10-Q 1 medp-20220630.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

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: 001-37856

 

Medpace Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

32-0434904

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

5375 Medpace Way, Cincinnati, OH 45227

(Address of principal executive offices) (Zip Code)

(513) 579-9911

(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

Common Stock $0.01 par value

MEDP

NASDAQ Global Select Market

 

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. Yes No

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). Yes No

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.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

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.

 

Class

 

Number of Shares Outstanding

Common Stock $0.01 par value

 

30,998,636 shares outstanding as of July 22, 2022

 

 


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR QUARTERLY PERIOD ENDED JUNE 30, 2022

TABLE OF CONTENTS

 

Item Number

 

 

 

Page

 

 

PART I — FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

 

3

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021

 

4

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021

 

5

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021

 

6

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

 

7

 

 

Notes to Condensed Consolidated Financial Statements

 

8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

24

Item 4.

 

Controls and Procedures

 

24

 

 

 

 

 

 

 

PART II — OTHER INFORMATION

 

24

Item 1.

 

Legal Proceedings

 

24

Item 1A.

 

Risk Factors

 

24

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

26

Item 3.

 

Defaults Upon Senior Securities

 

26

Item 4.

 

Mine Safety Disclosures

 

26

Item 5.

 

Other Information

 

26

Item 6.

 

Exhibits

 

26

 

 

EXHIBIT INDEX

 

27

 

 

SIGNATURES

 

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)

 

As Of

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

42,551

 

 

$

461,304

 

Accounts receivable and unbilled, net (includes $6.6 million and $2.7 million with related parties at June 30, 2022 and December 31, 2021, respectively)

 

 

225,695

 

 

 

186,432

 

Prepaid expenses and other current assets

 

 

60,641

 

 

 

43,176

 

Total current assets

 

 

328,887

 

 

 

690,912

 

Property and equipment, net

 

 

103,538

 

 

 

93,153

 

Operating lease right-of-use assets

 

 

135,389

 

 

 

129,558

 

Goodwill

 

 

662,396

 

 

 

662,396

 

Intangible assets, net

 

 

39,684

 

 

 

41,360

 

Deferred income taxes

 

 

26,441

 

 

 

25,134

 

Other assets

 

 

19,118

 

 

 

17,422

 

Total assets

 

$

1,315,453

 

 

$

1,659,935

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable (includes $0.3 million with related parties at June 30, 2022 and December 31, 2021, respectively)

 

$

28,800

 

 

$

25,678

 

Accrued expenses

 

 

173,192

 

 

 

159,286

 

Advanced billings (includes $12.0 million and $8.3 million with related parties at June 30, 2022 and December 31, 2021, respectively)

 

 

401,368

 

 

 

344,641

 

Short-term debt

 

 

249,700

 

 

 

-

 

Other current liabilities

 

 

25,899

 

 

 

27,612

 

Total current liabilities

 

 

878,959

 

 

 

557,217

 

Operating lease liabilities

 

 

134,977

 

 

 

130,965

 

Deferred income tax liability

 

 

1,002

 

 

 

1,080

 

Other long-term liabilities

 

 

17,263

 

 

 

17,745

 

Total liabilities

 

 

1,032,201

 

 

 

707,007

 

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 June 30, 2022 and December 31, 2021, respectively

 

 

-

 

 

 

-

 

Common stock - $0.01 par-value; 250,000,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; 30,987,636 and 36,006,778 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

309

 

 

 

360

 

Treasury stock - 81,573 and 180,000 shares at June 30, 2022 and December 31, 2021, respectively

 

 

(14,243

)

 

 

(5,427

)

Additional paid-in capital

 

 

753,300

 

 

 

727,857

 

(Accumulated deficit) Retained earnings

 

 

(446,142

)

 

 

234,984

 

Accumulated other comprehensive loss

 

 

(9,972

)

 

 

(4,846

)

Total shareholders’ equity

 

 

283,252

 

 

 

952,928

 

Total liabilities and shareholders’ equity

 

$

1,315,453

 

 

$

1,659,935

 

 

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)

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue, net (includes $17.2 million and $9.9 million with related parties for the three months ended June 30, 2022 and 2021, respectively, and $30.5 million and $15.2 million with related parties for the six months ended June 30, 2022 and 2021, respectively)

 

$

351,207

 

 

$

278,293

 

 

$

682,154

 

 

$

538,258

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Direct service costs, excluding depreciation and amortization

 

 

132,118

 

 

 

108,233

 

 

 

257,552

 

 

 

209,620

 

Reimbursed out-of-pocket expenses

 

 

120,093

 

 

 

95,409

 

 

 

226,929

 

 

 

175,560

 

Total direct costs

 

 

252,211

 

 

 

203,642

 

 

 

484,481

 

 

 

385,180

 

Selling, general and administrative

 

 

