MEDP Medpace Holdings Inc

• Revenue of $492.5 million in the third quarter of 2023 increased 28.3% from revenue of $383.7 million for the comparable prior-year period, representing a backlog conversion rate of 19.1%.
• Net new business awards were $611.5 million in the third quarter of 2023, representing an increase of 29.9% from net new business awards of $470.9 million for the comparable prior-year period, which resulted in a net book-to-bill ratio of 1.24x.
• Third quarter of 2023 GAAP net income was $70.6 million, or $2.22 per diluted share, versus GAAP net income of $66.0 million, or $2.05 per diluted share, for the comparable prior-year period. Net income margin was 14.3% and 17.2% for the third quarter of 2023 and 2022, respectively.
• EBITDA was $90.2 million for the third quarter of 2023, an increase of 1.0% from EBITDA of $89.3 million for the comparable prior-year period, resulting in an EBITDA margin of 18.3%.

Medpace Holdings, Inc. (Nasdaq: MEDP) (“Medpace”) today announced financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 Financial Results

Revenue for the three months ended September 30, 2023 increased 28.3% to $492.5 million, compared to $383.7 million for the comparable prior-year period. On a constant currency basis, revenue for the third quarter of 2023 increased 27.6% compared to the third quarter of 2022.

Backlog as of September 30, 2023 increased 20.3% to $2,689.5 million from $2,236.2 million as of September 30, 2022. Net new business awards were $611.5 million, representing a net book-to-bill ratio of 1.24x for the third quarter of 2023, as compared to $470.9 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 third quarter of 2023, total direct costs were $359.3 million, compared to total direct costs of $264.7 million in the third quarter of 2022. Selling, general and administrative (SG&A) expenses were $41.4 million in the third quarter of 2023, compared to SG&A expenses of $35.4 million in the third quarter of 2022.

GAAP net income for the third quarter of 2023 was $70.6 million, or $2.22 per diluted share, versus GAAP net income of $66.0 million, or $2.05 per diluted share, for the third quarter of 2022. This resulted in a net income margin of 14.3% and 17.2% for the third quarter of 2023 and 2022, respectively.

EBITDA for the third quarter of 2023 increased 1.0% to $90.2 million, or 18.3% of revenue, compared to $89.3 million, or 23.3% of revenue, for the comparable prior-year period. On a constant currency basis, EBITDA for the third quarter of 2023 increased 2.7% from the third 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.

Year-to-Date 2023 Financial Results

Revenue for the nine months ended September 30, 2023 was $1,387.4 million, and increased 30.2% on a reported basis and 30.0% on a constant currency organic basis from the comparable prior-year period. Year-to-date 2023 GAAP net income was $204.5 million, or $6.42 per diluted share, compared to $176.7 million, or $5.18 per diluted share, for the comparable prior-year period. Year-to-date 2023 EBITDA was $266.7 million, or 19.2% of revenue, and increased 17.1% on a reported basis and 16.8% on a constant currency organic basis from the comparable prior-year period.

Balance Sheet and Liquidity

The Company’s Cash and cash equivalents were $95.2 million at September 30, 2023, and the Company generated $114.4 million in cash flow from operating activities during the third quarter of 2023. Additionally, the Company paid off its remaining outstanding debt during the third quarter of 2023.

2023 Financial Guidance

The Company forecasts 2023 revenue in the range of $1.870 billion to $1.890 billion, representing growth of 28.1% to 29.5% over 2022 revenue of $1.460 billion. GAAP net income for full year 2023 is forecasted in the range of $272.0 million to $276.0 million. Additionally, full year 2023 EBITDA is expected in the range of $353.0 million to $361.0 million. Based on forecasted 2023 revenue of $1.870 billion to $1.890 billion and GAAP net income of $272.0 million to $276.0 million, diluted earnings per share (GAAP) is forecasted in the range of $8.54 to $8.66. This guidance assumes a full year 2023 tax rate of 16.25% to 17.25% and does not reflect the potential impact of any share repurchases the Company may make after September 30, 2023.

2024 Financial Guidance

The Company forecasts 2024 revenue in the range of $2.150 billion to $2.200 billion. Full year 2024 EBITDA is expected in the range of $390.0 million to $415.0 million.

