Medpace’s first quarter results were met with a negative market reaction despite the company surpassing Wall Street’s expectations for both revenue and profit. Management attributed the quarter’s performance to a combination of higher reimbursable cost activity and steady progression of ongoing clinical trial programs. CEO August Troendle noted that while RFP (request for proposal) activity remained strong, the quality of opportunities was mixed, reflecting both increased price competition and a rise in unfunded projects. The company also faced continued pipeline and pre-backlog cancellations, primarily driven by funding challenges among its biotech customers.
Is now the time to buy MEDP? Find out in our full research report (it’s free).
Medpace (MEDP) Q1 CY2025 Highlights:
- Revenue: $558.6 million vs analyst estimates of $528.2 million (9.3% year-on-year growth, 5.8% beat)
- EPS (GAAP): $3.67 vs analyst estimates of $3.04 (20.6% beat)
- Adjusted EBITDA: $118.6 million vs analyst estimates of $118.1 million (21.2% margin, in line)
- The company lifted its revenue guidance for the full year to $2.19 billion at the midpoint from $2.16 billion, a 1.4% increase
- EPS (GAAP) guidance for the full year is $12.65 at the midpoint, beating analyst estimates by 2.8%
- EBITDA guidance for the full year is $477 million at the midpoint, in line with analyst expectations
- Operating Margin: 20.3%, in line with the same quarter last year
- Organic Revenue rose 9.4% year on year (17.6% in the same quarter last year)
- Market Capitalization: $8.65 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Medpace’s Q1 Earnings Call
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David Windley (Jefferies) asked about increased price competition and whether rising RFP counts reflect real demand or more CROs vying for the same projects. CEO August Troendle confirmed both trends, emphasizing that RFP flow has increased but quality is mixed due to funding uncertainty and competitive pressure.
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Max Smock (William Blair) inquired about the likelihood of achieving higher book-to-bill ratios if the funding climate does not improve. Troendle explained that while a pathway exists, it depends on a significant reduction in cancellations, and stable conditions would likely result in book-to-bill ratios near current levels.
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Ann Hynes (Mizuho) questioned the drivers and breadth of project cancellations and whether they were concentrated in specific customer segments. Troendle responded that cancellations were widespread but primarily tied to funding issues, with some also resulting from drug safety or efficacy failures.
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Dan Leonard (UBS) explored the risk posed by clients with negative enterprise value, and whether their financial distress could lead to more project abandonments. Troendle and President Jesse Geiger said the key concern is funding availability rather than company valuations, and that failed or shuttered companies do not impact Medpace beyond project cancellations.
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Eric Coldwell (Baird) asked about the sustainability of increased backlog burn and whether it reflects operational improvements or simply timing and mix. CFO Kevin Brady attributed the higher burn to stronger program progression and elevated reimbursable costs, rather than changes in execution.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace and quality of new business awards and whether book-to-bill ratios recover above 1.0, (2) stabilization in project cancellation rates, particularly among small and mid-sized biopharma clients, and (3) whether higher reimbursable costs and site-related inflation persist or normalize. Progress in these areas will be critical for Medpace to sustain its revenue outlook and margin profile.
Medpace currently trades at $300, up from $288.35 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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