MEDP Medpace Holdings Inc

• Revenue of $434.1 million in the first quarter of 2023 increased 31.2% from revenue of $330.9 million for the comparable prior-year period, representing a backlog conversion rate of 18.6%.
• Net new business awards were $555.8 million in the first quarter of 2023, representing an increase of 31.4% from net new business awards of $423.0 million for the comparable prior-year period, which resulted in a net book-to-bill ratio of 1.28x.
• First quarter of 2023 GAAP net income was $72.9 million, or $2.27 per diluted share, versus GAAP net income of $61.3 million, or $1.69 per diluted share, for the comparable prior-year period. Net income margin was 16.8% and 18.5% for the first quarter of 2023 and 2022, respectively.
• EBITDA was $92.8 million for the first quarter of 2023, an increase of 31.9% from EBITDA of $70.4 million for the comparable prior-year period, resulting in an EBITDA margin of 21.4%.

Medpace Holdings, Inc. (Nasdaq: MEDP) (“Medpace”) today announced financial results for the first quarter ended March 31, 2023.

First Quarter 2023 Financial Results

Revenue for the three months ended March 31, 2023 increased 31.2% to $434.1 million, compared to $330.9 million for the comparable prior-year period. On a constant currency basis, revenue for the first quarter of 2023 increased 31.8% compared to the first quarter of 2022.

Backlog as of March 31, 2023 increased 17.8% to $2,460.1 million from $2,088.0 million as of March 31, 2022. Net new business awards were $555.8 million, representing a net book-to-bill ratio of 1.28x for the first quarter of 2023, as compared to $423.0 million for the comparable prior-year period. The Company calculates the net book-to-bill ratio by dividing net new business awards by revenue.

For the first quarter of 2023, total direct costs were $303.9 million, compared to total direct costs of $232.3 million in the first quarter of 2022. Selling, general and administrative (SG&A) expenses were $38.0 million in the first quarter of 2023, compared to SG&A expenses of $29.4 million in the first quarter of 2022.

GAAP net income for the first quarter of 2023 was $72.9 million, or $2.27 per diluted share, versus GAAP net income of $61.3 million, or $1.69 per diluted share, for the first quarter of 2022. This resulted in a net income margin of 16.8% and 18.5% for the first quarter of 2023 and 2022, respectively.

EBITDA for the first quarter of 2023 increased 31.9% to $92.8 million, or 21.4% of revenue, compared to $70.4 million, or 21.3% of revenue, for the comparable prior-year period. On a constant currency basis, EBITDA for the first quarter of 2023 increased 28.6% from the first quarter of 2022.

A reconciliation of the Company’s non-GAAP financial measures, including EBITDA and EBITDA margin to the corresponding GAAP measures is provided below.

Balance Sheet and Liquidity

The Company’s Cash and cash equivalents were $46.9 million at March 31, 2023, and the Company generated $80.1 million in cash flow from operating activities during the first quarter of 2023. Short-term debt was $115.0 million at March 31, 2023.

During the first quarter of 2023, the Company repurchased 654,787 shares for a total of $120.1 million. As of March 31, 2023, the Company had $332.7 million remaining under its authorized share repurchase program.

2023 Financial Guidance

The Company forecasts 2023 revenue in the range of $1.745 billion to $1.805 billion, representing growth of 19.5% to 23.6% over 2022 revenue of $1.460 billion. GAAP net income for full year 2023 is forecasted in the range of $250.0 million to $269.0 million. Additionally, full year 2023 EBITDA is expected in the range of $335.0 million to $355.0 million. Based on forecasted 2023 revenue of $1.745 billion to $1.805 billion and GAAP net income of $250.0 million to $269.0 million, diluted earnings per share (GAAP) is forecasted in the range of $7.81 to $8.40. This guidance assumes a full year 2023 tax rate of 17.5% to 18.5% and does not reflect the potential impact of any share repurchases the Company may make after March 31, 2023.

Conference Call Details

Medpace will host a conference call at 9:00 a.m. ET, Tuesday, April 25, 2023, to discuss its first quarter 2023 results.

