- Revenue of $230.9 million in the first quarter of 2020
increased 15.0% from revenue of $200.7 million for the comparable
prior-year period, representing a backlog conversion rate of
18.0%.
- Net new business awards were $246.9 million in the first
quarter of 2020, representing a decrease of 0.7% from net new
business awards of $248.7 million for the comparable prior-year
period, which resulted in a net book-to-bill ratio of 1.07x.
- First quarter of 2020 GAAP net income was $29.0 million, or
$0.76 per diluted share, versus GAAP net income of $19.2 million,
or $0.51 per diluted share, for the comparable prior-year period.
Net income margin was 12.5% and 9.6% for the first quarter of 2020
and 2019, respectively.
- EBITDA was $40.6 million for the first quarter of 2020, an
increase of 21.3% from EBITDA of $33.4 million for the comparable
prior-year period, resulting in an EBITDA margin of 17.6%.
Medpace Holdings, Inc. (Nasdaq: MEDP) (“Medpace”) today
announced financial results for the first quarter ended March 31,
2020.
First Quarter 2020 Financial Results
Revenue for the three months ended March 31, 2020 increased
15.0% to $230.9 million, compared to $200.7 million for the
comparable prior-year period. On a constant currency organic basis,
revenue for the first quarter of 2020 increased 15.2% compared to
the first quarter of 2019.
Backlog as of March 31, 2020 grew 16.8% to $1.3 billion from
$1.1 billion as of March 31, 2019. Net new business awards were
$246.9 million, representing a net book-to-bill ratio of 1.07x for
the first quarter of 2020, as compared to $248.7 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 2020, total direct costs were $165.8
million, compared to total direct costs of $145.7 million in the
first quarter of 2019. Selling, general and administrative
(SG&A) expenses were $25.1 million in the first quarter of
2020, compared to SG&A expenses of $21.3 million in the first
quarter of 2019.
GAAP net income for the first quarter of 2020 was $29.0 million,
or $0.76 per diluted share, versus GAAP net income of $19.2
million, or $0.51 per diluted share, for the first quarter of 2019.
This resulted in a net income margin of 12.5% and 9.6% for the
first quarter of 2020 and 2019, respectively.
EBITDA for the first quarter of 2020 increased 21.3% to $40.6
million, or 17.6% of revenue, compared to $33.4 million, or 16.7%
of revenue, for the comparable prior-year period. On a constant
currency basis, EBITDA for the first quarter of 2020 increased
19.1% from the first quarter of 2019.
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 $134.0 million at
March 31, 2020, and the Company generated $49.1 million in cash
flow from operating activities during the first quarter of 2020.
During the first quarter of 2020, the Company repurchased
approximately 0.7 million shares for a total of $43.2 million. The
Company had $56.8 million remaining under its authorized share
repurchase program at the end of the quarter.
COVID-19 Update and Financial Guidance
While we continue to operate globally, the level of activity at
each of our locations varies depending on the local governmental
requirements and guidelines. The majority of our office staff are
effectively working remotely and our labs are fully operational
with modifications made to ensure the safety of our employees. The
diversion of resources to treat COVID-19 patients has significantly
impacted the operations at most of the investigative sites where
patients in our clinical trials are recruited and treated. This has
resulted in reduced trial starts and slowed new business awards.
Depending on the duration of the disruption ongoing studies may be
cancelled and some of our clients may lack the funding to complete
trials which are extended due to slowed recruitment of patients. We
work with many smaller clients with limited financial resources and
market disruptions may make raising additional funds difficult.
Travel restrictions and business closures have also impacted study
participants and clinical sites which affects our ability to
efficiently provide clinical trial services. As a result, we are
working with our customers to develop solutions to limit disruption
to clinical trials while following required regulatory guidelines
and maintaining quality to ensure the health and well-being of
study participants. These include alternative assessment methods
such as virtual monitoring visits.
