Good morning, and thank you for joining Medpace's fourth-quarter and full-year 2025 earnings conference call. Also on the call today is our CEO, August Troendle, our President, Jesse Geiger, and our CFO, Kevin Brady.

Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risks and uncertainties, as well as other important factors that could cause actual results to differ materially from our current expectations.

These factors are discussed in our Form 10-K and other filings with the SEC. Please note that we assume no obligation to update forward-looking statements even if estimates change.

Accordingly, you should not rely on any of today's forward-looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non-GAAP financial measures.

These non-GAAP measures are not superior to or replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call.

The slides are available in the Investor Relations section of our website at investor.medpace.com. With that, I would now like to turn the call over to August Troendle.

Good day, everyone. Cancellations were elevated again in Q4.

Backlog cancellations, in absolute and percent terms, were the highest they've been in over a year. This resulted in a lower than anticipated net book-to-bill ratio of 1.04.

The good news is that with a backlog conversion rate of 23.6%, our book-to-bill rate does not need to be very high to generate growth. I see no reason to expect the higher level of cancellations to continue, but did not anticipate the spike in Q4.

Only time will tell. Good opportunities continue to present themselves, and I rate the overall business environment as adequate and headed in the right direction.

Jesse will now make some comments on Q4 and the year. Jesse?

Thank you, August. Good morning, everyone.

Revenue in the fourth quarter of 2025 was $708.5 million, which represents a year-over-year increase of 32%, and full-year 2025 revenue was $2.53 billion, a 20% increase from 2024. Net new business awards entering backlog in the fourth quarter increased 39.1% from the prior year to $736.6 million, resulting in a 1.04 net book-to-bill.

For the full year 2025, net new business awards were $2.65 billion, an increase of 18.7%. Ending backlog as of December 31st, 2025, was approximately $3 billion, an increase of 4.3% from the prior year.

We project that approximately $1.9 billion of backlog will convert to revenue in the next 12 months, and our backlog conversion rate in the fourth quarter was 23.6% of beginning backlog. With that, I will turn the call over to Kevin to review our financial performance in more detail and discuss our 2026 guidance.

Kevin?

Thank you, Jesse, and good morning to everyone listening in. As Jesse mentioned, revenue was $708.5 million in the fourth quarter of 2025.

This represented a year-over-year increase of 32%. Full-year 2025 revenue was $2.53 billion, an increase 20% from 2024.

EBITDA of $160.2 million increased 20% compared to $133.5 million in the fourth quarter of 2024. Full-year EBITDA was $557.7 million, an increase 16.1% from the comparable prior-year period.

EBITDA margin for the fourth quarter was 22.6% compared to 24.9% in the prior-year period. Full-year EBITDA margin was 22% compared to 22.8% in the prior year.

EBITDA margins were impacted by higher reimbursable cost activity driven by therapeutic mix. In the fourth quarter of 2025, net income of $135.1 million increased 15.5% compared to net income of $117 million in the prior-year period.

For full year 2025, net income was $451.1 million compared to $404.4 million in 2024, which represents an 11.6% increase. Net income growth below EBITDA growth was primarily driven by lower interest income compared to the prior-year period, as well as a slightly higher effective tax rate.

Net income per diluted share for the quarter was $4.67 compared to $3.67 in the prior-year period. For the full year 2025, net income per diluted share was $15.28 compared to net income per diluted share of $12.63 in 2024.

Regarding customer concentration, our top five and top 10 customers represent roughly 25% and 35%, respectively, of our full-year 2025 revenue. In the fourth quarter, we generated $192.7 million in cash flow from operating activities, and our net days sales outstanding was -58.7 days.

As of December 31st, 2025, we had $497 million in cash. For full year 2025, we repurchased 2.96 million shares for $912.9 million.

At the end of the year, we had $821.7 million remaining under our share repurchase authorization program. Moving now to our guidance for 2026.

Full-year 2026 total revenue is expected in the range of $2.755 billion to $2.855 billion, which represents growth of 8.9% to 12.8% over 2025 total revenue of $2.53 billion. Our 2026 EBITDA is expected in the range of $605 million to $635 million, representing growth of 8.5% to 13.9% compared to EBITDA of $557.7 million in 2025.

We forecast 2026 net income in the range of $487 million to $511 million. This guidance assumes a full-year 2026 effective tax rate of 18.5% to 19.5%, interest income of $24.3 million, and 29.2 million in diluted weighted average shares outstanding for 2026.

There are no additional share repurchases in our guidance. Earnings per diluted share is expected to be in the range of $16.68 to $17.50.

Guidance is based on foreign exchange rates as of December 31st, 2025. With that, I will turn the call back over to the operator so we can take your questions.

Hi, great. It's Christine Rains on for Max.

Thank you for taking our questions. First one is what is embedded in your guidance for revenue growth excluding pass-throughs?

Last quarter, believe you alluded to high single digit to low double-digit direct fee revenue growth in 2026, but wondering if your growth expectations for this component are now higher given your strong EBITDA guide, and also what you expect the cadence of this revenue growth to look like.

Hi, Christine, this is Kevin. We don't provide guidance on direct service revenue.

What I can tell you though is that from a reimbursable cost expectation, it's consistent with what we shared back in October and that we expect it to be kind of in the 41% to 42% of revenue in '26, slightly higher than what we finished here this year. From a quarterly cadence standpoint, nothing I'd call out in particular.

I would say in terms of revenue, I do expect that reimbursable costs will start the year higher as a percentage of revenue than when we end the year, and so that being said, I do expect maybe some flatter top-line growth throughout the quarters than what we've experienced in past years.

Great, that was really helpful context. Then I noticed the acceleration in headcount growth in the quarter.

What do you expect headcount growth to be in 2026? Should we expect this mid-single-digit growth cadence to continue, or will you need an acceleration in hiring to support your 2026 outlook?

Thanks.

Hey, it's Jesse. We do expect accelerated growth.

We anticipate hiring in '26 to be above '25 levels, somewhere in the mid to high-single-digit growth area.

Great, thank you so much.

Hi, good morning, everyone. Just was hoping can you can you sort of unpack the business environment and the commentary in the prepared remarks, like either quantifying RFP activity or win rates, and and then also there seemed, there was a pretty good funding quarter in funding environment in the quarter as well, can you just help us understand that?

Business environment was, as I said, reasonably good. RFPs, if they matter, were up a bit both quarter-over-quarter and year-over-year.

I don't think there's anything really to call out beyond that. It was a higher cancellation rate that led us to miss.

Our gross bookings have again substantially better than last year and I think doing fine overall.

Okay. Is there any way to help us understand if cancellations were normal, what sort of the net bookings would be?

Then with those cancellations, could you help characterize those a bit more? Was it in any therapeutic area or customer area, vintage?

No, cancellations were a little bit skewed towards metabolic, area that's been growing quite a bit. There were a higher level of cancellations there.

Overall bookings have continued to be oncology our strongest, metabolic still there, but there were some elevated cancellations. It was kind of otherwise relatively normal.

We're not providing what the booking would have been, we don't give gross bookings. We're just netting them out, but you know the kind of directional magnitude of cancellations.

They would have been substantially higher if we had cancellations in a nice range.

Thank you. I'll jump back in queue.

Thank you. I just want to ask some more questions on just the cancellations.

Can you remind us what your historical range is and maybe what it was this quarter versus maybe the heights that you saw in 2024 and early 2025? Again, I think the past few quarters, cancellations have been very stable.

Is this driven by maybe the competitive environment, M&A, is it widespread, or is it just maybe one big client canceling something? Any more details would be great.

Sure. No, it's widespread.

There was no single or couple of very large projects that canceled. It was just a higher level of cancellations overall.

Comparable to the past year, it was the highest level of cancellations out of backlog. If you combine backlog and kind of our entire portfolio, I think Q1 was a little bit worse because we had such a high cancellation among projects that had been awarded, but were not yet recognized in backlog.

It was a high level overall. Again, pretty widespread.

There was no pattern to it to discern. It was just kind of the usual random stuff that was very heavily concentrated.

Then your revenue growth, maybe what are you assuming just for cancellation trends for the remainder of the year? I know burn rate was very strong.

Maybe what's the driver of that and what you are assuming in guidance for the rest of the year for burn rate?

We don't guide to burn rate.

If,

Kevin, you want to say something?

No, to August's point, we don't guide to burn rate. It's just not something that we do, Ann.

All right, thanks.

Hi, good morning. Thanks for taking my questions.

