10-Q

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 March 31, 2020

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	35,374,485 shares outstanding as of April 24, 2020

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR QUARTERLY PERIOD ENDED MARCH 31, 2020

TABLE OF CONTENTS

Item Number		Page
	PART I — FINANCIAL INFORMATION	3
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23
	PART II — OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
	EXHIBIT INDEX	26
	SIGNATURES	27

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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
	March 31,			December 31.
	2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	133,999		$	131,920
Accounts receivable and unbilled, net (includes $2.8 million and $1.9 million with related parties at March 31, 2020 and December 31, 2019, respectively)		136,374			155,662
Prepaid expenses and other current assets		32,629			29,446
Total current assets		303,002			317,028
Property and equipment, net		50,015			47,292
Operating lease right-of-use assets		58,667			52,152
Goodwill		662,427			662,396
Intangible assets, net		52,353			54,350
Deferred income taxes		490			376
Other assets		10,680			9,477
Total assets	$	1,137,634		$	1,143,071
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable (includes $0.1 million and $0.2 million with related parties at March 31, 2020 and December 31, 2019, respectively)	$	16,985		$	22,404
Accrued expenses		107,005			109,252
Advanced billings (includes $1.1 million and $3.0 million with related parties at March 31, 2020 and December 31, 2019, respectively)		189,562			192,359
Other current liabilities		25,099			18,987
Total current liabilities		338,651			343,002
Operating lease liabilities		51,395			45,212
Deferred income tax liability		14,022			12,849
Other long-term liabilities		15,767			15,725
Total liabilities		419,835			416,788
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 March 31, 2020 and December 31, 2019, respectively		-			-
Common stock - $0.01 par-value; 250,000,000 shares authorized at March 31, 2020 and December 31, 2019, respectively; 35,484,473 and 36,065,278 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		355			360
Treasury stock - 200,000 shares at March 31, 2020 and December 31, 2019, respectively		(6,030	)		(6,030	)
Additional paid-in capital		673,372			666,585
Retained earnings		53,831			68,109
Accumulated other comprehensive loss		(3,729	)		(2,741	)
Total shareholders’ equity		717,799			726,283
Total liabilities and shareholders’ equity	$	1,137,634		$	1,143,071

See notes to condensed consolidated financial statements.

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MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in thousands, except per share amounts)	Three Months Ended
	March 31,
	2020		2019
Revenue, net (includes $5.5 million and $5.1 million with related parties for the three months ended March 31, 2020 and 2019, respectively)	$	230,879	$	200,741
Operating expenses:
Direct service costs, excluding depreciation and amortization		88,795		75,109
Reimbursed out-of-pocket expenses		77,006		70,594
Total direct costs		165,801		145,703
Selling, general and administrative		25,124		21,308
Depreciation		2,453		1,991
Amortization		1,997		5,844
Total operating expenses		195,375		174,846
Income from operations		35,504		25,895
Other income (expense), net:
Miscellaneous income (expense), net		617		(282	)
Interest income (expense), net		357		(955	)
Total other income (expense), net		974		(1,237	)
Income before income taxes		36,478		24,658
Income tax provision		7,524		5,460
Net income	$	28,954	$	19,198
Net income per share attributable to common shareholders:
Basic	$	0.80	$	0.54
Diluted	$	0.76	$	0.51
Weighted average common shares outstanding:
Basic		36,024		35,698
Diluted		38,030		37,285

See notes to condensed consolidated financial statements.

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MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Amounts in thousands)	Three Months Ended
	March 31,
	2020			2019
Net income	$	28,954		$	19,198
Other comprehensive income
Foreign currency translation adjustments, net of taxes		(988	)		(274	)
Comprehensive income	$	27,966		$	18,924

See notes to condensed consolidated financial statements.

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MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(Amounts in thousands)												Accumulated
							Additional					Other
	Common			Treasury			Paid-In		Accumulated			Comprehensive
	Stock			Stock			Capital		Deficit			Loss			Total
BALANCE — December 31, 2018	$	356		$	(6,030	)	$	639,381	$	(41,487	)	$	(2,517	)	$	589,703
Impact to Retained Earnings from adoption of ASU 2016-02										9,153						9,153
BALANCE — January 1, 2019		356			(6,030	)		639,381		(32,334	)		(2,517	)		598,856
Net income										19,198						19,198
Foreign currency translation													(274	)		(274	)
Stock-based compensation expense								3,183								3,183
Stock options exercised		1						933								934
BALANCE — March 31, 2019	$	357		$	(6,030	)	$	643,497	$	(13,136	)	$	(2,791	)	$	621,897
												Accumulated
							Additional					Other
	Common			Treasury			Paid-In		Retained			Comprehensive
	Stock			Stock			Capital		Earnings			Loss			Total
BALANCE — December 31, 2019	$	360		$	(6,030	)	$	666,585	$	68,109		$	(2,741	)	$	726,283
Net income										28,954						28,954
Foreign currency translation													(988	)		(988	)
Stock-based compensation expense								5,445								5,445
Stock options exercised		1						1,342								1,343
Repurchases of common stock		(6	)							(43,232	)					(43,238	)
BALANCE — March 31, 2020	$	355		$	(6,030	)	$	673,372	$	53,831		$	(3,729	)	$	717,799
See notes to condensed consolidated financial statements.

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MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	28,954		$	19,198
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,453			1,991
Amortization		1,997			5,844
Stock-based compensation expense		5,445			3,183
Amortization of debt issuance costs and discount		-			138
Noncash lease expense		2,917			2,363
Deferred income tax provision		1,079			656
Amortization and adjustment of deferred credit		(181	)		(200	)
Other		(67	)		(43	)
Changes in assets and liabilities:
Accounts receivable and unbilled, net		19,301			4,255
Prepaid expenses and other current assets		(2,694	)		(1,642	)
Accounts payable		(6,809	)		(2,684	)
Accrued expenses		(1,757	)		(5,221	)
Advanced billings		(2,695	)		2,437
Lease liabilities		(2,236	)		(2,041	)
Other assets and liabilities, net		3,441			5,771
Net cash provided by operating activities		49,148			34,005
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures		(5,561	)		(2,520	)
Other		39			(1,322	)
Net cash used in investing activities		(5,522	)		(3,842	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises		1,331			972
Repurchases of common stock		(41,776	)		-
Payment of debt		-			(24,000	)
Net cash used in financing activities		(40,445	)		(23,028	)
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(1,102	)		(290	)
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		2,079			6,845
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period		131,920			23,282
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	133,999		$	30,127

See notes to condensed consolidated financial statements.

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MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2020

(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, 2019.

Share Repurchases

In the first quarter of 2018, the Board of Directors approved a share repurchase program authorizing up to $50.0 million in share repurchases. In the first quarter of 2020, the Board of Directors approved an additional $50.0 million in share repurchases, bringing the total to $100.0 million authorized under the share repurchase program. During the quarter ended March 31, 2020, the Company repurchased 661,637 shares for $43.2 million. As of March 31, 2020, $56.8 million remained available under the repurchase program authorization.

Repurchases under the share repurchase program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1. The Company constructively retires all repurchased shares with all amounts paid in excess of par value reflected within Retained earnings in the Company’s condensed consolidated balance sheets. The repurchase program may be suspended or discontinued at any time without notice.

Supplemental Cash Flow Disclosure

During the three months ended March 31, 2020, the company engaged in a non-cash financing activity of $1.4 million related to share repurchases executed, but not yet paid as of March 31, 2020.

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard in the first quarter of 2020 and it had no impact to the condensed consolidated financial statements.          

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(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 undistributed earnings. Restricted Stock Awards (“RSAs”) 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 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 under the treasury stock method. The treasury stock method 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, 2020 and 2019 (in thousands, except for earnings per share): 

	Three Months Ended
	March 31,
	2020		2019
Weighted-average shares:
Common shares outstanding		36,024		35,698
RSAs		95		104
Total weighted-average shares		36,119		35,802
Earnings per common share—Basic
Net income	$	28,954	$	19,198
Less: Undistributed earnings allocated to RSAs		76		56
Net income available to common shareholders—Basic	$	28,878	$	19,142
Net income per common share—Basic	$	0.80	$	0.54
Basic weighted-average common shares outstanding		36,024		35,698
Effect of diluted shares		2,006		1,587
Diluted weighted-average shares outstanding		38,030		37,285
Net income per common share—Diluted	$	0.76	$	0.51

During the three months ended March 31, 2020 and 2019, the Company had 439,405 and 0 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

(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, 2020. There were no transfers between Level 1, Level 2 or Level 3 during the three months ended March 31, 2020 or March 31, 2019.

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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):

	As of
	March 31,			December 31,
	2020			2019
Accounts receivable	$	108,852		$	127,877
Unbilled receivables		28,059			28,368
Less: allowance for doubtful accounts		(537	)		(583	)
Total accounts receivable and unbilled, net	$	136,374		$	155,662

Contract Liabilities

Advanced billings represents 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):

	As of
	March 31,		December 31,
	2020		2019
Advanced billings	$	189,562	$	192,359

As of March 31, 2020, we had approximately $1.3 billion of performance obligations remaining to be performed for active projects.

(5) Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Intangible assets:
Finite-lived intangible assets:
Carrying amount:
Customer relationships		145,051			145,051
Other		3,074			3,074
Total finite-lived intangible assets		148,125			148,125
Accumulated amortization:
Customer relationships		(124,375	)		(122,426	)
Other		(3,043	)		(2,995	)
Total accumulated amortization		(127,418	)		(125,421	)
Total finite-lived intangible assets, net		20,707			22,704
Trade name (indefinite-lived)		31,646			31,646
Total intangible assets, net	$	52,353		$	54,350

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As of March 31, 2020, estimated amortization expense of the Company’s intangible assets for each of the next five years and thereafter is as follows (in thousands):

	Amortization
Remainder of 2020	$	5,879
2021		5,114
2022		3,353
2023		2,199
2024		1,443
Later years		2,719
	$	20,707

(6) Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	As of
	March 31,		December 31,
	2020		2019
Employee compensation and benefits	$	22,383	$	34,119
Project related reimbursable expenses		76,136		68,696
Other		8,486		6,437
Total accrued expenses	$	107,005	$	109,252

(7) Debt

On September 30, 2019, the Company obtained an unsecured credit facility in an aggregate principal amount up to $50.0 million (the “Credit Facility”) through its wholly owned subsidiaries, Medpace, Inc., as borrower, and Medpace IntermediateCo, Inc., as guarantor. Outstanding balances under the Credit Facility bear interest at a rate of LIBOR plus 100 basis points (1.00%). On March 30, 2020, the Company amended the credit facility to extend its expiration date to March 31, 2021 and add provisions for alternative interest rates when certain interbank market offered rates are not available.   

As of March 31, 2020, there were no outstanding borrowings under the Credit Facility and $0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit Facility. 

(8) Leases

The Company enters into leases for real estate and equipment. Real estate leases are for our corporate office space and laboratories around the world. Real estate leases have remaining lease terms of less than 1 year to 20 years. Many of the Company’s leases include options to extend the leases on a month to month basis or for set periods for up to 20 years. Many leases also include options to terminate the leases within 1 year or per other contractual terms.