We believe the COVID-19 pandemic will have an increasing impact
on our results of operations in the future, and as we cannot
predict the duration or scope of the pandemic, the future financial
impact on our results of operations cannot be reasonably estimated
at this time. Due to this economic uncertainty, the Company is
withdrawing previously provided revenue, EBITDA, net income, and
net income per diluted share guidance and is not issuing new
guidance at this time. We will provide updated guidance when we can
reasonably estimate the impacts of the COVID-19 pandemic on
business results.
Conference Call Details
Medpace will host a conference call at 9:00 a.m. ET, Wednesday,
April 29, 2020, to discuss its first quarter 2020 results.
To participate in the conference call, dial 800-219-7113
(domestic) or 574-990-1030 (international) using the passcode
5203559.
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.
A recording of the call will be available at 12:00 p.m. ET on
Wednesday, April 29, 2020 until 12:00 p.m. ET on Wednesday, May 13,
2020. To hear this recording, dial 855-859-2056 (domestic) or
404-537-3406 (international) using the passcode 5203559.
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 3,600 people across 37 countries as of March 31,
2020.
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 anticipated financial results and 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 “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” “will,” “would,” “target,” “forecast,”
“may,” “could,” “likely,” “anticipate,” “project,” “goal,”
“objective,” 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; fluctuation in our results between
fiscal quarters and years; decreased operating margins due to
increased pricing pressure or other pressures; 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 successfully execute
our growth strategies; 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 security breaches and other disruptions which
could compromise our information; our failure to manage our growth
effectively; 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; the risks associated with our
intercompany pricing policies; our failure to attract suitable
investigators and patients to our clinical trials; the liability
risks associated with our research and development services; the
risks related to our Phase I clinical services; inadequate
insurance coverage for our operations and indemnification
obligations; fluctuations in exchange rates; the risks related to
our relationships with existing or potential customers who are in
competition with each other; our failure to successfully integrate
potential future acquisitions; potential impairment of goodwill or
other intangible assets; our limited ability to utilize our net
operating loss carryforwards or other tax attributes; the risks
associated with the use and disposal of hazardous substances and
waste; the failure of third parties to provide us critical support
services; our limited ability to protect our intellectual property
rights; the risks associated with potential future investments in
our customers’ business or drugs; general economic conditions in
the markets in which we operate, including financial market
conditions; 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; 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 or withdraw an approved drug, biologic or
medical device from the market; failure to keep pace with rapid
technological changes; the impact of industry-wide reputational
harm to CROs; the effect of the U.K.’s withdrawal from the EU,
which could have implications on our research, commercial and
general business operations in the U.K. and the EU; changes in U.S.
generally accepted accounting principles, including the impact of
the changes to the revenue recognition standards; risks related to
internal control over financial reporting; our ability to fulfill
our debt obligations; the risks associated with incurring
additional debt or undertaking additional debt obligations; the
effect of covenant restrictions under our debt agreements on our
ability to operate our business; our inability to generate
sufficient cash to service all of our indebtedness; fluctuations in
interest rates; 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; and
our dependence on our lenders, which may not be able to fund
borrowings under the credit commitments, and our inability to
borrow.
