Medpace Q1 2025 Earnings Report

Medpace EPS Results

• Actual EPS: $3.67
• Consensus EPS: $3.06
• Beat/Miss: Beat by +$0.61
• One Year Ago EPS: $3.20

Medpace Revenue Results

• Actual Revenue: $558.57 million
• Expected Revenue: $528.38 million
• Beat/Miss: Beat by +$30.19 million
• YoY Revenue Growth: N/A

Medpace Announcement Details

• Quarter: Q1 2025
• Date: 4/21/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, April 22, 2025
• Conference Call Time: 9:00AM ET

Medpace (NASDAQ:MEDP) is a global clinical research organization (CRO) that provides comprehensive drug and medical device development services to pharmaceutical, biotechnology and medical device companies. The company’s full-service model covers all phases of clinical research, from early-stage Phase I trials through late-stage Phase IV studies, enabling sponsors to streamline development timelines and reduce complexity. Medpace’s integrated approach encompasses therapeutic expertise across oncology, cardiology, metabolic disease, central nervous system disorders and infectious diseases, among other areas.

Key service offerings include clinical monitoring, project management, biostatistics, data management and medical writing, supported by specialized units such as central laboratory services, imaging core lab operations, pharmacology and safety sciences. Medpace also provides regulatory consulting to help clients navigate regional and global approval pathways, ensuring alignment with local health authority requirements and industry best practices. This breadth of services allows the company to oversee trial execution, data analysis and regulatory submissions within a unified framework.

With headquarters in Cincinnati, Ohio, Medpace maintains a significant international presence, operating in more than 40 countries across North America, Europe, Asia-Pacific, Latin America and Africa. Its network of strategically located offices and laboratories enables efficient patient recruitment and site management, access to diverse patient populations and streamlined logistics. The company’s global footprint supports collaborations with academic institutions, hospitals and research centers to foster innovation and enhance trial delivery.

Founded in 1992 by Dr. August J. Troendle, Medpace has grown from a modest clinical monitoring firm into a leading mid-sized CRO. Under Dr. Troendle’s leadership as chairman and chief executive officer, the company has emphasized scientific rigor, operational excellence and a client-focused culture. Medpace’s management team combines decades of clinical research experience with a commitment to quality and regulatory compliance, positioning the firm to support both emerging biotech innovators and established pharmaceutical sponsors.

Medpace Q1 2025 Earnings Call Transcript

Key Takeaways

• Revenue of $558.6M in Q1 2025 rose 9.3% year-over-year, with net income of $114.6M up 11.7% and EPS of $3.67 versus $3.20.
• Net new business awards decreased 18.8% year-over-year to $500M, resulting in a 0.9 book-to-bill ratio and ending backlog of $2.8B, down 2.1% from Q1 2024.
• Full-year 2025 guidance projects $2.14B–$2.24B in revenue (1.5–6.2% growth) and EBITDA of $462M–$492M, reflecting margin pressure from higher costs and FX.
• Elevated pipeline and pre-backlog cancellations weighed on Q1 bookings, and management said moderating cancellations and an improved business climate are needed to target a 1.15 book-to-bill in H2.
• In Q1, Medpace repurchased 1.19M shares for $389.8M, leaving $344.8M available under its share repurchase authorization.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the Medpace First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question, please press 11 on your phone. If your question has been answered and you'd like to remove yourself from the queue, simply press 11 again.

[Operator]

As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Lauren Morris, Medpace's Director of Investor Relations. You may begin.

[Lauren Morris, Director of Investor Relations at Medpace]

Good morning, and thank you for joining Medpace's First Quarter twenty twenty five Earnings Conference Call. Also on the call today is our CEO, August Trundle our President, Jesse Geiger and our CFO, Kevin Brady. Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and uncertainties, as well as other important factors that could cause actual results to differ materially from our current expectations. These factors are discussed in our Form 10 ks and other filings with the SEC.

[Lauren Morris, Director of Investor Relations at Medpace]

Please note that we assume no obligation to update forward looking statements even if estimates change. Accordingly, you should not rely on any of today's forward looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non GAAP financial measures. These non GAAP measures are not superior to or replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of such non GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call.

[Lauren Morris, Director of Investor Relations at Medpace]

The slides are available in the Investor Relations section of our website at investor.medpace.com. With that, I would now like to turn the call over to August Trundle.