To participate in the conference call, interested parties must register in advance by clicking on this link. While it is not required, it is recommended you join 10 minutes prior to the event start. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique PIN that can be used to access the call.

To access the conference call via webcast, visit the “Investors” section of Medpace’s website at medpace.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call. A supplemental slide presentation will also be available at the “Investors” section of Medpace’s website prior to the start of the call.

About Medpace

Medpace is a scientifically-driven, global, full-service clinical contract research organization (CRO) providing Phase I-IV clinical development services to the biotechnology, pharmaceutical and medical device industries. Medpace’s mission is to accelerate the global development of safe and effective medical therapeutics through its high-science and disciplined operating approach that leverages regulatory and therapeutic expertise across all major areas including oncology, cardiology, metabolic disease, endocrinology, central nervous system and anti-viral and anti-infective. Headquartered in Cincinnati, Ohio, Medpace employs approximately 5,400 people across 40 countries as of March 31, 2023.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation, statements regarding our forecasted financial results and the effective tax rate used for non-GAAP adjustment purposes. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “guidance,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” “forecast,” “may,” “could,” “likely,” “anticipate,” “project,” “goal,” “objective,” “potential,” “range,” “estimate,” “preliminary,” similar expressions, and variations or negatives of these words.

These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our financial condition, actual results, performance (including share price performance), or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the potential loss, delay or non-renewal of our contracts, or the non-payment by customers for services we have performed; the failure to convert backlog to revenue at our present or historical conversion rate(s); the failure to maintain or generate new business awards; fluctuation in our results between fiscal quarters and years; the risks and uncertainties related to disruptions to or reductions in business operations or prospects due to pandemics, epidemics, widespread health emergencies, or outbreaks of infectious diseases such as coronavirus disease COVID-19; decreased operating margins due to increased pricing pressure or other factors; our failure to perform our services in accordance with contractual requirements, government regulations and ethical considerations; the impact of underpricing our contracts, overrunning our cost estimates or failing to receive approval for or experiencing delays with documentation of change orders; our failure to increase our market share, grow our business, successfully execute our growth strategies or manage our growth effectively; the impact of a failure to retain key executives or other personnel or recruit experienced personnel; the risks associated with our information systems infrastructure, including potential cybersecurity breaches and other disruptions which could compromise patient information or our information; adverse results from customer or therapeutic area concentration; the risks associated with doing business internationally, including the effects of tariffs and trade wars; the risks associated with the Foreign Corrupt Practices Act and other anti-corruption laws; future net losses; the impact of changes in tax laws and regulations; our failure to attract suitable investigators and patients to our clinical trials; the liability risks associated with our research and development services, including risks of liability resulting from harm to patients; inadequate insurance coverage for our operations and indemnification obligations; fluctuations in exchange rates; general economic conditions, including inflation, in the markets in which we operate, including financial market conditions; the impact of unfavorable economic conditions, including conditions caused by the uncertain international economic environment and current and future international conflicts; the impact of a natural disaster or other catastrophic event; negative outsourcing trends in the biopharmaceutical industry and a reduction in aggregate expenditures and research and development budgets; our inability to compete effectively with other CROs; the impact of healthcare reform; the impact of consolidation in the biopharmaceutical industry; our failure to comply with federal, state and foreign healthcare laws; the effect of current and proposed laws and regulations regarding the protection of personal data; our potential involvement in costly intellectual property lawsuits; actions by regulatory authorities or customers to limit the scope of indications related to or withdraw an approved drug, biologic or medical device from the market; and the impact of industry-wide reputational harm to CROs.

These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. We cannot guarantee that any forward-looking statement will be realized. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions. If known or unknown risks or uncertainties materialize or if underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events, developments or circumstances cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Non-GAAP Financial Measures

Certain financial measures presented in this press release, such as EBITDA and EBITDA margin, are not recognized under generally accepted accounting principles in the United States of America, or U.S. GAAP. Management uses EBITDA and EBITDA margin or comparable metrics as a measurement used in evaluating our operating performance on a consistent basis, as a consideration to assess incentive compensation for our employees, for planning purposes, including the preparation of our internal annual operating budget, and to evaluate the performance and effectiveness of our operational strategies.

