- Revenue of $383.7 million in the third quarter of 2022
increased 29.8% from revenue of $295.6 million for the comparable
prior-year period, representing a backlog conversion rate of
17.7%.
- Net new business awards were $470.9 million in the third
quarter of 2022, representing an increase of 15.4% from net new
business awards of $408.0 million for the comparable prior-year
period, which resulted in a net book-to-bill ratio of 1.23x.
- Third quarter of 2022 GAAP net income was $66.0 million, or
$2.05 per diluted share, versus GAAP net income of $48.6 million,
or $1.29 per diluted share, for the comparable prior-year period.
Net income margin was 17.2% and 16.4% for the third quarter of 2022
and 2021, respectively.
- EBITDA was $89.3 million for the third quarter of 2022, an
increase of 48.5% from EBITDA of $60.1 million for the comparable
prior-year period, resulting in an EBITDA margin of 23.3%.
Medpace Holdings, Inc. (Nasdaq: MEDP) (“Medpace”) today
announced financial results for the third quarter ended September
30, 2022.
Third Quarter 2022 Financial Results
Revenue for the three months ended September 30, 2022 increased
29.8% to $383.7 million, compared to $295.6 million for the
comparable prior-year period. On a constant currency organic basis,
revenue for the third quarter of 2022 increased 31.9% compared to
the third quarter of 2021.
Backlog as of September 30, 2022 increased 20.9% to $2.2 billion
from $1.8 billion as of September 30, 2021. Net new business awards
were $470.9 million, representing a net book-to-bill ratio of 1.23x
for the third quarter of 2022, as compared to $408.0 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 third quarter of 2022, total direct costs were $264.7
million, compared to total direct costs of $208.5 million in the
third quarter of 2021. Selling, general and administrative
(SG&A) expenses were $35.4 million in the third quarter of
2022, compared to SG&A expenses of $28.0 million in the third
quarter of 2021.
GAAP net income for the third quarter of 2022 was $66.0 million,
or $2.05 per diluted share, versus GAAP net income of $48.6
million, or $1.29 per diluted share, for the third quarter of 2021.
This resulted in a net income margin of 17.2% and 16.4% for the
third quarter of 2022 and 2021, respectively.
EBITDA for the third quarter of 2022 increased 48.5% to $89.3
million, or 23.3% of revenue, compared to $60.1 million, or 20.3%
of revenue, for the comparable prior-year period. On a constant
currency basis, EBITDA for the third quarter of 2022 increased
41.5% from the third quarter of 2021.
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 2022 Financial Results
Revenue for the nine months ended September 30, 2022 was
$1,065.9 million, and increased 27.8% on a reported basis and 29.3%
on a constant currency organic basis from the comparable prior-year
period. Year-to-date GAAP net income was $176.7 million, or $5.18
per diluted share, compared to $131.8 million, or $3.49 per diluted
share, for the comparable prior-year period. Year-to-date EBITDA
was $227.7 million, or 21.4% of revenue, and increased 40.9% on a
reported basis and 35.7% on a constant currency organic basis from
the comparable prior-year period.
Balance Sheet and Liquidity
The Company’s Cash and cash equivalents were $31.0 million at
September 30, 2022, and the Company generated $108.5 million in
cash flow from operating activities during the third quarter of
2022. The Company paid $110.0 million against the credit facility
during the third quarter of 2022. Short-term debt was $139.7
million at September 30, 2022.
Additionally, on October 21, 2022, the Company’s Board of
Directors authorized share repurchases of up to $500.0 million of
the Company’s common stock in the open market or negotiated
transactions, at the discretion of the Company’s management. The
extent and timing of repurchases depends on market conditions,
applicable regulatory requirements, and other considerations. The
share repurchase authorization does not obligate the Company to
acquire any minimum amount of common stock and any program may be
modified, limited, extended, suspended or terminated at any time at
the Company’s discretion. The Company currently expects that any
repurchases under the program would be made in compliance with the
SEC’s Rules 10b-5 and 10b-18.