The components of lease expense were as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	3,768	$	3,117
Variable lease cost		886		594

Supplemental cash flow information related to the leases was as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,600	$	2,216
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		10,076		3,952

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Supplemental balance sheet information related to the leases was as follows (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Operating lease right-of-use assets	$	58,667		$	52,152
Other current liabilities	$	12,556		$	10,977
Operating lease liabilities		51,395			45,212
Total operating lease liabilities	$	63,951		$	56,189
Weighted Average Remaining Lease Term (years)
Operating leases	6.2			6.3
Weighted Average Discount Rate
Operating leases		5.6	%		6.0	%

Lease payments due related to lease liabilities as of March 31, 2020 were as follows (in thousands):

	Related Party			Non-Related Parties			Total
	Operating Leases			Operating Leases			Operating Leases
Remainder of 2020	$	4,200		$	6,920		$	11,120
2021		5,601			9,716			15,317
2022		5,269			6,516			11,785
2023		3,613			5,566			9,179
2024		3,613			4,294			7,907
Later years		9,666			11,339			21,005
Total lease payments		31,962			44,351			76,313
Less: imputed interest		(5,755	)		(6,607	)		(12,362	)
Total	$	26,207		$	37,744		$	63,951

As of March 31, 2020, we have several additional leases with contractual obligations, which have not yet commenced, with future payments of $125.9 million. This includes a lease related to a corporate office under construction in Cincinnati, Ohio, which has not yet commenced, with future payments of $124.0 million. This lease will commence in fiscal year 2020 with an initial lease term of 20 years and a renewal option for two 10-year terms at prevailing market rates.

(9) Shareholder’s Equity and Stock-Based Compensation

The Company granted 312,897 awards to employees under the 2016 Incentive Award Plan during the three months ended March 31, 2020, consisting of 20,724 restricted stock awards (“RSA”) and 92,768 restricted stock units (“RSU”) vesting after four years, and 199,405 fully-vested stock option awards. The Company granted 268,617 awards to employees under the 2016 Incentive Award Plan during the three months ended March 31, 2019, consisting of 5,000 stock option awards and 164,200 RSU vesting after four years, 77,417 fully-vested stock option awards and 22,000 stock option awards with vesting in twelve equal monthly installments beginning on March 31, 2019.

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Award Activity

The following table sets forth the Company’s stock option activity:

	Three Months Ended March 31, 2020
				Weighted Average
	Stock Options			Exercise Price
Outstanding - beginning of period		3,030,071		$	34.50
Granted		199,405		$	107.93
Exercised		(80,832	)	$	16.61
Forfeited/Expired		(38,100	)	$	38.41
Outstanding - end of period		3,110,544		$	39.63
Exercisable - end of period		1,563,803		$	48.54

The following table sets forth the Company’s RSA/RSU activity:

	Three Months Ended
	March 31, 2020
	Shares/Units
Outstanding and unvested - beginning of period		569,770
Granted		113,492
Vested		-
Forfeited		(5,000	)
Outstanding and unvested - end of period		678,262
Cumulative vested shares - end of period		1,913,916

Stock-based compensation expense recognized in the condensed consolidated statements of operations related to all outstanding stock based compensation awards is summarized below (in thousands):

	Three Months Ended March 31,
	2020		2019
Total direct costs	$	2,006	$	1,560
Selling, general and administrative		3,439		1,623
Total stock-based compensation expense	$	5,445	$	3,183

(10) Income Taxes

The Company’s effective income tax rate was 20.6% and 22.1% for the three months ended March 31, 2020 and 2019, respectively. The Company’s effective income tax rate for the three months ended March 31, 2020 varied from the U.S. statutory rate of 21% primarily due to the impact of state taxes, which was favorably offset by previously acquired tax attributes, tax benefits related to Foreign Derived Intangible Income (FDII) and excess tax benefits recognized from share-based compensation.

(11) Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. The Company cannot predict with certainty the outcome of such proceedings, but it believes that adequate reserves have been recorded and losses already recognized with respect to such proceedings, which were immaterial as of March 31, 2020 and December 31, 2019.  There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, the Company believes that such potential losses were immaterial as of March 31, 2020.

Purchase Commitments

The Company has several minimum purchase commitments for project related supplies totaling $11.8 million. In return for the commitment, Medpace receives preferential pricing. The commitments expire at various times through 2026.

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(12) Related Party Transactions

Employee Loans

The Company periodically extends short term loans or advances to employees, typically upon commencement of employment.  Total receivables as a result of these employee advances of $0.2 million existed at March 31, 2020 and December 31, 2019, respectively, and are included in the Prepaid expenses and other current assets and Other assets line items of the condensed consolidated balance sheets, respectively, depending on the contractual repayment date.

Service Agreements

Cymabay Therapeutics, Inc. (“Cymabay”)

Cymabay is a clinical-stage biopharmaceutical company developing therapies to treat metabolic diseases with high unmet medical need, including serious rare and orphan disorders. A Medpace employee was a member Cymabay’s board of directors from the first quarter of 2016 until his resignation in the first quarter of 2020. The Company and Cymabay entered into a MSA dated October 21, 2016. Subsequently, the Company and Cymabay have entered into several task orders for the Company to perform clinical trial related services. During the three months ended March 31, 2019, the Company recognized total revenue from Cymabay of $3.1 million in the Company’s condensed consolidated statements of operations. As of December 31, 2019, the Company had Advanced billings from Cymabay of $1.6 million in the condensed consolidated balance sheets. As of December 31, 2019, the Company had Accounts receivable and unbilled, net from Cymabay of $1.4 million recorded in the condensed consolidated balance sheets. As of the first quarter of 2020, Cymabay is no longer considered a related party.

LIB Therapeutics LLC and subsidiaries (“LIB”)

Certain executives and employees of the Company, including the chief executive officer, are members of LIB’s board of managers. The Company entered into a MSA dated November 24, 2015 with LIB, a company that engages in research, development, marketing and commercialization of pharmaceutical drugs. Subsequently, the Company and LIB have entered into several task orders for the Company to perform clinical trial related services. During the three months ended March 31, 2020 and 2019, the Company recognized total revenue from LIB of $1.0 million and $0.7 million, respectively, in the Company’s condensed consolidated statements of operations. As of March 31, 2020 and December 31, 2019, respectively, the Company had Advanced billings from LIB of $0.4 million and $0.5 million recorded in the condensed consolidated balance sheets. In addition, as of March 31, 2020 and December 31, 2019, respectively, the Company had Accounts receivable and unbilled, net from LIB of $0.6 million and $0.3 million recorded in the condensed consolidated balance sheets.

CinRX Pharma and subsidiaries (“CinRx”)

Certain executives and employees of the Company, including the chief executive officer, are members of CinRx’s board of managers and/or have equity investments in CinRx, a biotech company. The Company and CinRx have entered into several task orders for the Company to perform clinical trial related services. During the three months ended March 31, 2020 and 2019, the Company recognized total revenue from CinRx of $4.4 million and $1.4 million, respectively, in the Company’s condensed consolidated statements of operations. As of March 31, 2020 and December 31, 2019, respectively, the Company had Advanced billings from CinRx of $0.7 million and $0.9 million recorded in the condensed consolidated balance sheets. As of March 31, 2020 and December 31, 2019 the Company had Accounts receivable and unbilled, net from CinRx of $2.2 million and $0.2 million, respectively, in the condensed consolidated balance sheets.

The Summit, a Dolce Hotel (“The Summit”)

The Summit Hotel, located on the Medpace campus, is owned by the chief executive officer, and managed by an unrelated hospitality management entity. Medpace incurs travel lodging and meeting expenses at The Summit. During the three months ended March 31, 2020 and 2019, Medpace incurred expenses of $0.2 million and $0.1 million at The Summit, respectively.

Leased Real Estate

Headquarters Lease

The Company entered into an operating lease for its corporate headquarters with an entity that is wholly owned by the chief executive officer of the Company. The Company has evaluated its relationship with the related party and concluded that the related party is not a variable interest entity because the Company has no direct ownership interest or relationship other than the lease. The lease for headquarters is for an initial term of twelve years through November 2022 with a renewal option for one 10-year term at prevailing market rates. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for its corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index. Operating lease cost recognized for the three months ended March 31, 2020 and 2019 was $0.5 million, respectively. The operating

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lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at March 31, 2020 and December 31, 2019 were $4.8 million and $5.3 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at March 31, 2020 were $1.8 million and $3.0 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2019 were $1.8 million and $3.5 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

In 2018, Medpace, Inc. entered into a multi-year lease agreement governing future occupancy of additional office space in Cincinnati, Ohio with an entity that is wholly owned by the Company’s chief executive officer and certain members of his immediate family. The lease expires in 2040 and the Company has two 10-year options to extend the term of the lease.

The Company entered into two multi-year lease agreements governing the occupancy of space of two buildings in Cincinnati, Ohio with an entity that is wholly owned by the Company’s chief executive officer and certain members of his immediate family. The Company assumed occupancy in 2012 and the leases expire in 2027 with the Company having one 10-year option to extend the lease term. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for the corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index. The Company has determined that the leases are operating leases. Operating lease cost recognized for the three months ended March 31, 2020 and 2019 was $0.9 million, respectively. The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at March 31, 2020 and December 31, 2019 were $21.4 million and $21.9 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at March 31, 2020 were $2.3 million and $19.1 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2019 were $2.3 million and $19.7 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

Travel Services      

The Company incurs expenses for travel services for company executives provided by a private aviation charter company that is owned by the chief executive officer and the executive vice president of operations of the Company (“private aviation charter”). The Company may contract directly with the private aviation charter for the use of its aircraft or indirectly through a third party aircraft management and jet charter company (the “Aircraft Management Company”). The travel services provided are primarily for business purposes, with certain personal travel paid for as part of the executives’ compensation arrangements. The Aircraft Management Company also makes the private aviation charter aircraft available to third parties. The Company incurred travel expenses of $0.2 million and $0.3 million during the three months ended March 31, 2020 and 2019, respectively, related to these travel services. These travel expenses are recorded in Selling, general and administrative in the Company’s condensed consolidated statements of operations.

(13) Entity Wide Disclosures

Revenue by Category

The following table disaggregates our revenue by major source (in thousands):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Therapeutic Area
Oncology	$	69,212	$	55,962
Other		50,569		46,869
Metabolic		36,075		35,001
Cardiology		25,899		22,650
AVAI		25,147		19,924
Central Nervous System		23,977		20,335
Total revenue	$	230,879	$	200,741

In the current quarter and for all periods presented, the revenue associated with medical device projects, previously a separate therapeutic area, has been included in the respective therapeutic area that best aligns with the therapeutic focus of the medical device project and represents how management evaluates disaggregated revenue in its internal reporting.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and with the information under the heading “Management Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. This item and the related discussion contain forward-looking statements reflecting current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those indicated in such forward-looking statements. Important factors that may cause such differences include, but are not limited to, those discussed under the “Forward-Looking Statements” below and “Risk Factors” in “Item 1A Risk Factors” of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained herein, including statements regarding our results of operations; financial position and performance; liquidity and our ability to fund our business operations and initiatives; capital expenditure and debt service obligations; business strategies, plans and goals, including those related to operations, marketing, acquisitions and expansion of our business; product approvals and plans; industry trends; expectations regarding consumer behaviors and trends; our culture and operating philosophy; human resource management; arrangements with and delivery of our services to the customers; conversion of backlog; dividend policy; legal proceedings; and our objectives for future operations, are forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to inherent uncertainties, risks, changes in circumstances and other important factors that are difficult to predict. Moreover, we operate in a very competitive and rapidly changing environment in which new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all important factors on our business or the extent to which any factor, or combination of such factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed may not occur and our financial condition and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We caution you therefore against relying on these forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. For a further discussion of the risks relating to our business, see “Item 1A Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and “Part II – Other Information, Item 1A Risk Factors” herein.

Business Overview

We are one of the world’s leading clinical contract research organizations, or CROs, by revenue, solely focused on providing scientifically-driven outsourced clinical development services to the biotechnology, pharmaceutical and medical device industries. Our mission is to accelerate the global development of safe and effective medical therapeutics. We differentiate ourselves from our competitors by our disciplined operating model centered on providing full-service Phase I-IV clinical development services and our therapeutic expertise. We believe this combination results in timely and cost-effective delivery of clinical development services for our customers. We believe that we are a partner of choice for small- and mid-sized biopharmaceutical companies based on our ability to consistently utilize our full-service, disciplined operating model to deliver timely and high-quality results for our customers.

