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IMS Health Q1 2007 Earnings Call Transcript

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TRANSCRIPT SPONSOR

IMS Health, Inc. (RX)
Q1 2007 Earnings Call
April 18, 2007 5:00 pm ET

Executives

Darcie Peck - VP of IR
Dave Carlucci - Chairman & CEO
Leslye Katz - CFO
Gilles Pajot - COO

Analysts

Steve Halper - Thomas Weisel Partners
Doug Sao - Lehman Brothers
James Kumpel - Friedman, Billings, Ramsey
John Kreger - William Blair
Terri Powers - Robert Baird
Steve Unger - Bear Stearns
Bob Willoughby - Banc of America Securities
Sandy Draper - Raymond James
Alex Alvarez - Goldman Sachs

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the IMS Health First Quarter 2007 Earnings Call. During the presentation, all participants will be in a listen- only mode. Afterwards, we will conduct a question- and- answer session. (Operator Instructions). As a reminder, this conference is being recorded, Wednesday, April 18, 2007.

We will now turn the conference call over to Darcie Peck, Vice President, Investor Relations. Please go ahead.

Darcie Peck

Thank you, Janie. Good afternoon everyone, and welcome to the IMS first quarter 2007 earnings conference call. With me today are Dave Carlucci, our Chairman and Chief Executive Officer; Leslye Katz, our Chief Financial Officer, and Gilles Pajot, our Chief Operating Officer. Dave and Leslye will discuss highlights of our first quarter results and discuss our guidance for the full year of 2007.

As in the past, we've posted slides on our website, and I would encourage you to view these during Dave and Leslye's prepared remarks this afternoon. A question- and- answer session will follow these prepared remarks.

Now, as a standard procedure, let me read you our Safe Harbor provision. Certain statements we make today are forward- looking, within the meaning of the U.S. Federal Securities Laws. These statements include certain projections regarding the trends in our business, future events, and future financial performance.

We would like to caution you that these statements are just predictions, and the actual event or results may differ. They can be affected by inaccurate assumptions, by known or unknown risks or uncertainties, consequently no forward- looking statement can be guaranteed.

We call your attention to our first quarter 2007 earnings release issued earlier today, and our 2006 full year report on our Form 10- K, which set forth important factors that would cause actual events to differ materially from those contained in any such forward- looking statements.

All forward- looking statements represent our views only as the date they are made, and the company undertakes no obligation to correct or update any such forward- looking statements, whether as a result of new information, future events or otherwise. Certain of the financial measures we'll talk about today are non- GAAP.

We'll highlight notable items in our results, in order to provide more meaningful comparison to prior year's non- GAAP results. And reconciliation on U.S. GAAP basis are in our press release in the investor section of our website, and I encourage investors to review those material.

Now, with that, let me turn the call over to Dave Carlucci. Dave?

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Dave Carlucci

Thank you, Darcie. Good afternoon everyone and thanks for joining us. As you have seen in our press release, we are off to a great start in 2007. Our revenue, operating income, and margin performance were very strong in the first quarter. In fact, we achieved better than balance double- digit growth. It's a great place to be at this point in the year, and give such real confidence that we will achieve our financial objectives for 2007.

For the first quarter, revenue was $510 million, up 14% reported and 11% constant dollar. This marks our tenth straight quarter of double- digit constant dollar revenue growth. Operating income rose 15% year- over- year, both as reported in constant dollars, and is ahead of our revenue growth.

Our operating margin remained strong at 22% in the quarter. On a comparable basis, our earnings per share was up 13% over last years’ first quarter. And Leslye will take you through the details of year- to- year performance in a few minutes.

Now let me start off with some highlights from the regions. In the Americas, we began the year strong, with revenue growth of 12% on both the reported and constant dollar basis. We saw impressive double- digit gains in the U.S., driven by client uptake of our next generation prescription services launched in January.