2022 Financial Guidance
The Company forecasts 2022 revenue in the range of $1.440
billion to $1.460 billion, representing growth of 26.1% to 27.8%
over 2021 revenue of $1.142 billion. GAAP net income for full year
2022 is forecasted in the range of $232.0 million to $236.0
million. Additionally, full year 2022 EBITDA is expected in the
range of $302.0 million to $310.0 million. Based on forecasted 2022
revenue of $1.440 billion to $1.460 billion and GAAP net income of
$232.0 million to $236.0 million, diluted earnings per share (GAAP)
is forecasted in the range of $6.88 to $7.00. This guidance assumes
a full year 2022 tax rate of 16.0% to 17.0%, 33.7 million diluted
weighted-average shares outstanding for 2022, and foreign exchange
rates as of September 30, 2022. This does not reflect the potential
impact of any share repurchases the Company may make after
September 30, 2022.
2023 Financial Guidance
The Company forecasts 2023 revenue in the range of $1.680
billion to $1.740 billion. Full year 2023 EBITDA is expected in the
range of $325.0 million to $350.0 million.
Conference Call Details
Medpace will host a conference call at 9:00 a.m. ET, Tuesday,
October 25, 2022, to discuss its third quarter 2022 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 5,000 people across 40 countries as of September 30,
2022.
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, the
anticipated impacts of the coronavirus COVID-19 pandemic and
international risks including the conflict involving Russia,
Ukraine and surrounding countries, respectively, on our business,
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 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; the impact of industry-wide
reputational harm to CROs; and 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.
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,
2022
2021
2022
2021
Revenue, net
$
383,744
$
295,567
$
1,065,898
$
833,825
Operating expenses:
Direct service costs, excluding
depreciation and amortization
136,648
112,540
394,200
322,160
Reimbursed out-of-pocket expenses
128,062
95,934
354,991
271,494
Total direct costs
264,710
208,474
749,191
593,654
Selling, general and administrative
35,418
28,046
97,999
80,757
Depreciation
4,951
4,056
13,928
11,819
Amortization
838
1,278
2,514
3,835
Total operating expenses
305,917
241,854
863,632
690,065
Income from operations
77,827
53,713
202,266
143,760
Other income, net:
Miscellaneous income, net
5,649
1,064
9,027
2,253
Interest expense, net
(1,584
)
(41
)
(2,078
)
(82
)
Total other income, net
4,065
1,023
6,949
2,171
Income before income taxes
81,892
54,736
209,215
145,931
Income tax provision
15,865
6,162
32,517
14,117
Net income
$
66,027
$
48,574
$
176,698
$
131,814
Net income per share attributable to
common shareholders:
Basic
$
2.13
$
1.35
$
5.39
$
3.67
Diluted
$
2.05
$
1.29
$
5.18
$
3.49
Weighted average common shares
outstanding:
Basic
31,009
35,816
32,791
35,822
Diluted
32,253
37,519
34,098
37,641
MEDPACE HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except share
amounts)
As of
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
31,007
$
461,304
Accounts receivable and unbilled, net
249,086
186,432
Prepaid expenses and other current
assets
57,648
43,176
Total current assets
337,741
690,912
Property and equipment, net
104,719
93,153
Operating lease right-of-use assets
139,071
129,558
Goodwill
662,396
662,396
Intangible assets, net
38,846
41,360
Deferred income taxes
27,023
25,134
Other assets
18,629
17,422
Total assets
$
1,328,425
$
1,659,935
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
28,245
$
25,678
Accrued expenses
204,117
159,286
Advanced billings
417,927
344,641
Short-term debt
139,700
—
Other current liabilities
30,879
27,612
Total current liabilities
820,868
557,217