EBITDA and EBITDA margin have important limitations as analytical tools and you should not consider them in isolation, or as a substitute for, analysis of our results as reported under U.S. GAAP. See the condensed consolidated financial statements included elsewhere in this release for our U.S. GAAP results. Additionally, for reconciliations of EBITDA and

EBITDA margin to our closest reported U.S. GAAP measures, refer to the appendix of this press release. We believe that EBITDA and EBITDA margin are useful to provide additional information to investors about certain material non-cash and non-recurring items. While we believe these financial measures are commonly used by investors to evaluate our performance and that of our competitors, because not all companies use identical calculations, this presentation of EBITDA and EBITDA margin may not be comparable to other similarly titled measures of other companies and should not be considered as an alternative to performance measures derived in accordance with U.S. GAAP. EBITDA is calculated as net income attributable to Medpace Holdings, Inc. before income tax expense, interest expense, net, depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by Revenue, net for each period. Our presentation of EBITDA and EBITDA margin should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

(Amounts in thousands, except per share amounts)

Three Months Ended March 31,

 

2023

 

2022

Revenue, net

$

434,074

 

 

$

330,947

Operating expenses:

 

 

 

Direct service costs, excluding depreciation and amortization

 

151,068

 

 

 

125,434

Reimbursed out-of-pocket expenses

 

152,817

 

 

 

106,836

Total direct costs

 

303,885

 

 

 

232,270

Selling, general and administrative

 

38,027

 

 

 

29,366

Depreciation

 

5,408

 

 

 

4,270

Amortization

 

550

 

 

 

838

Total operating expenses

 

347,870

 

 

 

266,744

Income from operations

 

86,204

 

 

 

64,203

Other (expense) income, net:

 

 

 

Miscellaneous income, net

 

687

 

 

 

1,067

Interest (expense) income, net

 

(861

)

 

 

54

Total other (expense) income, net

 

(174

)

 

 

1,121

Income before income taxes

 

86,030

 

 

 

65,324

Income tax provision

 

13,136

 

 

 

4,013

Net income

$

72,894

 

 

$

61,311

Net income per share attributable to common shareholders:

 

 

 

Basic

$

2.35

 

 

$

1.75

Diluted

$

2.27

 

 

$

1.69

Weighted average common shares outstanding:

 

 

 

Basic

 

31,008

 

 

 

34,918

Diluted

 

32,155

 

 

 

36,364

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(Amounts in thousands, except share amounts)

 

 

 

 

As of

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

46,922

 

 

$

28,265

 

Accounts receivable and unbilled, net

 

257,746

 

 

 

253,404

 

Prepaid expenses and other current assets

 

62,954

 

 

 

52,293

 

Total current assets

 

367,622

 

 

 

333,962

 

Property and equipment, net

 

113,755

 

 

 

109,849

 

Operating lease right-of-use assets

 

143,309

 

 

 

139,068

 

Goodwill

 

662,396

 

 

 

662,396

 

Intangible assets, net

 

37,458

 

 

 

38,008

 

Deferred income taxes

 

49,157

 

 

 

48,083

 

Other assets

 

22,026

 

 

 

21,129

 

Total assets

$

1,395,723

 

 

$

1,352,495

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

37,110

 

 

$

33,069

 

Accrued expenses

 

201,201

 

 

 

210,125

 

Advanced billings

 

466,040

 

 

 

462,729

 

Short-term debt

 

115,000

 

 

 

50,000

 

Other current liabilities

 

62,538

 

 

 

47,547

 

Total current liabilities

 

881,889

 

 

 

803,470

 

Operating lease liabilities

 

142,689

 

 

 

138,867

 

Deferred income tax liability

 

1,090

 

 

 

1,070

 

Other long-term liabilities

 

22,793

 

 

 

22,701

 

Total liabilities

 

1,048,461

 

 

 

966,108

 

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock - $0.01 par-value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

—

 

 

 

—

 

Common stock - $0.01 par-value; 250,000,000 shares authorized at March 31, 2023 and December 31, 2022, respectively; 30,623,655 and 31,091,694 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

306

 

 

 

