Good morning, and thank you for joining Medpace's Third Quarter 2026 Earnings Conference Call. Also on the call today is our CEO, August Troendle, 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 a 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.

Thanks, David. Good morning, everyone.

The business environment remained strong in quarter three 2026. We saw high-quality RFP activity, strong initial award notifications, and a good win rate.

Net new business awards reached an all-time high in the quarter, and our last 12-month growth in awards was 23.9%. We will provide guidance for 2027 at the end of our Q4 reporting, at the time of our Q4 reporting in February.

However, we see no large disconnect between analyst consensus estimates and our current modeling of 2027. Kevin will now review our financial results for Q3 and our updated 2026 guidance.

Thank you, and good morning to everyone listening in. Revenue was $716 million in the third quarter of 2026.

This represented a year-over-year increase of 8.5%. Revenue for the nine months ended September 30th, 2026, was $2.13 billion and increased 16.9%.

EBITDA of $172.1 million increased 16% compared to $148.4 million in the third quarter of 2025. Year-to-date EBITDA was $474.9 million and increased 19.5% from the comparable prior year period.

EBITDA margin for the third quarter was 24% compared to 22.5% in the prior year period. EBITDA margins benefited from lower reimbursable costs.

Year-to-date EBITDA margin was 22.3% compared to 21.8%. In the third quarter of 2026, net income of $137.5 million increased 23.7% compared to net income of $111.1 million in the third quarter of 2025.

Net income growth above EBITDA growth was primarily driven by higher interest income and a lower effective tax rate compared to the prior year period. Year-to-date net income was $382.7 million compared to $316 million in the comparable prior year period, which represents a 21.1% increase.

Net income per diluted share for the quarter was $4.84 compared to $3.86 in the prior year period. Year-to-date net income per diluted share was $13.37 compared to net income per diluted share of $10.64 in the comparable prior year period.

Net new business awards entering backlog in the third quarter increased 10.6% from the prior year to $873.4 million. Net new business awards entering backlog over the last 12 months increased $3.02 billion, representing a year-over-year increase of 23.9%.

Ending backlog as of September 30th, 2026, was approximately $3.2 billion, an increase of 5.6% from the prior year. We project that approximately $1.99 billion of backlog will convert to revenue in the next 12 months.

Backlog conversion in the third quarter was 23.8% of beginning backlog. Regarding customer concentration, our top five and top 10 customers represent roughly 31% and 39%, respectively, of our last 12-month revenue.

In the third quarter, we generated $216.6 million in cash flow from operating activities, and our net days sales outstanding was negative 66 days. Cash ended the quarter at $705.3 million.

Effective October 20th, 2026, the board terminated the company's current share repurchase authorization and approved a new share repurchase authorization of up to $1 billion. Moving now to our updated guidance for 2026.

Full-year 2026 total revenue is now expected in the range of $2.835 billion to $2.855 billion, representing growth of 12% to 12.8% over 2025 total revenue of $2.53 billion. Our 2026 EBITDA is now expected in the range of $638 million to $652 million, representing growth of 14.4% to 16.9% compared to EBITDA of $557.7 million in 2025.

We forecast 2026 net income in the range of $514 million to $524 million. This guidance assumes a full-year 2026 effective tax rate of 19% to 19.5%, interest income of $22.9 million, and 28.6 million diluted weighted average shares outstanding for 2026.

There are no additional share repurchases assumed in our guidance. Earnings per diluted share is now expected to be in the range of $17.97 to $18.32.

Guidance is based on foreign exchange rates as of September 30th, 2026. With that, I will turn the call back over to the operator so we can take your questions.

Oh, hi, can you hear me?

My apologies there. August, maybe just to dive into a bit more about your bookings commentary.

Clearly, that bookings performance in the quarter is really strong. As you think about where that's coming from, how do you see the evolving competitive environment within the biotech world?

How do you think about where either pricing lies or your ability to continue to push forward in your differentiation within your core biotech customer? Any more color you can give on the competitive components and what led to some of this bookings growth in what is a healthy market would be great.

Thank you.

August, you might be on mute.

Sorry, having trouble here. I guess you're kind of ultimately addressing win rate, I guess, how we're performing versus how much is environment.