We focus on conducting clinical trials across all major therapeutic areas, with particular strength in Cardiology, Metabolic Disease, Oncology, Central Nervous System (“CNS”), Antiviral and Anti-infective (“AVAI”), as well as therapeutic expertise in Medical Devices. Our global platform includes approximately 3,600 employees across 37 countries as of March 31, 2020, providing our customers with broad access to diverse markets and patient populations as well as local regulatory expertise and market knowledge.

How We Generate Revenue

We earn fees through the performance of services detailed in our customer contracts. Contract scope and pricing is typically based on either a fixed-fee or unit-of-service model, with consideration of activities performed by third parties, as well as ancillary costs necessary to deliver on the contract scope that are reimbursable by our customers. Our contracts can range in duration from a few months to several years. These contracts are individually priced and negotiated based on the anticipated project scope, including the complexity of the project and the performance risks inherent in the project. The majority of our contracts are structured with an

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upfront fee that is collected at the time of contract signing, and the balance of the fee is collected over the duration of the contract either through an arranged billing schedule or upon completion of certain performance targets or defined milestones.

Revenue, which is distinct from billing and cash receipt, is recognized based on the satisfaction of the individual performance obligations identified in each contract. Substantially all of our customer contracts consist of a single performance obligation, as the promise to transfer the individual services defined in the contracts are not separately identifiable from other promises in the contract, and therefore not distinct.  Our performance obligations are generally satisfied over time and recognized as services are performed.  The progression of our contract performance obligations are measured primarily utilizing the input method of cost to cost.  Cancellation provisions in our contracts allow our customers to terminate a contract either immediately or according to advance notice terms specified within the applicable contract, which is typically 30 days. Contract cancellation may occur for various reasons, including, but not limited to, adverse patient reactions, lack of efficacy, or inadequate patient enrollment. Upon cancellation, we are entitled to fees for services rendered through the date of termination, including payment for subsequent services necessary to conclude the study or close out the contract. These fees are typically discussed and agreed upon with the customer and are realized as revenue when we believe the amount can be estimated reliably and its realization is probable.  Changes in revenue from period to period are driven primarily by new business volume and task order execution activity, project cancellations, and the mix of active studies during a given period that can vary based on therapeutic area and or study life cycle stage.

Costs and Expenses

Our costs and expenses are comprised primarily of our total direct costs, selling, general and administrative costs, depreciation and amortization and income taxes.

Total Direct Costs

Total direct costs are primarily driven by labor and related employee benefits, but also include contracted third party service related expenses, fees paid to site investigators, reimbursed out of pocket expenses, laboratory supplies and other expenses contributing to service delivery. The other costs of service delivery can include office rent, utilities, supplies and software licenses which are allocated between Total direct costs and selling, general and administrative expenses based on the estimated contribution among service delivery and support function efforts on a percentage basis. Total direct costs are expensed as incurred and are not deferred in anticipation of contracts being awarded or finalization of changes in scope. Total direct costs, as a percentage of net revenue, can vary from period to period due to project labor efficiencies, changes in workforce, compensation/bonus programs and service mix.

Selling, General and Administrative

Selling, general and administrative expenses are primarily driven by compensation and related employee benefits, as well as rent, utilities, supplies, software licenses, professional fees (e.g., legal and accounting expenses), bad debt expense, travel, marketing and other operating expenses.

Depreciation

Depreciation is provided on our property and equipment on the straight-line method at rates adequate to allocate the cost of the applicable assets over their estimated useful lives, which is three to five years for computer hardware, software, phone, and medical imaging equipment, five to seven years for furniture and fixtures and other equipment, and thirty to forty years for buildings. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful life of the improvement or the associated remaining lease term.

Amortization

Amortization relates to finite-lived intangible assets recognized as expense using the straight-line method or using an accelerated method over their estimated useful lives, which range in term from 5 to 15 years. 

Income Tax Provision

Income tax provision consists of federal, state and local taxes on income in multiple jurisdictions.  Our income tax is impacted by the pre-tax earnings in jurisdictions with varying tax rates and any related tax credits that may be available to us.  Our current and future provision for income taxes will vary from statutory rates due to the impact of valuation allowances in certain countries, income tax incentives, certain non-deductible expenses, and other discrete items.

Key Performance Metrics

To evaluate the performance of our business, we utilize a variety of financial and performance metrics. These key measures include new business awards, cancellations and backlog.

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New Business Awards, Cancellations and Backlog

New business awards represent the value of anticipated future net revenue that has been awarded during the period that is recognized in backlog. This value is recognized upon the signing of a contract or receipt of a written pre-contract confirmation from a customer that confirms an agreement in principle on budget and scope. New business awards also include contract amendments, or changes in scope, where the customer has provided written authorization for changes in budget and scope or has approved us to perform additional work as of the measurement date. Awards may not be recognized as backlog after consideration of a number of factors, including whether (i) the relevant net revenue is expected only after a pending regulatory hurdle, which might result in cancellation of the study, (ii) the customer funding needed for commencement of the study is not believed to have been secured or (iii) study timelines are uncertain or not well defined. In addition, study amounts that extend beyond a three-year timeline are not included in backlog. The number and amount of new business awards can vary significantly from period to period, and an award’s contractual duration can range from several months to several years based on customer and project specifications.

Cancellations arise in the normal course of business and are reflected when we receive written confirmation from the customer to cease work on a contractual agreement. The majority of our customers can terminate our contracts without cause upon 30 days’ notice. Similar to new business awards, the number and amount of cancellations can vary significantly period over period due to timing of customer correspondence and study-specific circumstances.

Net new business awards represent gross new business awards received in a period offset by total cancellations in that period. Net new business awards were $246.9 million and $248.7 million for the three months ended March 31, 2020 and 2019, respectively.

Backlog represents anticipated future net revenue from net new business awards that have not commenced or are currently in process but not complete. Reported backlog will fluctuate based on new business awards, changes in the scope of existing contracts, cancellations, revenue recognition on existing contracts and foreign exchange adjustments from non-U.S. dollar denominated backlog. As of March 31, 2020, our backlog increased by $186.1 million, or 16.8%, to $1,294.2 million compared to $1,108.1 million as of March 31, 2019.

The effect of foreign currency adjustments on backlog was as follows: unfavorable foreign currency adjustments of $3.9 million for the three months ended March 31, 2020 and unfavorable foreign currency adjustments of $1.8 million for the three months ended March 31, 2019.

Backlog and net new business award metrics may not be reliable indicators of our future period revenue as they are subject to a variety of factors that may cause material fluctuations from period to period. These factors include, but are not limited to, changes in the scope of projects, cancellations, and duration and timing of services provided.

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Coronavirus (COVID-19)

On March 11, 2020, the World Health Organization declared the coronavirus COVID-19 outbreak to be a pandemic. This pandemic has resulted in increased travel restrictions and caused the shutdown of many businesses in countries in which we operate. While we continue to operate globally, the level of activity at each of our locations varies depending on the local governmental requirements and guidelines. The majority of our office staff are effectively working remotely and our labs are fully operational with modifications made to ensure the safety of our employees. The diversion of resources to treat COVID-19 patients has significantly impacted the operations at most of the investigative sites where patients in our clinical trials are recruited and treated. This has resulted in reduced trial starts and slowed new business awards, each of which results in decreased revenues. Depending on the duration of the disruption, ongoing studies may be cancelled and some of our clients may lack the funding to complete trials which are extended due to slowed recruitment of patients. We work with many smaller clients with limited financial resources and market disruptions may make raising additional funds difficult. Travel restrictions and business closures have also impacted study participants and clinical sites which affects our ability to efficiently provide clinical trial services. As a result, we are working with our customers to develop solutions to limit disruption to clinical trials while following required regulatory guidelines and maintaining quality to ensure the health and well-being of study participants. These include alternative assessment methods such as virtual monitoring visits. The COVID-19 outbreak has already had a significant adverse effect on the first quarter of fiscal 2020 and we believe that the outbreak will have an increasing adverse impact on our results of operations in the future. In connection with this expected adverse impact, we have also evaluated our headcount needs in a number of geographies and implemented some staff reductions where appropriate. As we cannot predict the duration or scope of the pandemic, the future financial impact on our results of operations and financial condition cannot be reasonably estimated, but will likely be material.

Exchange Rate Fluctuations

The majority of our contracts and operational transactions are U.S. dollar denominated.  The Euro represents the largest foreign currency denomination of our contractual and operational exposure.  As a result, a portion of our revenue and expenses are subject to exchange rate fluctuations. We have translated the Euro into U.S. dollars using the following average exchange rates based on data obtained from www.xe.com:

	Three Months Ended March 31,
	2020		2019
U.S. Dollars per Euro:		1.10		1.14

Results of Operations

Three Months Ended March 31, 2020 compared to Three Months Ended March 31, 2019

	Three Months Ended
	March 31,
(Amounts in thousands, except percentages)	2020		2019			Change			% Change
Revenue, net	$	230,879	$	200,741		$	30,138			15.0	%
Direct service costs, excluding depreciation and amortization		88,795		75,109			13,686			18.2	%
Reimbursed out-of-pocket expenses		77,006		70,594			6,412			9.1	%
Total direct costs		165,801		145,703			20,098			13.8	%
Selling, general and administrative		25,124		21,308			3,816			17.9	%
Depreciation		2,453		1,991			462			23.2	%
Amortization		1,997		5,844			(3,847	)		(65.8	)%
Total operating expenses		195,375		174,846			20,529			11.7	%
Income from operations		35,504		25,895			9,609
Miscellaneous income (expense), net		617		(282	)		899
Interest income (expense), net		357		(955	)		1,312
Income before income taxes		36,478		24,658			11,820
Income tax provision		7,524		5,460			2,064
Net income	$	28,954	$	19,198		$	9,756

Total revenue

Total revenue increased by $30.1 million to $230.9 million for the three months ended March 31, 2020, from $200.7 million for the three months ended March 31, 2019. The increase was primarily driven by growth within the Oncology, AVAI and other uncategorized therapeutic areas. 

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Total direct costs

Total direct costs increased by $20.1 million, to $165.8 million for the three months ended March 31, 2020 from $145.7 million for the three months ended March 31, 2019. The increase was primarily attributed to higher reimbursed out-of-pocket expenses and higher personnel costs to support the growth in service activities. Reimbursed out-of-pocket expenses, which can fluctuate significantly from period to period based on the timing of program initiation and closeout, increased $6.4 million for the three months ended March 31, 2020, compared to the same period in the prior year. The higher personnel costs portion increased by $11.9 million for the three months ended March 31, 2020, compared to the same period in the prior year.

Selling, general and administrative

Selling, general and administrative expenses increased by $3.8 million, to $25.1 million for the three months ended March 31, 2020 from $21.3 million for the three months ended March 31, 2019. This increase was primarily driven by higher personnel costs. The higher personnel costs portion increased by $4.0 million for the three months ended March 31, 2020, compared to the same period in the prior year. 

Depreciation and Amortization

Depreciation and amortization expense decreased by $3.4 million, to $4.5 million for the three months ended March 31, 2020 from $7.8 million for the three months ended March 31, 2019. The decrease in depreciation and amortization was primarily related to the continued amortization of our definite lived intangible assets, which are amortized on an accelerated basis.

Miscellaneous income (expense), net

Miscellaneous income (expense), net increased by $0.9 million to $0.6 million of income for the three months ended March 31, 2020 from $0.3 million of expense for the three months ended March 31, 2019. These changes were mainly attributable to foreign exchange gains or losses that arise in connection with the revaluation of short-term intercompany balances between our domestic and international subsidiaries, gains or losses from foreign currency transactions, such as those resulting from the settlement of third-party accounts receivables and payables denominated in a currency other than the local currency of the entity making the payment.

