0001564590-20-033881.txt : 20200728 0001564590-20-033881.hdr.sgml : 20200728 20200728160626 ACCESSION NUMBER: 0001564590-20-033881 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 70 CONFORMED PERIOD OF REPORT: 20200630 FILED AS OF DATE: 20200728 DATE AS OF CHANGE: 20200728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Medpace Holdings, Inc. CENTRAL INDEX KEY: 0001668397 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 320434904 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37856 FILM NUMBER: 201053942 BUSINESS ADDRESS: STREET 1: 5375 MEDPACE WAY CITY: CINCINNATI STATE: OH ZIP: 45227 BUSINESS PHONE: (513) 579-9911 MAIL ADDRESS: STREET 1: 5375 MEDPACE WAY CITY: CINCINNATI STATE: OH ZIP: 45227 10-Q 1 medp-10q_20200630.htm 10-Q medp-10q_20200630.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended June 30, 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)

(513579-9911

(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

 

35,408,120 shares outstanding as of July 24, 2020

 

 

 

 

 


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR QUARTERLY PERIOD ENDED JUNE 30, 2020

TABLE OF CONTENTS

 

Item Number

 

 

 

Page

 

 

PART I — FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements (unaudited)

 

3

 

 

Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

 

3

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019

 

4

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019

 

5

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2020 and 2019

 

6

 

 

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

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

25

Item 4.

 

Controls and Procedures

 

25

 

 

 

 

 

 

 

PART II — OTHER INFORMATION

 

25

Item 1.

 

Legal Proceedings

 

25

Item 1A.

 

Risk Factors

 

25

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

26

Item 3.

 

Defaults Upon Senior Securities

 

27

Item 4.

 

Mine Safety Disclosures

 

27

Item 5.

 

Other Information

 

27

Item 6.

 

Exhibits

 

27

 

 

EXHIBIT INDEX

 

28

 

 

SIGNATURES

 

29

 

- 2 -


 

PART I — FINANCIAL INFORMATION 

Item 1. Financial Statements

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

(Amounts in thousands, except share amounts)

 

As Of

 

 

 

June 30,

 

 

December 31.

 

 

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

160,903

 

 

$

131,920

 

Accounts receivable and unbilled, net (includes $2.5 million and $1.9 million with related parties at June 30, 2020 and December 31, 2019, respectively)

 

 

127,286

 

 

 

155,662

 

Prepaid expenses and other current assets

 

 

30,893

 

 

 

29,446

 

Total current assets

 

 

319,082

 

 

 

317,028

 

Property and equipment, net

 

 

65,954

 

 

 

47,292

 

Operating lease right-of-use assets

 

 

113,566

 

 

 

52,152

 

Goodwill

 

 

662,427

 

 

 

662,396

 

Intangible assets, net

 

 

50,373

 

 

 

54,350

 

Deferred income taxes

 

 

469

 

 

 

376

 

Other assets

 

 

10,263

 

 

 

9,477

 

Total assets

 

$

1,222,134

 

 

$

1,143,071

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable (includes $0.1 million and $0.2 million with related parties at June 30, 2020 and December 31, 2019, respectively)

 

$

14,879

 

 

$

22,404

 

Accrued expenses

 

 

102,950

 

 

 

109,252

 

Advanced billings (includes $1.6 million and $3.0 million with related parties at June 30, 2020 and December 31, 2019, respectively)

 

 

195,351

 

 

 

192,359

 

Other current liabilities

 

 

24,804

 

 

 

18,987

 

Total current liabilities

 

 

337,984

 

 

 

343,002

 

Operating lease liabilities

 

 

114,984

 

 

 

45,212

 

Deferred income tax liability

 

 

15,341

 

 

 

12,849

 

Other long-term liabilities

 

 

15,756

 

 

 

15,725

 

Total liabilities

 

 

484,065

 

 

 

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 June 30, 2020 and December 31, 2019, respectively

 

 

-

 

 

 

-

 

Common stock - $0.01 par-value; 250,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively; 35,408,120 and 36,065,278 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

 

354

 

 

 

360

 

Treasury stock - 200,000 shares at June 30, 2020 and December 31, 2019, respectively

 

 

(6,030

)

 

 

(6,030

)

Additional paid-in capital

 

 

676,621

 

 

 

666,585

 

Retained earnings

 

 

70,347

 

 

 

68,109

 

Accumulated other comprehensive loss

 

 

(3,223

)

 

 

(2,741

)

Total shareholders’ equity

 

 

738,069

 

 

 

726,283

 

Total liabilities and shareholders’ equity

 

$

1,222,134

 

 

$

1,143,071

 

 

See notes to condensed consolidated financial statements.