The business environment is a strong one, I think really across the board. I think that things have changed a little bit in terms of the mix of what we're seeing, and it's a little bit more traditional oncology, generally our largest area, a little bit less metabolic demand at the current time point.

I think there's a lot of good opportunities, and our win rate has been strong. I think it's a combination of the two.

I think we're booking good work, and a lot of it has been in the past certainly a few years here. It's been a lot of cancellations have driven ultimate performance in terms of awards and revenue growth.

I hope that is somewhat reduced going forward. Backlog cancellations this quarter were not something to call out, but also not a help.

They were toward the higher end, but within kind of the range we'd expect. I think that's what I can provide.

Thank you, and thanks for taking my questions. First, a quick clarification, August, about your comment about current consensus being in the right range.

I'm assuming that applies to both revenue and EBITDA. Then on the revenue expectation, I think Street is modeling 6% growth.

Anything you can share in terms of how you think about direct fee revenue versus pass-through, that would be really helpful.

We don't comment on direct, pass-through, etc. You see our pass-through expenses, I think that's kind of a way to try to back into it, not accurately, but at least directionally.

I don't know, Kevin, do you want to comment on that?

No, I think we'll provide more color, Jailendra, in terms of what that will look like in February, but I would just kind of reiterate what August said, that consensus looks reasonable relative to our current modeling, and that would include some assumptions on pass-throughs at the current moment. We'll have to see how bookings progress in the next quarter.

The only other thing that I would call out, while we do agree with the percentages, just a reminder that we do have a significant expansion coming online here in Cincinnati, which will add about $20 million of operating costs in 2027.

That's helpful. Then quick follow-up on the direct fee gross margin in the quarter.

Really good trends there. Anything to call out in particular?

Just trying to figure out if there was anything out of the ordinary in terms of mix or change orders or timing and if these Q3 direct fee gross margin levels are sustainable.

I would just say, Jailendra, quarter to quarter, there's certainly volatility that can occur in our numbers, and I know that everybody uses pass-through as a proxy for what direct service fee revenue is, but that's not exactly how 606 works. Your margins, again are good, very good, but they can be lumpy from quarter to quarter.

I don't see anything that would significantly disrupt kind of the margin performance in Q4.

Great. Thanks a lot.

Hello, this is Tucker Remmers filling in for Kevin Caliendo here. I'm going to probably double click on the last question on the margin.

Headcount grew high single digits sequentially, and yeah, you were able to maintain that margin level. Kind of what drove service fee margin being so strong, why would it essentially maintain at this level going forward?

Again, there can be some timing things that happen in a given quarter. There can be some lumpiness caused by 606.

No, it's good performance overall across the business. Utilization continues to be in a good spot, and while we're growing headcount, the revenue is growing faster than that at the given moment.

Got it. Then maybe if I can just follow up quickly, this is mostly a question on the mix of service fee and pass-throughs essentially in the backlog.

Pass-throughs obviously dipped down in the quarter, and so does that essentially imply that service fee bookings are higher in backlog? The question is essentially, would Medpace be able to maintain this 10% plus service fee growth in the foreseeable future, assuming that the pass-throughs are kind of maintaining at this lower-ish 40% level?

Again, in terms of service fee growth, obviously the bookings over the last couple of quarters have been good. We'll have to see what happens in the fourth quarter, but that will then influence what 2027 looks like.

In terms of growth rates, nothing to comment on in terms of 2027 at the moment other than what we have already said, in that we don't see a major disconnect with where consensus is right now.

Got it. Thank you.

Good morning. Thank you.

When I look at the implied growth rate for 2027, definitely lower than what Medpace usually does, is that just a factor of, even though bookings were very strong this quarter and the last three quarters were just below historically what you've got, or is it anything you're seeing in the environment, maybe over the past couple of weeks as interest rates have gone up, that you think's going to impact demand next year? Thanks.

No, Ann, I think that our growth profile has dropped quite a bit over the last few years related primarily to pressure from cancellations has been one of the biggest things, particularly this past year. We've had good opportunities.

The business environment's been strong this year. It continues to be.

