UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
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Number of Shares Outstanding |
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MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR QUARTERLY PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS
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Page |
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3 |
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
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3 |
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Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 |
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4 |
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5 |
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Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2022 and 2021 |
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Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 |
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8 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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26 |
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27 |
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28 |
- 2 -
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share amounts) |
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As Of |
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March 31, |
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December 31, |
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2022 |
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2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable and unbilled, net (includes $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Intangible assets, net |
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Deferred income taxes |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable (includes $ |
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$ |
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$ |
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Accrued expenses |
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Advanced billings (includes $ |
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Other current liabilities |
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Total current liabilities |
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Operating lease liabilities |
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Deferred income tax liability |
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Other long-term liabilities |
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Total liabilities |
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(see Note 11) |
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Shareholders’ equity: |
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Preferred stock - $ |
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Common stock - $ |
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Treasury stock - |
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Additional paid-in capital |
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(Accumulated deficit) Retained earnings |
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Accumulated other comprehensive loss |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
- 3 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except per share amounts) |
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Revenue, net (includes $ |
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$ |
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$ |
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Operating expenses: |
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Direct service costs, excluding depreciation and amortization |
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Reimbursed out-of-pocket expenses |
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Total direct costs |
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Selling, general and administrative |
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Depreciation |
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Amortization |
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Total operating expenses |
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Income from operations |
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Other income, net: |
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Miscellaneous income, net |
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Interest income (expense), net |
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( |
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Total other income, net |
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Income before income taxes |
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Income tax provision |
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Net income |
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$ |
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$ |
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Net income per share attributable to common shareholders: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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See notes to condensed consolidated financial statements.
- 4 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Amounts in thousands) |
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Other comprehensive income |
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Foreign currency translation adjustments, net of taxes |
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( |
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Comprehensive income |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
- 5 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) |
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(Amounts in thousands) |
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Accumulated |
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Additional |
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Other |
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Common |
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Treasury |
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Paid-In |
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Retained |
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Comprehensive |
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Stock |
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Stock |
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Capital |
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Earnings |
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Loss |
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Total |
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BALANCE — December 31, 2020 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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Foreign currency translation |
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( |
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Stock-based compensation expense |
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Stock options exercised |
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BALANCE — March 31, 2021 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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(Accumulated |
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Accumulated |
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Additional |
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Deficit) |
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Other |
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Common |
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Treasury |
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Paid-In |
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Retained |
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Comprehensive |
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Stock |
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Stock |
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Capital |
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Earnings |
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Loss |
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Total |
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BALANCE — December 31, 2021 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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Foreign currency translation |
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( |
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Stock-based compensation expense |
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Stock options exercised |
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Repurchases of common stock |
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( |
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( |
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( |
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Retirement of treasury stock |
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( |
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- |
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BALANCE — March 31, 2022 |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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$ |
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See notes to condensed consolidated financial statements. |
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- 6 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands) |
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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Amortization |
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Stock-based compensation expense |
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Noncash lease expense |
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Deferred income tax (benefit) provision |
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( |
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Amortization and adjustment of deferred credit |
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( |
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( |
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Other |
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Changes in assets and liabilities: |
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Accounts receivable and unbilled, net |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable |
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( |
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( |
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Accrued expenses |
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( |
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( |
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Advanced billings |
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Lease liabilities |
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( |
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( |
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Other assets and liabilities, net |
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( |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Property and equipment expenditures |
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( |
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( |
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Other |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from stock option exercises |
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Repurchases of common stock |
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( |
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Proceeds from revolving loan |
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- |
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Payments on revolving loan |
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( |
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- |
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Net cash (used in) provided by financing activities |
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( |
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EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND |
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(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period |
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CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION — |
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Acquistion of property and equipment—non-cash |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
- 7 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2022
(1) Basis of Presentation
Description of Business
Medpace Holdings, Inc. (together with its subsidiaries, “Medpace” or the “Company”), a Delaware corporation, is a global provider of clinical research-based drug and medical device development services. The Company partners with pharmaceutical, biotechnology, and medical device companies in the development and execution of clinical trials. The Company’s drug development services focus on full service Phase I-IV clinical development services and include development plan design, project management, regulatory affairs, clinical monitoring, data management and analysis, pharmacovigilance new drug application submissions, post-marketing clinical support, laboratory services, clinical human pharmacology, imaging services, and electrocardiography reading support for clinical trials.