33,215

 

 

 

26,973

 

 

 

62,581

 

 

 

52,711

 

Depreciation

 

 

4,707

 

 

 

3,951

 

 

 

8,977

 

 

 

7,763

 

Amortization

 

 

838

 

 

 

1,279

 

 

 

1,676

 

 

 

2,557

 

Total operating expenses

 

 

290,971

 

 

 

235,845

 

 

 

557,715

 

 

 

448,211

 

Income from operations

 

 

60,236

 

 

 

42,448

 

 

 

124,439

 

 

 

90,047

 

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

Miscellaneous income, net

 

 

2,311

 

 

 

265

 

 

 

3,378

 

 

 

1,189

 

Interest expense, net

 

 

(548

)

 

 

(27

)

 

 

(494

)

 

 

(41

)

Total other income, net

 

 

1,763

 

 

 

238

 

 

 

2,884

 

 

 

1,148

 

Income before income taxes

 

 

61,999

 

 

 

42,686

 

 

 

127,323

 

 

 

91,195

 

Income tax provision

 

 

12,639

 

 

 

2,752

 

 

 

16,652

 

 

 

7,955

 

Net income

 

$

49,360

 

 

$

39,934

 

 

$

110,671

 

 

$

83,240

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.52

 

 

$

1.11

 

 

$

3.28

 

 

$

2.32

 

Diluted

 

$

1.46

 

 

$

1.06

 

 

$

3.16

 

 

$

2.20

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

32,493

 

 

 

35,894

 

 

 

33,696

 

 

 

35,825

 

Diluted

 

 

33,695

 

 

 

37,714

 

 

 

35,034

 

 

 

37,737

 

 

See notes to condensed consolidated financial statements.

 

- 4 -


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 

(Amounts in thousands)

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

49,360

 

 

$

39,934

 

 

$

110,671

 

 

$

83,240

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of taxes

 

 

(3,584

)

 

 

506

 

 

 

(5,126

)

 

 

(1,629

)

Comprehensive income

 

$

45,776

 

 

$

40,440

 

 

$

105,545

 

 

$

81,611

 

 

See notes to condensed consolidated financial statements.

 

- 5 -


 

 

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, 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

 

Net income

 

 

 

 

 

 

 

 

 

 

 

39,934

 

 

 

 

 

 

39,934

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

506

 

 

 

506

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,570

 

 

 

 

 

 

 

 

 

3,570

 

Stock options exercised

 

 

2

 

 

 

 

 

 

5,100

 

 

 

 

 

 

 

 

 

5,102

 

Repurchases of common stock

 

 

(3

)

 

 

 

 

 

 

 

 

(56,154

)

 

 

 

 

 

(56,157

)

BALANCE — June 30, 2021

 

$

358

 

 

$

(5,578

)

 

$

716,547

 

 

$

142,315

 

 

$

(1,760

)

 

$

851,882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Accumulated

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Deficit)

 

 

Other

 

 

 

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Total

 

BALANCE — December 31, 2021

 

$

360

 

 

$

(5,427

)

 

$

727,857

 

 

$

234,984

 

 

$

(4,846

)

 

$

952,928

 

Net income

 

 

 

 

 

 

 

 

 

 

 

61,311

 

 

 

 

 

 

61,311

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,542

)

 

 

(1,542

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,372

 

 

 

 

 

 

 

 

 

4,372

 

Stock options exercised

 

 

3

 

 

 

 

 

 

13,894

 

 

 

 

 

 

 

 

 

13,897

 

Repurchases of common stock

 

 

(27

)

 

 

(14,243

)

 

 

 

 

 

(411,680

)

 

 

 

 

 

(425,950

)

Retirement of treasury stock

 

 

 

 

 

5,427

 

 

 

 

 

 

(5,427

)

 

 

 

 

 

-

 

BALANCE — March 31, 2022

 

$

336

 

 

$

(14,243

)

 

$

746,123

 

 

$

(120,812

)

 

$

(6,388

)

 

$

605,016

 

Net income

 

 

 

 

 

 

 

 

 

 

 

49,360

 

 

 

 

 

 

49,360

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,584

)

 

 

(3,584

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,653

 

 

 

 

 

 

 

 

 

5,653

 

Stock options exercised

 

 

 

 

 

 

 

 

1,524

 

 

 

 

 

 

 

 

 

1,524

 

Repurchases of common stock

 

 

(27

)

 

 

 

 

 

 

 

 

(374,690

)

 

 

 

 

 

(374,717

)

BALANCE — June 30, 2022

 

$

309

 

 

$

(14,243

)

 

$

753,300

 

 

$

(446,142

)

 

$

(9,972

)

 

$

283,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

 

- 6 -


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

(Amounts in thousands)

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

110,671

 

 

$

83,240

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

8,977

 

 

 

7,763

 

Amortization