[August Troendle, Chairman & CEO at Medpace]

Good day, everyone. Our quarter one net awards were down sequentially and year over year with a net book to bill ratio of 0.9. This was primarily a reflection of high pipeline cancellations in prior quarters as previously discussed. Backlog cancellations were modestly elevated in Q1, but pre backlog cancellations were worse, impacting Q1 and future projected backlog net awards. RFP flow was strong in Q1, but quality has been variable and decisions are slowing.

[August Troendle, Chairman & CEO at Medpace]

We continue to see a path to improved backlog growth, reflected in book to bill ratios above 1.15 in Q3 and Q4. However, this will depend upon moderating cancellations and an improved business climate. Jesse will now provide comments on the quarter. Jesse?

[Jesse Geiger, President at Medpace]

Thank you, and good morning, everyone. Revenue for the first quarter of twenty twenty five was 558,600,000.0 which represents a year over year increase of 9.3%. Net new business awards entering backlog in the first quarter decreased 18.8% from the prior year to $500,000,000 resulting in a 0.9 net book to bill, and ending backlog as of 03/31/2025 was approximately $2,800,000,000 a decrease of 2.1% from the prior year. We project that approximately 1,610,000,000 of backlog will convert to revenue in the next twelve months, and backlog conversion in the first quarter was 19.2% of beginning backlog. With that, I will turn the call over to Kevin to review our financial performance in more detail and discuss our 2025 guidance. Kevin?

[Kevin Brady, CFO at Medpace]

Thank you, Jesse, and good morning to everyone listening in. As Jesse mentioned, revenue was $558,600,000 in the first quarter of twenty twenty five. This represented a year over year increase of 9.3%. EBITDA of $118,600,000 increased 2.6% compared to $115,700,000 in the first quarter of twenty twenty four. EBITDA margin for the first quarter was 21.2% compared to 22.6 in the prior year period.

[Kevin Brady, CFO at Medpace]

EBITDA margin compared to the prior year period was impacted by employee related costs and foreign exchange behind the weakening of the U. S. Dollar in the quarter. In the first quarter of twenty twenty five, net income of 114,600,000.0 increased 11.7% compared to net income of $102,600,000 in the prior year period. Net income growth above EBITDA growth was primarily driven by a lower effective tax rate from option exercises in the quarter and higher interest income.

[Kevin Brady, CFO at Medpace]

Net income per diluted share for the quarter was $3.67 compared to $3.2 in the prior year period. Regarding customer concentration, our top five and top 10 customers represented roughly 2232% respectively of our first quarter twenty twenty five revenue. In the first quarter, we generated $125,800,000 in cash flow from operating activities and our net days sales outstanding was negative sixty seven point eight days. As of 03/31/2025, we had 441,400,000 in cash. During the first quarter, we repurchased approximately 1,190,000.00 shares for $389,800,000 At the end of the quarter, we had $344,800,000 remaining under our share repurchase authorization program.

[Kevin Brady, CFO at Medpace]

Moving now to our updated guidance for 2025. Full year 2025 total revenue is now expected in the range of $2,140,000,000 to $2,240,000,000 representing growth of 1.5 to 6.2% over 2024 total revenue of $2,110,000,000 Our 2025 EBITDA is expected in the range of $462,000,000 to $492,000,000 representing a decline of 3.8% to gross of 2.5% compared to EBITDA of $480,200,000 in 2024. We forecast 2025 net income in the range of $378,000,000 to $4.00 $2,000,000 This guidance assumes a full year twenty twenty five effective tax rate of 15.5% to 16.5%, interest income of $15,800,000 and 30,800,000.0 diluted weighted average shares outstanding for 2025. There are no additional share repurchases reflected in guidance. Earnings per diluted share is now expected to be in the range of $12.26 to $13.04 Guidance is based on foreign exchange rates as of 03/31/2025.

[Kevin Brady, CFO at Medpace]

With that, I will turn the call back over to the operator so we can take your questions.

[Operator]

Thank you. And our first question will come from David Windley with Jefferies. Your line is open.