Our U.S. results also continued to benefit from exceptional growth in our managed care offerings in the quarter. And that was fueled by client's needs to understand the dynamics of Medicare Part D.

Our Consulting business in the region also posted significant gains. We're bringing new value in the marketplace, by leveraging our anonymized patient- level data to deliver new insights into therapy classes and treatment patterns.

In the EMEA region, we delivered another outstanding quarter; with revenue growing 20% reported and 11% constant dollar. Across Europe there is a very strong opportunity pipeline for our consulting capabilities, and we are seeing a lot more demand from multi- country engagements that combine our information assets and our consulting expertise.

Our investments in Health Economics and Outcomes Research are paying off with new demand for our HEOR offerings, that measure cost effectiveness, budget impact and compliance and persistence. All aimed at helping healthcare clients demonstrate the value of their medicines.

Turning now to Asia- Pacific; revenue growth in the region was 7% reported and 6% constant dollar. Two of our larger markets, Australia and Japan were off to a relatively slower start compared with last year, when both countries delivered exceptionally strong double digit growth.

This was the result of a significant acquisition in Australia in the first quarter of 2006 and the ramp up of our then new DDD sales force effectiveness offering in Japan. These results are consistent with what we expected, and we have a strong opportunity pipeline and anticipate accelerated growth for the region in the second quarter.

I am also pleased with our consulting and services uptake in Asia Pacific, especially in Japan. And our emerging market growth rates remain very high, exceeding 25% in the key markets of China, India and Korea.

Now on the strength of our global relationships, we once again posted double- digit gains with our top 20 clients. And we continue to engage new audiences in healthcare.

Revenue from generics, emerging biotech, and government clients grew more than 20% in the quarter. And this speaks to our strengths, whether its new offerings like MIDAS market segmentation to address the generics market or our HEOR capabilities to demonstrate the value of new drugs, were more relevant than ever to an expanding set of clients.

Turning now to the business lines. Sales force effectiveness grew 9% as reported, 6% on a constant dollar basis in the quarter. As expected, strong results in the U.S. were tempered by a difficult year- over- year compare in Asia Pacific as I mentioned earlier.

There are tremendous opportunities for us, and SFE’s clients evaluate the productivity of their sales models. The opportunity pipeline remains robust and more comfortable that will meet our SFE growth objectives for the year.

Portfolio optimization grew an exceptional 19% as reported, and 15% on a constant dollar basis. Traction for MIDAS remains very strong, as clients roll- out their headquarter strategies and products in more markets worldwide.

It offers the unique ability to analyze global opportunities, and we are seeing more clients use it to plan for strategic expansion into emerging markets. And we are delivering new value to clients by bringing together the portfolio planning expertise of our recent STG acquisition and our MIDAS offerings.

Launch, Brand and other grew 20% as reported and 15% constant dollar. Our pricing and market access consulting practice again posted excellent results. Building momentum as clients consider strategies to optimize brand value in an increasing complex and competitive environment.

And as I mentioned earlier, our offerings to help clients understand the managed care marketplace, which are part of this business line continue to generate strong growth in the US.

And in consulting and services, we did exceptionally well in the quarter with 44% reported growth and 38% constant dollar and we acquired and integrated three US- based consulting companies within the past four months.

Consulting and services now represents 19% of our business, an indication of our success in building out our practices across major markets. So, all- in- all, a very strong start to 2007, as we continue to build on a great track record of sustained performance.

So, now I will turn the call over to Leslye, who will take you through the details of our first quarter financials. Leslye?

Leslye Katz

Thanks Dave, and good afternoon everyone. As you can see from our press release and from Dave's comments, we started this year with a strong first quarter. Revenue was $510 million, up 11% on a constant dollar basis and 14% as reported.

Acquisitions contributed approximately two points to our constant dollar growth this quarter, with the remaining nine points coming from organic growth. Operating income was $111 million, up 15% on a constant dollar and as reported basis.

