings great focus and strength to our organization. And so that's an area with a very significant factor as we contemplated this transaction. There's really not much we can't do in that clinical space. And that's -- having said that, there is always further innovation, further technology and we'll be open to those sorts of opportunities as this, particularly on the decentralized trial market, moves forward and as that momentum continues into the future. We'll be active in that space, making sure that we are engaging with the best providers and even potential further acquisitions around that, so that we can deliver strongly. Brendan, do you want to comment on the breakup fee?

[Brendan Brennan, executive]

Yes. Just maybe to point out, George, at this point, we haven't disclosed those as yet. There are breakup fees. They will be included in the proxy. So watch this space, and you'll be able to find them.

[Operator]

And your next question comes from the line of John Kreger.

[John Kreger, analyst]

Steve and Colin, can you guys just elaborate a little bit more on how the combined company will be able to better serve emerging biotech? That's the 1 category where it doesn't necessarily seem obvious that enhanced scale is necessarily helpful. Do you agree that more innovation is coming out of emerging biotech? And how does the combination allow you to sort of address that market better?

[Colin Shannon, executive]

Yes. Thanks, John. I'll start this one first because Steve and I talked about this because we both realized that this is a very important element because a lot of innovation comes here. And we are absolutely going to ensure that all of the clients that we currently work with and all of the emerging biotechs that we work in terms with our models and the way we approach it, we're going to actually think about how we manage to continue to do that so that they realize that they're not going to be lost in a shuffle, they're going to get the amount of attention that they would get for any client. We recognize that their innovation is really very powerful, and we're going to work on and continue to grow that part of our business. It's been a very, very long piece of our key components for many, many years. And Steve completely values what we've done in that area and wants to continue doing that and expanding it even further.

[Steven Cutler, executive]

Yes. And John, I'd concur with what Colin just said. But I'm not sure I'd agree with your perspective around enhanced scale not being useful for biotech. Many of these companies, smaller companies are in the rare disease areas. And when you're in the rare disease areas, there's a real benefit to being able to broaden and deepen in terms of access to patients. So there's an opportunity, I think, there to really make a compelling offering to our biotech. We've shown that. I mean, the PRA guys have been really preeminent in that market. ICON has also been very successful in that market. And we've shown we can deliver. The old sort of model, the old sort of mantra of we're too big and we don't care, has really gone away, I think. We've shown, I think, operationally and delivery-wise that we really can put it out there and deliver for these biotech customers, particularly around their challenging and complex trials.

[John Kreger, analyst]

Great. And maybe 1 quick follow-up for Brendan. Brendan, as you try to model out the combined company in, let's say, '22, does COVID-related work, is that about the same as '21? Or does it change significantly? What's your sort of view of sort of the durability of that type of work?

[Brendan Brennan, executive]

Well, certainly, John, at the moment, we're seeing quite a bolus of work on that side. A lot of that, of course, is vaccine development. And as we know, there are a lot of variants in the market. So we still aren't seeing, I should say, variants of the actual virus. But -- so we are seeing still add-on or additional development. So certainly, for the foreseeable future generally during 2021, we do expect it to be a reasonable chunk of our business wins. I think it's probably fair to say as vaccinations increase globally and we are seeing in some of the more advanced countries, there are drop-offs in the numbers of new patients obviously getting the virus. So we would expect it to tail out somewhat in terms of the vaccine development during '22. But I think COVID and COVID treatment is going to be something that's a significant part of our business for the foreseeable future.

[Operator]

And your next question comes from the line of Juan Avendano.

[Juan Avendano, analyst]

Congrats on the deal. My first question is CRO business is relationship based. And given what we've seen in previous large CRO mergers, there can be some significant employee project management turnover as well as biopharma account turnover during the integration. So can you talk about what are you doing to minimize any potential near-term disruption? And what ways will this merger be different than the last 2 CRO mergers that we saw in recent years?

[Steven Cutler, executive]

Yes. I'll talk about that, Juan. We obviously recognize the risks there. And we're putting in place detailed integration plans to address them. And then one of those areas is the employee turnover and making sure that we're minimizing that. So there's a number of things we're doing. Obviously, the usual things around regular communication, making sure our employees know what opportunities there are and where we are in the whole integration process, making decisions in a timely fashion, letting them know that they have a role within the company. This union is really about growth. We're going to be looking at how we grow the company. And so there'll be -- as an employee of the combined entity, there will be more opportunities for people going forward. And that's something that we want to emphasize to them as well. And then in various situations, we'll be putting in place retention incentives and the normal sort of course of event things. We'll be making sure that people understand what their role is, what the time lines are, what we expect of them, et cetera, et cetera. So overall, I would say to our employees, there is going to be huge opportunity, I think, in this organization going forward. And this is a story of growth rather than anything else. And we want people to be with us. And I think, as Colin mentioned earlier on, as the preeminent clinical CRO, we believe we'll be able to attract the best talent in the industry, particularly as we put together our -- a compelling and integrated, decentralized clinical trial, where we will be allowing people to work in probably a different way going forward. The old story of CROs on planes 4 days a week, we'll move. We'll be able to move faster, I think, on that. And to give employees, there'll be -- clearly, there'll be work to do, but it'll be less -- perhaps less burdensome, being at airports and all of those sorts of things. So those sorts of opportunities, I think, are going to be significant within our organization.

