Medpace Q2 2025 Earnings Report

Medpace EPS Results

• Actual EPS: $3.10
• Consensus EPS: $3.00
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: $2.75

Medpace Revenue Results

• Actual Revenue: $603.31 million
• Expected Revenue: $537.70 million
• Beat/Miss: Beat by +$65.61 million
• YoY Revenue Growth: +14.20%

Medpace Announcement Details

• Quarter: Q2 2025
• Date: 7/21/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, July 22, 2025
• Conference Call Time: 9:00AM ET

Medpace (NASDAQ:MEDP) engages in the provision of outsourced clinical development services to the biotechnology, pharmaceutical and medical device industries. Its services include medical department, clinical trial management, data-driven feasibility, study-start-up, clinical monitoring, regulatory affairs, patient recruitment and retention, medical writing, biometrics and data sciences, pharmacovigilance, core laboratory, laboratories, clinics, and quality assurance. The company was founded by August James Troendle in 1992 and is headquartered in Cincinnati, OH.

Medpace Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue for Q2 was $603.3 M, up 14.2% YoY, and EBITDA reached $130.5 M (+16.2%), prompting a $280 M increase to full-year revenue guidance.
• Positive Sentiment: A Q2 book-to-bill ratio of 1.03 with $620.5 M of net new awards and $2.9 B in backlog—of which ~$1.75 B is expected to convert over the next 12 months—supports management’s view of exceeding a 1.15 book-to-bill in Q3.
• Positive Sentiment: Pipeline dynamics improved as cancellations declined, RFP flow stayed strong, and funding challenges stabilized, aided by a shift toward faster-burning therapeutic areas and higher investigator costs that accelerated project start-ups.
• Neutral Sentiment: Reimbursable costs are projected to rise by 200–300 bps of revenue in H2, reflecting mix shifts that boost top-line growth but may temper margin expansion.
• Positive Sentiment: Share buybacks continued with 1.75 M shares repurchased for $518.5 M in Q2 and $908.4 M YTD, leaving $826.3 M available under the current authorization.

Presentation

[Operator]

Good day ladies and gentlemen and welcome to the Medpace Second 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'd 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, Lauren Morris, Medpace's Director of Investor Relations. You may begin.

[Lauren Morris, Director - IR at Medpace]

Good morning, and thank you for joining Medpace's second quarter twenty twenty five earnings conference call. Also on the call today is our CEO, August Trendel 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 - IR 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 a 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 - IR 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 Rendle.

[August Troendle, Chairman & CEO at Medpace]

Good day. RFP flow in Q2 continued to be strong, and we saw an increase in rate of decisions. Total pending RFP dollars were down on the quarter, and our award notifications were strong. Cancellations were down across the pipeline, and awards recognized in the backlog were the highest in the past five quarters, with a book to bill of 1.03 in the second quarter of twenty twenty five. We continue to see a strong potential for book to bills returning to above 1.15 in Q3.

[August Troendle, Chairman & CEO at Medpace]

Although funding challenges remain acute for many of our clients, the large majority of those clients with ongoing studies were able to obtain sufficient funding to keep the trials running. The funding environment has been stable to improve. Due to several factors, including better funding than anticipated, fewer cancellations, accelerated client decisions, rapid project start up, shifting mix away from oncology and toward faster burning therapeutic areas, and significantly higher investigator costs, we now anticipate accelerating revenue in the second half of the year. As a result, our revenue guidance has been raised by $280,000,000 at the midpoint. Jesse will now add some additional detail.

[Jesse Geiger, President at Medpace]

Thank you. Good morning, everyone. Revenue for the 2025 was $603,300,000 which represents a year over year increase of 14.2%. Net new business awards entering backlog in the second quarter increased 12.6% from the prior year to $620,500,000 resulting in a 1.03 net book to bill. Ending backlog as of 06/30/2025, was approximately $2,900,000,000 a decrease of 1.8% from the prior year.

[Jesse Geiger, President at Medpace]

We project that approximately $1,750,000,000 of backlog will convert to revenue in the next twelve months, and backlog conversion in the second quarter was 21.2% of beginning backlog. Now with that, I'll turn the call over to Kevin to review our financial performance in more detail as well as our guidance expectations for the balance of 2025. Kevin?

[Kevin Brady, CFO at Medpace]

Thank you, Jesse. As Jesse mentioned, revenue was $603,300,000 in the second quarter of twenty twenty five. This represented a year over year increase of 14.2% on a reported basis and 13.8% on a constant currency basis. Revenue for the six months ended 06/30/2025 was $1,160,000,000 and increased 11.8%. Revenue for the quarter was favorably impacted by higher reimbursable activity, particularly at investigator sites, driven by studies progressing ahead of projected schedules and the therapeutic mix shift to faster burning studies in areas like metabolic, which have a higher concentration of reimbursable costs.

[Kevin Brady, CFO at Medpace]

EBITDA of $130,500,000 increased 16.2% compared to $112,300,000 in the second quarter of twenty twenty four. On a constant currency basis, second quarter EBITDA increased 18.5%. Year to date EBITDA was $249,100,000 and increased 9.3% from the comparable prior year period. EBITDA margin for the second quarter was 21.6% compared to 21.3% in the prior year period. Year to date EBITDA margin was 21.4% compared to 21.9% in the prior year period.