Operating lease liabilities
139,203
130,965
Deferred income tax liability
911
1,080
Other long-term liabilities
17,558
17,745
Total liabilities
978,540
707,007
Commitments and contingencies
Shareholders’ equity:
Preferred stock - $0.01 par-value;
5,000,000 shares authorized; no shares issued and outstanding at
September 30, 2022 and December 31, 2021, respectively
—
—
Common stock - $0.01 par-value;
250,000,000 shares authorized at September 30, 2022 and December
31, 2021, respectively; 31,098,397 and 36,006,778 shares issued and
outstanding at September 30, 2022 and December 31, 2021,
respectively
309
360
Treasury stock - 81,573 and 180,000 shares
at September 30, 2022 and December 31, 2021, respectively
(14,243
)
(5,427
)
Additional paid-in capital
759,986
727,857
(Accumulated deficit) Retained
earnings
(380,115
)
234,984
Accumulated other comprehensive loss
(16,052
)
(4,846
)
Total shareholders’ equity
349,885
952,928
Total liabilities and shareholders’
equity
$
1,328,425
$
1,659,935
MEDPACE HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(Amounts in thousands)
Nine Months Ended
September 30,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
176,698
$
131,814
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
13,928
11,819
Amortization
2,514
3,835
Stock-based compensation expense
15,819
10,488
Noncash lease expense
13,460
11,878
Deferred income tax (benefit)
provision
(2,126
)
3,299
Amortization and adjustment of deferred
credit
(465
)
(501
)
Other
115
213
Changes in assets and liabilities:
Accounts receivable and unbilled, net
(62,438
)
(25,046
)
Prepaid expenses and other current
assets
(17,397
)
(22,049
)
Accounts payable
770
2,150
Accrued expenses
47,848
24,691
Advanced billings
73,286
48,184
Lease liabilities
(11,134
)
(11,335
)
Other assets and liabilities, net
488
2,993
Net cash provided by operating
activities
251,366
192,433
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures
(27,636
)
(19,155
)
Other
(1,886
)
(3,093
)
Net cash used in investing activities
(29,522
)
(22,248
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises
16,313
15,212
Repurchases of common stock
(800,667
)
(62,096
)
Proceeds from revolving loan
299,200
—
Payments on revolving loan
(159,500
)
—
Net cash used in financing activities
(644,654
)
(46,884
)
EFFECT OF EXCHANGE RATES ON CASH, CASH
EQUIVALENTS, AND
RESTRICTED CASH
(7,487
)
(2,680
)
(DECREASE) INCREASE IN CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH
(430,297
)
120,621
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH — Beginning of period
461,304
277,766
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH — End of period
$
31,007
$
398,387
MEDPACE HOLDINGS, INC. AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(Amounts in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
RECONCILIATION OF GAAP NET INCOME TO
EBITDA
Net income (GAAP)
$
66,027
$
48,574
$
176,698
$
131,814
Interest expense, net
1,584
41
2,078
82
Income tax provision
15,865
6,162
32,517
14,117
Depreciation
4,951
4,056
13,928
11,819
Amortization
838
1,278
2,514
3,835
EBITDA (Non-GAAP)
$
89,265
$
60,111
$
227,735
$
161,667
Net income margin (GAAP)
17.2
%
16.4
%
16.6
%
15.8
%
EBITDA margin (Non-GAAP)
23.3
%
20.3
%
21.4
%
19.4
%
FY 2022 GUIDANCE RECONCILIATION
(UNAUDITED)
(Amounts in millions, except per share
amounts)
Forecast 2022
Net Income
Net income per diluted
share
Low
High
Low
High
Net income and net income per diluted
share (GAAP)
$
232.0
$
236.0
$
6.88
$
7.00
Income tax provision
44.3
48.3
Interest expense, net
3.3
3.3
Depreciation
19.0
19.0
Amortization
3.4
3.4
EBITDA (Non-GAAP)
$
302.0
$
310.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221024005703/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
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