[Juan Avendano, analyst]

And a follow-up. As you look into the combined company portfolio, do you expect to divest any businesses? And specifically for you, Steve, do you view PRA's Data Solutions business as a core asset to the combined company? And any early thoughts on what ICON could do to leverage PRA's Data Solutions business?

[Steven Cutler, executive]

Yes. We're going to assess all of it as we constantly assess all of our business, and it's way too early for us to be making any statements around that one. As I've said, I think, a number of times on the call, we see great complementarity in terms of the technology and the platforms that PRA bring to us, and that includes the data sources and combining those data sources with our one-view solution around our labs and our CTMS, data opportunity, to us, looks really compelling. And so we're going to be assessing that really over the next sort of 6 to 12 months, making sure we're putting that in the right place and then bringing that to the benefit of our customers. So while we always assess our businesses, it's too early to make any statements on that.

[Operator]

And your next question comes from the line of Dan Brennan.

[Daniel Brennan, analyst]

Great. Maybe just 1 that was asked earlier, but I just wanted to get clarification. So just on the interest cost, Brendan, on the $6 billion of debt. I know Eric's asked it, but just wondering if you can disclose what that is in the term and the other secured indebtedness?

[Brendan Brennan, executive]

You're just -- your question is around the interest cost, is it Dan? Sorry, I didn't quite [ catch with my ears ]...

[Daniel Brennan, analyst]

Yes, exactly, what kind of rate should we be assuming on the debt?

[Brendan Brennan, executive]

Yes. We're kind of in the high 2s on that. I mean, we'll obviously move. We've got a bridge facility in place and we'll swap across to longer types of debt. But the market is very good for debt at the moment, as you well know, Dan. So at the moment, we're looking in the kind of the high 2 range, 2.75, that kind of ballpark.

[Daniel Brennan, analyst]

Got it. And then I know it was asked earlier too on the $150 million of cost savings, and you said you'll give us more color on that. But I'm just wondering, if you look at just PRA's SG&A, obviously, just applied to that, that would be meaningful. But obviously, you're getting some savings on synergies on the combined scale and purchasing power, but can you give us any way to help think about some of the components of that? I know in the deck, you've got some bullet points here, but I'm just trying to think through that number conservative or not, just would be helpful to get some qualitative color?

[Brendan Brennan, executive]

I think, Dan, what we will say about that is it's very achievable, is the way I'd put it. We've looked at the numbers, obviously, on the combined business. There's a lot of infrastructure in the combined business. There's a lot of overlap of IT systems. And as we said, we want to leverage our centers of excellence around how we run support services. So I do think it's a very, very achievable number. And certainly, in the time frame that we've given it there, it's very achievable. So we feel very confident about getting to that number across those bullets.

[Daniel Brennan, analyst]

Got it. And then you talk about a high single-digit revenue growth rate for the combined entity and that's before any potential revenue synergies. What's assumed on that? Like when you think about ICON stand-alone and PRA stand-alone, are they both high single digit? Just kind of wondering how you're thinking about the base businesses? And then could you give us any color at all about why you're not going to include revenue synergies? Any way to ballpark? I know you've given a lot of discussion points around what they could be in terms of the qualitative factors, but how would you potentially size the revenue synergy?

[Brendan Brennan, executive]

Well, Dan, on that particular one, we do see the business is a high single-digit growth in both stand-alone, and obviously, the combination should be in that ballpark as well. I think we're -- as you know, Dan, folks who think about things in terms of making sure they're absolutely doable. So while we get in and we integrate these businesses, we do see opportunities. Steve has pointed out that we have a lab business. They have data elements that we don't have. Likewise, we have the imaging. They have a lot more early phase. So there definitely is cross-sell opportunities. But I suppose what we're saying in the first instance is, let's get to those high single digits and make sure we're firing on all cylinders there, and then we'll look to that as additional leverage.

[Operator]

There are currently no further questions from the phone lines.

[Steven Cutler, executive]

Okay. Well, thank you, operator. Let me just close by saying the union of ICON and PRA brings together 2 high-quality growing organizations with similar customer-centric cultures to create a world-leading health intelligence and clinical CRO. Our focus is on executing trials from Phase I to post-approval studies with the highest quality and expertise, and we'll leverage innovative strategies to accelerate development through the use of new data and technologies, while remaining focused on delivering our current projects.

So with that, again, I'd like to thank both the PRA and the ICON team who worked so hard over the last few months to bring this deal together and also a shout out to all of our employees, both PRAs and ICONs, for delivering such strong results over the course of 2020. Thank you all. Have a great day.

[Operator]

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