[Kevin Brady, CFO at Medpace]

EBITDA margin in the quarter benefited from direct service activities and productivity, offset by higher reimbursable costs and foreign exchange losses behind the weaker U. S. Dollar. In the second quarter of twenty twenty five, net income of $90,300,000 increased 2.2% compared to net income of $88,400,000 in the prior year period. Net income growth behind EBITDA growth was primarily driven by a higher effective tax rate in the quarter and lower interest income.

[Kevin Brady, CFO at Medpace]

Net income per diluted share for the quarter was $3.1 compared to $2.75 in the prior year period. Regarding customer concentration, our top five and top 10 customers represent roughly 2131% respectively of our year to date revenue. In the second quarter, we generated $148,500,000 in cash flow from operating activities and our net days sales outstanding was negative sixty five days. During the second quarter, we repurchased approximately 1,750,000.00 shares for $518,500,000 Year to date, we repurchased 2,900,000.0 shares for $908,400,000 As of 06/30/2025, we had 826,300,000 remaining under our share repurchase authorization program. Moving now to our updated guidance for 2025.

[Kevin Brady, CFO at Medpace]

Full year 2025 total revenue is now expected in the range of $2,420,000,000 to 2,520,000,000.00 representing growth of 14.7% to 19.5% over 2024 total revenue of $2,110,000,000 Our 2025 EBITDA is now expected in the range of $515,000,000 to $545,000,000 representing growth of 7.3% to 13.5% compared to EBITDA of $480,200,000 in 2024. The increase in our guidance reflects the impact of lower second quarter backlog cancellations, improved funding on several challenged programs, we which anticipate will continue through the remainder of the year, and a shift in business toward faster burning therapeutic areas with a higher concentration of reimbursable costs. We now expect reimbursable costs as a percentage of revenue to increase by 200 to 300 basis points over the balance of the year. We forecast 2025 net income in the range of $4.00 $5,000,000 to $428,000,000 This increased guidance assumes a full year '25 effective tax rate of 18.5% to 19%, interest income of 11,600,000.0 and 29,400,000.0 diluted weighted average shares outstanding for 2025. There are no additional share repurchases in our guidance.

[Kevin Brady, CFO at Medpace]

Earnings per diluted share is now expected to be in the range of $13.76 to $14.53 Guidance is based on foreign exchange rates as of 06/30/2025. With that, I will turn the call back over to the operator so we can take your questions.

[Operator]

Thank you. Our first question is going to come from the line of Anne Hines with Mizuho. Your line is open. Please go ahead.

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

Great. Thank you so much. Could you just, let us know what your booking expectations are for the second half? And the reason being is that your burn rate stepped up 2Q and obviously you guys implied to step up in 3Q and 4Q. And I'm just trying to figure out what that means for 2026 revenue growth.

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

I know you want to probably want to give guidance for 2026, but do you expect an acceleration in bookings for the second half to support growth in 2026? Thanks.

[August Troendle, Chairman & CEO at Medpace]

Yeah, as I said in my prepared comments, we do believe that there's a reasonable chance of getting book to bills back over 1.15, which implies a considerable increase in bookings as our revenue is also growing. So yes, we do expect bookings to increase now, again, that's always dependent upon cancellations which were very well behaved in this quarter. But last quarter they were terribly high. So if things continue in the trend, we saw in this quarter, then yes, we expect bookings to remain strong through the remainder of the year.

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

And can you provide any more information on cancellations? Like what was the rate this quarter versus what had been trending the past couple of quarters?

[August Troendle, Chairman & CEO at Medpace]

Yeah, we don't disclose the actual rate, but it was down across the entire portfolio. So both, sort of the non backlog awards, before they get the backlog was very low. And our backlog cancellations that have been at or above the upper range of what we'd consider normal. They're actually toward the lower end of expectations or usual history in this past quarter in Q2. So they were actually very well behaved and that of course made us exceed what we felt we were going to do in terms of both bookings and overall performance in terms of revenue and EBITDA.

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

Perfect, thank you so much.

[Operator]

Thank you. And one moment as we move on to our next question. Our next question is gonna come from the line of David Windley with Jefferies. Your line is open. Please go ahead.

[Dave Windley, Managing Director at Jefferies LLC]

Hi. Thanks for taking the questions. I've got a few I'll try to go through quickly. On the on the burn rate, my I'm not quick enough on the calculator. I heard Kevin you say that you do expect pass throughs to be 200 to 300 basis points higher over the balance of the year and that I think contributes in part to the higher burn rate.

[Dave Windley, Managing Director at Jefferies LLC]

I was hoping you could maybe walk me to water a little bit on how much of the increased guide is pass through versus direct revenue.

[Kevin Brady, CFO at Medpace]

Yeah, Dave. Mean, obviously, large portion of the increase is going to be on the accelerated reimbursable cost activity, right? But we did increase also the EBITDA guide as well. So we're also seeing some pull through on just greater productivity on the existing staff and quite frankly some programs that are progressing ahead of what we had projected in our schedules. So it's a combination of both, but the revenue in particular is certainly heavily influenced by the 200 to 300 basis point increase in expectations on the pass throughs.