One reason we decided to not provide any real guidance on next year yet is it's still shaping up quite a bit. Q4 awards are still a important component of next year revenue, but more important is kind of where we shake out in terms of cancellation pattern here in Q4 and going into the next year.

Things are improving month to month in terms of us increasing our revenue expectations for 2027. Hopefully that continues.

Again, a large part of that'll be kind of what the cancellation profile is in Q4. We see no reason for high cancellations, but these are kind of things that just come out of the blue.

They were a little bit higher than we would have liked in the current quarter, but manageable. Hopefully that continues for the rest of the year anyway.

Ann, just another comment that you remember the mix of pass-throughs relative to revenue will also influence that growth rate as well, right?

Yeah. Then just maybe, any incremental color on the cancellations?

Did anything surprise you about them in the quarter, is it just funding, I guess what's driving the cancellations, or any change from what's been driving them over the past few quarters?

No, our cancellations now are primarily those of product failure, a little bit more clearly product failure, you know? It's always, well, some of it's prioritization, too.

You could say that's related to total level of funding, possible. No real signs funding is now a main driver of many of the cancellations.

It's products that are not living up to expectation, safety signals, other things that are causing programs to stop. Everything surprises me about them, you know?

They're all just random events and unexpected. No real trend there.

Great. Thank you.

Hi, good morning, everyone. Just a continuation of the last question.

In terms of the decision to wait until February to guide, what is more of the factor here? Is it more about the awards, or is it more about cancellations?

Just trying to get a better sense here of why the change from last year.

I'm not sure I can sort that out. It's just that over the last quarter, our view on 27 has moved, and we expect it to continue to move.

It just seemed that we can't provide a very firm guide. We feel we can provide a much more firm guide in February than we would be able to now.

We didn't see a real need to come out with some commentary on what we expected relative to consensus. It looked somewhat in line.

I'm not saying it's the same, but it didn't look drastically off. We decided that there's no point in making a poor guide that might not be very accurate in retrospect.

That's really it.

Understood. Then just a couple of quick follow-ups there.

How does the funnel look in terms of potential awards and RFPs for the rest of the year?

No, look, the pending RFPs is up. The total dollar value of opportunities that we're looking at is up nicely.

RFP numbers are actually down some, but, like I said, I kind of ignore RFP numbers. The quality and the total pending decisions by clients is very large, and they're not being held up.

This is just because of volume of opportunities that have come in. It's not that things are not being awarded.

Things are actually moving along at a relatively normal pace in terms of award decisions, projects moving forward, getting funding in place. Things are actually going very well, but the total number of opportunities has increased, and is at a good, very very good high.

I think that if we can win well in Q4 and certainly anywhere near as well as in Q3, and cancellations aren't really out of range, I think things are going to improve toward our '27 expectations.

Great. I will jump back in queue.

Thank you.

Morning. Thanks for taking my questions.

Maybe going back to the new awards and good to see that they're growing healthy. I guess, do you have any way of, I guess, clarifying how much of that new awards momentum is a result of the pre-backlog that you called out in the prior year period kind of clearing those gating factors and moving into backlog?

Most of our awards come from something that was previously notified that we were chosen as the CRO to do this. Most of it is those gating factors if you consider the start of the study being a gating factor, which we do.

We bring things into backlog when the study starts actually, operationally in the field. Now, if you're asking how much is that versus other gating factors, still the biggest one is getting started in the trial.

It's a minor number of additional amounts of backlog added because there was some gating factor on a award that was already partially in backlog. I don't know if that answers your question, but most things that are awards in a given quarter were in our pre-backlog.

Got it. Okay.

Then just you mentioned a few quarters ago some initiatives you're putting in place to address your win rates, and clearly they're bearing fruit. Any more color you can share on just how those initiatives have been working and generating success?

No, I'm not going to give details on what they were. Again, I wanted to point out we recognized our win rate wasn't as high as we'd like in 2025, and toward the end of 2025, we made some meaningful adjustments in our processes and how we address things.

It's very difficult over even just a couple quarters to assess that. I think our assessment to date is that they've been very successful, and we hope to continue to improve going forward.

Great. Thank you.

Hi, thanks for taking my question. Good morning.

