Medpace Holdings, Inc 10-Q for FY2021 Q1

Medpace Holdings, Inc. (MEDP)

10-Q 2021-04-27 For: 2021-03-31

Added on April 08, 2026

About this 10-Q

Medpace Holdings, Inc filed this 10-Q on April 27, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $259.97M; up 12.6% from $230.88M a year earlier
Net income: $43.31M; up 49.6% from net income of $28.95M a year earlier
Diluted EPS: $1.14; up 50.0% from $0.76 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.01 par value	MEDP	NASDAQ Global Select Market

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

Class		Number of Shares Outstanding
Common Stock $0.01 par value		35,972,156 shares outstanding as of April 23, 2021

Item Number		Page
	PART I — FINANCIAL INFORMATION	3
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020	5
	Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

	PART II — OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	25
Item 6.	Exhibits	25
	EXHIBIT INDEX	26
	SIGNATURES	27

(Amounts in thousands, except share amounts)	As Of
	March 31,			December 31.
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents	$	332,877		$	277,766
Accounts receivable and unbilled, net (includes $2.2 million and $2.6 million with related parties at March 31, 2021 and December 31, 2020, respectively)		159,997			160,962
Prepaid expenses and other current assets		40,506			34,923
Total current assets		533,380			473,651
Property and equipment, net		84,504			85,017
Operating lease right-of-use assets		112,266			113,809
Goodwill		662,396			662,396
Intangible assets, net		45,196			46,474
Deferred income taxes		556			536
Other assets		13,062			8,794
Total assets	$	1,451,360		$	1,390,677
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable (includes $0.1 million and $0.2 million with related parties at March 31, 2021 and December 31, 2020, respectively)	$	21,348		$	26,552
Accrued expenses		123,608			134,367
Advanced billings (includes $6.1 million and $6.5 million with related parties at March 31, 2021 and December 31, 2020, respectively)		277,807			255,664
Other current liabilities		24,543			23,527
Total current liabilities		447,306			440,110
Operating lease liabilities		114,144			115,143
Deferred income tax liability		14,876			13,551
Other long-term liabilities		16,107			16,094
Total liabilities		592,433			584,898
Commitments and contingencies (see Note 11)
Shareholders’ equity:
Preferred stock - $0.01 par-value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		-			-
Common stock - $0.01 par-value; 250,000,000 shares authorized at March 31, 2021 and December 31, 2020, respectively; 35,926,158 and 35,519,989 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		359			355
Treasury stock - 185,000 shares at March 31, 2021 and December 31, 2020, respectively		(5,578	)		(5,578	)
Additional paid-in capital		707,877			695,904
Retained earnings		158,535			115,229
Accumulated other comprehensive loss		(2,266	)		(131	)
Total shareholders’ equity		858,927			805,779
Total liabilities and shareholders’ equity	$	1,451,360		$	1,390,677

(Amounts in thousands, except per share amounts)	Three Months Ended
	March 31,
	2021			2020
Revenue, net (includes $5.3 million and $5.5 million with related parties for the three months ended March 31, 2021 and 2020, respectively)	$	259,965		$	230,879
Operating expenses:
Direct service costs, excluding depreciation and amortization		101,387			88,795
Reimbursed out-of-pocket expenses		80,151			77,006
Total direct costs		181,538			165,801
Selling, general and administrative		25,738			25,124
Depreciation		3,812			2,453
Amortization		1,278			1,997
Total operating expenses		212,366			195,375
Income from operations		47,599			35,504
Other income, net:
Miscellaneous income, net		924			617
Interest (expense) income, net		(14	)		357
Total other income, net		910			974
Income before income taxes		48,509			36,478
Income tax provision		5,203			7,524
Net income	$	43,306		$	28,954
Net income per share attributable to common shareholders:
Basic	$	1.21		$	0.80
Diluted	$	1.14		$	0.76
Weighted average common shares outstanding:
Basic		35,753			36,024
Diluted		37,749			38,030

(Amounts in thousands)	Three Months Ended
	March 31,
	2021			2020
Net income	$	43,306		$	28,954
Other comprehensive income
Foreign currency translation adjustments, net of taxes		(2,135	)		(988	)
Comprehensive income	$	41,171		$	27,966

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(Amounts in thousands)												Accumulated
							Additional					Other
	Common			Treasury			Paid-In		Retained			Comprehensive
	Stock			Stock			Capital		Earnings			Loss			Total
BALANCE — December 31, 2019	$	360		$	(6,030	)	$	666,585	$	68,109		$	(2,741	)	$	726,283
Net income										28,954						28,954
Foreign currency translation													(988	)		(988	)
Stock-based compensation expense								5,445								5,445
Stock options exercised		1						1,342								1,343
Repurchases of common stock		(6	)							(43,232	)					(43,238	)
BALANCE — March 31, 2020	$	355		$	(6,030	)	$	673,372	$	53,831		$	(3,729	)	$	717,799