[David Windley, Managing Director at Jefferies LLC]

Hi, thanks for taking my questions. Good morning. August, your comment, maybe August and Jesse, your comments around RFPs and quality of RFPs, I wanted to explore. We've in some of our discussions been told that biotechs and kind of your target client audience are inviting more CROs into bid situations and in some cases taking a larger number of CROs maybe by one or two, but a larger number of CROs forward into bid defense. And so and maybe, you know, implied fishing for for lower prices.

[David Windley, Managing Director at Jefferies LLC]

Wanted to to get you to flesh out if you would, your quality comments. Are you seeing these kinds of trends? Are you seeing more price competition? And is that a little bit of what you mean when you say the quality is a little more mixed? Thanks.

[August Troendle, Chairman & CEO at Medpace]

Yeah, Dave, is true. Anytime there's a slowdown in the industry there tends to be more price competition, more broader look at CROs, but a big factor is unfunded projects that they're looking toward funding and getting proposals so that they can bring that back to try to make a story for moving a product forward rather than having some assets to move the product forward to start with. But yeah, do tend to get more churn and a larger number of CROs participating in particular bids. RFP numbers can go up, but that just means they've doubled the number of average number CROs are inviting to each RFP and so everyone sees an increase in RFPs. So, yeah, I do think that's a good part of it.

[August Troendle, Chairman & CEO at Medpace]

But the more concerning issue for me is, the likelihood of funding and the type of assets and where they are in their funding cycle and how far out the project is, at what stage it is, that leads to a worsening in quality of the RFPs.

[David Windley, Managing Director at Jefferies LLC]

Thanks for that. And and, August, your comments about, you know, still depending on environment, I didn't get your exact words, but but kind of depending on environment, still believe you you have the potential to track to a 1.15 book to bill in the second half. I noted noted your comments about backlog cancellations, but pre backlog cancellations were worse. I guess I would love for you to flesh out how, you know, what would be required, I guess, to achieve that because in say middle of last year, when you talked about that intensification of pre backlog cancellations, that was essentially what seemed to submit your view that you wouldn't be able to get to a higher book to bill, say later last year and maybe early this year? How is that different now?

[August Troendle, Chairman & CEO at Medpace]

Sure. Yeah, the pipeline cancellations, the pre backlog cancellations particularly have narrowed our options quite a bit and limited possible booking levels in the next few quarters. But you realize we have a pretty good visibility in the opportunities that could most of the opportunities that could convert into backlog in the next few quarters. They're kind of already known to us as opportunities at whatever stage. And they're sufficient to get us there if cancellations come back to a nice reasonable range and we don't see this across the pipeline kind of elevated level.

[August Troendle, Chairman & CEO at Medpace]

And things continue to move forward. And we've seen a slowing in decisions on RFPs and once in a while you also have delays in project starts due to funding or for other reasons and we need the projects to move into operational execution and recognition and backlog and we need to avoid large cancellations. So, our path there has narrowed quite a bit, but we still see the reason it's not just a hypothetical far off, I'm saying it's still possible, but it's highly improbable. We still have a reasonable path to get there if cancellations come back quite a bit.

[David Windley, Managing Director at Jefferies LLC]

Thank you for that. I'll leave it at that. Thank you.

[Operator]

And our next question will come from Max Schmuck with William Blair. Your line is open.

[Max Smock, Research Analyst - Healthcare at William Blair]

Hi, good morning. Thanks for taking our question. August, you mentioned thinking can get back to 1.15 book to bill in the back half of the year if you get that improved climate. I guess my question would be, what do you think bookings look like if you don't get that improved climate? And then in that scenario where we assume even a stable environment from here, how much downside is there to the top line this year?

[Max Smock, Research Analyst - Healthcare at William Blair]

And then what would that imply for top line growth in 2026? Thank you.

[August Troendle, Chairman & CEO at Medpace]

How much risk is there to top line this year? You mean bookings or you're talking revenue in

[Max Smock, Research Analyst - Healthcare at William Blair]

more impact on revenue in the second half.

[Max Smock, Research Analyst - Healthcare at William Blair]

I guess three parts, right? If the environment is stable from here, what does book to bill look like in the back half of the year? How much downside is there to how you're thinking about revenue and back half of the end of your guide for this year? And then what does that all imply for top line growth in 2026?