[Dave Windley, Managing Director at Jefferies LLC]

Okay. So last night, on this topic, we looked at kind of a pattern in 2023 where you also had an increase in revenue and and a, you know, a good chunk of that coming from pass through sounds like, you know, maybe not quite that extreme, but similar. And and to get the EBITDA increase that you just mentioned on, you effectively the direct revenue portion, sounds like the minority, you're having to get pretty high incremental margin, as you just alluded. Management has been talking for the last, I don't know, year at least, that staff productivity has been increasing, that you were at levels that were, you know, above historical records and probably not much upside room there. So I'd ask you to elaborate a little bit on how you're able to squeeze additional productivity out.

[Dave Windley, Managing Director at Jefferies LLC]

And then to support the revenue growth and your bookings expectations, I would guess that you're expecting to kind of, take the shackles off hiring a little bit and accelerate the hiring. And how should we expect that to impact margin over the next couple of quarters? Thanks.

[Kevin Brady, CFO at Medpace]

Dave, you're right. I mean, didn't expect productivity to continue from what we saw in 2024. Certainly, we've reduced our hiring expectations a little bit coming into the year, but we're also seeing improved attrition rates again furthering in the past couple of quarters. So all of that is contributing to I still expect some headwinds on a net basis in 2025 relative to where we are in 2024. But you're right, certainly improved versus where we were coming into the year.

[Dave Windley, Managing Director at Jefferies LLC]

And then last question for me quickly the the August, your comments around funding are interesting to me. Certainly, you know, our tracker's not not the gospel, certainly, but but we have seen some predictiveness out of it. And funding year to date is is pretty bad, really. June was much better, but we're down, you know, over 40% year to date. So how do you get comfortable I mean, I know you you know, you have a lot of visibility into the awards that you have in hand that aren't even in backlog yet.

[Dave Windley, Managing Director at Jefferies LLC]

But how do you get comfort that the weak funding through the first six months of this year is not essentially foreshadowing another downturn in demand activity for you as it did in '23 ahead of '24?

[August Troendle, Chairman & CEO at Medpace]

Well, I guess I'm I I don't get myself comfortable with that. You know, mean, I I thought we probably hit a bottom in q four, but then cancellation, look, a big part of all of our difficulty the last year has been cancellations, not new projects and baseline level of business, certainly the last nine months, it's really been just really heavy cancellations and if they get adequate funding, I don't know what subset that is of the total pool of funding you're talking about, but we get comfortable with that and we can make our numbers. But could things pull back again and really impact 2026? Sure, that's quite possible, I have no idea. I do know that we have good pipeline of things awarded but not yet reaching backlog that should support good bookings through the remainder of this year.

[August Troendle, Chairman & CEO at Medpace]

Again, as long as cancellations don't rear their head excessively And that should at least get us started in the 2026. But, is it possible there's a pullback in the future and we run into another, very weak booking, quarters? I don't know.

[Dave Windley, Managing Director at Jefferies LLC]

Okay. Appreciate the answers. Thank you.

[Operator]

Thank you. And one moment as we move on to our next question. Our next question comes from the line of Jalen Dressing with Truist Securities. Your line is open. Please go ahead.

[Jailendra Singh, Managing Director at Truist Securities]

Thank you. Good morning and congrats on a strong quarter. Actually, I want to follow-up on the last part of David's question. I mean, it seems like macro environment in business pipeline when we caught up in early June was still choppy and pressured. Keeping that in mind, can you provide some color around how intra quarter trends were in 2Q, where majority of trends suddenly accelerate towards the end of Q2, essentially like June and those trends have continued.

[Jailendra Singh, Managing Director at Truist Securities]

Just give us some flavor how demand environment evolved in Q2 in particular.

[August Troendle, Chairman & CEO at Medpace]

Yes, I mean Q2 was again, it was really a continuation of a Q1 in terms of the business environment was continued to be pretty strong in terms of RFPs. I said in Q1 they were strong, it was really cancellations that backed off quite a bit and that was sort of throughout the quarter. As I said back cancellations were actually low on the low side this quarter as opposed to being very high in the past and certainly in the prior quarter. So it was across the quarter. I mean, didn't see any real trends of acceleration or deceleration in the quarter.

[Jailendra Singh, Managing Director at Truist Securities]

Okay. And my quick follow-up on the these trials, which were delayed or kind of put on hold coming back, new trials, business wins. Are you seeing in any ways the scope being different? Are you seeing like reduced scope of work or is it like a similar scope of work as you guys agreed on? And related to that, is there any meaningful variations around EBITDA margin if the project comes at lower scope or reduced scope than previously planned?

[August Troendle, Chairman & CEO at Medpace]

Yes, sure. A number of projects were down scoped and we see that in any environment, don't know if that was particularly prevalent but you do see some down scoping and largely delays, mean slower startup, hold off on certain regions, kind of keep the steady running but don't execute as fast as you could otherwise, so those are the kind things that clients do to try to keep things alive while they don't have adequate funding. Obviously, your profits gonna be impacted by that. Yeah, I mean, the most profitable project for us is a project that runs the fastest and if it's delayed, if it's down scoped, if it's has some gating, etcetera, that impairs our ability to execute and to make a profit on it.

[Jailendra Singh, Managing Director at Truist Securities]

Great, thanks for taking the questions.

[Operator]

Thank you. And one moment for our next question. Our next question is going to come from the line of Max Schmuck with William Blair. Your line is open. Please go ahead.