309

 

Treasury stock - 70,573 and 71,573 shares at March 31, 2023 and December 31, 2022, respectively

 

(12,322

)

 

 

(12,497

)

Additional paid-in capital

 

778,691

 

 

 

770,794

 

Accumulated deficit

 

(408,099

)

 

 

(359,827

)

Accumulated other comprehensive loss

 

(11,314

)

 

 

(12,392

)

Total shareholders’ equity

 

347,262

 

 

 

386,387

 

Total liabilities and shareholders’ equity

$

1,395,723

 

 

$

1,352,495

 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

(Amounts in thousands)

Three Months Ended March 31,

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

72,894

 

 

$

61,311

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

 

5,408

 

 

 

4,270

 

Amortization

 

550

 

 

 

838

 

Stock-based compensation expense

 

5,438

 

 

 

4,372

 

Noncash lease expense

 

4,757

 

 

 

4,537

 

Deferred income tax benefit

 

(1,063

)

 

 

(713

)

Other

 

(1,455

)

 

 

(420

)

Changes in assets and liabilities:

 

 

 

Accounts receivable and unbilled, net

 

(4,344

)

 

 

(38,224

)

Prepaid expenses and other current assets

 

(10,205

)

 

 

(5,547

)

Accounts payable

 

4,457

 

 

 

(1,041

)

Accrued expenses

 

(9,364

)

 

 

(3,651

)

Advanced billings

 

3,311

 

 

 

22,580

 

Lease liabilities

 

(5,284

)

 

 

(3,542

)

Other assets and liabilities, net

 

14,976

 

 

 

1,486

 

Net cash provided by operating activities

 

80,076

 

 

 

46,256

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Property and equipment expenditures

 

(9,513

)

 

 

(9,257

)

Other

 

10

 

 

 

(1,951

)

Net cash used in investing activities

 

(9,503

)

 

 

(11,208

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from stock option exercises

 

2,463

 

 

 

13,867

 

Repurchases of common stock

 

(120,146

)

 

 

(425,950

)

Proceeds from revolving loan

 

90,000

 

 

 

49,500

 

Payments on revolving loan

 

(25,000

)

 

 

(49,500

)

Net cash used in financing activities

 

(52,683

)

 

 

(412,083

)

EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND

RESTRICTED CASH

 

767

 

 

 

(1,426

)

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

18,657

 

 

 

(378,461

)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period

 

28,265

 

 

 

461,304

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period

$

46,922

 

 

$

82,843

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)

 

(Amounts in thousands)

Three Months Ended March 31,

 

2023

 

2022

RECONCILIATION OF GAAP NET INCOME TO EBITDA

 

 

 

Net income (GAAP)

$

72,894

 

 

$

61,311

 

Interest expense (income), net

 

861

 

 

 

(54

)

Income tax provision

 

13,136

 

 

 

4,013

 

Depreciation

 

5,408

 

 

 

4,270

 

Amortization

 

550

 

 

 

838

 

EBITDA (Non-GAAP)

$

92,849

 

 

$

70,378

 

Net income margin (GAAP)

 

16.8

%

 

 

18.5

%

EBITDA margin (Non-GAAP)

 

21.4

%

 

 

21.3

%

FY 2023 GUIDANCE RECONCILIATION (UNAUDITED)

 

(Amounts in millions, except per share amounts)

Forecast 2023

 

Net Income

 

Net income per diluted share

 

Low

 

High

 

Low

 

High

Net income and net income per diluted share (GAAP)

$

250.0

 

$

269.0

 

$

7.81

 

$

8.40

Income tax provision

 

56.7

 

 

57.7

 

 

 

 

Interest expense, net

 

1.7

 

 

1.7

 

 

 

 

Depreciation

 

24.4

 

 

24.4

 

 

 

 

Amortization

 

2.2

 

 

2.2

 

 

 

 

EBITDA (Non-GAAP)

$

335.0

 

$

355.0

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230424005688/en/

Investor Contact: Lauren Morris 513.579.9911 x11994 l.morris@medpace.com

Media Contact: Julie Hopkins 513.579.9911 x12627 j.hopkins@medpace.com