Medpace Holdings, Inc. Q4 FY2025 earnings call

• Cancellations were elevated in Q4 with backlog cancellations at the highest in over a year, resulting in a net book-to-bill ratio of 1.04.
• 2025 revenue was $2.53 billion, a 20% increase from 2024; net new business awards in 2025 were $2.65 billion, up 18.7%.
• Ending backlog as of December 31, 2025, was approximately $3 billion, a 4.3% increase from the prior year, with $1.9 billion projected to convert to revenue in the next twelve months.
• EBITDA margin for Q4 2025 was 22.6%, full year EBITDA margin was 22%. Net income per diluted share in 2025 was $15.28 compared to $12.63 in 2024.
• In 2025, 2.96 million shares were repurchased for $912.9 million.

In 2025, revenue was $2.53 billion, with Q4 revenue at $708.5 million, a year-over-year increase of 32%. EBITDA in 2025 was $557.7 million, increasing 16.1% from the prior year. Net income in 2025 was $451.1 million, an 11.6% increase from 2024. Customer concentration: top five and top ten customers represent roughly 25% and 35%, respectively, of full year 2025 revenue. Cash from operating activities in Q4 was $192.7 million, and net days sales outstanding was negative 58.7 days. As of December 31, 2025, cash was $497 million, and $821.7 million remained under the share repurchase authorization program.

• 2026 total revenue expected in the range of $2.755 billion to $2.855 billion (8.9% to 12.8% growth over 2025).
• 2026 EBITDA expected in the range of $605 million to $635 million (8.5% to 13.9% growth over 2025).
• 2026 net income expected in the range of $487 million to $511 million.
• Earnings per diluted share expected in the range of $16.68 to $17.50. Guidance assumes a full year 2026 effective tax rate of 18.5% to 19.5%, interest income of $24.3 million, and 29.2 million diluted weighted average shares outstanding for 2026, with no additional share repurchases.

• Elevated cancellations in Q4, which impacted the net book-to-bill ratio.
• Concentration risk in the metabolic area, though expected to normalize as a percentage of revenue next year.
• Uncertainty around the impact of AI on the business, with early stages of rollout and potential long-term effects on productivity and revenue.

Q: What is embedded in your guidance for revenue growth excluding pass-throughs?

A: Kevin Brady stated they do not provide guidance on direct service revenue, but reimbursable cost expectation is consistent with prior sharing, expected to be 41% to 42% of revenue in 2026, and reimbursable costs start the year higher as a percentage of revenue than they end.

Q: Can you help us understand the business environment and RFP activity?

A: August Troendle said the business environment was reasonably good, RFPs were up a bit quarter over quarter and year over year, but higher cancellation rate led to missing the net book-to-bill ratio.

Q: What is the historical range of cancellations and what drove them in Q4?

A: August Troendle said cancellations were widespread, skewed towards the metabolic area, and at the highest level of cancellations out of backlog in over a year, not due to a single large project but overall elevated.

Q: How do you think about concentration risk in metabolic and cancellations there?

A: August Troendle said metabolic concentration is expected to normalize as a percentage of revenue next year, and cancellations in metabolic were part of elevated overall cancellations, driven by the nature of metabolic trials with high pass-throughs.

Q: Any thoughts on AI and its impact on the space?

A: August Troendle said it's too early to know the full impact, investment in AI may equal benefits seen in 2026, and long-term productivity advances could have mixed implications for revenue; Jesse Geiger added AI initiatives are focused on improving efficiency and assisting with data analytics for feasibility and on-site selection.

Q: Any color on new signings in Q4 and pre-backlog?

A: August Troendle said they don't provide details on new signings in Q4 and pre-backlog quantification.

Q: Impacts from accelerating M&A environment with large pharma buying clients?

A: August Troendle said it's a potential, but they have a broad client base and generally don't lose short-term work with clients who are acquired.