[August Troendle, Chairman & CEO at Medpace]

Yeah, well, that's a kind of a difficult hypothetical. What kind of downside is there? That depends on how bad the environment gets. If cancellations continue kind of the way they have of recent past and particularly this past quarter and some of the quarters last year, we're gonna be in the same kind of place we've been, somewhere around one, I guess. I think that's kind of the downside, but we still have opportunities to again, paths toward getting to 1.15.

[August Troendle, Chairman & CEO at Medpace]

Revenue in the second half is pretty much locked in, that's kind of a different issue because that's a different cancellation, it would mean a more later stage cancellation to knock our revenue off. Now that's possible and of course, we continue to have clients with funding difficulties that we have to stop work on and, or cancel the project because of work. So there's still some risk to second half revenue, but most of that is pretty locked in. And I really don't have a model for '26. So I can't go there yet, and the environment is just too early to really talk about 2026 revenue impact of poor bookings through this year.

[Max Smock, Research Analyst - Healthcare at William Blair]

Yeah, understood. And maybe framing it as the downside scenario wasn't the right way to do. I was thinking more, but if things stay the same, stay the way they are today and you don't get that improved climate. And just to confirm if that is the case and we're talking book to bill kind of around one point zero in the back half of the year versus if you do get that improvement, you're still thinking you can get to 1.15?

[August Troendle, Chairman & CEO at Medpace]

Correct.

[Max Smock, Research Analyst - Healthcare at William Blair]

Okay. That's helpful. Thank you. And then maybe as a follow-up, there's been a lot of headlines recently around just out of the FDA and there was one over the weekend from an interview where they were saying going to require less clinical trials in certain areas going forward if the mechanism of action makes sense and efficient unmet need. Do you have any sense or can you provide us any detail around what your rare disease exposure looks like?

[Max Smock, Research Analyst - Healthcare at William Blair]

And just how you're thinking about this kind of discussion from the FDA and the talk about doing less trials in some of these indications moving forward. Is that a long term structural headwind for med patients for the CRO industry as a whole?

[August Troendle, Chairman & CEO at Medpace]

I don't know, that's pretty hypothetical, you make drugs easier to develop and you tend to get more development. So, certainly if you took away the need for significant trials in an area, that does have an impact. But I think that's very hypothetical and rare disease and it kind of depends on how you define it is certainly a meaningful part of our business but I really don't make much of the, I think great to have the trial requirements be proportional serious and needs of society for drugs and you got to have the right balance. We want effective drugs, but we want them developed at a reasonable cost. And that's just kind of the trade offs and I don't really see a risk to our industry from that.

[Max Smock, Research Analyst - Healthcare at William Blair]

Got it, thank you.

[Operator]

And our next question comes from Anne Hines with Mizuho. Your line is open.

[Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group]

Hi, good morning. Maybe talk about cancellations a little bit more. Can you remind us what your cancellation rate I don't think you said what it was this quarter versus what it was last quarter and what it is versus historical. And maybe just the type of trials that you're seeing canceled, is it widespread, is it specific customers, any incremental detail on cancellations would be very helpful. Thanks.

[August Troendle, Chairman & CEO at Medpace]

Sure, yeah. You didn't hear it because we didn't say it because we don't disclose it. So we just don't, you know, we don't provide cancellation rate. You know, we do talk about broad trends in magnitude, but we don't give the rates. And the cancellations have been pretty broad, but largely centered around funding issues.

[August Troendle, Chairman & CEO at Medpace]

And, you can call it reprioritization and other things and that's certainly part of it and there's certainly drugs that have had significant safety signals or other failures of trials that have impacted the development of the program. But funding has been at least a part of a good portion of the cancellations, but I can't sort out a different therapeutic area or anything like that, it's kind of across the board.

[Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group]

Great, and then my next question is just on share repurchase. Obviously, your stocks down year to date, it's gonna be down a little bit more today. And there's no incremental share repurchase in your guidance. I guess what would trigger Medpace to get more aggressive on share repurchases?

[Kevin Brady, CFO at Medpace]

Yeah. I mean, Anne, this is Kevin. We'll continue to take an opportunistic approach as we have the last couple of quarters. And so we'll continue to look for those opportunities to do that. And we'll kind of see how we're able to execute.

[Kevin Brady, CFO at Medpace]

As you saw, we did increase the board authorization on share repurchases. And so we'll look for opportunities to continue to do that.

[Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group]

Thank you.

[Operator]

And our next question comes from Dan Leonard with UBS. Your line is open.

[Dan Leonard, Managing Director & Research Analyst at UBS Group]

Thank you. I have a question on that small biopharma exposure that you report at 80% of your revenue. Do you have any sense for how much of that is negative enterprise value biotech? And are you concerned at all that some of these biotechs that have negative enterprise value might just start to close-up shop and return the cash?

[August Troendle, Chairman & CEO at Medpace]

Jesse, do you have any proportions on that? Continue to see companies fail. I don't know how many if the drugs failed and they're not doing anything and they close-up shop, guess who cares, they don't have a viable drug to go forward with. Certainly funding difficulties is a bigger issue than drug failures and closing up shop at the current time. But Jesse, do you have any kind

[Jesse Geiger, President at Medpace]

of metrics Yeah, I don't have anything on negative EV quantification. The things we do quantify, we'll look at what percentage is public versus private, fully funded companies and kind of what percentage is partnered with large pharma. But we don't we're not tracking and reporting EV values.

[Dan Leonard, Managing Director & Research Analyst at UBS Group]

Got it. It doesn't sound like that's a high level of concern of yours independent from the broader funding environment anyway. Is that fair?

[August Troendle, Chairman & CEO at Medpace]

Yeah, I think companies having too much money and haven't returned it to investors is not our problem. Those that don't have money on

[Dan Leonard, Managing Director & Research Analyst at UBS Group]

the Understood.

[Dan Leonard, Managing Director & Research Analyst at UBS Group]

And then my follow-up question, which is coming up a lot in the investment community, August, do you have any sense on whether all the turnover at the FDA is impacting your client discussions at all and making them incrementally behave differently or more worried about the future?

[August Troendle, Chairman & CEO at Medpace]

I think it makes everybody worried about the future. I'm not convinced there's any kind of evidence that there's been delays or problems to date or changing behavior, but we'll have to see, I think it's too early.

[Dan Leonard, Managing Director & Research Analyst at UBS Group]

Okay, thank you.

[Operator]

And our next question will come from Eric Coldwell with Baird. Your line is open.

[Eric Coldwell, Senior Research Analyst at Baird]

Thanks very much. I wanted to hit on the other side You've got bookings, you also have backlog burn. Backlog burn was up pretty nicely year over year. It looks like the forecast must incorporate higher levels of backlog burn this year.

[Eric Coldwell, Senior Research Analyst at Baird]

I'm curious how much of that is a function of the lower backlog growth and the lower bookings, which naturally changes the denominator, denominator equation, but also were there unusual timing shifts in the burn rate of your backlog or project specific items this quarter? Are there execution improvements that you're showing and maybe think are sustainable? We'd just like to get a better sense on the magnitude of this backlog burn reacceleration, how sustainable it is.

[Kevin Brady, CFO at Medpace]

Yeah, Eric, this is Kevin. I mean, it's more a function of you saw an acceleration in revenue in the quarter. So programs were progressing well, but you also saw an increase in the reimbursable cost activity, right? That was a bit higher than what we had expected. So that's going to influence it as well.

[Kevin Brady, CFO at Medpace]

And then it's the lower bookings that August talked about in his prepared remarks. It was coming in a bit soft. So it's not that we're changing execution or anything associated with that. I mean programs continue to progress very nicely. It's more a reflection of the numerator and the denominator.

[Eric Coldwell, Senior Research Analyst at Baird]

Okay. And then Kevin, last quarter on the call mid February you had in response to one of my questions you had suggested that you thought revenue would be more modest in the first quarter and then linearly progressing through the year. We got quite the opposite with over 9% revenue growth, but the rest of your targeted growth rates are lower. So, what other than the near 10% growth in pass throughs, what were the other dynamics in play? Were you really thinking pass throughs were going to be down and instead they grew 10%, so maybe we didn't know what to model, but in your mind that was the big delta here.

[Eric Coldwell, Senior Research Analyst at Baird]

I'm just, you know, told us to start slow and grow revenue and it was the opposite. You know, six weeks left in the quarter is what we heard. So I'm just trying to figure out the change.