I wanted to ask a question around kind of composition of work, and what I'm driving at is, August, your intent, I think consistent intent, to do full-service work for your clients. I think you have a minimum kind of composition of the trial that you want to control in order to really want to engage with a client.

What we're hearing is some additional, I guess, carve-out of biometrics work within trials, otherwise FSO-type trials. Then biotechs that, somewhat counterintuitive to me, but biotechs that are interested in engaging in FSP discussions, which I don't think you're interested in.

I wanted to probe if you are seeing changes in the way your target client base wants to engage around projects. Thanks.

David, I wouldn't say that I see certainly a meaningful change in that. There's always been clients that want to carve out biometrics, sometimes internally, sometimes with another chosen provider.

We do prefer totally full-service opportunities, but as long as we're able to add real value in terms of managing the recruitment, quality of the trial, execution overall. If we have all of the front-end operations, and they may want to keep even data in-house as well as statistics and medical writing, that may be an opportunity that's of interest to us, yes.

I haven't really seen a step increase in the number of clients that are doing that really. It is dependent on size of client to a good extent.

If it's truly functional, you're right, we're not interested at all. Certainly if it's front-end only, we do do projects that are front-end only.

Got it. Thanks.

Then maybe you commented about therapeutic mix shifting back toward more traditional oncology, a little less cardiometabolic. Ryan asked the question about the topic that you kind of raised last time about having some trials that have these interim looks or contingencies that may be removed midstream.

I guess I'm wondering if there's an interrelationship between those two, which therapeutic areas tend to have that interim look, how prevalent are those things? Maybe the simplest way to ask the question is, we did see the backlog beyond next 12 months kind of regrow, or kind of inflate a little bit where it hasn't for a while, and I'm just again probing around some of those moving parts in the backlog, long-term versus next 12 months.

Thanks.

I guess fair question. I just don't have the analytics in front of me, and I generally don't look at that.

It's possible that's related. I don't know that there's any real shift in the amount that's rolling in versus new awards, etc.

Both in terms of notifications and things being recognized into backlog, awards have and to some extent, RFPs have pivoted more back towards oncology. Although we are also seeing in terms of RFPs quite a bit of metabolic work again.

Sort of there was a little bit of a drop, and so the notifications and awards are down in the metabolic area, but there is a lot of pending opportunities for metabolic for us currently. What's driving the increase in duration, is it new projects that are entered and very short remaining projects that are coming out that's driving it?

I think that's probably the bigger factor. Was there any gates that were reached that opened up that caused a meaningful increase in the duration of projects?

I don't know. I doubt it's therapeutic-related.

It may be true that oncology has a bit more likely to have gates. They tend to be longer trials, and they have more gating.

That's probably true overall, but I don't know if that's influencing our outside of 12-month backlog change.

Okay. Great.

Thank you.

Hi, good morning, it's Christine Rains on for Jared. Thanks for taking our questions.

The pass-through revenue mix came in nicely below your prior 41% to 42% expectation for the second half. Is that range still the right expectation for 2H, and should we expect pass-through mix to step up in 4Q?

I guess good question. I expect it to be somewhere around where we finished the third quarter.

Kind of 40% to 40.5% based on our current modeling.

Great. Perfect.

That's very helpful. Then would you characterize customer decision timelines in the quarter as healthy, and overall, did you see any notable decline in timelines sequentially and relative to last year?

Thank you.

I think things are moving along faster than last year. I think we're kind of in a pretty good place in terms of projects moving along well.

The RFPs not being bid 1,000 times, and things moving along towards award and then projects start up. I think things are pretty normalized environment in terms of we're getting opportunities that clients want to move forward on in the current time frame, not sometime in the future.

Perfect. Appreciate the color.

Thanks very much, and good morning. Obviously a very strong margin in the quarter, and clearly the lower reimbursable revenue is a contributor to that optically.

I am curious if there were other drivers in the quarter that you would highlight, whether that be project or therapeutic mix, hiring perhaps being lower than you were anticipating, or turnover being lower than you were anticipating, other efficiencies, any accounting oddities or one-timers? I'm just continually impressed by your EBITDA margin, and I think this was the second highest quarter since ASC 606.