We continue to achieve one of our primary financial objectives to grow operating income in balance with revenue growth. And in fact we grew our constant dollar operating income four points faster than constant dollar revenue growth. Operating margin in the first quarter was 21.8%, up 10 basis points over last year.

Let me give you some perspective on the dynamics underneath the operating margin performance in the quarter. If you measure our operating margin on a constant dollar basis, it expanded 70 basis points. But foreign exchange movements reduced that expansion by 60 basis points.

Also in the first quarter, we released $2.8 million of excess accruals from the 2001 and 2003 restructuring programs, primarily related to the termination of an impaired lease. This contributed about 50 basis points to our margins, helping to offset the negative impact from foreign exchange.

We continue to deliver strong margins right in line with our expectations. Our margin performance was driven by better than balanced growth in data and production cost, partially offset with acquisition investments for the continued build out of our consulting capabilities.

Net interest expense in the quarter was just below $7 million, down slightly from last year. This was primarily due to lower borrowing cost in Q1 '07 versus Q1 '06, and other expense, net, in the quarter was $3 million.

This reflects the impact from foreign exchange hedge losses, as the dollar generally weakened versus several currencies during the first quarter. As you know, in 2007, we have taken further steps to simplify our financial reporting.

And as you see in our press release, we now report only our GAAP net income and EPS results. However, we have highlighted notable items in order to provide a more meaningful comparison to prior year's adjusted results.

GAAP net income in the first quarter was $86 million, down from $118 million in the first quarter of 2006. GAAP EPS for the quarter was $0.43, compared to $0.56 for Q1 of last year. These results are certainly not indicative of our underlying operational performance.

To improve the clarity of our operational results, we detailed in the note section of our press release, the significant items that were included in our GAAP net income and EPS results in the first quarter of 2007 and their comparable numbers in 2006.

Last year's Q1 GAAP EPS of $0.56 included $0.25, primarily from three items; legacy tax benefit, phasing of a favorable audit settlement with IRS and phasing of foreign exchange hedge gains.

Adjusting for these items, EPS in Q1 2006 would've been $0.31. For this year, the Q1 GAAP EPS of $0.43 includes $0.08 of tax benefit and foreign exchange hedge losses, which would have been phased into subsequent quarters.

On a comparable basis, Q1 EPS would be $0.35, amounting to year- over- year growth of $0.04 per share or 13%. This is the EPS growth Dave referenced earlier.

In terms of our first quarter tax rate, let me put that in the context of what we expect for the full year. Our tax rate in the first quarter was 15.5%, as a result of the settlement of a foreign tax audit and other tax- related items.

As I indicated in our last call, we expect our full year tax rate to be approximately 31% this year. Therefore in the second through fourth quarters, the GAAP tax rate will be a significantly higher than the Q1 rate bringing the full year to the expected 31%.

In the first quarter, we bought back 6.1 million shares through the accelerated share repurchase program we announced in our year- end earnings call. This transaction is now completed. We had 200.8 million weighted average diluted shares outstanding in the quarter, and we ended the quarter with 196.2 million shares outstanding.

Preliminary free cash flow was negative $9 million. It is not unusual for us to see negative free cash flow in the first quarter, but it was also affected by our DSO at 71 days, it is unfavorable compared with the first quarter of 2006. DSO will be a focus area for me; for the next several quarters, and I am confident we can improve it and achieve our full year cash flow guidance.

Turning to the balance sheet; cash and equivalents totaled $162 million at the end of the first quarter, an increase of $5 million compared with year end '06. Debt as of March 31, totaled $1.16 billion, an increase of $187 million compared with December 31, '06, due to the January 2007 accelerated share repurchase program.

We completed one acquisition in the first quarter, ValueMedics, a leading Health Economics and Outcomes Research consulting company in the U.S. This acquisition helps extend our capabilities globally in this important area of our growth.