August, I wanted to kind of philosophically ask around therapeutic area concentration. You mentioned oncology being very strong and metabolic right behind it.

As people have seen and you've highlighted, metabolic has been on this very steep growth ramp. I guess to me the difference between those two areas is oncology is spread across tens if not hundreds of different kind of micro indications and metabolic seems to be very concentrated in diabetes and obesity.

I wondered how you think about the concentration risk in metabolic and the crowding and the potential for cancellations like you apparently just saw because people say we don't have enough differentiation.

Another big area is MASH and there are a few others that for us are meaningful. It is of late heavily kind of toward the obesity, diabetes area specifically.

I don't think we're at a level of overconcentration that that's a big worry. Metabolic will be decreasing as a percent of our revenue next year, I think.

I think it's going to kind of somewhat normalize, head towards a more normal range, but I don't really see that as a big risk for us at this time. Does that answer your question, Dave?

I think it does. I think it does.

Thanks. Guess then exploring the pass-throughs, I think I understand that these metabolic trials carry relatively high pass-throughs, and so it seems to track that your rapid growth in metabolic has also then contributed to the rapid growth in pass-throughs as a percentage of revenue.

I think Kevin kind of referenced this, and maybe the cancellation in metabolic is also what makes that moderate as you go through the year. Is that right?

That's absolutely right. In terms of pass-throughs, they have been driven largely by our metabolic programs and we do expect them to start to normalize in this next year.

It does provide a headwind of overall revenue growth, but it'll be more direct revenue, I guess, which is fine. I think that's correct.

Got it. If I could sneak one clarification on this in.

To what extent pass-throughs have outstripped your expectations in '25, to what extent is that underlying site-level inflation and things like that that you're having to rebudget and add, and therefore those adjustments are kind of going directly into backlog and right into revenue, and kind of the pass-through outstripping is what's driving this higher burn rate? How much would you attribute to that?

Almost none. I think this is not an issue of sites changing, getting more, these were known to be very high pass-through projects going in.

They're just the design of the project is just very heavy on investigator fees. I think the characteristics of the stage of the project and what is burning overall in our backlog does cause our conversion rate to shift around quite a bit as we get other projects that don't have as much relatively short-duration, high burn that have been awarded quarter-to-quarter.

It's not I think just the addition of pass-throughs, it's the study itself has been opened up. There were some issues with recognizing it in backlog because uncertainty of the program and stuff.

Those relatively short-term programs come on, okay, you get awards and they burn rather quickly. I think that will normalize over time and it is driven partly by the metabolic studies that we have, but not specifically because of a change in the expectation at sites.

Okay. Thank you.

Appreciate the extra question.

Thanks.

yeah, thanks for taking the question. Maybe just two clarifications if I could.

Kevin, you mentioned earlier that you expect pass-through revenues to be higher at the start of the year than at the end of the year. Does that suggest that you expect a lower metabolic mix as you exit '26?

Then, second question being, and maybe this is a little bit of follow-up to Dave's question, the way I understand how you think about what goes into backlog versus when you talk about stuff getting canceled out of pre-backlog. If cancellations were broad-based but elevated, were these cancellations less about funding and maybe more from either trials failing or decisions by sponsors to abandon programs?

Maybe I'll take your first question, Charles, just in terms of reimbursables and I do expect it to start the year higher. To August's comments, we do expect some of that metabolic shift to slow down a little bit.

I wouldn't say it's materially so, but we do expect it to slow down a little bit. What was your second question, Charles?

Oh yeah, it's just trying to understand, you've talked about backlog versus pre-backlog, and my understanding was that pre-backlog cancellations is perhaps more of a funding issue, but if something is canceling out of backlog itself, is that more of an issue that either trial maybe wasn't successful and so was canceled, or sponsors actually decide to abandon a program?

That's the case. Things that startup, they restructure, they change, they decide to end study early.

There were a number of studies ended early because of compound performance. I don't think there was no pattern and it wasn't just one or two very large projects.

Okay. Thank you.

Thanks. Good morning.

Maybe just on guidance, if you could help us with some of the margin puts and takes. At the midpoint, you have about 10 basis points of margin expansion for the year, and that's despite I know you all said accelerating hiring for the year, maybe a bit higher percentage for the year pass-throughs.

How much pressure do you expect those to create? Then the offsets, is it just predominantly more productivity gains you can drive, and then where are those productivity gains expected to come from?