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

Hey, good morning, everyone. Thanks for taking our questions. Just wanted to follow-up on some of the questions that have already been asked around book to bill in the back half of the year, in particular your commentary about getting back to 1.15. If you do that in the back half of the year, think that implies bookings are up more than 40% year over year. So just trying to get a sense for when you're talking about getting back to 1.15, do you need to see further improvement in funding or the demand environment to get there? And if you don't think about or if you think about there not being improvement from today, what do bookings look like if the environment essentially remained unchanged from 2Q? Should we expect some more net awards in the back half of the year roughly in line with the $620,000,000 that you posted in the second quarter?

[August Troendle, Chairman & CEO at Medpace]

Yes.

[August Troendle, Chairman & CEO at Medpace]

I'll answer that. Bookings in give me the first part of that question again, the bookings?

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

So if I'm just thinking about your guide and your commentary about 1.15 book to bill in the back half of the year, I mean, implies net bookings up over 40%. So just trying to get a sense for how much visibility you have into that. And then what's embedded the outlook to get back to 1.15? Do you need to see further macro improvement? And if you don't, what does book to bill look like in the back half of the year?

[August Troendle, Chairman & CEO at Medpace]

Sure, I think that it's macro improvement. It depends whether all of our cancellations have been related to funding and I think part of them were yes. So we do have to see cancellations remain lower. I don't need to see new strong business environment with new opportunities, but we need to see things progress along and not be held up by funding or other factors. But the current quarter, Q2 was relatively low on cancellations.

[August Troendle, Chairman & CEO at Medpace]

If that continues I think we're going to be there. If it's in the mid upper range of cancellations we're getting right on the edge. I think prior to last quarter prior to the prior quarter, Q1, in which we had a lot of cancellations, particularly in the pre backlog bucket things that we expected to be converting in this next quarter, in the next couple of quarters, a lot of things dropped out and made it a lot closer on being able to get back to that 1.15. But I think it's still not anywhere near a slam dunk, but I think that if things continue the way they have in this past quarter, I think we'll be there. And how much more weakness and increased cancellations can occur. Don't know, that answers your question.

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

Yeah, it does. I'm sorry for the long winded question on my end. Maybe just one on competition and win rate and what you saw there in the second quarter and maybe how much of your results are more a reflection of you all taking share more so than a broader rebounding demand environment from small biotech?

[August Troendle, Chairman & CEO at Medpace]

Yes, no, I was hoping not to have to talk about the win rate. It was not great in the quarter actually. It was more an issue of more decisions. As I said, in the prior quarter Q1, things were not being decided, things were being held up, a lot of funding issues and the go ahead was not being given on new awards, they weren't making decisions. And so our pending RFP dollars increased quite a bit.

[August Troendle, Chairman & CEO at Medpace]

That came down in this past quarter because it was a lot of decisions. Our win rate on those decisions was not particularly high, But there was a lot of decisions so actually awards were good. We actually had a very good new award quarter but on a lower end win rate, competitive win rate. But that's something that bounces around quarter to quarter and I never make anything out of a single quarter down, the prior quarter was fine. So we'll see.

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

Got it. Thanks again for taking our questions.

[Operator]

Thank you. And one moment for our next question. Our next question is going to come from the line of Michael Cherny with Leerink. Your line is open. Please go ahead.

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

Good morning, and thanks for taking the question. So maybe if I could just dive a little bit more on the trajectory in back half into 'twenty six, in particular, on the step up and pass through business. I think, Kevin, please correct me if I'm off here, you said 200 to

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

300 basis points of increased pass through business baked into the numbers in the back half of the year. Is this something, especially given the results this quarter, that should be a new normal going forward? Or is this just a matter of luck of the draw, on the types of contracts that are currently hitting your backlog?

[Kevin Brady, CFO at Medpace]

Yeah, I mean, certainly in the near term, it's going to be new normal. And again it's heavily influenced by just the mix that we're currently seeing in areas where there is a higher concentration of reimbursable costs. So yes, in the near term I would say it's going to be elevated. How long does this last? I'm not going to provide commentary on '26 at this point but certainly the balance of the year we do expect it to be and continue to be elevated.

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

Understood. And I won't poke further at the implied 26 numbers at this point in time. But maybe just a follow-up, August, your last comment regarding the win rate dynamics. I certainly understand how it can bounce around on a quarter by quarter basis. With the win rate, was there anything from a disease state perspective, from a or any other pieces perspective that characterized why you think the win rate shook out where it did or was this also just a random dispersion across your book?

[August Troendle, Chairman & CEO at Medpace]

Yes, it wasn't I mean look it is always concentrated because it the factor is very large programs were less likely to win. And there were some very large programs in that. And you know, so size of project and our experience in this area and our experience with the client, obviously if it's a new client and it's very large and they've got existing providers, our win rates going to be lower, that's what bounces around quarter to quarter. We won the projects we expected to win and unfortunately in that quarter, in this past quarter, there were some very large and we're talking about dollars, I talk about win rate, it's dollar based. And so a very large program is a good part.

[August Troendle, Chairman & CEO at Medpace]

I mean, it actually is a single program can be a substantial part of the total win, wins or losses in the quarter. So it just happened to bounce down in this past quarter. We did lose it was two very large projects in that. But no, I can't it was not like we're weak in a particular therapeutic area or some trend or subset, it just happens to be what projects we're close to and which ones were really large.

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

And one last really quick one if I may, as the market's opening, your stock's up a lot. I know the guidance does not assume any more buyback, but conceptually given the outstanding authorization you still have, how are you thinking about near term balance sheet utilization and the potential for incremental buybacks?

[Kevin Brady, CFO at Medpace]

It's more of the same Michael that we'll continue to be opportunistic in buying at levels that we see to be very accretive and if our plans don't execute, then we're okay building cash. We're very happy with what we were able to execute in the fourth quarter, first quarter, and second quarter of this year.

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

Got it. Thank you.

[Operator]

Thank you. And one moment for our next question. Our next question is going to come from the line of Eric Coldwell with Baird. Your line is open. Please go ahead.

[Eric Coldwell, Senior Research Analyst at Baird]

Thank you very much. I have a few, hopefully not too repetitive. I was hoping we could start with talking about following on that last line of questioning, just talking more broadly about the bookings dynamics this period. There was some speculation going around last night based on the big increase in revenue that maybe you had picked up some large studies. It does not sound like that happened this quarter, anything particularly crazy large, but I was hoping you could just maybe more specifically tell us what your largest win individually was in the quarter.

[Eric Coldwell, Senior Research Analyst at Baird]

If there were any rescue awards or losses that you could talk to, maybe just broadly talk about competitive dynamics? You did mention your win rate wasn't the best, but talk a bit about competitive dynamics. Just hoping to get a little more flavor on the bookings mix and breadth of those bookings to start.

[August Troendle, Chairman & CEO at Medpace]

Sure. Yeah. And Eric I think your question kind of, I don't know, in my head confuses some of the moving parts here. When we're talking about competitive wins and we're talking about wins etcetera, those are awards and notifications. And they're not in backlog yet, we're not making any revenue off them and it's often multiple quarters before they come in.

[August Troendle, Chairman & CEO at Medpace]

So a new award this quarter is not going to influence our revenue or anything like that. A booking would probably because that's when we're starting to get revenue, it could be late in the quarter, it might not be much of a factor, it's mostly in future quarters that that's going to impact. So if I look at just sort of new notifications this quarter, nothing particularly stands out, there's nothing particularly large, it was a pretty usual quarter. In fact, the really large stuff we lost. Our competitive win rate was actually on the lower side, but completely understandable if you took out a couple of those two outliers, our win rate was great.

[August Troendle, Chairman & CEO at Medpace]

Mean, it was fine. So that's not an issue. And what went into bookings this quarter? Nothing particularly unusual or notable. The big and there was nothing sort of a rescue or something, really short term project that we won during the quarter or something that added to it.

[August Troendle, Chairman & CEO at Medpace]

It was just kind of usual stuff that, stuff that progressed that a lot of it we did not anticipate it might progress. So sort of good upside news on things progressing and we thought might not, things went faster than expected and we maybe didn't do as great a job at projecting what some of the pass how quickly things were going to move forward on some of the investigator fees, etcetera. So, that part of it, I think on direct fee basis, we were probably pretty good at projecting it, but there were still projects that went forward that more than we expected and faster than we expected. There was some upside, but there was nothing kind of unusual in terms of short term, quick or interim or rescue work or anything like that.

[Eric Coldwell, Senior Research Analyst at Baird]

Okay. On the reimbursable, indirect revenue commentary, and I hate to be this myopic, especially since it's been talked about so much, but I want to make sure I'm 100% clear. When you talk about 200 to 300 basis point increase in mix for the rest of the year, can you clarify, does that specifically mean you're looking at something 41%, 42% plus in the second half? Or does that mean something more like 38%, 39% for the full year compared to 2024 total levels? I'm just I'm not 100% clear what that two plus two to 300 basis points specifically is in reference to or what the absolute percentage you're targeting is?

[Kevin Brady, CFO at Medpace]

Yeah, Eric. Yeah, thanks for asking the question to clarify that's relative to what we saw in the second quarter. So yeah, we could see this in the low 40%, the back half of this year.

[Eric Coldwell, Senior Research Analyst at Baird]

Okay. And then, last one for me for now. So you have, obviously, know, it's kind of shocked the street with this update. You have enormous backlog conversion already. Now it's going up to 41.5, 42.5% in the second half.

[Eric Coldwell, Senior Research Analyst at Baird]

Backlog is down 2% year over year, but you're seeing revenue growth as much as 27% in the back half at the high end of the range. I mean, there's just a lot of questions about sustainability. And I know it's so hard to project with the mix shift in reimbursables, which are seemingly clearly driving the majority of the revenue increase and those may or may not continue next year. But what can you give us today that can help us understand the jumping off point from these conversion rates and these growth rates as we look at 2026? I mean, I know you're not guiding now, but we all have to build models and do assessments for next year, and you've caught us so off guard, I think, well, I'll admit, at least I'm scrambling to understand what kind of a growth rate we might be looking at in the next year.

[Eric Coldwell, Senior Research Analyst at Baird]

Know? It doesn't feel sustainable, to be honest, but, you know, then again, I didn't see this quarter coming.

[August Troendle, Chairman & CEO at Medpace]

Eric, broke up a little bit in the middle of that, I think I heard enough of it, so if I don't cover it then jump back. I think that, yes, have had a significant shift towards faster burning stuff. And a part of it, conversion rate is high overall because the slower denominator, and of course that does that mean that we're gonna burn off our backlog and then we're gonna have a real gap? I don't think that's necessarily true, I think that we do have adequate business environment to replenish things. I do think that our indirects are ramping because of a shift toward metabolic work, I don't know how long that's gonna So if continues then okay, I think our growth rate next year is probably fine.