[Kevin Brady, CFO at Medpace]

Yeah, yeah, I think the bigger influence was the reimbursable cost activity. Now having said that, your programs progressed probably a bit better than I had anticipated in the first quarter as well. But I think the bigger influence was the reimbursable.

[Eric Coldwell, Senior Research Analyst at Baird]

And then my last question for this call. Just I saw a little bit of headcount growth quarter over quarter, a little bit more year over year, but maybe a bit slower than I was originally anticipating, probably because of the lower bookings. But what is your new outlook on turnover hiring, timing of hiring this year? I'm curious what your plans are at this point, what you'd like to do and what you think is actually doable in the environment.

[Jesse Geiger, President at Medpace]

Yeah. Thanks, Eric. We did have a little bit of modest headcount growth in the first quarter. Turnover remains pretty good. And we're still targeting headcount growth this year likely around mid single digit.

[Eric Coldwell, Senior Research Analyst at Baird]

Okay. Thanks very much.

[Operator]

And our next question comes from Charles Rhyee Your line is open.

[Charles Rhyee, Managing Director at TD Cowen]

Yeah, thanks for taking the question. I just want to go back a little bit when you're talking about, obviously, the funding issues with clients. Are you seeing any clients because we've heard in some instances where companies have been committed, have gotten funding, but then either their private equity or VC backers kind of maybe pulled back on some of those commitments. And so maybe some of the funding data we've seen over the last year or so may not actually materialize. Just curious if that is some of the dynamics you're seeing in some of clients potentially having some funding issues.

[August Troendle, Chairman & CEO at Medpace]

Sure, yeah, I definitely think that's part of it. Often clients represent us that they've got funding arranged, they have commitments, have whatever, how strong those commitments are. Know, VCs and others having to choose between, you know, the winners and losers in their portfolio, but it's where we are.

[Charles Rhyee, Managing Director at TD Cowen]

Yeah. Okay. And then maybe just I know you're not disclosing sort of the cancellation rates, but can you give us a sense sort of maybe between pre backlog cancellations and just cancellations out of backlog, sort of maybe the relative mix between the two? As you kind of I know you guys said you kind of were looking at your pre backlog kind of expectations for the course of the year. I know you said it was higher, but was it really outside the realm that you expected?

[Charles Rhyee, Managing Director at TD Cowen]

Or was it just kind of at the upper bounds of what you kind of thought could happen?

[August Troendle, Chairman & CEO at Medpace]

Yes, I think I'd classify our backlog cancellations kind of in that range, but just outside of the range kind of, but the pre backlog cancellations were significantly worse and very high. So, overall it was a pretty high rate of pipeline cancellations.

[Charles Rhyee, Managing Director at TD Cowen]

Okay, thanks. And Jesse, maybe just real quickly, you talked about headcount. Would you say you're still on track for a mid to high single digit growth or is that really just now dependent on what we see in terms of the in environment over the next couple months?

[Jesse Geiger, President at Medpace]

Yeah, I would say at this moment we're on track for mid single digit growth, but it will depend on how the environment unfolds. Things pick up will accelerate more aggressive hiring.

[Charles Rhyee, Managing Director at TD Cowen]

Great. Thank you.

[Operator]

And our next question comes from Michael Cherny with Leerink Partners. Your line is open.

[Michael Cherny, Senior Managing Director & Senior Research Analyst at Leerink Partners]

Good morning and thanks for taking the question. Maybe just to come at the cancellations question another way both on the existing backlog and the pre backlog. Is there anything you can tell us about cadence over the course of the quarter? Clearly, we can't no one you can't control the dynamics going on at play across the changeover in HHS, but did you see any elevated activity maybe over the course into March, given the uncertainty that's been created from the moving pieces across FDA?

[August Troendle, Chairman & CEO at Medpace]

Yeah, I'm not sure had anything to do with movements at FDA. And I mean, I don't have the cadence in terms of month to month in front of me, but it didn't strike me as all back end or front end loaded. It was kind of across the quarter.

[Michael Cherny, Senior Managing Director & Senior Research Analyst at Leerink Partners]

Okay. And then on the dynamics and the build back towards an improved book to bill, you talked about their conditions in place to get back to 1.15. Is there anything your clients are telling you in terms of how they feel about achieving those conditions? And what would be the comfort factors you're looking for in order to get back to those levels? Curious along those lines where what the feedback is from the channel specifically.