Interest income (expense), net

Interest income (expense), net increased by $1.3 million to $0.4 million of income for the three months ended March 31, 2020 from $1.0 million of expense for the three months ended March 31, 2019. The increase in interest income (expense), net was related to a lower average outstanding balance in the three months ended March 31, 2020 under our credit facility.

Income tax provision

Income tax provision increased by $2.1 million, to $7.5 million for the three months ended March 31, 2020 from $5.5 million for the three months ended March 31, 2019. The increase in the income tax provision was primarily attributable to an increase in pre-tax book income which was partially offset by an increase in tax benefits related to FDII and an increase in excess tax benefits recognized from share-based compensation compared to the same period in the prior year. The overall effective tax rate for the three months ended March 31, 2020 was 20.6%, compared to an overall effective tax rate of 22.1% for the three months ended March 31, 2019. The decrease in the overall effective tax rate was primarily attributable to an increase in tax benefits related to Foreign Derived Intangible Income (FDII) and an increase in excess tax benefits recognized from share-based compensation compared to the same period in the prior year.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal sources of liquidity are operating cash flows and funds available for borrowing under our unsecured credit facility consisting of up to a $50.0 million revolving line of credit which we entered into on September 30, 2019 (the “Credit Facility”). As of March 31, 2020, we had cash and cash equivalents of $134.0 million. Approximately $21.8 million of cash and cash equivalents, none of which was restricted, was held by our foreign subsidiaries as of March 31, 2020. On March 30, 2020, we extended the expiration date of the Credit Facility to March 31, 2021 and added provisions for alternative interest rates when certain interbank market offered rates are not available.

As of March 31, 2020, we had $49.8 million available for borrowing under the Credit Facility. Our expected primary cash needs on both a short and long-term basis are for investment in operational growth, capital expenditures, share repurchases, selective strategic bolt-on acquisitions, other investments, and other general corporate needs. We have historically funded our operations and growth with cash flow from operations and borrowings under our credit facilities. We expect to continue expanding our operations through organic growth and potentially highly selective bolt-on acquisitions and investments. We expect these activities will be funded from

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existing cash, cash flow from operations and, if necessary, borrowings under our existing or future credit facilities. We have deemed that foreign earnings will be indefinitely reinvested and therefore we have not provided taxes on these earnings. While we do not anticipate the need to repatriate these foreign earnings for liquidity purposes given our cash flows from operations and available borrowing under existing and future credit facilities, we would incur taxes on these earnings if the need for repatriation due to liquidity purposes arises.

	Three Months Ended
	March 31,
Cash Flows (Amounts in thousands)	2020			2019
Net cash provided by operating activities	$	49,148		$	34,005
Net cash used in investing activities		(5,522	)		(3,842	)
Net cash used in financing activities		(40,445	)		(23,028	)
Effect of exchange rates on cash, cash equivalents and restricted cash		(1,102	)		(290	)
Increase in cash, cash equivalents and restricted cash	$	2,079		$	6,845

Cash Flow from Operating Activities

Cash flows from operations are driven mainly by net income, stock based compensation expense and net movement in accounts receivable and unbilled, net, and accounts payable. Accounts receivable and unbilled, net and advanced billings fluctuate on a regular basis as we perform our services, bill our customers and ultimately collect on those receivables. We attempt to negotiate payment terms in order to provide for payments prior to or soon after the provision of services, but this timing of collection can vary significantly on a period by period comparative basis.

Net cash flows provided by operating activities was $49.1 million for the three months ended March 31, 2020 beginning with net income of $29.0 million. Adjustments to reconcile net income to net cash provided by operating activities were $13.6 million, primarily related to amortization of intangibles of $2.0 million, depreciation of $2.5 million, stock based compensation expense of $5.4 million and noncash lease expense of $2.9 million. Changes in operating assets and liabilities provided $6.5 million in operating cash flows and was primarily driven by decreased accounts receivable and unbilled, net of $19.3 million and a change in other assets and liabilities, net of $3.4 million, offset by decreased accounts payable of $6.8 million.  

Net cash flows provided by operating activities was $34.0 million for the three months ended March 31, 2019 beginning with net income of $19.2 million. Adjustments to reconcile net income to net cash provided by operating activities were $13.9 million, primarily related to amortization of intangibles of $5.8 million, depreciation of $2.0 million, stock based compensation expense of $3.2 million and noncash lease expense of $2.4 million. Changes in operating assets and liabilities provided $0.9 million in operating cash flows and was primarily driven by a change in other assets and liabilities, net of $5.8 million and decreased accounts receivable and unbilled, net of $4.3 million, offset by increased accrued expenses of $5.2 million.

Cash Flow from Investing Activities

Net cash used in investing activities was $5.5 million for the three months ended March 31, 2020 primarily consisting of property and equipment expenditures.

Net cash used in investing activities was $3.8 million for the three months ended March 31, 2019 primarily consisting of property and equipment expenditures.

Cash Flow from Financing Activities

Net cash used in financing activities was $40.4 million for the three months ended March 31, 2020 primarily related to $41.8 million in repurchases of common stock.

Net cash used in financing activities was $23.0 million for the three months ended March 31, 2019 primarily related to $24.0 million in principal payments on our Prior Senior Secured Term Loan Facility.

- 21 -

Share Repurchases

In the first quarter of 2018, the Board of Directors approved a share repurchase program authorizing up to $50.0 million in share repurchases. In the first quarter of 2020, the Board of Directors approved an additional $50.0 million in share repurchases, bringing the total to $100.0 million authorized under the share repurchase program. During the quarter ended March 31, 2020, the Company repurchased 661,637 shares for $43.2 million. As of March 31, 2020, $56.8 million remained available under the repurchase program authorization.

Repurchases under the share repurchase program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1. The Company constructively retires all repurchased shares with all amounts paid in excess of par value reflected within Retained earnings in the Company’s condensed consolidated balance sheets. The repurchase program may be suspended or discontinued at any time without notice.

Indebtedness

As of March 31, 2020, we had no indebtedness and $0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit Facility. Refer to Note 7 of the Notes to Condensed Consolidated Financial Statements for details regarding our Credit Facility.

Contractual Obligations and Commercial Commitments

We have various contractual obligations, which are recorded as liabilities in our condensed consolidated financial statements. Other items are not recognized as liabilities in our condensed consolidated financial statements but are required to be disclosed. There have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Off-Balance Sheet Arrangements

Off-balance sheet arrangements refer to any transaction, agreement or other contractual arrangement to which an entity not consolidated under our entity structure exists, where we have an obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such an entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. We have no off-balance sheet arrangements currently.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, requires us to make a variety of decisions which affect reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience and other assumptions. Actual results could differ from our estimates. We are committed to incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.

There have been no significant changes in the critical accounting policies and estimates as previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Effect of Recent Accounting Pronouncements

Refer to Note 1 of the Condensed Consolidated Financial Statements for management’s discussion of the effect of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Other than the negative impact the recent outbreak of the coronavirus (COVID-19) has had and will continue to have on our business and results of operations as discussed elsewhere in this report, there have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

- 22 -

Item 4. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the President and Chief Executive Officer (the Principal Executive Officer) and Chief Financial Officer (the Principal Financial Officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13(a)-15(e) and 15(d) -15(e) of the Securities Exchange Act of 1934 (Exchange Act), as of the end of the period covered by this report. Based on this evaluation, we concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s forms and rules, and the material information relating to the Company is accumulated and communicated to management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that control objectives are met. Because of inherent limitations in all control systems, no evaluation of controls can provide assurance that all control issues and instances of fraud, if any, within a company will be detected. Additionally, controls can be circumvented by individuals, by collusion of two or more people or by management override. Over time, controls can become inadequate because of changes in conditions or the degree of compliance may deteriorate. Further, the design of any system of controls is based in part upon assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Because of the inherent limitations in any cost-effective control system, misstatements due to errors or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

In the ordinary course of business, we routinely enhance our information systems by either upgrading current systems or implementing new ones. There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are party to legal proceedings incidental to our business. While the outcome of these matters could differ from management’s expectations, we do not believe that the resolution of these matters is reasonably likely to have a material adverse effect to our financial statements.

Item 1A. Risk Factors

There have been no material changes from risk factors as previously disclosed in the Company’s fiscal 2019 Annual Report on Form 10-K in response to Item 1A of Part I of Form 10-K, except that we are adding the following risk factor discussion relating to coronavirus COVID-19.

The outbreak of the coronavirus (COVID-19) is materially and adversely affecting our business.

On March 11, 2020, the World Health Organization declared the coronavirus COVID-19 outbreak to be a pandemic. This pandemic has resulted in increased travel restrictions and caused the shutdown of many businesses in countries in which we operate. While we continue to operate globally, the level of activity at each of our locations varies depending on the local governmental requirements and guidelines. The majority of our office staff are effectively working remotely and our labs are fully operational with modifications made to ensure the safety of our employees. The diversion of resources to treat COVID-19 patients has significantly impacted the operations at most of the investigative sites where patients in our clinical trials are recruited and treated. This has resulted in reduced trial starts and slowed new business awards, each of which results in decreased revenues. Depending on the duration of the disruption, ongoing studies may be cancelled and some of our clients may lack the funding to complete trials which are extended due to slowed recruitment of patients. We work with many smaller clients with limited financial resources and market disruptions may make raising additional funds difficult. Travel restrictions and business closures have also impacted study participants and clinical sites which affects our ability to efficiently provide clinical trial services. As a result, we are working with our customers to develop solutions to

- 23 -

limit disruption to clinical trials while following required regulatory guidelines and maintaining quality to ensure the health and well-being of study participants. These include alternative assessment methods such as virtual monitoring visits. The COVID-19 outbreak has already had a significant adverse effect on the first quarter of fiscal 2020 and we believe that the outbreak will have an increasing adverse impact on our results of operations in the future. In connection with this expected adverse impact, we have also evaluated our headcount needs in a number of geographies and implemented some staff reductions where appropriate. As we cannot predict the duration or scope of the pandemic, the future financial impact on our results of operations and financial condition cannot be reasonably estimated, but will likely be material.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchases

This table provides certain information with respect to our monthly repurchases of the Company’s common stock during the first quarter of fiscal year 2020:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publically Announced Plan		Approximate Dollar Value of Share That May Yet Be Purchased Under the Plan
March 1, 2020, through March 31, 2020		661,637	$	65.32		661,637	$	56,784,756
Total		661,637	$	65.32		661,637

All share repurchases were made using cash resources and executed pursuant to established Rule 10b5-1 trading plans. Our share repurchases may occur through open market purchases or negotiated transactions. The above table excludes shares repurchased to settle employee tax withholding related to the vesting of stock awards.

We returned $43.2 million to shareholders in the form of share repurchases in the first quarter of fiscal year 2020. Refer to Note 1 – Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion regarding share repurchases.

- 24 -

Recent Sales of Unregistered Securities

Date	Equity Plan	Number of Stock Options Exercised		Exercise Price		Approximate Aggregate Purchase Price
January 2, 2020	2014 Equity Incentive Plan		555	$	16.20	$	9,000
January 31, 2020	2014 Equity Incentive Plan		23,702		14.41		341,500
January 31, 2020	2014 Equity Incentive Plan		2,962		16.20		48,000
February 18, 2020	2014 Equity Incentive Plan		2,305		14.41		33,200
February 18, 2020	2014 Equity Incentive Plan		2,592		16.20		42,000
February 21, 2020	2014 Equity Incentive Plan		200		14.41		2,900
February 24, 2020	2014 Equity Incentive Plan		1,667		14.41		24,000
February 27, 2020	2014 Equity Incentive Plan		1,628		14.41		23,500
February 27, 2020	2014 Equity Incentive Plan		3,222		16.20		52,200
February 28, 2020	2014 Equity Incentive Plan		200		14.41		2,900
February 28, 2020	2014 Equity Incentive Plan		2,777		18.23		50,600
March 2, 2020	2014 Equity Incentive Plan		3,166		14.41		45,600
March 4, 2020	2014 Equity Incentive Plan		2,962		16.20		48,000
March 6, 2020	2014 Equity Incentive Plan		876		14.41		12,600
March 9, 2020	2014 Equity Incentive Plan		150		14.41		2,200
March 12, 2020	2014 Equity Incentive Plan		150		14.41		2,200
March 13, 2020	2014 Equity Incentive Plan		250		14.41		3,600
March 16, 2020	2014 Equity Incentive Plan		3,179		14.41		45,800
March 17, 2020	2014 Equity Incentive Plan		250		14.41		3,600
March 18, 2020	2014 Equity Incentive Plan		6,102		14.41		87,900
March 18, 2020	2014 Equity Incentive Plan		2,369		16.20		38,400
March 18, 2020	2014 Equity Incentive Plan		1,603		18.23		29,200
March 19, 2020	2014 Equity Incentive Plan		4,443		14.41		64,000
March 19, 2020	2014 Equity Incentive Plan		1,111		16.20		18,000
March 23, 2020	2014 Equity Incentive Plan		500		14.41		7,200
March 23, 2020	2014 Equity Incentive Plan		1,111		16.20		18,000
March 27, 2020	2014 Equity Incentive Plan		355		14.41		5,100
March 27, 2020	2014 Equity Incentive Plan		445		16.20		7,200
Total			70,832			$	1,068,400

All of the forgoing transactions involved issuances of securities to employees of the Company and are exempt from registration pursuant to Rule 701 promulgated under the Securities Act of 1933, as amended, as transactions pursuant to benefit plans and contracts relating to compensation.

Use of Proceeds from Registered Securities

Not applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits in the accompanying Exhibit Index preceding the signature page are filed or furnished as a part of this report and are incorporated herein by reference.

- 25 -

EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
10.1	Amendment No. 1 dated March 30, 2020 to Loan Agreement dated as of September 30, 2019, by and among Medpace, Inc., as borrower, and PNC Bank, National Association	8-K	001-37856	10.1	4/1/2020
31.1	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer					*
31.2	Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer					*
32.1	Section 1350 Certification of Chief Executive Officer					**
32.2	Section 1350 Certification of Chief Financial Officer					**
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document					*
101.SCH	Inline XBRL Taxonomy Extension Schema Document					*
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document					*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document					*
101.PRE	Inline XBRL Taxonomy Extension Presentation					*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

- 26 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MEDPACE HOLDINGS, INC.

/s/ Jesse J. Geiger

Jesse J. Geiger

Chief Financial Officer, and Chief Operating Officer, Laboratory Operations

(Authorized Officer and Principal Financial Officer)

Date: April 29, 2020

- 27 -

EX-31.1

Exhibit 31.1

I, August J. Troendle, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Medpace Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 29, 2020

/s/ August J. Troendle

August J. Troendle

President, Chief Executive Officer and Chairman of the Board of Directors

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Jesse J. Geiger, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Medpace Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 29, 2020

/s/ Jesse J. Geiger

Jesse J. Geiger

Chief Financial Officer and Chief Operating Officer, Laboratory Operations

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Medpace Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: April 29, 2020

By:	/s/ August J. Troendle
	August J. Troendle
	President, Chief Executive Officer and Chairman of the Board of Directors
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Medpace Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.

Date: April 29, 2020

By:	/s/ Jesse J. Geiger
	Jesse J. Geiger
	Chief Financial Officer and Chief Operating Officer, Laboratory Operations
	(Principal Financial Officer)

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Accounts receivable, unbilled services with related parties	$ 2.8	$ 1.9
Accounts payable includes related parties	0.1	0.2
Advanced billings with related parties	$ 1.1	$ 3.0
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock shares authorized	250,000,000	250,000,000
Common stock shares issued	35,484,473	36,065,278
Common stock shares outstanding	35,484,473	36,065,278
Treasury stock shares	200,000	200,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-in Capital	(Accumulated Deficit) Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Impact to Retained Earnings from adoption of ASU 2016-02 | ASU 2016-02	$ 9,153				$ 9,153
Balance	598,856	$ 356	$ (6,030)	$ 639,381	(32,334)	$ (2,517)
Balance at Dec. 31, 2018	589,703	356	(6,030)	639,381	(41,487)	(2,517)
Net income	19,198				19,198
Foreign currency translation	(274)					(274)
Stock-based compensation expense	3,183			3,183
Stock options exercised	934	1		933
Balance at Mar. 31, 2019	621,897	357	(6,030)	643,497	(13,136)	(2,791)
Balance at Dec. 31, 2019	726,283	360	(6,030)	666,585	68,109	(2,741)
Net income	28,954				28,954
Foreign currency translation	(988)					(988)
Stock-based compensation expense	5,445			5,445
Stock options exercised	1,343	1		1,342
Repurchases of common stock	(43,238)	(6)			(43,232)
Balance at Mar. 31, 2020	$ 717,799	$ 355	$ (6,030)	$ 673,372	$ 53,831	$ (3,729)

XML

Shareholder's Equity and Stock-Based Compensation - Schedule of RSA/RSU Activity (Details) - RSA/RSU	3 Months Ended
	Mar. 31, 2020 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding and unvested - beginning of period	569,770
Granted	113,492
Vested	0
Forfeited	(5,000)
Outstanding and unvested - end of period	678,262
Cumulative vested shares - end of period	1,913,916

XML

Debt - Additional Information (Details) - Credit Facility - USD ($)	Sep. 30, 2019	Mar. 31, 2020
Debt Instrument [Line Items]
Debt instrument, basis points	1.00%
Outstanding borrowings		$ 0
Outstanding letters of credit		$ 200,000
Maximum
Debt Instrument [Line Items]
Debt instrument, principal amount	$ 50,000,000.0

XML

Leases - Summary of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Assets And Liabilities Lessee [Abstract]
Operating lease right-of-use assets	$ 58,667	$ 52,152	$ 52,152
Other current liabilities	$ 12,556		$ 10,977
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesCurrent		us-gaap:OtherLiabilitiesCurrent
Operating lease liabilities	$ 51,395	$ 45,212	$ 45,212
Total operating lease liabilities	$ 63,951		$ 56,189
Weighted Average Remaining Lease Term (years)
Operating leases	6 years 2 months 12 days		6 years 3 months 18 days
Weighted Average Discount Rate
Operating leases	5.60%		6.00%

XML

Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Intangible assets:
Finite-lived intangible assets:
Carrying amount:
Customer relationships		145,051			145,051
Other		3,074			3,074
Total finite-lived intangible assets		148,125			148,125
Accumulated amortization:
Customer relationships		(124,375	)		(122,426	)
Other		(3,043	)		(2,995	)
Total accumulated amortization		(127,418	)		(125,421	)
Total finite-lived intangible assets, net		20,707			22,704
Trade name (indefinite-lived)		31,646			31,646
Total intangible assets, net	$	52,353		$	54,350

Schedule of Estimated Amortization Expense of Intangible Assets

As of March 31, 2020, estimated amortization expense of the Company’s intangible assets for each of the next five years and thereafter is as follows (in thousands):

	Amortization
Remainder of 2020	$	5,879
2021		5,114
2022		3,353
2023		2,199
2024		1,443
Later years		2,719
	$	20,707

XML

Entity Wide Disclosures

3 Months Ended

Mar. 31, 2020

Entity Wide Disclosures [Abstract]

Entity Wide Disclosures

(13) Entity Wide Disclosures

Revenue by Category

The following table disaggregates our revenue by major source (in thousands):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Therapeutic Area
Oncology	$	69,212	$	55,962
Other		50,569		46,869
Metabolic		36,075		35,001
Cardiology		25,899		22,650
AVAI		25,147		19,924
Central Nervous System		23,977		20,335
Total revenue	$	230,879	$	200,741

In the current quarter and for all periods presented, the revenue associated with medical device projects, previously a separate therapeutic area, has been included in the respective therapeutic area that best aligns with the therapeutic focus of the medical device project and represents how management evaluates disaggregated revenue in its internal reporting.

XML

Entity Wide Disclosures (Tables)

3 Months Ended

Mar. 31, 2020

Entity Wide Disclosures [Abstract]

Summary of Revenue by Major Source

The following table disaggregates our revenue by major source (in thousands):

	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Therapeutic Area
Oncology	$	69,212	$	55,962
Other		50,569		46,869
Metabolic		36,075		35,001
Cardiology		25,899		22,650
AVAI		25,147		19,924
Central Nervous System		23,977		20,335
Total revenue	$	230,879	$	200,741

XML

Intangible Assets, Net - Schedule of Estimated Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2020	$ 5,879
2021	5,114
2022	3,353
2023	2,199
2024	1,443
Later years	2,719
Total finite-lived intangible assets, net	$ 20,707	$ 22,704

XML

Basis of Presentation - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2018
Basis Of Presentation [Line Items]
Repurchases of shares, value	$ 41,776,000	$ 0
Share Repurchase Program
Basis Of Presentation [Line Items]
Stock repurchase program, authorized amount	100,000,000.0
Stock repurchase program, additional amount authorized	$ 50,000,000.0
Repurchases of shares	661,637
Repurchases of shares, value	$ 43,200,000
Remaining amount of repurchase program	56,800,000
Non cash activity related share repurchase program	$ 1,400,000
Share Repurchase Program | Maximum
Basis Of Presentation [Line Items]
Stock repurchase program, authorized amount			$ 50,000,000.0

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Contract Assets and Contract Liabilities - Summary of Accounts Receivable and Unbilled, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Revenue From Contract With Customer [Abstract]
Accounts receivable	$ 108,852	$ 127,877
Unbilled receivables	28,059	28,368
Less: allowance for doubtful accounts	(537)	(583)
Total accounts receivable and unbilled, net	$ 136,374	$ 155,662

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Shareholder's Equity and Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Shareholder's Equity and Stock-Based Compensation

(9) Shareholder’s Equity and Stock-Based Compensation

The Company granted 312,897 awards to employees under the 2016 Incentive Award Plan during the three months ended March 31, 2020, consisting of 20,724 restricted stock awards (“RSA”) and 92,768 restricted stock units (“RSU”) vesting after four years, and 199,405 fully-vested stock option awards. The Company granted 268,617 awards to employees under the 2016 Incentive Award Plan during the three months ended March 31, 2019, consisting of 5,000 stock option awards and 164,200 RSU vesting after four years, 77,417 fully-vested stock option awards and 22,000 stock option awards with vesting in twelve equal monthly installments beginning on March 31, 2019.

Award Activity

The following table sets forth the Company’s stock option activity:

	Three Months Ended March 31, 2020
				Weighted Average
	Stock Options			Exercise Price
Outstanding - beginning of period		3,030,071		$	34.50
Granted		199,405		$	107.93
Exercised		(80,832	)	$	16.61
Forfeited/Expired		(38,100	)	$	38.41
Outstanding - end of period		3,110,544		$	39.63
Exercisable - end of period		1,563,803		$	48.54

The following table sets forth the Company’s RSA/RSU activity:

	Three Months Ended
	March 31, 2020
	Shares/Units
Outstanding and unvested - beginning of period		569,770
Granted		113,492
Vested		-
Forfeited		(5,000	)
Outstanding and unvested - end of period		678,262
Cumulative vested shares - end of period		1,913,916

Stock-based compensation expense recognized in the condensed consolidated statements of operations related to all outstanding stock based compensation awards is summarized below (in thousands):

	Three Months Ended March 31,
	2020		2019
Total direct costs	$	2,006	$	1,560
Selling, general and administrative		3,439		1,623
Total stock-based compensation expense	$	5,445	$	3,183

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Intangible Assets, Net

3 Months Ended

Mar. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

(5) Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Intangible assets:
Finite-lived intangible assets:
Carrying amount:
Customer relationships		145,051			145,051
Other		3,074			3,074
Total finite-lived intangible assets		148,125			148,125
Accumulated amortization:
Customer relationships		(124,375	)		(122,426	)
Other		(3,043	)		(2,995	)
Total accumulated amortization		(127,418	)		(125,421	)
Total finite-lived intangible assets, net		20,707			22,704
Trade name (indefinite-lived)		31,646			31,646
Total intangible assets, net	$	52,353		$	54,350

As of March 31, 2020, estimated amortization expense of the Company’s intangible assets for each of the next five years and thereafter is as follows (in thousands):

	Amortization
Remainder of 2020	$	5,879
2021		5,114
2022		3,353
2023		2,199
2024		1,443
Later years		2,719
	$	20,707

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Commitments and Contingencies - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Minimum purchase commitments for project related supplies	$ 11.8
Minimum purchase commitments, description	The Company has several minimum purchase commitments for project related supplies totaling $11.8 million. In return for the commitment, Medpace receives preferential pricing. The commitments expire at various times through 2026.

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Net Income Per Share - Schedule of Reconciliation of Denominators and Additional Shares that are Excluded from the Calculation of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Weighted-average shares:
Basic weighted-average common shares outstanding	36,024	35,698
Total weighted-average shares	36,119	35,802
Earnings per common share—Basic
Net income	$ 28,954	$ 19,198
Net income available to common shareholders—Basic	$ 28,878	$ 19,142
Net income per common share—Basic	$ 0.80	$ 0.54
Basic weighted-average common shares outstanding	36,024	35,698
Effect of diluted shares	2,006	1,587
Diluted weighted-average shares outstanding	38,030	37,285
Net income per common share—Diluted	$ 0.76	$ 0.51
RSAs
Weighted-average shares:
Basic weighted-average common shares outstanding	95	104
Earnings per common share—Basic
Less: Undistributed earnings allocated to RSAs	$ 76	$ 56
Basic weighted-average common shares outstanding	95	104
Common Stock
Weighted-average shares:
Basic weighted-average common shares outstanding	36,024	35,698
Earnings per common share—Basic
Basic weighted-average common shares outstanding	36,024	35,698

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Contract Assets and Contract Liabilities - Summary of Advanced Billings (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Revenue From Contract With Customer [Abstract]
Advanced billings	$ 189,562	$ 192,359

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Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued Liabilities And Other Liabilities [Abstract]
Employee compensation and benefits	$ 22,383	$ 34,119
Project related reimbursable expenses	76,136	68,696
Other	8,486	6,437
Total accrued expenses	$ 107,005	$ 109,252

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Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

(8) Leases

The Company enters into leases for real estate and equipment. Real estate leases are for our corporate office space and laboratories around the world. Real estate leases have remaining lease terms of less than 1 year to 20 years. Many of the Company’s leases include options to extend the leases on a month to month basis or for set periods for up to 20 years. Many leases also include options to terminate the leases within 1 year or per other contractual terms.

The components of lease expense were as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	3,768	$	3,117
Variable lease cost		886		594

Supplemental cash flow information related to the leases was as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,600	$	2,216
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		10,076		3,952

Supplemental balance sheet information related to the leases was as follows (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Operating lease right-of-use assets	$	58,667		$	52,152
Other current liabilities	$	12,556		$	10,977
Operating lease liabilities		51,395			45,212
Total operating lease liabilities	$	63,951		$	56,189
Weighted Average Remaining Lease Term (years)
Operating leases	6.2			6.3
Weighted Average Discount Rate
Operating leases		5.6	%		6.0	%

Lease payments due related to lease liabilities as of March 31, 2020 were as follows (in thousands):

	Related Party			Non-Related Parties			Total
	Operating Leases			Operating Leases			Operating Leases
Remainder of 2020	$	4,200		$	6,920		$	11,120
2021		5,601			9,716			15,317
2022		5,269			6,516			11,785
2023		3,613			5,566			9,179
2024		3,613			4,294			7,907
Later years		9,666			11,339			21,005
Total lease payments		31,962			44,351			76,313
Less: imputed interest		(5,755	)		(6,607	)		(12,362	)
Total	$	26,207		$	37,744		$	63,951

As of March 31, 2020, we have several additional leases with contractual obligations, which have not yet commenced, with future payments of $125.9 million. This includes a lease related to a corporate office under construction in Cincinnati, Ohio, which has not yet commenced, with future payments of $124.0 million. This lease will commence in fiscal year 2020 with an initial lease term of 20 years and a renewal option for two 10-year terms at prevailing market rates.

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Contract Assets and Contract Liabilities

3 Months Ended

Mar. 31, 2020

Revenue From Contract With Customer [Abstract]

Contract Assets and Contract Liabilities

(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):

	As of
	March 31,			December 31,
	2020			2019
Accounts receivable	$	108,852		$	127,877
Unbilled receivables		28,059			28,368
Less: allowance for doubtful accounts		(537	)		(583	)
Total accounts receivable and unbilled, net	$	136,374		$	155,662

Contract Liabilities

Advanced billings represents 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):

	As of
	March 31,		December 31,
	2020		2019
Advanced billings	$	189,562	$	192,359

As of March 31, 2020, we had approximately $1.3 billion of performance obligations remaining to be performed for active projects.

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Income Taxes - Additional Information (Details)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate	20.60%	22.10%
U.S. statutory rate	21.00%	21.00%

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 133,999	$ 131,920
Accounts receivable and unbilled, net (includes $2.8 million and $1.9 million with related parties at March 31, 2020 and December 31, 2019, respectively)	136,374	155,662
Prepaid expenses and other current assets	32,629	29,446
Total current assets	303,002	317,028
Property and equipment, net	50,015	47,292
Operating lease right-of-use assets	58,667	52,152
Goodwill	662,427	662,396
Intangible assets, net	52,353	54,350
Deferred income taxes	490	376
Other assets	10,680	9,477
Total assets	1,137,634	1,143,071
Current liabilities:
Accounts payable (includes $0.1 million and $0.2 million with related parties at March 31, 2020 and December 31, 2019, respectively)	16,985	22,404
Accrued expenses	107,005	109,252
Advanced billings (includes $1.1 million and $3.0 million with related parties at March 31, 2020 and December 31, 2019, respectively)	189,562	192,359
Other current liabilities	25,099	18,987
Total current liabilities	338,651	343,002
Operating lease liabilities	51,395	45,212
Deferred income tax liability	14,022	12,849
Other long-term liabilities	15,767	15,725
Total liabilities	419,835	416,788
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 March 31, 2020 and December 31, 2019, respectively	0	0
Common stock - $0.01 par-value; 250,000,000 shares authorized at March 31, 2020 and December 31, 2019, respectively; 35,484,473 and 36,065,278 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	355	360
Treasury stock - 200,000 shares at March 31, 2020 and December 31, 2019, respectively	(6,030)	(6,030)
Additional paid-in capital	673,372	666,585
Retained earnings	53,831	68,109
Accumulated other comprehensive loss	(3,729)	(2,741)
Total shareholders’ equity	717,799	726,283
Total liabilities and shareholders’ equity	$ 1,137,634	$ 1,143,071

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 28,954	$ 19,198
Other comprehensive income
Foreign currency translation adjustments, net of taxes	(988)	(274)
Comprehensive income	$ 27,966	$ 18,924

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Leases - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) Option
Lessee Lease Description [Line Items]
Lease not yet commenced, future payments	$ 125.9
Real Estate and Equipment
Lessee Lease Description [Line Items]
Lease renewal term, operating lease	20 years
Description of option to extend the lease	Many of the Company’s leases include options to extend the leases on a month to month basis or for set periods for up to 20 years.
Operating lease, existense of option to extend	true
Description of option to terminate the lease	Many leases also include options to terminate the leases within 1 year or per other contractual terms.
Lessee, operating lease, existence of option to terminate	true
Real Estate and Equipment | Minimum
Lessee Lease Description [Line Items]
Remaining lease term, operating lease	1 year
Real Estate and Equipment | Maximum
Lessee Lease Description [Line Items]
Remaining lease term, operating lease	20 years
Operating lease, options to terminate lease term	1 year
Corporate Offices
Lessee Lease Description [Line Items]
Initial term of operating lease not yet commenced	20 years
Lease not yet commenced, option to extend	true
Lease not yet commenced, option to extend description	renewal option for two 10-year terms at prevailing market rates
Operating lease not yet commenced, renewal term	10 years
Operating lease not yet commenced, number of renewal option | Option	2
Corporate Offices | Cincinnati, Ohio | Leased Real Estate
Lessee Lease Description [Line Items]
Lease not yet commenced, future payments	$ 124.0

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Leases - Schedule of Lease Payments Due Related To Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Operating Lease Liabilities Payments Due [Line Items]
Remainder of 2020	$ 11,120
2021	15,317
2022	11,785
2023	9,179
2024	7,907
Later years	21,005
Total lease payments	76,313
Less: imputed interest	(12,362)
Total	63,951	$ 56,189
Related Party
Operating Lease Liabilities Payments Due [Line Items]
Remainder of 2020	4,200
2021	5,601
2022	5,269
2023	3,613
2024	3,613
Later years	9,666
Total lease payments	31,962
Less: imputed interest	(5,755)
Total	26,207
Non-Related Party
Operating Lease Liabilities Payments Due [Line Items]
Remainder of 2020	6,920
2021	9,716
2022	6,516
2023	5,566
2024	4,294
Later years	11,339
Total lease payments	44,351
Less: imputed interest	(6,607)
Total	$ 37,744

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Shareholder's Equity and Stock-Based Compensation - Summary of Stock-Based Compensation Expense Recognized in Statements of Operations Related to All Outstanding Stock Based Compensation Awards (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 5,445	$ 3,183
Total Direct Costs
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2,006	1,560
Selling, General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 3,439	$ 1,623

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Shareholder's Equity and Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Stock Option Activity

The following table sets forth the Company’s stock option activity:

	Three Months Ended March 31, 2020
				Weighted Average
	Stock Options			Exercise Price
Outstanding - beginning of period		3,030,071		$	34.50
Granted		199,405		$	107.93
Exercised		(80,832	)	$	16.61
Forfeited/Expired		(38,100	)	$	38.41
Outstanding - end of period		3,110,544		$	39.63
Exercisable - end of period		1,563,803		$	48.54

Schedule of RSA/RSU Activity

The following table sets forth the Company’s RSA/RSU activity:

	Three Months Ended
	March 31, 2020
	Shares/Units
Outstanding and unvested - beginning of period		569,770
Granted		113,492
Vested		-
Forfeited		(5,000	)
Outstanding and unvested - end of period		678,262
Cumulative vested shares - end of period		1,913,916

Summary of Stock-Based Compensation Expense Recognized in Statements of Operations Related to All Outstanding Stock Based Compensation Awards

Stock-based compensation expense recognized in the condensed consolidated statements of operations related to all outstanding stock based compensation awards is summarized below (in thousands):

	Three Months Ended March 31,
	2020		2019
Total direct costs	$	2,006	$	1,560
Selling, general and administrative		3,439		1,623
Total stock-based compensation expense	$	5,445	$	3,183

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Contract Assets and Contract Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Revenue From Contract With Customer [Abstract]

Summary of Company's Contract Asset and Contract Liability

Accounts receivable and unbilled, net consisted of the following (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Accounts receivable	$	108,852		$	127,877
Unbilled receivables		28,059			28,368
Less: allowance for doubtful accounts		(537	)		(583	)
Total accounts receivable and unbilled, net	$	136,374		$	155,662

Advanced billings consisted of the following (in thousands):

	As of
	March 31,		December 31,
	2020		2019
Advanced billings	$	189,562	$	192,359

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Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions

(12) Related Party Transactions

Employee Loans

The Company periodically extends short term loans or advances to employees, typically upon commencement of employment.  Total receivables as a result of these employee advances of $0.2 million existed at March 31, 2020 and December 31, 2019, respectively, and are included in the Prepaid expenses and other current assets and Other assets line items of the condensed consolidated balance sheets, respectively, depending on the contractual repayment date.

Service Agreements

Cymabay Therapeutics, Inc. (“Cymabay”)

Cymabay is a clinical-stage biopharmaceutical company developing therapies to treat metabolic diseases with high unmet medical need, including serious rare and orphan disorders. A Medpace employee was a member Cymabay’s board of directors from the first quarter of 2016 until his resignation in the first quarter of 2020. The Company and Cymabay entered into a MSA dated October 21, 2016. Subsequently, the Company and Cymabay have entered into several task orders for the Company to perform clinical trial related services. During the three months ended March 31, 2019, the Company recognized total revenue from Cymabay of $3.1 million in the Company’s condensed consolidated statements of operations. As of December 31, 2019, the Company had Advanced billings from Cymabay of $1.6 million in the condensed consolidated balance sheets. As of December 31, 2019, the Company had Accounts receivable and unbilled, net from Cymabay of $1.4 million recorded in the condensed consolidated balance sheets. As of the first quarter of 2020, Cymabay is no longer considered a related party.

LIB Therapeutics LLC and subsidiaries (“LIB”)

Certain executives and employees of the Company, including the chief executive officer, are members of LIB’s board of managers. The Company entered into a MSA dated November 24, 2015 with LIB, a company that engages in research, development, marketing and commercialization of pharmaceutical drugs. Subsequently, the Company and LIB have entered into several task orders for the Company to perform clinical trial related services. During the three months ended March 31, 2020 and 2019, the Company recognized total revenue from LIB of $1.0 million and $0.7 million, respectively, in the Company’s condensed consolidated statements of operations. As of March 31, 2020 and December 31, 2019, respectively, the Company had Advanced billings from LIB of $0.4 million and $0.5 million recorded in the condensed consolidated balance sheets. In addition, as of March 31, 2020 and December 31, 2019, respectively, the Company had Accounts receivable and unbilled, net from LIB of $0.6 million and $0.3 million recorded in the condensed consolidated balance sheets.

CinRX Pharma and subsidiaries (“CinRx”)

Certain executives and employees of the Company, including the chief executive officer, are members of CinRx’s board of managers and/or have equity investments in CinRx, a biotech company. The Company and CinRx have entered into several task orders for the Company to perform clinical trial related services. During the three months ended March 31, 2020 and 2019, the Company recognized total revenue from CinRx of $4.4 million and $1.4 million, respectively, in the Company’s condensed consolidated statements of operations. As of March 31, 2020 and December 31, 2019, respectively, the Company had Advanced billings from CinRx of $0.7 million and $0.9 million recorded in the condensed consolidated balance sheets. As of March 31, 2020 and December 31, 2019 the Company had Accounts receivable and unbilled, net from CinRx of $2.2 million and $0.2 million, respectively, in the condensed consolidated balance sheets.

The Summit, a Dolce Hotel (“The Summit”)

The Summit Hotel, located on the Medpace campus, is owned by the chief executive officer, and managed by an unrelated hospitality management entity. Medpace incurs travel lodging and meeting expenses at The Summit. During the three months ended March 31, 2020 and 2019, Medpace incurred expenses of $0.2 million and $0.1 million at The Summit, respectively.

Leased Real Estate

Headquarters Lease

The Company entered into an operating lease for its corporate headquarters with an entity that is wholly owned by the chief executive officer of the Company. The Company has evaluated its relationship with the related party and concluded that the related party is not a variable interest entity because the Company has no direct ownership interest or relationship other than the lease. The lease for headquarters is for an initial term of twelve years through November 2022 with a renewal option for one 10-year term at prevailing market rates. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for its corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index. Operating lease cost recognized for the three months ended March 31, 2020 and 2019 was $0.5 million, respectively. The operating

lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at March 31, 2020 and December 31, 2019 were $4.8 million and $5.3 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at March 31, 2020 were $1.8 million and $3.0 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2019 were $1.8 million and $3.5 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

In 2018, Medpace, Inc. entered into a multi-year lease agreement governing future occupancy of additional office space in Cincinnati, Ohio with an entity that is wholly owned by the Company’s chief executive officer and certain members of his immediate family. The lease expires in 2040 and the Company has two 10-year options to extend the term of the lease.

The Company entered into two multi-year lease agreements governing the occupancy of space of two buildings in Cincinnati, Ohio with an entity that is wholly owned by the Company’s chief executive officer and certain members of his immediate family. The Company assumed occupancy in 2012 and the leases expire in 2027 with the Company having one 10-year option to extend the lease term. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for the corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index. The Company has determined that the leases are operating leases. Operating lease cost recognized for the three months ended March 31, 2020 and 2019 was $0.9 million, respectively. The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at March 31, 2020 and December 31, 2019 were $21.4 million and $21.9 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at March 31, 2020 were $2.3 million and $19.1 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2019 were $2.3 million and $19.7 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

Travel Services      

The Company incurs expenses for travel services for company executives provided by a private aviation charter company that is owned by the chief executive officer and the executive vice president of operations of the Company (“private aviation charter”). The Company may contract directly with the private aviation charter for the use of its aircraft or indirectly through a third party aircraft management and jet charter company (the “Aircraft Management Company”). The travel services provided are primarily for business purposes, with certain personal travel paid for as part of the executives’ compensation arrangements. The Aircraft Management Company also makes the private aviation charter aircraft available to third parties. The Company incurred travel expenses of $0.2 million and $0.3 million during the three months ended March 31, 2020 and 2019, respectively, related to these travel services. These travel expenses are recorded in Selling, general and administrative in the Company’s condensed consolidated statements of operations.

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Accrued Expenses

3 Months Ended

Mar. 31, 2020

Payables And Accruals [Abstract]

Accrued Expenses

(6) Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	As of
	March 31,		December 31,
	2020		2019
Employee compensation and benefits	$	22,383	$	34,119
Project related reimbursable expenses		76,136		68,696
Other		8,486		6,437
Total accrued expenses	$	107,005	$	109,252

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Net Income Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Net Income Per Share

(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 undistributed earnings. Restricted Stock Awards (“RSAs”) 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 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 under the treasury stock method. The treasury stock method 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, 2020 and 2019 (in thousands, except for earnings per share): 

	Three Months Ended
	March 31,
	2020		2019
Weighted-average shares:
Common shares outstanding		36,024		35,698
RSAs		95		104
Total weighted-average shares		36,119		35,802
Earnings per common share—Basic
Net income	$	28,954	$	19,198
Less: Undistributed earnings allocated to RSAs		76		56
Net income available to common shareholders—Basic	$	28,878	$	19,142
Net income per common share—Basic	$	0.80	$	0.54
Basic weighted-average common shares outstanding		36,024		35,698
Effect of diluted shares		2,006		1,587
Diluted weighted-average shares outstanding		38,030		37,285
Net income per common share—Diluted	$	0.76	$	0.51

During the three months ended March 31, 2020 and 2019, the Company had 439,405 and 0 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

(10) Income Taxes

The Company’s effective income tax rate was 20.6% and 22.1% for the three months ended March 31, 2020 and 2019, respectively. The Company’s effective income tax rate for the three months ended March 31, 2020 varied from the U.S. statutory rate of 21% primarily due to the impact of state taxes, which was favorably offset by previously acquired tax attributes, tax benefits related to Foreign Derived Intangible Income (FDII) and excess tax benefits recognized from share-based compensation.

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Fair Value Measurements - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair Value Disclosures [Abstract]
Fair value measurements transfers between level 1, level 2 or level 3	$ 0	$ 0

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Intangible Assets, Net - Schedule of Intangible Assets, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Finite-lived intangible assets:
Total finite-lived intangible assets	$ 148,125	$ 148,125
Accumulated amortization:
Total accumulated amortization	(127,418)	(125,421)
Total finite-lived intangible assets, net	20,707	22,704
Trade name (indefinite-lived)	31,646	31,646
Total intangible assets, net	52,353	54,350
Customer Relationships
Finite-lived intangible assets:
Total finite-lived intangible assets	145,051	145,051
Accumulated amortization:
Total accumulated amortization	(124,375)	(122,426)
Other
Finite-lived intangible assets:
Total finite-lived intangible assets	3,074	3,074
Accumulated amortization:
Total accumulated amortization	$ (3,043)	$ (2,995)

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Related Party Transactions - Additional Information (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020 USD ($) RenewalOption Agreement Building	Mar. 31, 2019 USD ($)	Dec. 31, 2018 RenewalOption	Dec. 31, 2019 USD ($)
Related Party Transaction [Line Items]
Advanced billings	$ 1,100			$ 3,000
Accounts receivable and unbilled, net	2,800			1,900
Operating lease cost	3,768	$ 3,117
Operating lease right-of-use assets	58,667	52,152		52,152
Current portion of lease liability	12,556	10,977
Long-term portion of lease liabilities	51,395	45,212		45,212
Employee Loans | Prepaid Expenses and Other Current Assets and Other Assets
Related Party Transaction [Line Items]
Employee advances receivables	200			200
Service Agreements | Cymabay
Related Party Transaction [Line Items]
Advanced billings				1,600
Accounts receivable and unbilled, net				1,400
Service Agreements | Cymabay | Revenue Net
Related Party Transaction [Line Items]
Revenue with related parties		3,100
Service Agreements | LIB
Related Party Transaction [Line Items]
Advanced billings	400			500
Accounts receivable and unbilled, net	600			300
Service Agreements | LIB | Revenue Net
Related Party Transaction [Line Items]
Revenue with related parties	1,000	700
Service Agreements | CinRx Pharma and Subsidiaries
Related Party Transaction [Line Items]
Advanced billings	700			900
Accounts receivable and unbilled, net	2,200			200
Service Agreements | CinRx Pharma and Subsidiaries | Revenue Net
Related Party Transaction [Line Items]
Revenue with related parties	4,400	1,400
Service Agreements | The Summit
Related Party Transaction [Line Items]
Expenses incurred	$ 200	100
Leased Real Estate | Chief Executive Officer
Related Party Transaction [Line Items]
Term of lease	12 years
Lease expiration period	2022-11
Number of lease renewal, 10-year option | RenewalOption	1
Lease term upon renewal	10 years
Leased Real Estate | Chief Executive Officer | Direct Costs and Selling, General And Administrative
Related Party Transaction [Line Items]
Operating lease cost	$ 500	500
Leased Real Estate | Chief Executive Officer And Immediate Family
Related Party Transaction [Line Items]
Number of lease renewal, 10-year option | RenewalOption	1		2
Lease term upon renewal	10 years		10 years
Lease expiration year	2027		2040
Number of lease agreements | Agreement	2
Number of buildings | Building	2
Lease occupancy year	2012
Leased Real Estate | Chief Executive Officer And Immediate Family | Direct Costs and Selling, General And Administrative
Related Party Transaction [Line Items]
Operating lease cost	$ 900	900
Leased Real Estate | Operating Lease Right-of-Use Assets | Chief Executive Officer
Related Party Transaction [Line Items]
Operating lease right-of-use assets	4,800			5,300
Leased Real Estate | Operating Lease Right-of-Use Assets | Chief Executive Officer And Immediate Family
Related Party Transaction [Line Items]
Operating lease right-of-use assets	21,400			21,900
Leased Real Estate | Other Current Liabilities | Chief Executive Officer
Related Party Transaction [Line Items]
Current portion of lease liability	1,800			1,800
Leased Real Estate | Other Current Liabilities | Chief Executive Officer And Immediate Family
Related Party Transaction [Line Items]
Current portion of lease liability	2,300			2,300
Leased Real Estate | Operating Lease Liabilities | Chief Executive Officer
Related Party Transaction [Line Items]
Long-term portion of lease liabilities	3,000			3,500
Leased Real Estate | Operating Lease Liabilities | Chief Executive Officer And Immediate Family
Related Party Transaction [Line Items]
Long-term portion of lease liabilities	19,100			$ 19,700
Travel Services | Chief Executive Officer
Related Party Transaction [Line Items]
Travel expenses with related party	$ 200	$ 300