												Accumulated
							Additional					Other
	Common			Treasury			Paid-In		Retained			Comprehensive
	Stock			Stock			Capital		Earnings			Loss			Total
BALANCE — December 31, 2020	$	355		$	(5,578	)	$	695,904	$	115,229		$	(131	)	$	805,779
Net income										43,306						43,306
Foreign currency translation													(2,135	)		(2,135	)
Stock-based compensation expense								2,871								2,871
Stock options exercised		4						9,102								9,106
BALANCE — March 31, 2021	$	359		$	(5,578	)	$	707,877	$	158,535		$	(2,266	)	$	858,927

See notes to condensed consolidated financial statements.

	As of
	March 31,			December 31,
	2021			2020
Accounts receivable	$	131,918		$	137,912
Unbilled receivables		28,425			23,396
Less: allowance for doubtful accounts		(346	)		(346	)
Total accounts receivable and unbilled, net	$	159,997		$	160,962

	Amortization
Remainder of 2021	$	3,836
2022		3,353
2023		2,199
2024		1,443
2025		946
Later years		1,773
	$	13,550

	Three Months Ended March 31,
	2021		2020
Operating lease cost	$	5,730	$	3,768
Variable lease cost		1,704		886

	Related Party			Non-Related Parties			Total
	Operating Leases			Operating Leases			Operating Leases
Remainder of 2021	$	7,892		$	9,534		$	17,426
2022		10,301			9,259			19,560
2023		8,771			7,957			16,728
2024		8,900			5,872			14,772
2025		9,032			4,350			13,382
Later years		103,006			9,195			112,201
Total lease payments		147,902			46,167			194,069
Less: imputed interest		(58,422	)		(5,392	)		(63,814	)
Total	$	89,480		$	40,775		$	130,255

	Three Months Ended March 31, 2021
				Weighted Average
	Stock Options			Exercise Price
Outstanding - beginning of period		2,500,727		$	43.26
Granted		-		$	-
Exercised		(406,169	)	$	22.42
Forfeited/Expired		(12,000	)	$	57.94
Outstanding - end of period		2,082,558		$	47.24

Exercisable - end of period		1,564,110		$	49.66

	Three Months Ended
	March 31, 2021
	Shares/Units
Outstanding and unvested - beginning of period		695,562
Granted		-
Vested		-
Forfeited		(13,935	)
Outstanding and unvested - end of period		681,627

Cumulative vested shares - end of period		1,913,916

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Therapeutic Area
Oncology	$	79,138	$	69,212
Other		68,938		50,569
Metabolic		32,495		36,075
AVAI		30,820		25,147
Central Nervous System		24,812		23,977
Cardiology		23,762		25,899
Total revenue	$	259,965	$	230,879

(Amounts in thousands)	Three Months Ended
	March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	43,306		$	28,954
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,812			2,453
Amortization		1,278			1,997
Stock-based compensation expense		2,871			5,445
Noncash lease expense		3,903			2,917
Deferred income tax provision		1,289			1,079
Amortization and adjustment of deferred credit		(167	)		(181	)
Other		124			(67	)
Changes in assets and liabilities:
Accounts receivable and unbilled, net		1,089			19,301
Prepaid expenses and other current assets		(6,073	)		(2,694	)
Accounts payable		(2,638	)		(6,809	)
Accrued expenses		(10,043	)		(1,757	)
Advanced billings		22,143			(2,695	)
Lease liabilities		(3,155	)		(2,236	)
Other assets and liabilities, net		(420	)		3,441
Net cash provided by operating activities		57,319			49,148
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures		(6,507	)		(5,561	)
Other		(3,144	)		39
Net cash used in investing activities		(9,651	)		(5,522	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises		9,102			1,331
Repurchases of common stock		-			(41,776	)
Net cash provided by (used in) financing activities		9,102			(40,445	)
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(1,659	)		(1,102	)
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		55,111			2,079
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period		277,766			131,920
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	332,877		$	133,999

	As of
	March 31,			December 31,
	2021			2020
Intangible assets:
Finite-lived intangible assets:
Carrying amount:
Customer relationships		145,051			145,051
Accumulated amortization:
Customer relationships		(131,501	)		(130,223	)
Total finite-lived intangible assets, net		13,550			14,828
Trade name (indefinite-lived)		31,646			31,646
Total intangible assets, net	$	45,196		$	46,474

Date	Equity Plan	Number of Stock Options Exercised		Exercise Price		Approximate Aggregate Purchase Price
January 4, 2021	2014 Equity Incentive Plan		401	$	14.41	$	5,800
January 4, 2021	2014 Equity Incentive Plan		426		18.23		7,800
January 6, 2021	2014 Equity Incentive Plan		98,043		14.41		1,412,800
January 6, 2021	2014 Equity Incentive Plan		65,305		16.20		1,057,900
January 6, 2021	2014 Equity Incentive Plan		10,887		16.88		183,800
January 6, 2021	2014 Equity Incentive Plan		11,112		18.23		202,600
January 7, 2021	2014 Equity Incentive Plan		3,703		14.41		53,400
January 12, 2021	2014 Equity Incentive Plan		2,000		14.41		28,800
January 13, 2021	2014 Equity Incentive Plan		900		14.41		13,000
January 15, 2021	2014 Equity Incentive Plan		531		16.20		8,600
January 25, 2021	2014 Equity Incentive Plan		1,000		14.41		14,400
February 1, 2021	2014 Equity Incentive Plan		500		14.41		7,200
February 1, 2021	2014 Equity Incentive Plan		3,703		16.20		60,000
February 1, 2021	2014 Equity Incentive Plan		426		18.23		7,800
February 16, 2021	2014 Equity Incentive Plan		93		16.20		1,500
February 18, 2021	2014 Equity Incentive Plan		850		16.20		13,800
February 19, 2021	2014 Equity Incentive Plan		1,111		16.20		18,000
February 22, 2021	2014 Equity Incentive Plan		1,111		14.41		16,000
February 25, 2021	2014 Equity Incentive Plan		3,000		14.41		43,200
March 1, 2021	2014 Equity Incentive Plan		246		16.20		4,000
March 5, 2021	2014 Equity Incentive Plan		201		16.20		3,300
March 8, 2021	2014 Equity Incentive Plan		2,588		14.41		37,300
March 8, 2021	2014 Equity Incentive Plan		2,700		16.20		43,700
March 9, 2021	2014 Equity Incentive Plan		740		14.41		10,700
March 15, 2021	2014 Equity Incentive Plan		1,851		14.41		26,700
March 15, 2021	2014 Equity Incentive Plan		2,251		16.20		36,500
March 16, 2021	2014 Equity Incentive Plan		617		14.41		8,900
March 17, 2021	2014 Equity Incentive Plan		1,481		14.41		21,300
March 18, 2021	2014 Equity Incentive Plan		557		16.20		9,000
March 24, 2021	2014 Equity Incentive Plan		1,481		14.41		21,300
March 24, 2021	2014 Equity Incentive Plan		240		16.20		3,900
March 25, 2021	2014 Equity Incentive Plan		3,703		14.41		53,400
Total			223,758			$	3,436,400

	MEDPACE HOLDINGS, INC.

	/s/ Jesse J. Geiger
	Jesse J. Geiger
	Chief Financial Officer, and Chief Operating Officer, Laboratory Operations (Authorized Officer and Principal Financial Officer)

	Three Months Ended
	March 31,
(Amounts in thousands, except percentages)	2021			2020		Change			% Change
Revenue, net	$	259,965		$	230,879	$	29,086			12.6	%
Direct service costs, excluding depreciation and amortization		101,387			88,795		12,592			14.2	%
Reimbursed out-of-pocket expenses		80,151			77,006		3,145			4.1	%
Total direct costs		181,538			165,801		15,737			9.5	%
Selling, general and administrative		25,738			25,124		614			2.4	%
Depreciation		3,812			2,453		1,359			55.4	%
Amortization		1,278			1,997		(719	)		(36.0	)%
Total operating expenses		212,366			195,375		16,991			8.7	%
Income from operations		47,599			35,504		12,095
Miscellaneous income, net		924			617		307
Interest (expense) income, net		(14	)		357		(371	)
Income before income taxes		48,509			36,478		12,031
Income tax provision		5,203			7,524		(2,321	)
Net income	$	43,306		$	28,954	$	14,352

	Three Months Ended
	March 31,
Cash Flows (Amounts in thousands)	2021			2020
Net cash provided by operating activities	$	57,319		$	49,148
Net cash used in investing activities		(9,651	)		(5,522	)
Net cash provided by (used in) financing activities		9,102			(40,445	)
Effect of exchange rates on cash, cash equivalents and restricted cash		(1,659	)		(1,102	)
Increase in cash, cash equivalents and restricted cash	$	55,111		$	2,079

By:		/s/ August J. Troendle
		August J. Troendle
		President, Chief Executive Officer and Chairman of the Board of Directors
		(Principal Executive Officer)

By:		/s/ Jesse J. Geiger
		Jesse J. Geiger
		Chief Financial Officer and Chief Operating Officer, Laboratory Operations
		(Principal Financial Officer)