[August Troendle, Chairman & CEO at Medpace]

If that pulls back, then I think that it can challenge growth rate but that's because of a drop in reimbursables and I think on a direct fee basis, we're gonna do fine. So I think our profitability is gonna there's no reason to see it dropping off. And I think that we could have growth rates similar to this year, ex the pass through stuff, right? I don't know, we don't have the model next year. It's really dependent upon stuff that's coming in now and over the next couple of quarters.

[August Troendle, Chairman & CEO at Medpace]

So, six is not really addressable, but we don't have a reason to believe that we're gonna have a challenge next year and have our growth go to zero or something. Unless pass throughs drop drastically and all of our growth is direct fee, but I don't really see that as a, know, a six zero five basis, we'd be fine, you know.

[Eric Coldwell, Senior Research Analyst at Baird]

Completely understood, and I appreciate the commentary, thank you.

[Operator]

Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Luke Surgatt with Barclays. Your line is open. Please go ahead.

[Luke Sergott, Director - Healthcare Equity Research at Barclays Capital]

Great. Thanks for the questions. I just kind of want to figure out, you know, we've talked a lot about the moving parts, everybody's focused on the burn rates, etcetera. But, you know, you have this elevated burn rates, everything stepped up materially, you have a big step up in bookings, you didn't need to hire additional SG and A for the type of revenue growth that we would typically think. You had DSOs step up materially also in the quarter.

[Luke Sergott, Director - Healthcare Equity Research at Barclays Capital]

So and it doesn't sound like you picked up some ongoing work from someone else So I'm just trying to figure out, like, what's going like, what what actually drove, you know, this this the the step up and everything and and trying to to foot all these different metrics.

[August Troendle, Chairman & CEO at Medpace]

A drop in cancellations. I mean, we've been running at growth rates of 20% plus for a long time. Things dropped back. We did have a weakening environment, but still our fundamental growth rate I think is pretty good X a lot of unusual cancellations. Now that's part of the same package, I mean the same environment that causes the cancellations reduced opportunities to some extent, but I don't know how you close the loop on those things, think the environment is reasonable if cancellations are reasonably behaved.

[August Troendle, Chairman & CEO at Medpace]

Conversion rate is up because we've have dropped both two major factors. The denominator has not grown as expected. And we have a shift towards faster burning stuff. I mean, we're in an era of a lot of metabolic type of programs, particularly in the obesity space are important part of the market. So that's, things have a faster burn turnaround.

[August Troendle, Chairman & CEO at Medpace]

But otherwise, I think big step up from our expectation was less cancellations than we anticipated.

[Luke Sergott, Director - Healthcare Equity Research at Barclays Capital]

Okay. And then I guess just to follow on that, your backlog that you guys report, so like anything over twelve months that's included there took a pretty big step down in the quarter. It's been declining the last few quarters. And that makes sense with everything you're saying, like faster burn rates and so more near term stuff. So as you think about, as this starts to roll off, like what's the average timeline of these faster burning trials as we think about into '26 and '27?

[Luke Sergott, Director - Healthcare Equity Research at Barclays Capital]

I mean, that's it's like to Eric saying, like, we're all trying to model here of what we're seeing for '26 and the range just gets pretty, you know, really wide.

[August Troendle, Chairman & CEO at Medpace]

Yeah, I can't give you an average for overall categories or something like that. But look, long studies can be six to ten years in duration, and oncology studies are classically kind of that and they run a very long time and it's a slow burn, metabolic studies, some of these can run-in, two, three years, and have a larger proportion of indirects as a part of it. Indirect, usually the model is the direct fees burn a lot faster upfront, toward the beginning, that's when a lot of work is being done in organizing and setting up and getting the trial ongoing and recruited. But a lot of the investigator fees are later on when patients are enrolled and having lots of visits. So, there's usually acceleration, the direct fees are the first half of the study heavy and the second half it's investigator costs.

[August Troendle, Chairman & CEO at Medpace]

Metabolic study, like I said, they can be very fast and it all happens at once.

[Luke Sergott, Director - Healthcare Equity Research at Barclays Capital]

Okay. And then just real quick from the last one, as I think about like from the margin and the hiring needs, you know, to meet these trials, like we talked about the efficiency on your existing base and you guys don't do FSP, so, you know, and you have a really strong culture where the attrition rates are really low. So how should we think about your hiring needs in the back half if you're gonna be able to sustain these type of burn rates and and elevated growth?

[Jesse Geiger, President at Medpace]

Yeah. Back back half of the year, we do expect accelerated hiring. We expect to hire more in the second half than we hire in the first half. We still think we'll be kind of in the mid single digit to kind of upper mid single digit growth rate for the year. But then as we move into the third quarter and fourth quarter, depending on, you know, a lot of factors, including the business environment and new opportunities and activity, you know, we have opportunities to accelerate that beyond that.

[Jesse Geiger, President at Medpace]

But right now, we're very comfortable with current headcount levels and projections to handle the current and future projects, but it is dynamic as we adapt as we go.

[Luke Sergott, Director - Healthcare Equity Research at Barclays Capital]

Great. Thank you.

[Operator]

Thank you. And one moment for our next question. Our next question is going to come from the line of Charles Rhyee with TD Cowen. Your line is open. Please go ahead.

[Charles Rhyee, Managing Director at TD Cowen]

Yes, thanks for taking questions. I just wanted to follow-up on some of the questions from earlier. August, it sounds like what you're saying is that what we've really been seeing over the last year or so plus with the weak funding environment, that's really tied really that's where cancellations come in, people that can't get funded, projects cancel, but that projects themselves, new RP, that flow has never changed. Has that always been constant over the last couple of years?

[August Troendle, Chairman & CEO at Medpace]

I wouldn't say that's not changed. I'm saying that the, I think the big outlier, biggest component of us for us has been very elevated cancellations, they've helped things back quite a bit. I'm not saying that overall environment certainly over the last few years hasn't weakened from kind of the COVID high and it came back and it's been weaker, there's weaker funding overall, so you have less attractive opportunities. RFPs don't necessarily reflect what's going on and so last year there was certainly weak overall opportunities and sometimes people looking for a price that they could get it done at etcetera and less opportunity. But the biggest thing of late has been cancellations that just, like I said, I thought we were past it all in Q4 and I thought this was the bottom and things are improving.

[August Troendle, Chairman & CEO at Medpace]

And the biggest gap hasn't been the improved fundamental opportunities that we started seeing in Q4. So the business environment started improving, before that yes, we had real weakness and everything. But the business environment seem to be okay on new opportunities the last several quarters, but cancellations were just, last quarter were horrendous. And that's what has been probably the biggest uncertainty in our modeling is cancellations rather than new opportunities and new awards. They're both components of it, but it's really been the cancellations that have thrown us off and this past quarter Q2 showed a great improvement in that, but we saw a great improvement in Q4, don't know, we'll see. Q1 had spiked again.

[Charles Rhyee, Managing Director at TD Cowen]

And and then in terms of then this quarter cancellations were obviously much lower relative to q one. Anything that when you look at reasons for cancellation, is cancellations, are those all tied to funding or is that how much of that maybe is changing priorities from sponsors?

[August Troendle, Chairman & CEO at Medpace]

You could never sort that out entirely. I think they're very highly related. Know, reprioritization is sometimes another word for cutting back. And, know, so I don't know, but I do think the funding environment has been a critical part of the vast majority of cancellations.

[Charles Rhyee, Managing Director at TD Cowen]

Okay. And then you talked about earlier, you know, faster burning therapeutic areas like metabolic, but, you know, when we look at revenue contribution by category, you know, that's sequentially the same in metabolic. It was sort of this other category. We saw a big step up in the quarter. Can you give us some examples of therapy area in that other bucket that you saw this big pickup?

[Charles Rhyee, Managing Director at TD Cowen]

And just curious like what kind of visibility you have or like how much of your upcoming pipeline of RFP activity is in this other bucket and what kind of visibility you have into that?

[August Troendle, Chairman & CEO at Medpace]

Yeah. No, mean, it's a bunch of different things and there's nothing that sort of is the vast majority of it or something. But you do look, the big trend has been metabolic over the last year. You look at our metabolic revenue and awards and they've been a higher percent of the overall and they will continue because of the rewards, they're gonna continue for the next couple quarters anyway, to be a growing part of our overall revenue base and they tend to be, overall some of them are long term, overall tend to be faster burning and higher indirect fees.

[Charles Rhyee, Managing Director at TD Cowen]

Great and maybe last one for me, talked about faster decision making. Anything that you can elaborate what that might be? Is that just maybe with drug pricing kind of being kicked out with MFN maybe towards the end of the year and just people deciding, hey, you know what, we can't wait forever and so we just got to make decisions now or anything that could maybe point to why decision making maybe has picked up again?

[August Troendle, Chairman & CEO at Medpace]

No, think that's funding again. I mean, think we saw things somewhat seizing up our pending RFP dollars that is RFPs we've received, we made a bid on and are just sitting there waiting for a response and no decision and no go forward on things even that we have been awarded and they say they're going to use us, they agree to the budget but then they want to hold off on things until I think largely that's sometimes there's other reasons, there's drug supply, there's other waiting on some other information on the drug, Another study may be completing whatever, there's lots of reasons but funding is a big part of it and we've I think we've seen a more rapid execution on sponsors sides to move forward and give us authorization and get us stuff that we need to move forward has been funding related.

[Charles Rhyee, Managing Director at TD Cowen]

Okay, great. I really appreciate the comments. Thank you.

[Operator]

Thank you. And our next question is going to come from the line of Justin Bowers with Deutsche Bank. Your line is open. Please go ahead.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Hi. Good morning, everyone. So Jesse, just a quick cleanup question. On the employee growth, it's you were breaking up a little bit, but it sounded like accelerated hiring in the second half and mid to upper single digit. Is that for the second half or is that for the full year?

[Jesse Geiger, President at Medpace]

Yeah. Accelerated hiring in the second half. So hiring hiring more second half than first half. We make the high mid single digit for the full year growth rate.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay. So second half employee growth should be mid to high single digit year over year?

[August Troendle, Chairman & CEO at Medpace]

Correct. I think we're talking about the full year would be high single digit growth over the prior year.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Oh, okay. So then then you're looking at It

[August Troendle, Chairman & CEO at Medpace]

obviously has to increase some because you didn't have that Double digit. Yeah.

[Jesse Geiger, President at Medpace]

For the for the six months, year to date, we grew you know, we grew revenue, you know, one and a half percent or so. We expect that to accelerate. We hired, you know, we I'm sorry. Two two and a half percent for the first half. We we we the headcount growth is up two and a half percent for the six months.