 

- 3 -


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

(Amounts in thousands, except per share amounts)

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue, net (includes $2.7 million and $4.0 million with related parties for the three months ended June 30, 2020 and 2019, respectively, and $8.2 million and $9.1 million with related parties for the six months ended June 30, 2020 and 2019, respectively)

 

$

204,995

 

 

$

214,104

 

 

$

435,874

 

 

$

414,845

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct service costs, excluding depreciation and amortization

 

 

86,625

 

 

 

79,327

 

 

 

175,420

 

 

 

154,436

 

Reimbursed out-of-pocket expenses

 

 

61,733

 

 

 

70,985

 

 

 

138,739

 

 

 

141,579

 

Total direct costs

 

 

148,358

 

 

 

150,312

 

 

 

314,159

 

 

 

296,015

 

Selling, general and administrative

 

 

21,855

 

 

 

23,556

 

 

 

46,979

 

 

 

44,864

 

Depreciation

 

 

2,674

 

 

 

1,982

 

 

 

5,127

 

 

 

3,973

 

Amortization

 

 

1,980

 

 

 

2,995

 

 

 

3,977

 

 

 

8,839

 

Total operating expenses

 

 

174,867

 

 

 

178,845

 

 

 

370,242

 

 

 

353,691

 

Income from operations

 

 

30,128

 

 

 

35,259

 

 

 

65,632

 

 

 

61,154

 

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Miscellaneous income (expense), net

 

 

239

 

 

 

(19

)

 

 

856

 

 

 

(301

)

Interest (expense) income, net

 

 

(5

)

 

 

(748

)

 

 

352

 

 

 

(1,703

)

Total other income (expense), net

 

 

234

 

 

 

(767

)

 

 

1,208

 

 

 

(2,004

)

Income before income taxes

 

 

30,362

 

 

 

34,492

 

 

 

66,840

 

 

 

59,150

 

Income tax provision

 

 

6,258

 

 

 

7,037

 

 

 

13,782

 

 

 

12,497

 

Net income

 

$

24,104

 

 

$

27,455

 

 

$

53,058

 

 

$

46,653

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.68

 

 

$

0.76

 

 

$

1.48

 

 

$

1.30

 

Diluted

 

$

0.64

 

 

$

0.73

 

 

$

1.40

 

 

$

1.24

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,386

 

 

 

35,839

 

 

 

35,705

 

 

 

35,772

 

Diluted

 

 

37,328

 

 

 

37,389

 

 

 

37,680

 

 

 

37,377

 

 

See notes to condensed consolidated financial statements.

 

- 4 -


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 

(Amounts in thousands)

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

24,104

 

 

$

27,455

 

 

$

53,058

 

 

$

46,653

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of taxes

 

 

506

 

 

 

414

 

 

 

(482

)

 

 

140

 

Comprehensive income

 

$

24,610

 

 

$

27,869

 

 

$

52,576

 

 

$

46,793

 

 

See notes to condensed consolidated financial statements.

 

- 5 -


 

 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Accumulated

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Deficit)

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

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

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,455

 

 

 

 

 

 

 

27,455

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

414

 

 

 

414

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

5,385

 

 

 

 

 

 

 

 

 

 

 

5,385

 

Stock options exercised

 

 

2

 

 

 

 

 

 

 

2,902

 

 

 

 

 

 

 

 

 

 

 

2,904

 

BALANCE — June 30, 2019

 

$

359

 

 

$

(6,030

)

 

$

651,784

 

 

$

14,319

 

 

$

(2,377

)

 

$

658,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,104

 

 

 

 

 

 

 

24,104

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

506

 

 

 

506

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

2,616

 

 

 

 

 

 

 

 

 

 

 

2,616

 

Stock options exercised

 

 

 

 

 

 

 

 

 

 

633

 

 

 

 

 

 

 

 

 

 

 

633

 

Repurchases of common stock

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

(7,588

)

 

 

 

 

 

 

(7,589

)

BALANCE — June 30, 2020

 

$

354

 

 

$

(6,030

)

 

$

676,621

 

 

$

70,347

 

 

$

(3,223

)

 

$

738,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

 

- 6 -


 

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

(Amounts in thousands)

 

Six Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

53,058

 

 

$

46,653

 

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

 

 

 

 

 

 

 

 

Depreciation

 

 

5,127

 

 

 

3,973

 

Amortization

 

 

3,977

 

 

 

8,839

 

Stock-based compensation expense

 

 

8,061

 

 

 

8,568

 

Amortization of debt issuance costs and discount

 

 

-

 

 

 

874

 

Noncash lease expense

 

 

6,288

 

 

 

4,787

 

Deferred income tax provision

 

 

2,416

 

 

 

1,840

 

Amortization and adjustment of deferred credit

 

 

(356

)

 

 

(400

)

Other

 

 

(265

)

 

 

10

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and unbilled, net

 

 

28,524

 

 

 

(15,470

)

Prepaid expenses and other current assets

 

 

(860

)

 

 

(3,414

)

Accounts payable

 

 

(7,173

)

 

 

5,338

 

Accrued expenses

 

 

(5,933

)