News Release
Medpace Holdings, Inc. Reports First Quarter 2020 Results
-
Revenue of
$230.9 million in the first quarter of 2020 increased 15.0% from revenue of$200.7 million for the comparable prior-year period, representing a backlog conversion rate of 18.0%. -
Net new business awards were
$246.9 million in the first quarter of 2020, representing a decrease of 0.7% from net new business awards of$248.7 million for the comparable prior-year period, which resulted in a net book-to-bill ratio of 1.07x. -
First quarter of 2020 GAAP net income was
$29.0 million , or$0.76 per diluted share, versus GAAP net income of$19.2 million , or$0.51 per diluted share, for the comparable prior-year period. Net income margin was 12.5% and 9.6% for the first quarter of 2020 and 2019, respectively. -
EBITDA was
$40.6 million for the first quarter of 2020, an increase of 21.3% from EBITDA of$33.4 million for the comparable prior-year period, resulting in an EBITDA margin of 17.6%.
First Quarter 2020 Financial Results
Revenue for the three months ended
Backlog as of
For the first quarter of 2020, total direct costs were
GAAP net income for the first quarter of 2020 was
EBITDA for the first quarter of 2020 increased 21.3% to
A reconciliation of the Company’s non-GAAP financial measures, including EBITDA and EBITDA margin to the corresponding GAAP measures is provided below.
Balance Sheet and Liquidity
The Company’s Cash and cash equivalents were
COVID-19 Update and Financial Guidance
While we continue to operate globally, the level of activity at each of our locations varies depending on the local governmental requirements and guidelines. The majority of our office staff are effectively working remotely and our labs are fully operational with modifications made to ensure the safety of our employees. The diversion of resources to treat COVID-19 patients has significantly impacted the operations at most of the investigative sites where patients in our clinical trials are recruited and treated. This has resulted in reduced trial starts and slowed new business awards. Depending on the duration of the disruption ongoing studies may be cancelled and some of our clients may lack the funding to complete trials which are extended due to slowed recruitment of patients. We work with many smaller clients with limited financial resources and market disruptions may make raising additional funds difficult. Travel restrictions and business closures have also impacted study participants and clinical sites which affects our ability to efficiently provide clinical trial services. As a result, we are working with our customers to develop solutions to limit disruption to clinical trials while following required regulatory guidelines and maintaining quality to ensure the health and well-being of study participants. These include alternative assessment methods such as virtual monitoring visits.
We believe the COVID-19 pandemic will have an increasing impact on our results of operations in the future, and as we cannot predict the duration or scope of the pandemic, the future financial impact on our results of operations cannot be reasonably estimated at this time. Due to this economic uncertainty, the Company is withdrawing previously provided revenue, EBITDA, net income, and net income per diluted share guidance and is not issuing new guidance at this time. We will provide updated guidance when we can reasonably estimate the impacts of the COVID-19 pandemic on business results.
Conference Call Details
To participate in the conference call, dial 800-219-7113 (domestic) or 574-990-1030 (international) using the passcode 5203559.
To access the conference call via webcast, visit the “Investors” section of Medpace’s website at medpace.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.
A supplemental slide presentation will also be available at the “Investors” section of Medpace’s website prior to the start of the call.
A recording of the call will be available at
About
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our anticipated financial results and effective tax rate used for non-GAAP adjustment purposes. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” “forecast,” “may,” “could,” “likely,” “anticipate,” “project,” “goal,” “objective,” similar expressions, and variations or negatives of these words.