Is it technology, offshoring, something else?

Maybe just in terms of our guidance range, you're kind of at the midpoint, it assumes kind of normal cancellation rates. As Jesse mentioned, from a hiring perspective, we expect to be in the mid to high-single digits, which is lower than the expectation on revenue growth.

What's driving that is just continued expectation that we continue to see good retention throughout 2026, which enables the productivity that we've seen throughout 2025 and exiting 2024. It enables us to hire, but at a slower rate.

It's not that I would say that we've got major cost-savings initiatives that are out there or we're certainly not planning on restructuring. We always look for ways to operate in a more efficient way, and so that contributes to some of that margin improvement around the edges, but by and large, it's going to be driven by just slower hiring ability on good retention.

Utilization overall. We also have laboratory operations, which are not huge, but utilization in lab is up, tests.

It's across the board, we've had good productivity.

Yeah.

Thanks. Then maybe just one on AI, since perceptions around that have had a pretty big impact on the space over the last week or so.

Just maybe any thoughts you can share on how big of a technological step change you think this is for the space over the next few years, and then to what extent you think that's a longer-term net positive or negative for Medpace? How are you all positioning, are you a little bit more insulated just given the kind of the nature of your client base?

How are you positioned for this? Are you investing around that?

I'll address that a little bit. Look, I think it's too early to know what kind of changes.

I do think that they will occur slowly. I would not anticipate really any productivity advantage, overall net advantage to AI applications in 2026.

I think that's not because we're not rolling out and doing a lot of things in AI, it's that I think the investment is going to at least equal the benefit seen in this first year of kind of rolling out applications. Where this goes in terms of how much productivity enhancement there is in the long term, and what that means to us, I do think that the productivity advances are going to be, apart it's going to be rent to the providers of the models, etc., but are going to be benefits to clients.

What that means in terms of encouraging more development, etc., but overall, you'd think on the surface of it, it's net negative to a service company that makes money by providing staff to perform work that is now made more efficient. I think that the timing of this, it's going to take years, just what that means, what the opportunities for us are, are difficult to see.

We're hoping to use AI in a lot of applications, we hope it does improve our productivity. That means potentially in the long run, fewer staff than you'd otherwise have, and that means a little bit less revenue than you would have otherwise had, at least net revenue.

That's very helpful. Thanks again.

Thank you, and thanks for taking my questions. Outside of cancellations spike you guys called out, did you also see any slowdown in decision-making or business moving from pre-backlog to backlog or within pre-backlog?

I'm sorry, changes between pre-backlog and backlog?

Just in general in terms of decision-making, are projects getting delayed or the way of moving from pre-backlog to backlog, is the business still moving at the same pace outside of cancellation?

Look, I think things are moving along pretty well. There isn't at least a sudden change in nothing's seizing up or anything like that.

I think things are relatively normal. You always have cases where somethings are held or are slowed down for whatever reasons, drug availability, they're waiting on results of something.

There's always reasons why things can progress into backlog slower than anticipated. They can change the design of the trial, and you have to then rework things before you get it launched.

I don't see any real trend there in terms of in the past sometimes we've seen, because of funding, a seize-up in a lot of things that prevents them from moving forward. We're not seeing that at this time.

Then my follow-up, just in general about the competitive landscape, as you guys have called out about top three CROs kind of getting more aggressive in the market. Have you seen them kind of continuing to get aggressive in terms of broadening their focus within biotech or in terms of price?

Has that had any impact on your win rate? Just give us a little bit more flavor about the landscape in general with these top players getting into this space.

I don't think there's anything to say there. I know they're more aggressively interested in the space because they say they are, but they've been involved in the space all along and I don't really see a large change in the dynamic.

It's hard for me to know. I do not perceive a difference.

We see the same competitors in the space and it seems to be the same as it was five years ago.

Got it. Thank you.

Thank you very much. My first question, it looked like from your disclosure that you had a pretty good quarter in large pharma revenue growth.

Was there anything unusual to call out there and would that be sustainable?

Dan, nothing to really call out. I think it might have changed a percentage point, but nothing to call out there.

It's not a focus. Large pharma is not a focus for us, so.

Thank you. A follow-up on that AI topic.

August, you mentioned that 2026 is the first year you're rolling out applications. Can you elaborate on that comment?