Would love to get a sense on if there's anything unique to the quarter that barring the optics of pass-throughs up or down, that we would be using this as some kind of a jumping off point or have a reason to have sustainably higher expectations here.

No, Eric, nothing to specifically call out. Just other than what I mentioned earlier, that certainly there is volatility in our margin percentages quarter to quarter, right?

There can be some timing aspects to when certain contracts are signed. The business is performing very well on the direct service side, to your point.

Attrition rates are in a very good spot, and the business continues to deliver. Some of it certainly can be influenced by just the volatility that we see and some of the 606 impacts, but again, I don't expect there to be a major degradation in the fourth quarter.

Again there is some level of headwind in 2027 as we absorb the Cincinnati campus expansion, but provide more color on that in February.

Okay. Then I think you touched on it, but I did want to specifically ask about turnover rates, hiring, salaries, wages, benefits, inflation, what your thoughts are going into '27.

I've recently conversed with a few of your peers, some of the mid-tier biotech-focused privates, etc., and what I am picking up is that almost everybody had exceptionally low turnover in recent years and, in many cases, actually record low turnover, voluntary turnover at least, but we are picking up some signs that turnover levels are starting to come back, that a number of firms are starting to hire again, people are more willing to jump ship if there's more options, and companies need to start paying up for talent. I'm just curious what your overall view on the staff marketplace looks like as we go into '27.

Turnover looks very low. I think we've continued with low turnover.

Don't know what else to say on that. No, and

no pressures on incremental or abnormal pressures on salaries, wages, benefits at this point?

No. No, it's pretty look, it's it's an ongoing thing, but no, I I don't think there's any real real change over the past over the past year.

That's great. Then

In terms of the rate, obviously it's always increasing some, but within our expectations, yes.

No, that's where I was going, thank you for that. Then last one for me.

Last quarter, August, you seemed a lot more upbeat about, I don't know, maybe it's just the focus of what we're talking about today, but there was a lot more commentary on, I think, bookings and the big second-half ramp that you expected. You were obviously accurate with book-to-bill getting back above that 1.2 zip code, and strong awards that came in this quarter.

It felt like there was a little less commentary on that on the fourth quarter, some modest mentions of higher cancels out of backlog. Help us get to the right spot for the fourth quarter if you know

Look, it's going to be cancellations. No, I don't feel any different.

I think that Q4, if things go right, is going to be another record awards. I hate to look at book-to-bill.

I just think it's a bad measure. I'd rather focus on award growth and trailing 12 awards, and I would expect another step-up.

Things look very good. We have a lot of stuff in the pipeline, both in terms of opportunities, RFPs that are pending award.

We had very strong quarter in terms of awards and of notifications, themselves, and I would expect business awards, things moving into backlog to continue to move upward going forward next year, next quarter and sequentially. No real difference on that.

It just comes down to do we get some unusual cancellations or not?

Thank you so much. That's very helpful.

Have a great day. Thanks.

Thanks, Eric.

Hey, thanks. Thanks again for the question.

You guys had a pretty big step-up in the large pharma side. I just wanted to know kind of what you're seeing there from a share dynamic, especially over the last couple years.

I know that the revenue is really contingent on what you won over the last 2 years ago. Just give a sense of where are there any specific indications, or you adding new logos, or is this just kind of more about assets and where those existing relations progressing through the development pipeline?

Most of our large pharma opportunities have come from a limited number of providers, and often it's related to biotech clients we had that got acquired. It's not really a direct outreach from us to try to win large pharma work at new clients.

It's supporting existing clients that largely are there because we had an acquisition of a former client of ours. I think that's it.

Just more of the same that's been going on there. Then, I guess, could you talk about pricing and competitiveness on the RFP?

You guys are investing there to add capacity. It feels like markets in full recovery mode right now, are things starting to tighten up and you're able to maybe get some price in some types of services on the full-service side?

I think there were some that really focused on pricing. We focus on quality of our deliverables, and I do think that some of the crazy approaches taken by some in the past few years have died out, I think we're kind of back to a normalized environment.

Good to hear. Thanks.

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 fourth quarter 2026 earnings call.