These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our financial condition, actual results, performance (including share price performance), or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the potential loss, delay or non-renewal of our contracts, or the non-payment by customers for services we have performed; the failure to convert backlog to revenue at our present or historical conversion rate; fluctuation in our results between fiscal quarters and years; decreased operating margins due to increased pricing pressure or other pressures; failure to perform our services in accordance with contractual requirements, government regulations and ethical considerations; the impact of underpricing our contracts, overrunning our cost estimates or failing to receive approval for or experiencing delays with documentation of change orders; our failure to successfully execute our growth strategies; the impact of a failure to retain key executives or other personnel or recruit experienced personnel; the risks associated with our information systems infrastructure, including potential security breaches and other disruptions which could compromise our information; our failure to manage our growth effectively; adverse results from customer or therapeutic area concentration; the risks associated with doing business internationally, including the effects of tariffs and trade wars; the risks associated with the Foreign Corrupt Practices Act and other anti-corruption laws; future net losses; the impact of changes in tax laws and regulations; the risks associated with our intercompany pricing policies; our failure to attract suitable investigators and patients to our clinical trials; the liability risks associated with our research and development services; the risks related to our Phase I clinical services; inadequate insurance coverage for our operations and indemnification obligations; fluctuations in exchange rates; the risks related to our relationships with existing or potential customers who are in competition with each other; our failure to successfully integrate potential future acquisitions; potential impairment of goodwill or other intangible assets; our limited ability to utilize our net operating loss carryforwards or other tax attributes; the risks associated with the use and disposal of hazardous substances and waste; the failure of third parties to provide us critical support services; our limited ability to protect our intellectual property rights; the risks associated with potential future investments in our customers’ business or drugs; general economic conditions in the markets in which we operate, including financial market conditions; the impact of a natural disaster or other catastrophic event; negative outsourcing trends in the biopharmaceutical industry and a reduction in aggregate expenditures and research and development budgets; our inability to compete effectively with other CROs; the impact of healthcare reform; the impact of consolidation in the biopharmaceutical industry; failure to comply with federal, state and foreign healthcare laws; the effect of current and proposed laws and regulations regarding the protection of personal data; our potential involvement in costly intellectual property lawsuits; actions by regulatory authorities or customers to limit the scope of or withdraw an approved drug, biologic or medical device from the market; failure to keep pace with rapid technological changes; the impact of industry-wide reputational harm to CROs; the effect of the U.K.’s withdrawal from the EU, which could have implications on our research, commercial and general business operations in the
These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the
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
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
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
||||||||
|
|
|
|
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(Amounts in thousands, except per share amounts) |
|
Three Months Ended |
|
|||||
|
|
|
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Revenue, net |
|
$ |
230,879 |
|
|
$ |
200,741 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Direct service costs, excluding depreciation and amortization |
|
|
88,795 |
|
|
|
75,109 |
|
Reimbursed out-of-pocket expenses |
|
|
77,006 |
|
|
|
70,594 |
|
Total direct costs |
|
|
165,801 |
|
|
|
145,703 |
|
Selling, general and administrative |
|
|
25,124 |
|
|
|
21,308 |
|
Depreciation |
|
|
2,453 |
|
|
|
1,991 |
|
Amortization |
|
|
1,997 |
|
|
|
5,844 |
|
Total operating expenses |
|
|
195,375 |
|
|
|
174,846 |
|
Income from operations |
|
|
35,504 |
|
|
|
25,895 |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
Miscellaneous income (expense), net |
|
|
617 |
|
|
|
(282 |
) |
Interest income (expense), net |
|
|
357 |
|
|
|
(955 |
) |
Total other income (expense), net |
|
|
974 |
|
|
|
(1,237 |
) |
Income before income taxes |
|
|
36,478 |
|
|
|
24,658 |
|
Income tax provision |
|
|
7,524 |
|
|
|
5,460 |
|
Net income |
|
$ |
28,954 |
|
|
$ |
19,198 |
|
Net income per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.80 |
|
|
$ |
0.54 |
|
Diluted |
|
$ |
0.76 |
|
|
$ |
0.51 |
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
36,024 |
|
|
|
35,698 |
|
Diluted |
|
|
38,030 |
|
|
|