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Leases - Summary of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 2,600	$ 2,216
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$ 10,076	$ 3,952

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Shareholder's Equity and Stock-Based Compensation - Schedule of Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Equity [Abstract]
Number of Stock Options, Outstanding - beginning of period | shares	3,030,071
Number of Stock Options, Granted | shares	199,405
Number of Stock Options, Exercised | shares	(80,832)
Number of Stock Options, Forfeited/Expired | shares	(38,100)
Number of Stock Options, Outstanding - end of period | shares	3,110,544
Number of Stock Options, Exercisable - end of period | shares	1,563,803
Weighted Average Exercise Price, Outstanding - beginning of Period | $ / shares	$ 34.50
Weighted Average Exercise Price, Granted | $ / shares	107.93
Weighted Average Exercise Price, Exercised | $ / shares	16.61
Weighted Average Exercise Price, Forfeited/Expired | $ / shares	38.41
Weighted Average Exercise Price, Outstanding - end of period | $ / shares	39.63
Weighted Average Exercise Price, Exercisable - end of period | $ / shares	$ 48.54

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 28,954	$ 19,198
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	2,453	1,991
Amortization	1,997	5,844
Stock-based compensation expense	5,445	3,183
Amortization of debt issuance costs and discount	0	138
Noncash lease expense	2,917	2,363
Deferred income tax provision	1,079	656
Amortization and adjustment of deferred credit	(181)	(200)
Other	(67)	(43)
Changes in assets and liabilities:
Accounts receivable and unbilled, net	19,301	4,255
Prepaid expenses and other current assets	(2,694)	(1,642)
Accounts payable	(6,809)	(2,684)
Accrued expenses	(1,757)	(5,221)
Advanced billings	(2,695)	2,437
Lease liabilities	(2,236)	(2,041)
Other assets and liabilities, net	3,441	5,771
Net cash provided by operating activities	49,148	34,005
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures	(5,561)	(2,520)
Other	39	(1,322)
Net cash used in investing activities	(5,522)	(3,842)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises	1,331	972
Repurchases of common stock	(41,776)	0
Payment of debt	0	(24,000)
Net cash used in financing activities	(40,445)	(23,028)
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(1,102)	(290)
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	2,079	6,845
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period	131,920	23,282
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$ 133,999	$ 30,127

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenue, net (includes $5.5 million and $5.1 million with related parties for the three months ended March 31, 2020 and 2019, respectively)	$ 230,879	$ 200,741
Operating expenses:
Direct service costs, excluding depreciation and amortization	88,795	75,109
Reimbursed out-of-pocket expenses	77,006	70,594
Total direct costs	165,801	145,703
Selling, general and administrative	25,124	21,308
Depreciation	2,453	1,991
Amortization	1,997	5,844
Total operating expenses	195,375	174,846
Income from operations	35,504	25,895
Other income (expense), net:
Miscellaneous income (expense), net	617	(282)
Interest income (expense), net	357	(955)
Total other income (expense), net	974	(1,237)
Income before income taxes	36,478	24,658
Income tax provision	7,524	5,460
Net income	$ 28,954	$ 19,198
Net income per share attributable to common shareholders:
Basic	$ 0.80	$ 0.54
Diluted	$ 0.76	$ 0.51
Weighted average common shares outstanding:
Basic	36,024	35,698
Diluted	38,030	37,285

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Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2020

Payables And Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	As of
	March 31,		December 31,
	2020		2019
Employee compensation and benefits	$	22,383	$	34,119
Project related reimbursable expenses		76,136		68,696
Other		8,486		6,437
Total accrued expenses	$	107,005	$	109,252

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Unaudited Interim Financial Information

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, 2019.

Share Repurchases

Share Repurchases

In the first quarter of 2018, the Board of Directors approved a share repurchase program authorizing up to $50.0 million in share repurchases. In the first quarter of 2020, the Board of Directors approved an additional $50.0 million in share repurchases, bringing the total to $100.0 million authorized under the share repurchase program. During the quarter ended March 31, 2020, the Company repurchased 661,637 shares for $43.2 million. As of March 31, 2020, $56.8 million remained available under the repurchase program authorization.

Repurchases under the share repurchase program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1. The Company constructively retires all repurchased shares with all amounts paid in excess of par value reflected within Retained earnings in the Company’s condensed consolidated balance sheets. The repurchase program may be suspended or discontinued at any time without notice.

Supplemental Cash Flow Disclosure

During the three months ended March 31, 2020, the company engaged in a non-cash financing activity of $1.4 million related to share repurchases executed, but not yet paid as of March 31, 2020.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard in the first quarter of 2020 and it had no impact to the condensed consolidated financial statements.          

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Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Lease Cost [Abstract]
Operating lease cost	$ 3,768	$ 3,117
Variable lease cost	$ 886	$ 594

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Shareholder's Equity and Stock-Based Compensation - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options granted	199,405
2016 Incentive Award Plan | Granted to Employees
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Awards granted to employees	312,897	268,617
2016 Incentive Award Plan | Vesting After Four Years | Restricted Stock Awards (RSA)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares granted	20,724
Award vesting period	4 years
2016 Incentive Award Plan | Vesting After Four Years | Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options granted		5,000
Award vesting period		4 years
2016 Incentive Award Plan | Vesting After Four Years | Restricted Stock Units (RSU)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares granted	92,768	164,200
Award vesting period	4 years	4 years
2016 Incentive Award Plan | Fully-vested Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options granted	199,405	77,417
2016 Incentive Award Plan | Vesting in Twelve Equal Monthly Installments
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options granted		22,000

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 24, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Trading Symbol	MEDP
Entity Registrant Name	Medpace Holdings, Inc.
Entity Central Index Key	0001668397
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		35,374,485
Entity File Number	001-37856
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	32-0434904
Entity Address, Address Line One	5375 Medpace Way
Entity Address, City or Town	Cincinnati
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45227
City Area Code	513
Local Phone Number	579-9911
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common Stock $0.01 par value
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue Net
Revenue with related parties	$ 5.5	$ 5.1

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Basis of Presentation

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

(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, 2019.

Share Repurchases

In the first quarter of 2018, the Board of Directors approved a share repurchase program authorizing up to $50.0 million in share repurchases. In the first quarter of 2020, the Board of Directors approved an additional $50.0 million in share repurchases, bringing the total to $100.0 million authorized under the share repurchase program. During the quarter ended March 31, 2020, the Company repurchased 661,637 shares for $43.2 million. As of March 31, 2020, $56.8 million remained available under the repurchase program authorization.

Repurchases under the share repurchase program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1. The Company constructively retires all repurchased shares with all amounts paid in excess of par value reflected within Retained earnings in the Company’s condensed consolidated balance sheets. The repurchase program may be suspended or discontinued at any time without notice.

Supplemental Cash Flow Disclosure

During the three months ended March 31, 2020, the company engaged in a non-cash financing activity of $1.4 million related to share repurchases executed, but not yet paid as of March 31, 2020.

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard in the first quarter of 2020 and it had no impact to the condensed consolidated financial statements.          

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Leases (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Summary of Components of Lease Expense

The components of lease expense were as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	3,768	$	3,117
Variable lease cost		886		594

Summary of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to the leases was as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,600	$	2,216
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		10,076		3,952

Summary of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to the leases was as follows (in thousands):

	As of
	March 31,			December 31,
	2020			2019
Operating lease right-of-use assets	$	58,667		$	52,152
Other current liabilities	$	12,556		$	10,977
Operating lease liabilities		51,395			45,212
Total operating lease liabilities	$	63,951		$	56,189
Weighted Average Remaining Lease Term (years)
Operating leases	6.2			6.3
Weighted Average Discount Rate
Operating leases		5.6	%		6.0	%

Schedule of Lease Payments Due Related To Lease Liabilities

Lease payments due related to lease liabilities as of March 31, 2020 were as follows (in thousands):

	Related Party			Non-Related Parties			Total
	Operating Leases			Operating Leases			Operating Leases
Remainder of 2020	$	4,200		$	6,920		$	11,120
2021		5,601			9,716			15,317
2022		5,269			6,516			11,785
2023		3,613			5,566			9,179
2024		3,613			4,294			7,907
Later years		9,666			11,339			21,005
Total lease payments		31,962			44,351			76,313
Less: imputed interest		(5,755	)		(6,607	)		(12,362	)
Total	$	26,207		$	37,744		$	63,951

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Reconciliation of Denominators and Additional Shares that are Excluded from the Calculation of EPS

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2020 and 2019 (in thousands, except for earnings per share): 

	Three Months Ended
	March 31,
	2020		2019
Weighted-average shares:
Common shares outstanding		36,024		35,698
RSAs		95		104
Total weighted-average shares		36,119		35,802
Earnings per common share—Basic
Net income	$	28,954	$	19,198
Less: Undistributed earnings allocated to RSAs		76		56
Net income available to common shareholders—Basic	$	28,878	$	19,142
Net income per common share—Basic	$	0.80	$	0.54
Basic weighted-average common shares outstanding		36,024		35,698
Effect of diluted shares		2,006		1,587
Diluted weighted-average shares outstanding		38,030		37,285
Net income per common share—Diluted	$	0.76	$	0.51

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(11) Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. The Company cannot predict with certainty the outcome of such proceedings, but it believes that adequate reserves have been recorded and losses already recognized with respect to such proceedings, which were immaterial as of March 31, 2020 and December 31, 2019.  There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, the Company believes that such potential losses were immaterial as of March 31, 2020.

Purchase Commitments

The Company has several minimum purchase commitments for project related supplies totaling $11.8 million. In return for the commitment, Medpace receives preferential pricing. The commitments expire at various times through 2026.

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Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

(7) Debt

On September 30, 2019, the Company obtained an unsecured credit facility in an aggregate principal amount up to $50.0 million (the “Credit Facility”) through its wholly owned subsidiaries, Medpace, Inc., as borrower, and Medpace IntermediateCo, Inc., as guarantor. Outstanding balances under the Credit Facility bear interest at a rate of LIBOR plus 100 basis points (1.00%). On March 30, 2020, the Company amended the credit facility to extend its expiration date to March 31, 2021 and add provisions for alternative interest rates when certain interbank market offered rates are not available.   

As of March 31, 2020, there were no outstanding borrowings under the Credit Facility and $0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit Facility. 

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Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

(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, 2020. There were no transfers between Level 1, Level 2 or Level 3 during the three months ended March 31, 2020 or March 31, 2019.

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Net Income Per Share - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of diluted EPS	439,405	0

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Contract Assets and Contract Liabilities - Additional Information (Details) $ in Billions	Mar. 31, 2020 USD ($)
Revenue From Contract With Customer [Abstract]
Performance obligations remaining to be performed	$ 1.3

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Entity Wide Disclosures - Summary of Revenue by Major Source (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation Of Revenue [Line Items]
Total revenue	$ 230,879	$ 200,741
Oncology
Disaggregation Of Revenue [Line Items]
Total revenue	69,212	55,962
Other
Disaggregation Of Revenue [Line Items]
Total revenue	50,569	46,869
Metabolic
Disaggregation Of Revenue [Line Items]
Total revenue	36,075	35,001
Cardiology
Disaggregation Of Revenue [Line Items]
Total revenue	25,899	22,650
AVAI
Disaggregation Of Revenue [Line Items]
Total revenue	25,147	19,924
Central Nervous System
Disaggregation Of Revenue [Line Items]
Total revenue	23,977	20,335
Revenue Net
Disaggregation Of Revenue [Line Items]
Total revenue	$ 230,879	$ 200,741