Conference Call Details

Medpace will host a conference call at 9:00 a.m. ET, Tuesday, October 24, 2023, to discuss its third 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 5,800 people across 41 countries as of September 30, 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 September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue, net

$

492,499

 

 

$

383,744

 

 

$

1,387,441

 

 

$

1,065,898

 

Operating expenses:

 

 

 

 

 

 

 

Direct service costs, excluding depreciation and amortization

 

164,364

 

 

 

136,648

 

 

 

473,958

 

 

 

394,200

 

Reimbursed out-of-pocket expenses

 

194,942

 

 

 

128,062

 

 

 

525,784

 

 

 

354,991

 

Total direct costs

 

359,306

 

 

 

264,710

 

 

 

999,742

 

 

 

749,191

 

Selling, general and administrative

 

41,407

 

 

 

35,418

 

 

 

118,838

 

 

 

97,999

 

Depreciation

 

6,329

 

 

 

4,951

 

 

 

17,707

 

 

 

13,928

 

Amortization

 

549

 

 

 

838

 

 

 

1,649

 

 

 

2,514

 

Total operating expenses

 

407,591

 

 

 

305,917

 

 

 

1,137,936

 

 

 

863,632

 

Income from operations

 

84,908

 

 

 

77,827

 

 

 

249,505

 

 

 

202,266

 

Other (expense) income, net:

 

 

 

 

 

 

 

Miscellaneous (expense) income, net

 

(1,602

)

 

 

5,649

 

 

 

(2,198

)

 

 

9,027

 

Interest expense, net

 

(105

)

 

 

(1,584

)

 

 

(2,332

)

 

 

(2,078

)

Total other (expense) income, net

 

(1,707

)

 

 

4,065

 

 

 

(4,530

)

 

 

6,949

 

Income before income taxes

 

83,201

 

 

 

81,892

 

 

 

244,975

 

 

 

209,215

 

Income tax provision

 

12,651

 

 

 

15,865

 

 

 

40,463

 

 

 

32,517

 

Net income

$

70,550

 

 

$

66,027

 

 

$

204,512

 

 

$

176,698

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

2.30

 

 

$

2.13

 

 

$

6.65

 

 

$

5.39

 

Diluted

$

2.22

 

 

$

2.05

 

 

$

6.42

 

 

$

5.18

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

30,629

 

 

 

31,009

 

 

 

30,723

 

 

 

32,791

 

Diluted

 

31,762

 

 

 

32,253

 

 

 

31,839

 

 

 

34,098

 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(Amounts in thousands, except share amounts)

 

 

 

 

As of

 

September 30, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

95,207

 

 

$

28,265

 

Accounts receivable and unbilled, net

 

292,773

 

 

 

253,404

 

Prepaid expenses and other current assets

 

60,901

 

 

 

52,293

 

Total current assets

 

448,881

 

 

 

333,962

 

Property and equipment, net

 

114,764

 

 

 

109,849

 

Operating lease right-of-use assets

 

144,147

 

 

 

139,068

 

Goodwill

 

662,396

 

 

 

662,396

 

Intangible assets, net

 

36,359

 

 

 

38,008

 

Deferred income taxes

 

59,343

 

 

 

48,083

 

Other assets

 

20,831

 

 

 

21,129

 

Total assets

$

1,486,721

 

 

$

1,352,495

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

29,023

 

 

$

33,069

 

Accrued expenses

 

264,785

 

 

 

210,125

 

Advanced billings

 

518,755

 

 

 

462,729

 

Short-term debt

 

—

 

 

 

50,000

 

Other current liabilities

 

35,955

 

 

 

47,547

 

Total current liabilities

 

848,518

 

 

 

803,470

 

Operating lease liabilities

 

143,039

 

 

 

138,867

 

Deferred income tax liability

 

1,128

 

 

 

1,070

 

Other long-term liabilities

 

23,124

 

 

 

22,701

 

Total liabilities

 

1,015,809

 

 

 

966,108

 

Commitments and contingencies

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock - $0.01 par-value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

—

 

 

 

—

 