What are you rolling out this year and what are you trying to accomplish?

I'll leave it to Jesse. Jesse, do you want to comment on that?

I would just say in general, they fall into two categories. One, just a number of different initiatives that are targeted on improving efficiency.

That there's a blurry line between what you call AI improvement that's really tech-enabled support for different things across the organization that are focused in that category. Then the other category would be assisting with data analytics for feasibility and site selection and helping the team there with some AI-enabled tech.

That's where we're starting.

Thank you very much.

Great, thanks for the question here. I just wanted to kind of follow up on Dave's and on the kind of the margin questions.

Can you help us understand the near-term levers that you have to pull as a project starts to ramp on? What I really want to get at is let's assume you get some type of booking a year ago, and your assumption is that these are the types of resources that you're going to need to execute this trial.

As that ramps, it starts to either come out that you can actually use less resources or more resources. I just want to understand your flexibility to ramp here.

This is I think important as you think about the overall mix of the bookings and how this has changed from a burn rate and capacity needs as you go, as metabolic and the like continue to gain share.

Just remember that in terms of our business model, we like to hire ahead because we are a training shop, we like to train and develop our people. When you've got larger attrition rates, right, you're having to replace those individuals that are leaving plus onboard new people.

What we've seen over the last year or so is that with improved retention rates, you're having to do less of that training, you're only training the ones that are coming in. Because of that, you're seeing more improved productivity because you're spending less time on training and development and you've got more experienced individuals and staff that are on site.

We continue to operate under that business model of hiring ahead and we'll continue to do that, but it's at levels that are less than what we had to do two years ago. What you're seeing is that productivity and that improved utilization continue to play through for us.

All right, great. Then I guess from your performance obligations that are over three years long have continued to kind of trend down here off of your peak of 4Q '24.

Assume that obviously that most of this is probably due with the faster burning business, but anything else going here, is there a change in the duration of these trials or the type of work that's going on?

There certainly was a average change in the duration of our trials because we had this substantial ramp in metabolic trials and a number of trials overall that were shorter, but that kind changes over time. I don't think there's a change in a particular class of trial, I just think it's a change in the mix of trials that we've had in the last few years, last year particularly.

I don't think there's a long-term trend in terms of trial duration changing for a given indication and stage of a trial.

Great. Thanks.

Great, thank you. This is Dan Clark on for Mike.

Just wanted to ask about pricing. How did that look in your new awards in 4Q and how are you thinking about that for 2026?

Our pricing on that is changed materially over time. I don't think it should have a impact on margin.

I think our margin is going to be maintained. Given all the other factors, it's not going to be a driver of a margin change.

Got it. Thank you.

Then just one more on AI. When you're talking to customers or involved in RFPs, what are they kind of focused on if anything from an AI angle?

Thank you.

I was going to say it's a balanced conversation because we do take a very measured approach to AI. We want to balance the benefits with risk management and ensure that, A, we have quality adoption, and, B, that we're not putting any of their information at risk.

The conversations are kind of twofold. One, what are we doing with AI to help with their studies, and at the same time, how are we being good stewards of data to make sure that we continue with high quality and confidentiality?

Hey, thanks. Appreciate the question.

I was wondering if you could give us any more color on the new signings in the fourth quarter, that tranche of business that would have largely moved into your pre-backlog. Could you give any quantification on that pre-backlog and maybe how much it's up year-over-year, quarter-over-quarter?

We don't provide details on that. Q4 was a bit light as was the prior Q4, but we don't give exact magnitude on that.

Okay. Then could you speak to the impacts that you've seen from this accelerating M&A environment with large pharma buying your clients and any impact that may have had on your revenue, your bookings, or your future revenue projections?

I'm sorry, the what would have a impact?

Accelerating M&A environment with large pharma buying some of your clients.

Yes. It's obviously a potential.

Our clients, a number of our clients have been purchased in the past year. It continues to be.

We have a pretty broad base of clients, I don't anticipate that to be an issue. Generally, we don't lose the work that we're doing with the client.

We generally lose the client long term, get incorporated into a large pharma. It's generally not a short-term risk, but it happens not infrequently.

Good, thank you.

Thank you for joining us on today's call and for your interest in Medpace. We look forward to speaking with you again on our first-quarter 2026 earnings call.