I am pleased to report that our recent acquisition integrations are proceeding extremely well. In December of last year, we acquired DRSI and the Life Sciences Practice of Strategic Decisions Group. We fully integrated DRSI seamlessly into our forecasting practice, and in the case of STG, we are seeing some exciting opportunities to leverage our combined assets.

In the first three months post acquisition, we've consolidated back office operations, delivered five joint engagements, and appointed two leaders from these companies to key global positions. These acquisitions helped drive excellent consulting and services revenue growth in the quarter.

CNS revenue reached $99 million, up 44% reported, and 38% constant dollar. Acquisitions contributed about 11 points of that growth and organic CNS growth was about 27%.

Our key operating metrics including utilization rates and expense to revenue ratios continued to improve in the quarter. So, we are off to an excellent start both operationally and financially. Let me close by reconfirming our full year guidance.

Constant dollar revenue growth of 9% to 11%, constant dollar operating income growth of 9% to 11%, full year GAAP EPS of $1.56 to $1.60, and free cash flow of $290 million to $325 million. With this strong Q1 performance, we continue to be comfortable with our full year guidance

Now let me turn the call back to Dave.

Dave Carlucci

Thanks Leslye. And you are right, we had a great quarter and we are confident that we'll deliver another strong year. We continue to build an excellent track record, a sustained performance as we execute on our client- focused strategy.

As an indication of that, I am also heartened by the fact that a record number of clients responded to our latest annual customer survey. We have been tracking our progress with clients since 2002, and this marks the fifth straight year that overall satisfaction scores have improved.

Our loyalty scores rose in every region. But probably, most importantly on top of that the number of respondents was up more than a third, which is statically very significant. Another indication on how we are touching more clients around the world.

These survey results were also born out by the conversations you and I had earlier this week at our annual America's client conference, where our team shared with more than a 140 customers, our progress and addressing their needs and strengthening our partnership with them.

And another way we are reaching out the clients is through IMS Intelligence 360, our annual publication that offers our evidence- based prospective on the factors driving pharmaceutical markets around the globe.

Our third edition is just of the presses, and we are holding webcast with clients to share our latest perspective on the issue shaping the face of the healthcare industry.

And finally, I also want to mention how proud we are that business we've just named IMS to its annual list of the 50 best performing U.S. companies. We are ranked no. 25 among those businesses.

We are in good company on this list, and we are there for good reason. It's great to see our outstanding team recognized for an innovative strategy, and certainly for the ability to execute. We’ve got a great business and we are very, very excited about the future.

So, before we open it up to your questions, I’d like to invite all of you to our 2007 Investor Day, which will be held on May 24th in New York City. You can contact Darcie for details, and I hope to see all of you there.

So thanks for your time this afternoon, and now we will be very happy to take questions.

Leslye Katz

Jenny if you could ask for questions now that would be terrific. Thank you.

Question-and-Answer Session

Operator

Thank you. You are very welcome. (Operator Instructions) One moment please for the first question. Our first question comes from the line of Steve Halper of Thomas Weisel Partners. Please proceed with your questions.

Steve Halper - Thomas Weisel Partners

Hi, good afternoon. On the tax rate, I guess when you gave us guidance of 31%, you knew that the tax benefit was coming in. And if you lump it all in to the first quarter the out quarters are then about 35%- 36%. What are the implications for tax rate going forward in 2008?

Leslye Katz

Well, Steve you’ve got the math exactly right. A full year tax rate this year, we expect to be 31%. And with the low rate in the first quarter because for GAAP purposes you have to recognize those tax benefits. When they are realized, the rate will go up in that range in Q2 through Q4.

I can't really comment on the tax rate going forward, but we certainly have seen it vary from year- to- year in the past, and would expect it will vary from year- to- year in the future.

Steve Halper - Thomas Weisel Partners

Right. But if you look back historically, 36% is a pretty high rate yield going back all the way to the beginning of 2003. So is the 36% rate sustainable, is it, I mean?