Common stock - $0.01 par-value; 250,000,000 shares authorized at September 30, 2023 and December 31, 2022, respectively; 30,682,157 and 31,091,694 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

307

 

 

 

309

 

Treasury stock - 70,573 and 71,573 shares at September 30, 2023 and December 31, 2022, respectively

 

(12,322

)

 

 

(12,497

)

Additional paid-in capital

 

795,994

 

 

 

770,794

 

Accumulated deficit

 

(300,197

)

 

 

(359,827

)

Accumulated other comprehensive loss

 

(12,870

)

 

 

(12,392

)

Total shareholders’ equity

 

470,912

 

 

 

386,387

 

Total liabilities and shareholders’ equity

$

1,486,721

 

 

$

1,352,495

 

 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

(Amounts in thousands)

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

204,512

 

 

$

176,698

 

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

 

 

 

Depreciation

 

17,707

 

 

 

13,928

 

Amortization

 

1,649

 

 

 

2,514

 

Stock-based compensation expense

 

15,351

 

 

 

15,819

 

Noncash lease expense

 

14,579

 

 

 

13,460

 

Deferred income tax benefit

 

(11,308

)

 

 

(2,126

)

Other

 

821

 

 

 

(350

)

Changes in assets and liabilities:

 

 

 

Accounts receivable and unbilled, net

 

(39,314

)

 

 

(62,438

)

Prepaid expenses and other current assets

 

(8,954

)

 

 

(17,397

)

Accounts payable

 

(921

)

 

 

770

 

Accrued expenses

 

54,923

 

 

 

47,848

 

Advanced billings

 

56,026

 

 

 

73,286

 

Lease liabilities

 

(14,433

)

 

 

(11,134

)

Other assets and liabilities, net

 

(13,659

)

 

 

488

 

Net cash provided by operating activities

 

276,979

 

 

 

251,366

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Property and equipment expenditures

 

(26,662

)

 

 

(27,636

)

Other

 

30

 

 

 

(1,886

)

Net cash used in investing activities

 

(26,632

)

 

 

(29,522

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from stock option exercises

 

9,855

 

 

 

16,313

 

Repurchases of common stock

 

(144,020

)

 

 

(800,667

)

Proceeds from revolving loan

 

105,000

 

 

 

299,200

 

Payments on revolving loan

 

(155,000

)

 

 

(159,500

)

Net cash used in financing activities

 

(184,165

)

 

 

(644,654

)

EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND

RESTRICTED CASH

 

760

 

 

 

(7,487

)

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

 

66,942

 

 

 

(430,297

)

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

 

28,265

 

 

 

461,304

 

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

$

95,207

 

 

$

31,007

 

 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)

 

(Amounts in thousands)

Three Months Ended September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

RECONCILIATION OF GAAP NET INCOME TO EBITDA

 

 

 

 

 

 

 

Net income (GAAP)

$

70,550

 

 

$

66,027

 

 

$

204,512

 

 

$

176,698

 

Interest expense, net

 

105

 

 

 

1,584

 

 

 

2,332

 

 

 

2,078

 

Income tax provision

 

12,651

 

 

 

15,865

 

 

 

40,463

 

 

 

32,517

 

Depreciation

 

6,329

 

 

 

4,951

 

 

 

17,707

 

 

 

13,928

 

Amortization

 

549

 

 

 

838

 

 

 

1,649

 

 

 

2,514

 

EBITDA (Non-GAAP)

$

90,184

 

 

$

89,265

 

 

$

266,663

 

 

$

227,735

 

Net income margin (GAAP)

 

14.3

%

 

 

17.2

%

 

 

14.7

%

 

 

16.6

%

EBITDA margin (Non-GAAP)

 

18.3

%

 

 

23.3

%

 

 

19.2

%

 

 

21.4

%

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)

$

272.0

 

$

276.0

 

$

8.54

 

$

8.66

Income tax provision

 

53.2

 

 

57.2

 

 

 

 

Interest expense, net

 

1.2

 

 

1.2

 

 

 

 

Depreciation

 

24.4

 

 

24.4

 

 

 

 

Amortization

 

2.2

 

 

2.2

 

 

 

 

EBITDA (Non-GAAP)

$

353.0

 

$

361.0

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231023910435/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