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, on February 25, 2020,
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. Should known or unknown risks or
uncertainties materialize or should 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 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,
2020
2019
Revenue, net
$
230,879
$
200,741
Operating expenses:
Direct service costs, excluding
depreciation and amortization
88,795
75,109
Reimbursed out-of-pocket expenses
77,006
70,594
Total direct costs
165,801
145,703
Selling, general and administrative
25,124
21,308
Depreciation
2,453
1,991
Amortization
1,997
5,844
Total operating expenses
195,375
174,846
Income from operations
35,504
25,895
Other income (expense), net:
Miscellaneous income (expense), net
617
(282
)
Interest income (expense), net
357
(955
)
Total other income (expense), net
974
(1,237
)
Income before income taxes
36,478
24,658
Income tax provision
7,524
5,460
Net income
$
28,954
$
19,198
Net income per share attributable to
common shareholders:
Basic
$
0.80
$
0.54
Diluted
$
0.76
$
0.51
Weighted average common shares
outstanding:
Basic
36,024
35,698
Diluted
38,030
37,285
MEDPACE HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except share
amounts)
As Of
March 31,
December 31,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
133,999
$
131,920
Accounts receivable and unbilled, net
136,374
155,662
Prepaid expenses and other current
assets
32,629
29,446
Total current assets
303,002
317,028
Property and equipment, net
50,015
47,292
Operating lease right-of-use assets
58,667
52,152
Goodwill
662,427
662,396
Intangible assets, net
52,353
54,350
Deferred income taxes
490
376
Other assets
10,680
9,477
Total assets
$
1,137,634
$
1,143,071
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
16,985
$
22,404
Accrued expenses
107,005
109,252
Advanced billings
189,562
192,359
Other current liabilities
25,099
18,987
Total current liabilities
338,651
343,002
Operating lease liabilities
51,395
45,212
Deferred income tax liability
14,022
12,849
Other long-term liabilities
15,767
15,725
Total liabilities
419,835
416,788
Commitments and contingencies
Shareholders’ equity:
Preferred stock - $0.01 par-value;
5,000,000 shares authorized; no shares issued and outstanding at
March 31, 2020 and December 31, 2019, respectively
-
-
Common stock - $0.01 par-value;
250,000,000 shares authorized at March 31, 2020 and December 31,
2019, respectively; 35,484,473 and 36,065,278 shares issued and
outstanding at March 31, 2020 and December 31, 2019,
respectively
355
360
Treasury stock - 200,000 shares at March
31, 2020 and December 31, 2019, respectively
(6,030
)
(6,030
)
Additional paid-in capital
673,372
666,585
Retained earnings
53,831
68,109
Accumulated other comprehensive loss
(3,729
)
(2,741
)
Total shareholders’ equity
717,799
726,283
Total liabilities and shareholders’
equity
$
1,137,634
$
1,143,071
MEDPACE HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(Amounts in thousands)
Three months ended
March 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
28,954
$
19,198
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
2,453
1,991
Amortization
1,997
5,844
Stock-based compensation expense
5,445
3,183
Amortization of debt issuance costs and
discount
-
138
Noncash lease expense
2,917
2,363
Deferred income tax provision
1,079
656
Amortization and adjustment of deferred
credit
(181
)
(200
)
Other
(67
)
(43
)
Changes in assets and liabilities:
Accounts receivable and unbilled, net
19,301
4,255
Prepaid expenses and other current
assets
(2,694
)
(1,642
)
Accounts payable
(6,809
)
(2,684
)
Accrued expenses
(1,757
)
(5,221
)
Advanced billings
(2,695
)
2,437
Lease liabilities
(2,236
)
(2,041
)
Other assets and liabilities, net
3,441
5,771
Net cash provided by operating
activities
49,148
34,005
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures
(5,561
)
(2,520
)
Other
39
(1,322
)
Net cash used in investing activities
(5,522
)
(3,842
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises
1,331
972
Repurchases of common stock
(41,776
)
-
Payment of debt
-
(24,000
)
Net cash used in financing activities
(40,445
)
(23,028
)
EFFECT OF EXCHANGE RATES ON CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH
(1,102
)
(290
)
INCREASE IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
2,079
6,845
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH — Beginning of period
131,920
23,282
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH — End of period
$
133,999
$
30,127
MEDPACE HOLDINGS, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(Amounts in thousands, except per share
amounts)
Three Months Ended
March 31,
2020
2019
RECONCILIATION OF GAAP NET INCOME TO
EBITDA
Net income (GAAP)
$
28,954
$
19,198
Interest (income) expense, net
(357
)
955
Income tax provision
7,524
5,460
Depreciation
2,453
1,991
Amortization
1,997
5,844
EBITDA (Non-GAAP)
$
40,571
$
33,448
Net income margin (GAAP)
12.5
%
9.6
%
EBITDA margin (Non-GAAP)
17.6
%
16.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200428005863/en/
Media Contact: Julie Hopkins Medpace Holdings, Inc. 513.579.9911
x12627 j.hopkins@medpace.com
Investor Contact: investor@medpace.com
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