Leslye Katz

The 36% rate is really just a reflection of the timing of when we recognized the tax benefit within the year. The full year rate is 31%, that’s really how we've done it in prior years as well.

Steve Halper - Thomas Weisel Partners

Right. But in the subsequent quarters like Q2, Q3, Q4, your GAAP effective tax rate is going to be 36%. So, do you have another benefit coming in year 2008?

Leslye Katz

Well again I can't really comment on the tax rate for 2008. But if you look back at our GAAP tax rate in prior years as well as this year, it varies quite a lot quarter- to- quarter. That’s something that we have seen with the GAAP tax rate, and we try to provide the full year rate so that you have a good way to model it.

Steve Halper - Thomas Weisel Partners

I understand that, but we are just trying to understand what the tax rate might be for 2008, we really don't have anyway of estimating that?

Leslye Katz

I am not really not able to comment on anything with respect to 2008 at this point; tax rate or otherwise.

Steve Halper - Thomas Weisel Partners

Okay.

Operator

Our next question comes from the line [Doug Sao] of Lehman Brothers. Please proceed with your question.

Doug Sao - Lehman Brothers

Hi thanks for taking the questions. On the acquisition front, I was just wondering, if you still feel comfortable with your guidance of, I think it’s between $75 million and $100 million worth of acquisitions. I mean over the last three quarters, it seems that its been sort of pits and starts as far as the number of deals that you closed, and if you give me our assessment of the pipeline over the next few quarters?

Leslye Katz

Sure. I mean when we gave our guidance in February, we said that it reflected an assumption of spending about $70 million to $100 million on acquisitions, and we spent about $10 million in the first quarter. And it certainly has varied quite a bit year- on- year. We have a good pipeline of acquisitions, and we also have plenty of flexibility in our balance sheet and in our cash flow. So, that is our assumption at the moment, the $70 million to $100 million.

Doug Sao - Lehman Brothers

Okay. So, you are still sticking to that number. And then I guess Leslye, you sort of indicated on the last call that you are going to sort of spend some time on the road, looking into opportunities for leverage in the business and margin expansion. I'm just wondering if you could provide a little color on what you found out?

Leslye Katz

Well absolutely, although I don't have a lot of news since February when we talked about margins. I am certainly very pleased with our execution in the first quarter, and the fact that we've stabilized our margins over the past two years and we remain committed to that going forward.

But I continue working on my agenda of looking at everything we do from a cost and expense standpoint, and I will provide at least an initial assessment of that when we get to Investor Day in May.

Doug Sao - Lehman Brothers

Okay. And then last time in February, you talked a little bit about utilization improvement opportunities. And I'm just wondering, if you could sort of provide a little more detail on exactly what pieces of the business and particularly you sort of see potential opportunities in utilization?

Leslye Katz

Yeah, I think as we've reached scale in a lot of our consulting practice areas, we expect to see utilization. It's going to vary by practice area, it’s going to vary by geography and, as well, even by different types of consultants. But we continue to see positive trends overall in utilization.

Doug Sao - Lehman Brothers

Could that potentially imply that you might want to reduce headcount in some of the consulting businesses that you have required?

Leslye Katz

I think we have so much opportunity for growth in those, that I don't think a headcount reduction is required.

Doug Sao - Lehman Brothers

Okay. That's it for now. Thanks.

Operator

Our next question comes from the line of James Kumpel of Friedman, Billings, Ramsey. Please proceed.

James Kumpel - Friedman, Billings, Ramsey

Hi, good evening. Leslye, can you just tell us in the $1.56 to $1.60 GAAP EPS guidance for 2007, did you anticipate basically using 15% tax rate to get the $0.43 numbers. So basically from that point forward you are talking about a $1.13 to $1.17 for the remainder of the year?

Leslye Katz

I did anticipate that it would be likely that we would have a low GAAP tax rate in the first quarter and a higher rate in Q2 through Q4, just because that's very consistent from a GAAP standpoint, with how it's been for the last few years. I guess that's in the guidance.

