Medpace Holdings, Inc. Posts Strong Q3 2023 Results and Guides Above Street for 2024; Strong Read-Through on Biopharma Investment
Medpace Holdings, Inc. has reported strong financial results for the third quarter ended September 30, 2023, highlighting impressive growth. Medpace recorded revenue of $492.5 million in the third quarter of 2023, marking a significant 28.3% increase compared to the same period in the prior year and significantly above consensus estimates of $475.8 million. There were also signs there is more to come with strong backlog trends as total backlog as of September 30, 2023, surged by 20.3%, reaching $2,689.5 million compared to $2,236.2 million at the same time in 2022. The company anticipates it will convert $1.46 billion of its backlog in the next 12 months. Net new business awards for Q3 2023 totaled an impressive $611.5 million, reflecting a substantial 29.9% increase compared to the prior year’s net new business awards of $470.9 million. The book-to-bill ratio in the quarter was 1.24x indicating a healthy balance between new business awards and revenue. The company saw a larger impact from its biggest customers in the quarter with top-5 customers contributing 23% of revenue vs. 17% last year.
Medpace reported a net income of $70.6 million for Q3 2023, translating to $2.22 per diluted share above consensus forecasts of $2.05 per share. As of September 30, 2023, the company reported cash and cash equivalents amounting to $95.2 million, with strong cash flow of $114.4 million generated from operating activities during Q3 2023. Perhaps the only negative in the quarter was EBITDA margins which declined year-over-year from a high of 23.3% in the 3Q22 to 18.3% in the 3Q23. The company has previously cited inflationary effects and staffing costs weighing on profitability.
Medpace now expects its revenue for 2023 to fall within the range of $1.870 billion to $1.890 billion, signifying substantial growth of 28.1% to 29.5% over the 2022 revenue of $1.460 billion. At the mid-range this implies a relatively flat quarter with Q323 on a sequential basis implying total revenue of $493 million. The anticipated diluted earnings per share (GAAP) for 2023 is estimated to range from $8.54 to $8.66. This implies 4Q23 adjusted EPS of $2.18 at the mid-range, once again relatively flat with 3Q23. Looking ahead to 2024, Medpace forecasts its revenue to fall within the range of $2.150 billion to $2.200 billion implying growth of 16% at the mid-point over the current mid-point of its guidance range. The street was forecasting 2024 revenue of $2.09 billion prior to the call.