[August Troendle, Chairman & CEO at Medpace]

Yeah. No, I have no I don't think that's provided me any input. I don't think anybody knows.

[Michael Cherny, Senior Managing Director & Senior Research Analyst at Leerink Partners]

Okay, thank you.

[Operator]

And our next question comes from Jaylinda Singh with Truist. Your line is open.

[Jailendra Singh, Managing Director at Truist Securities]

Thank you, and good morning, and thanks for taking my questions. I just want to go back to revenue guidance rates for the year. You report this metric of amount of backlog expected to convert in the next twelve months. It has been around a little over $1,600,000,000 for the last few quarters. Have you seen any cancellation in that bucket recently?

[Jailendra Singh, Managing Director at Truist Securities]

Because it seems you are implying that even if booking trends and book to bill remain at the current levels first of the year, you still feel good about revenue outlook for the year. And I'm wondering because you don't see much concern around that $1,600,000,000 amount of backlog conversion.

[Kevin Brady, CFO at Medpace]

Yeah, this Kevin. I mean, terms of kind of reemphasizing what August said, we feel good about the 2025 guidance because we've got the programs in backlog and barring any acceleration and cancellations, we always have cancellations in that bucket. But as long as they stay relatively normal, we feel good about the revenue that's going to come out of that bucket. Certainly revenue has or backlog has declined a little bit and so that next twelve month figure has come down a little bit, but we feel good again about the guidance that we have out there on revenue.

[Jailendra Singh, Managing Director at Truist Securities]

Okay. And then my follow-up, I want to go back to David's question around biotech CRO landscape getting more competitive. I mean, your pitch to biotech companies has been giving them more personalized focus, more personalized services. If some of your peers are restructuring their approach and going after this market more aggressively, how are you guys responding to that? Are you guys making any changes to your pitch or your approach as you go after these clients?

[August Troendle, Chairman & CEO at Medpace]

I don't think there's been a change in our competitive dynamics lately of any material. In fact, everybody tries to give their clients individual attention and there's been no change.

[Jailendra Singh, Managing Director at Truist Securities]

Okay, thank you.

[Operator]

Our next question comes from Justin Bowers with DB. Your line is open.

[Justin Bowers, Analyst at Deutsche Bank]

Hi, good morning everyone. Just a few follow ups from what's been discussed. In terms of the programs progressing faster and the step up in 1Q revenue, is that Kevin, is that more internal or external factors? Meaning was it like execution on your end? Or is there a push from clients to maybe sort of get the data done faster? Just anything to call out the progression there.

[Kevin Brady, CFO at Medpace]

I mean, I would say there's nothing unusual. It's just that the the active programs that we have in backlog just continue to progress very nicely. It's not to say that we've made any major internal changes. There's always pressure from sponsors to do things faster and we certainly do what we can, but I would say there's no change internally as it relates to how we execute.

[Justin Bowers, Analyst at Deutsche Bank]

Okay. And then in terms of the cancellations, it sounds like most of that was concentrated or the elevation was around the pre booking. But in terms of the in flight cancellations, was that elevated as well? And is that what trends are you seeing there? Is it more around futility or is it also funding related?

[August Troendle, Chairman & CEO at Medpace]

Yeah, mean the in flight backlog cancellations tend to be a bit more related to drug performance, but the funding has been a big part of even our backlog cancellations. So it's a lot of overlap.

[Justin Bowers, Analyst at Deutsche Bank]

Okay. And then, just in terms of, one of the earlier questions on pricing pressure, I think Medpace of this compared to the bigger guys has been pretty competitively priced. The pressure that you talked about is that are you seeing that from your midsized peers? Or are you also seeing that coming from some of the larger competitors that may be encroaching on your market space?

[Jesse Geiger, President at Medpace]

It's both. I mean, we're seeing competitive from clients.

[August Troendle, Chairman & CEO at Medpace]

Yeah. I'm sorry. Go ahead, Jesse.

[Jesse Geiger, President at Medpace]

Yeah.

[Jesse Geiger, President at Medpace]

Yeah. I'll say it's from both peers and, you know, and larger, you know, midsize and and larger competitors. But also, the pricing is influenced by just scarcity of funds as well from the biotech perspective.