James Kumpel - Friedman, Billings, Ramsey

Okay. And do you anticipate, I guess because a critical line item would be missing for analysts and investors. It's kind of difficult to at least for FirstCall, I think it would be difficult to sort of compare your actual results against expectations if there are wildly varying assumptions I suppose. So, I was curious if you are absolutely intent on not presenting non- GAAP adjusted numbers on a going forward basis?

Leslye Katz

No, it's perhaps in the very, very back of our press release. But we laid out in the note to our press release, how the tax rate, for example, would be phased in the year and the foreign exchange. So, for example, we call out in that footnote that if you phase the tax rate level, 31% in each quarter, you move about $0.08 of EPS out of Q1. So, instead of the $0.43 GAAP number, it would be $0.35, and that would compare I think the street consensus that was out there at $0.34, and it would compare to the $0.31 adjusted number we have last year.

James Kumpel - Friedman, Billings, Ramsey

And so you would anticipate going with those notes in the future I guess?

Leslye Katz

Yes, we'll call it out at each quarter. So, it's hopefully clear.

James Kumpel - Friedman, Billings, Ramsey

Okay. Dave, if you can comment a little bit about the legislative outlook in number of states? I guess there is some news about a Nevada State legislator, who is agitating for similar types of privacy interpretations as New Hampshire has.

And I was curious if you might be able to talk about some of the methods ala Germany with the [brake] system. How you might be able to provide clear physician prescribing data elements that help pharmaceutical companies better promote and detail their drugs in the absence of absolute names and addresses for physicians?

Dave Carlucci

Well, sure Jim. We do continue to see some states pursuing legislation that's modeled a bit after New Hampshire, but conversely a number of other states have decided not to move forward with this copycat legislation. So, we're pretty pleased what we've seen in the last 60 days. There are currently bills under consideration in legislators in Nevada, Maine and Vermont. And IMS and others in the industry are active in these states, educating state legislators on the value of provider- identifiable data as a key metric for healthcare quality and an important element of risk management programs.

At this stage it's early in the legislator process and it's kind of impossible to predict whether any of these bills will become law during the legislative session. But to your point a lot of this depends on the granularity in which you collect the data. And that's been key to the way we have been able to sustain offerings even if they are aggregated at a brick level or at other dimensions. And we are pretty comfortable that we certainly know what would involve the change in the way we develop our offerings, in particularly in combination with our consulting capability, we can still help our clients gain significant insides from the data.

So, again nothing specific enough to have us have to begin an effort to re-look at that at a broad scale. It’s certainly encouraging to us that several states including much larger states than the one we've talked about have chosen not to introduce similar legislation and so we'll just watch the space. But as you point out Jim, it has been fact a light for us for many, many years across Europe and Canada and in many, many states in the U.S. And so I just see this as an ongoing aspect to our business.

James Kumpel - Friedman, Billings, Ramsey

So I guess like in an age of GPS, Global Positioning Systems and other sort of geographic breakdowns, it’s still possible to say a dermatologist in a particular area of Manhattan or something, might be inclined to prefer one type of detailing versus another and maybe that might be helpful enough?

Dave Carlucci

Well, you will aggregate at certain points and you would not identify specific positions, but you can certainly spot trends and you can certainly assist your clients in having their sales forces be more productive.

James Kumpel - Friedman, Billings, Ramsey

Great, thank you, very much.

Operator

Our next question comes from the line of John Kreger of William Blair. Please proceed with your question.

John Kreger - William Blair

Thanks very much. Dave you mentioned I think for five straight years of improvement in your customer satisfaction rankings.

Dave Carlucci

Yes.

John Kreger - William Blair

Can you just give us a sense about where you think you stand in that process, how far you have come and in that context what were some key areas for improvement that you are focusing on this year?