[Jesse Geiger, President at Medpace]

You know, we expect a growth rate in the second half, you know, at or slightly above that for the second half.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay. So you're expecting

[Operator]

It would

[Jesse Geiger, President at Medpace]

equate to, you know, a a five, you know, five or 6% for the full year.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay. Alright. And then in terms of what's the growth this year, the top line that you're forecast what does the guidance assume for growth on a six zero five basis for the top line?

[Kevin Brady, CFO at Medpace]

Yes, Justin, we don't provide a six zero five basis look. I think if you just model it kind of using the guidance that we have out there and assume kind of that 200 to 300 basis point increase in reimbursable costs over the balance of the year, kind of back into what that could be.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay. And then in terms of it sounds like the burn rate is going to is fairly sustainable, likely to increase in the back half of the year. What does the pre backlog or your current authorizations but not yet in backlog, the mix look like? Is that similar to what the revenue composition has been like this year or are there any notable differences to call out in terms of therapeutic mix?

[August Troendle, Chairman & CEO at Medpace]

Yes, we're seeing a move towards more metabolic and that'll continue it looks like based upon anticipated awards, yeah.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay, and then on the cancellations, there's really two things that jump out. One was just the improved execution and the changes there during the quarter. And then clearly, the cancellations has cited as well. When did you like when did that start to really inflect or turn? Was that something that, you know, was that sort of May where things really started to change or did that, you know, was that exiting March or?

[August Troendle, Chairman & CEO at Medpace]

Yeah, I don't have the monthly breakout and, you know, we kind of reconcile these things quarterly. So there isn't like, you know, good mean, we obviously do know the date of notification of, you know, something, etcetera. But I I I just not tried to, you know, sort out when, exactly cancels and if they were low in March before this quarter began or didn't start until May after the quarter was well into it or what, but it it, know, pretty much across the quarter, you know, we had lower cancellations, but I I can't I I just don't have the the, you know, good data of just when, you you call it again, you know, there's and and what do you mean by, you know, when, you know, it's kinda, you know, they give us a notification, but we don't really know what's happening and then, you know, they finally reconcile what exactly we're gonna do to close this thing down or, know, you know, these are kind of things that that, you know, have a have a period to them. But look, I think Q2 was much lower than Q1.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay. And then maybe just one last one for me online. With what was change order activity like during the quarter? And how did that change from 1Q or even what you saw towards the tail end of last year?

[August Troendle, Chairman & CEO at Medpace]

Don't have the numbers on just what the magnitude of change orders were, but there's nothing been particularly unusual there.

[Kevin Brady, CFO at Medpace]

Yeah, Justin, I wouldn't say there's anything unusual on change orders that happen all the time but nothing that would stick out.

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay, nothing. Okay, I just one follow-up

[August Troendle, Chairman & CEO at Medpace]

with And again, change origin, sometimes they award something they it's going to be a global study this, but they want to award it first is just the first region or something, and then we're planning in six months to, and you don't have the budget for it till then and so it's what's even a change order, it's difficult, it's when we get authorization, and then when it meets our criteria

[Justin Bowers, Equity Research Analyst at Deutsche Bank]

Okay. Thanks. Well, I'll jump I'll we'll catch up after after the call.

[Operator]

Thank you. And one moment for our next question. Our next question comes from the line of Kyle Cruz with UBS. Your line is open. Please go ahead.

[Kyle Crews, Equity Research Associate at UBS Group]

Hey, thank you for taking the question. You've historically disclosed around a high single digit revenue exposure to cell and gene therapy. Can you talk about the impact of Sarepta recently having their clinical trials put on hold and kind of the pausing of the platform technology designation there and the impact to your company? Thank you.

[August Troendle, Chairman & CEO at Medpace]

Has no impact to us.

[Kyle Crews, Equity Research Associate at UBS Group]

Can you maybe speak more broadly to the cell therapy market and what you've seen there and if you're still not exposed to it?

[August Troendle, Chairman & CEO at Medpace]

Don't have a great deal of exposure to the overall area, but we certainly do have exposure, but I don't think there's we not to Sarepta, know, they're not, it's not a, don't think it's gonna have an impact on our programs, but.

[Kyle Crews, Equity Research Associate at UBS Group]

Thank you.

[Operator]

Thank you. And I'm showing no further questions at this time. And I would like to hand the conference back over to Lauren Morris for any closing remarks.

[Lauren Morris, Director - IR at Medpace]

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

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

Participants

Executives

• Lauren Morris, Director - IR
• August Troendle, Chairman & CEO
• Jesse Geiger, President
• Kevin Brady, CFO

Analysts

• Ann Hynes, MD & Senior Healthcare Services Equity Analyst at Mizuho Financial Group
• Dave Windley, Managing Director at Jefferies LLC
• Jailendra Singh, Managing Director at Truist Securities
• Max Smock, Research Analyst - Healthcare at William Blair
• Michael Cherny, Senior MD & Senior Research Analyst at Leerink Partners
• Eric Coldwell, Senior Research Analyst at Baird
• Luke Sergott, Director - Healthcare Equity Research at Barclays Capital
• Charles Rhyee, Managing Director at TD Cowen
• Justin Bowers, Equity Research Analyst at Deutsche Bank
• Kyle Crews, Equity Research Associate at UBS Group