The Company’s operations are principally based in North America, Europe, and Asia.
Unaudited Interim Financial Information
The interim condensed consolidated financial statements include the accounts of the Company, are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The preparation of the interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes could differ from management’s estimates and assumptions. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Share Repurchases
In the second quarter of 2021, the Board approved an increase of $
Recently Issued Accounting Standards
(2) Net Income Per Share
Basic and diluted earnings or loss per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in
- 8 -
undistributed earnings. The Company’s Restricted Stock Awards (“RSA”) are considered participating securities because they are legally issued at the date of grant and holders are entitled to receive non-forfeitable dividends during the vesting term.
The computation of diluted EPS includes additional common shares, such as unvested Restricted Stock Units (“RSU”) and stock options with exercise prices less than the average market price of the Company’s common stock during the period (“in-the-money options”), which would be considered outstanding. This assumes that additional shares would have to be issued in cases where the exercise price of stock options is less than the value of the common stock being acquired because the cash proceeds received from the stock option holder would not be sufficient to acquire that same number of shares. The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.
The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021 (in thousands, except for earnings per share):
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Weighted-average shares: |
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Common shares outstanding |
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RSAs |
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Total weighted-average shares |
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Earnings per common share—Basic |
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Net income |
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$ |
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$ |
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Less: Undistributed earnings allocated to RSAs |
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( |
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( |
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Net income available to common shareholders—Basic |
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$ |
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$ |
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Net income per common share—Basic |
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$ |
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$ |
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Basic weighted-average common shares outstanding |
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Effect of diluted shares |
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Diluted weighted-average shares outstanding |
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Net income per common share—Diluted |
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$ |
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$ |
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During the three months ended March 31, 2022, the Company had (in thousands)
(3) Fair Value Measurements
The Company follows accounting guidance related to fair value measurements that defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy for inputs used in measuring fair value. This hierarchy maximizes the use of “observable” inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy specifies three levels based on the inputs, as follows:
Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities.
Level 2: Valuations based on directly observable inputs or unobservable inputs corroborated by market data.
Level 3: Valuations based on unobservable inputs supported by little or no market activity representing management’s determination of assumptions of how market participants would price the assets or liabilities.
The fair value of financial instruments such as cash and cash equivalents, accounts receivable and unbilled, net, accounts payable, accrued expenses and advanced billings approximate their carrying amounts due to their short term maturities.
The Company does not have any recurring fair value measurements as of March 31, 2022. There were
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(4) Contract Assets and Contract Liabilities
Contract assets and liabilities are reflected in the Company’s condensed consolidated balance sheets within the accounts reflected below.
Contract Assets
Accounts receivable represent amounts due from the Company’s customers who are concentrated primarily in the pharmaceutical, biotechnology, and medical device industries. Unbilled represents revenue recognized to date that has not been billed or is not yet contractually billable to the customer. In general, amounts become billable upon the achievement of negotiated contractual events, in accordance with predetermined payment schedules or when a reimbursable expense has been incurred. Amounts classified to unbilled are those billable to customers within one year from the respective balance sheet date.
Accounts receivable and unbilled, net consisted of the following (in thousands):
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As of |
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March 31, |
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December 31, |
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2022 |
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2021 |
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Accounts receivable |
$ |
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$ |
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Unbilled receivables |
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Less: allowance for doubtful accounts |
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( |
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( |
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Total accounts receivable and unbilled, net |
$ |
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$ |
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Contract Liabilities
Advanced billings represent cash received from customers, or billed amounts per an agreed upon payment schedule, in advance of services being performed or revenue being recognized.
Advanced billings consisted of the following (in thousands):
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As of |
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March 31, |
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December 31, |
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2022 |
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2021 |
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Advanced billings |
$ |