Dave Carlucci

Yeah, I think that the most important one to us was to see significant improvement in the client's willingness to recommend IMS also in value. Value is the one that we have been watching very, very closely, because we feel that if the value equation isn't foreseen by our clients as in line then it will make it tougher for us to expand into these multiple areas that we have expanded in the last five years.

So those are the key areas. Quality also improved a bit. But that's one that I would stay very, very focused on, because what we are finding is the complexity of the market is increasing dramatically. And the desire for the client to take syndicated assets and customize those assets to their environment, adds a whole dimension of complexity to our end- to- end process. So we've been very diligent of now mapping our enterprise processes, particularly customer delivery in the last three years. And that's an area that I am really focused on. I am never quite pleased with the overall results in that even though we've seen a fairly steady improvement.

John Kreger - William Blair

Okay thanks and if you go one layer lower. Are there particular areas where you guys think you can still do better and I am thinking kind of customer service versus product innovation versus technology and ease of use of the data by your customers? Are there any particular areas where you still think you can make meaningful strides?

Dave Carlucci

Well, like I said. I am never happy that our service levels shouldn't be higher although again we continue to see improved comments about them. But I would say the innovation scores have been very good, we have introduced a lot. And John, as you get to higher level audiences in pharma you have a different set of criteria on ease of use.

And clearly our offerings for 50 years were targeted more at market research professionals and sales operations people who did a lot of the analytical work around our assets. As we move up we can certainly get better in ease of use and the surrogate for that is we've introduced a lot of our offerings as you know like precision sales force by delivering them through consulting. So, that you call them down and you offer up a more understandable to the average individual conclusion. But that's an area we need to continue to work on. Also these have evolved over the years as very sophisticated massive amounts of data types of systems designed really for professionals to massage them and do the analysis. We're streamlining that because we see the need as pharma continues to have pressure on cost for them to eliminate process steps also. So, it is an area of focus for us and I think it's an area that we will continue to see progress on.

John Kreger - William Blair

Great, thanks. Just one other question, can you give us an update on your data supplier negotiations and renewals, where do we stand, are you pretty much done for the year and are you seeing any sort of a cost trend one way or the other?

Dave Carlucci

Well, they're staggered around the world and we don't have any large impending ones, at least in the next couple of quarters, but there'll certainly be some that we'll have to negotiate. And our strategy has always been and our partners like that strategy as we generally start those discussions about a year before expiration in the United States.

So it's kind of an ongoing process and I think Leslye said in her comments that in the first quarter at least, we saw our data and production cost better than balance, right in terms of revenue. So, the trends are good. I do think that, as you know we have increased our investment in data assets in specialty data and long- term care data in APLD (Anonymized Patient Level Data). We're really seeing those investments pay off in our growth and we've seen the ramp on the new offerings be much better than they were several years ago. But again, it's always important for us John to keep that in balance on whether we are going to get a return from those assets, right now feel pretty good about it but those negotiations are ongoing and our partners are pretty conversant on the value of these data assets.

John Kreger - William Blair

Great, thank you.

Operator

Our next question comes from the line of Terri Powers from Robert Baird, please proceed with your question.

Ms. Powers your line is now open if you would like to proceed with your question, perhaps check your mute feature or…

Terri Powers - Robert Baird

Can you hear me now?

Operator

Yes.

Terri Powers - Robert Baird

Thank you. I wanted to follow up with you guys on revenue growth, great start to the year, you hit a 11% constant dollar, which is at a high end of your full year growth rate. It seems like you have broad- base growth and things are going very well. Is there anything that you can think of that would lead to slowing growth through the rest of the year, or any tough comps that we should be aware of in any one of the business lines or at this point is it a great start to the year but don’t want to get to far ahead of yourself?

Leslye Katz

I would say it’s more of the latter Terri, it’s a great start to the year but it's still early in the year; I don’t see any particular hiccups along the way.

Terri Powers - Robert Baird

All right, thank you very much.

Operator

Our next question comes from the line of Steve Unger from Bear Stearns. Please proceed with your question.