[Justin Bowers, Analyst at Deutsche Bank]

Got it. All right. Thank you. I will jump back in queue.

[Operator]

And our next question comes from David Windley Your line is open.

[David Windley, Managing Director at Jefferies LLC]

Hi, thanks for taking my follow-up. I have a few, but I'm only going to ask one bigger one, which is around sites and the pass through, elements. So one of the things that we've heard anecdotally a fair amount is that the NIH grant funding, you know, let's call it debate freeze, whatever, does have academic medical centers nervous about their situations. And while those funds probably fund investigator, you know, investigator driven studies and not the type that you would directly run, but those funds probably also fund research infrastructure at these academic medical centers that could influence, you know, the the throughput capabilities of the sites that you might use in studies. So with that having said been said, I'm wondering about general site access, you know, recruitment rates, how much do you use academic medical centers, and to what extent are how should we think about the pass through, you know, increase in your revenue?

[David Windley, Managing Director at Jefferies LLC]

Is that inflation driven Is it just re budgeting of kind of quantity of consumption? And how much of that pass through, inflation that we saw in the first quarter is also driving the revenue for the year? Thank you.

[August Troendle, Chairman & CEO at Medpace]

Well, I think that threats and concern around academic funding at these large university centers is not reflected in any things today. It's a theoretical issue for the future. Think to date the increase in pass throughs of investigator costs as portions of budgets relate to a number of things including complexity of the evaluations done at sites, but inflation and scarcity of patients, and the pandemic of course had a huge impact on operations at centers and caused considerable cost increases and inflationary impact you might say at that sites. But costs were driven up at sites and passed through to trials. So that's been the driver we've seen to date.

[August Troendle, Chairman & CEO at Medpace]

This shifting of possible overhead costs to on the sponsor driven clinical trials, clinical trials. Maybe that'll happen, don't know, but certainly not a factor in the current dynamic.

[David Windley, Managing Director at Jefferies LLC]

And on the revenue mix for the year, if we if we were to think about, you know, you raised by a little bit, is all of that raised pass through? Is more than the raised pass through? How should we think about the pass through influence on on revenue versus your prior expectations?

[Kevin Brady, CFO at Medpace]

In the quarter, Dave?

[David Windley, Managing Director at Jefferies LLC]

I mean, I'm really thinking about the guidance for the year.

[Kevin Brady, CFO at Medpace]

Yeah, I mean, certainly it was elevated in the quarter, but we kind of see that as being more timing related. We continue to feel that the cost, the pass through pre fund reimbursable costs of the percentage of it will be at similar levels to what we saw in the back half of 'twenty four. But as you know, it bounces around from quarter to quarter, but the expectation for the year is that it's somewhere to what we similar to what we saw in the back half of twenty twenty four.

[David Windley, Managing Director at Jefferies LLC]

Yes, but my question is, did the jump in our revenue, is that in anticipation of jump in pass through or direct?

[Kevin Brady, CFO at Medpace]

Yes, Dave, as I said before, we were not expecting pass throughs to be this high in the quarter. So a big part of the revenue increase that we saw this quarter was influenced by the reimbursable activity.

[David Windley, Managing Director at Jefferies LLC]

Yeah. Yeah. Thank you for that.

[Operator]

I show no further questions at this time. I would now like to turn the call back to Lauren for closing remarks.

[Lauren Morris, Director of Investor Relations at Medpace]

Thank you all for joining us on today's call and for your interest in Medpace. We look forward to speaking with you again on our second quarter twenty twenty five earnings call.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Lauren Morris, Director of Investor Relations
• August Troendle, Chairman & CEO
• Jesse Geiger, President
• Kevin Brady, CFO

Analysts

• David Windley, Managing Director at Jefferies LLC
• Max Smock, Research Analyst - Healthcare at William Blair
• Ann Hynes, Senior Healthcare Services Equity Analyst & Managing Director at Mizuho Financial Group
• Dan Leonard, Managing Director & Research Analyst at UBS Group
• Eric Coldwell, Senior Research Analyst at Baird
• Charles Rhyee, Managing Director at TD Cowen
• Michael Cherny, Senior Managing Director & Senior Research Analyst at Leerink Partners
• Jailendra Singh, Managing Director at Truist Securities
• Justin Bowers, Analyst at Deutsche Bank