37,285 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
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|
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|
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(Amounts in thousands, except share amounts) |
|
As Of |
|
|||||
|
|
|
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|
|
|
||
|
|
2020 |
|
|
2019 |
|
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ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
133,999 |
|
|
$ |
131,920 |
|
Accounts receivable and unbilled, net |
|
|
136,374 |
|
|
|
155,662 |
|
Prepaid expenses and other current assets |
|
|
32,629 |
|
|
|
29,446 |
|
Total current assets |
|
|
303,002 |
|
|
|
317,028 |
|
Property and equipment, net |
|
|
50,015 |
|
|
|
47,292 |
|
Operating lease right-of-use assets |
|
|
58,667 |
|
|
|
52,152 |
|
|
|
|
662,427 |
|
|
|
662,396 |
|
Intangible assets, net |
|
|
52,353 |
|
|
|
54,350 |
|
Deferred income taxes |
|
|
490 |
|
|
|
376 |
|
Other assets |
|
|
10,680 |
|
|
|
9,477 |
|
Total assets |
|
$ |
1,137,634 |
|
|
$ |
1,143,071 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
16,985 |
|
|
$ |
22,404 |
|
Accrued expenses |
|
|
107,005 |
|
|
|
109,252 |
|
Advanced billings |
|
|
189,562 |
|
|
|
192,359 |
|
Other current liabilities |
|
|
25,099 |
|
|
|
18,987 |
|
Total current liabilities |
|
|
338,651 |
|
|
|
343,002 |
|
Operating lease liabilities |
|
|
51,395 |
|
|
|
45,212 |
|
Deferred income tax liability |
|
|
14,022 |
|
|
|
12,849 |
|
Other long-term liabilities |
|
|
15,767 |
|
|
|
15,725 |
|
Total liabilities |
|
|
419,835 |
|
|
|
416,788 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock - |
|
|
- |
|
|
|
- |
|
Common stock - |
|
|
355 |
|
|
|
360 |
|
|
|
|
(6,030 |
) |
|
|
(6,030 |
) |
Additional paid-in capital |
|
|
673,372 |
|
|
|
666,585 |
|
Retained earnings |
|
|
53,831 |
|
|
|
68,109 |
|
Accumulated other comprehensive loss |
|
|
(3,729 |
) |
|
|
(2,741 |
) |
Total shareholders’ equity |
|
|
717,799 |
|
|
|
726,283 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,137,634 |
|
|
$ |
1,143,071 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
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(Amounts in thousands) |
|
Three months ended |
|
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2020 |
|
|
2019 |
|
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CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
28,954 |
|
|
$ |
19,198 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
2,453 |
|
|
|
1,991 |
|
Amortization |
|
|
1,997 |
|
|
|
5,844 |
|
Stock-based compensation expense |
|
|
5,445 |
|
|
|
3,183 |
|
Amortization of debt issuance costs and discount |
|
|
- |
|
|
|
138 |
|
Noncash lease expense |
|
|
2,917 |
|
|
|
2,363 |
|
Deferred income tax provision |
|
|
1,079 |
|
|
|
656 |
|
Amortization and adjustment of deferred credit |
|
|
(181 |
) |
|
|
(200 |
) |
Other |
|
|
(67 |
) |
|
|
(43 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable and unbilled, net |
|
|
19,301 |
|
|
|
4,255 |
|
Prepaid expenses and other current assets |
|
|
(2,694 |
) |
|
|
(1,642 |
) |
Accounts payable |
|
|
(6,809 |
) |
|
|
(2,684 |
) |
Accrued expenses |
|
|
(1,757 |
) |
|
|
(5,221 |
) |
Advanced billings |
|
|
(2,695 |
) |
|
|
2,437 |
|
Lease liabilities |
|
|
(2,236 |
) |
|
|
(2,041 |
) |
Other assets and liabilities, net |
|
|
3,441 |
|
|
|
5,771 |
|
Net cash provided by operating activities |
|
|
49,148 |
|
|
|
34,005 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Property and equipment expenditures |
|
|
(5,561 |
) |
|
|
(2,520 |
) |
Other |
|
|
39 |
|
|
|
(1,322 |
) |
Net cash used in investing activities |
|
|
(5,522 |
) |
|
|
(3,842 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from stock option exercises |
|
|
1,331 |
|
|
|
972 |
|
Repurchases of common stock |
|
|
(41,776 |
) |
|
|
- |
|
Payment of debt |
|
|
- |
|
|
|
(24,000 |
) |
Net cash used in financing activities |
|
|
(40,445 |
) |
|
|
(23,028 |
) |
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
|
(1,102 |
) |
|
|
(290 |
) |
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
|
|
2,079 |
|
|
|
6,845 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period |
|
|
131,920 |
|
|
|
23,282 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period |
|
$ |
133,999 |
|
|
$ |
30,127 |
|
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) |
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(Amounts in thousands, except per share amounts) |
|
Three Months Ended |
|
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|
|
|
|
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|
|
|
2020 |
|
|
|
2019 |
|
RECONCILIATION OF GAAP NET INCOME TO EBITDA |
|
|
|
|
|
|
|
|
Net income (GAAP) |
|
$ |
28,954 |
|
|
$ |
19,198 |
|
Interest (income) expense, net |
|
|
(357 |
) |
|
|
955 |
|
Income tax provision |
|
|
7,524 |
|
|
|
5,460 |
|
Depreciation |
|
|
2,453 |
|
|
|
1,991 |
|
Amortization |
|
|
1,997 |
|
|
|
5,844 |
|
EBITDA (Non-GAAP) |
|
$ |
40,571 |
|
|
$ |
33,448 |
|
Net income margin (GAAP) |
|
|
12.5 |
% |
|
|
9.6 |
% |
EBITDA margin (Non-GAAP) |
|
|
17.6 |
% |
|
|
16.7 |
% |
|
|
|
|
|
|
|
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|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200428005863/en/
Media Contact:
513.579.9911 x12627
j.hopkins@medpace.com
Investor Contact:
investor@medpace.com
Source: